After several delays, the Consolidated Appropriations Act, 2021 (the “Act”) was signed into law on December 27, 2020. Although the Act primarily addresses coronavirus emergency response and relief and appropriations through September 30, 2021, it also contains several provisions of interest for employers that sponsor benefit plans, including temporary flexibility for health care and dependent care flexible spending accounts (FSAs), changes to retirement plan provisions, and certain health care plan changes related to so-called “surprise billing”. The following summarizes the provisions of the Act that affect health care and dependent care FSAs.
Continue Reading New Year, Old FSA Money?
Tenth Circuit Decision Puts New Emphasis on Including Discretionary Authority Language in Summary Plan Descriptions
The Tenth Circuit’s recent split decision in M. v. Premera Blue Cross, No. 18-4098 (July 24, 2020), poses a significant threat to the deferential standard of review typically applied to benefit plan claim determinations, and imposes a new burden on plan administrators.
More than 30 years ago, the Supreme Court held in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989), that benefit denials are “reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.” Applying the Firestone doctrine, lower courts have consistently applied the substantially more deferential “arbitrary and capricious” or “abuse of discretion” standard of review to benefit denials when the plan at issue granted the plan administrator (or relevant fiduciary) discretionary authority consistent with the Firestone case.
The Tenth Circuit, in Premera, changes that standard.Continue Reading Tenth Circuit Decision Puts New Emphasis on Including Discretionary Authority Language in Summary Plan Descriptions
Flexibility for Flexible Spending Accounts in Light of COVID-19
The IRS and the Treasury Department, acknowledging the widespread impact of COVID-19, have issued Notice 2020-29 and Notice 2020-33, granting much-sought flexibility for flexible spending accounts (“FSAs”) and health plans. Though the Section 125 cafeteria plan rules applicable to FSAs and health plans already permitted some limited election changes in the case of changes in status (for example, in the event of significant cost or coverage changes), they did not address the wide array of changes that many participants have wanted to make based on the ripple effects of the COVID-19 crisis. In addition, the existing Section 125 rules required that any change to the election be consistent with (as determined under the rules) and on account of the applicable change in status.
Continue Reading Flexibility for Flexible Spending Accounts in Light of COVID-19
CARES Act – Changes for Health and Welfare Plans
On March 27, 2020, President Trump signed the largest economic stimulus bill in US history: the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The CARES Act provides resources to support our health care system in the fight against the COVID-19 pandemic, cash and other forms of relief for individual citizen; loans and
Considering a Furlough?
US employers are considering many alternatives to address the significant economic hardships caused by the COVID-19 pandemic. One such alternative is putting one or more groups of employees on furlough—a low paid or unpaid leave of absence. However, now more than ever, employers must carefully address health plan coverage during a furlough. See our Legal
Impact of Families First Coronavirus Response Act on Health Plans
The Families First Coronavirus Response Act, signed into law on March 18, 2020, is a significant piece of federal legislation addressing the 2019 Novel Coronavirus (COVID-19) pandemic. Among its many provisions is a broad requirement that group health plans and health insurance issuers provide coverage for COVID-19 testing without any cost sharing, prior authorization,
COVID-19 Coverage under High Deductible Health Plans
For an update on the Families First Coronavirus Response Act, which requires coverage of testing without cost sharing effective March 18, 2020, see our blog entry.
In an effort to remove barriers to testing for and treatment of the 2019 Novel Coronavirus (COVID-19), the Internal Revenue Service today issued Notice 2020-15. The Notice
Cadillac Tax Repeal on the Horizon?
The Affordable Care Act contains a provision–the so-called “Cadillac tax”–providing for a 40% exci
se tax on high cost employer-sponsored health coverage. The bar for “high cost” is fairly low, and the Cadillac tax is ultimately expected to apply to a significant number of employer-sponsored health plans.
Since the passage of the Affordable Care Act, many employers and insurers (who would be responsible for paying the tax) have actively opposed the implementation of the Cadillac tax provisions, with moderate success. The Cadillac tax was originally slated to take effect in 2018, but its implementation has been delayed twice–most recently until 2022. Continue Reading Cadillac Tax Repeal on the Horizon?
IRS Changes Course Again on HSAs
In welcome news, the IRS reversed its course on the maximum annual health savings account contribution for a family with high deductible health coverage. As you may recall, the IRS
initially set the maximum 2018 HSA contribution for family coverage at $6,900. In March 2018, the IRS lowered that maximum to $6,850. Via Rev. Proc.
HSA Holders Beware: Reduction to Contribution Limits Effective Immediately
On March 5, 2018, the IRS announced adjustments – effective immediately – to various annual limitations already in place for 2018. One such adjustment is to the maximum annual health savings account contribution for a family with high deductible health coverage. Previously set at $6,900 for 2018, the IRS has lowered the limit to $6,850,