Compliance Check - April 2021

OVERVIEW

March 2021 was an eventful month with regard to new guidance on recently passed legislation and expanded provisions from the IRS to provide relief to individuals and businesses impacted by the continuing COVID-19 pandemic. Most significantly, on March 11, 2021, the American Rescue Plan Act of 2021 (overview) was enacted into law which, in part, mandates that eligible individuals receive a six-month 100% COBRA.

Below is a summary of the many changes and updates for review.

IRS Notice 2021-21

Due to the COVID-19 national emergency, the Internal Revenue Service (IRS) released Notice 2021-21 (Notice) that extends the deadline for filing income returns on Form 1040, Form 1040-SR, Form 1040-NR, Form 1040-PR, Form 1040-SS, or Form 1040 (SP). The Notice extends the general April 15, 2021, deadline to May 17, 2021. The Notice provides that individuals with a deadline to file a claim for credit or refund of federal income tax filed on the Form 1040 series or on a Form 1040-X that falls on or after April 15, 2021, and before May 17,
2021, have until May 17, 2021, to file the claims for credit or refund.

The Notice also extends the deadline to file and furnish Form 5498 (individual retirement account (IRA) Contribution Information), Form 5498-ESA (Coverdell education savings account (ESA) Contribution Information), and Form 5498-SA (health savings account (HSA), Archer Medical Savings Account (Archer MSA), or Medicare Advantage Medical Savings Accounts (Medicare Advantage MSA) Information). The Notice extends the general June 1, 2021, deadline to June 30, 2021. The deadline for making contributions to IRAs, Roth IRAs, HSAs, Archer MSAs, and Coverdell ESAs has also been extended from April 15, 2021, to May 17, 2021.

 

PPE as Section 213(d) Qualified Medical Expenses

The Internal Revenue Service (IRS) released Announcement 2021-7 providing that amounts paid for personal protective equipment (PPE) such as masks, hand sanitizer and sanitizing wipes, for the primary purpose of preventing the spread of COVID-19, are qualified medical expenses under Internal Revenue Code Section 213(d). Therefore, these expenses are eligible for reimbursement from account-based plans, including health flexible spending arrangements (health FSAs), Archer medical savings accounts (Archer MSAs), health reimbursement arrangements (HRAs), and health savings accounts (HSAs). Note that if the expense is reimbursed under an account-based plan, it is not deductible for the taxpayer under Section 213 (no double benefit).

The IRS provides that group health plans, including health FSAs and HRAs, will need to be amended if the plans prohibit reimbursement of PPE. Group health plans may be amended to provide for such reimbursement of PPE expenses incurred for any period beginning on or after
January 1, 2020. Such an amendment must be adopted no later than the last day of the first calendar year beginning after the end of the plan year in which the amendment is effective. The amendment can have a retroactive effective date (unless it is adopted after December 31, 2022) if the plan is operated consistent with the terms of the amendment beginning on the effective date of the amendment. The IRS provides that the amendment will not cause plans to fail the Section 125 cafeteria plan requirements.

 

Executive Order on Strengthening Medicaid and the Affordable Care Act

3/24/2021 Update: CMS has extended the new special enrollment period for marketplaces using the Heathcare.gov platform until August 15, 2021. See the updated CMS FAQs for more information. On January 28, 2021, President Biden signed an Executive Order on Strengthening Medicaid and the Affordable Care Act. The Executive Order instructs the Department of Health and Human Services (HHS) to consider establishing a special open enrollment period (SEP) for individuals to enroll in or change their current coverage under federally facilitated health insurance marketplaces. The Centers for Medicare and Medicaid Services (CMS) initially established that the special enrollment period would begin on February 15, 2021, and would continue through May 15, 2021. CMS extended the SEP to apply from February 15, 2021, through August 15, 2021. This SEP will be available to individuals in the 36 states with marketplaces using the Healthcare.gov platform. Individuals can check their eligibility for this SEP on Healthcare.gov.

The Executive Order instructs HHS, the Department of Labor (DOL), the Department of the Treasury (Treasury), and all other executive departments and agencies with authorities and responsibilities related to Medicaid and the ACA (Agencies) to review all existing  regulations and other guidelines or policies (agency actions) as soon as possible to examine:

  • policies or practices that may undermine protections for people with pre-existing conditions, including complications related to COVID-19, under the ACA;
  • demonstrations and waivers, as well as demonstration and waiver policies, that may reduce coverage under or otherwise undermine Medicaid or the ACA;
  • policies or practices that may undermine the Health Insurance Marketplace or the individual, small group, or large group markets for health insurance in the United States;
  • policies or practices that may present unnecessary barriers to individuals and families attempting to access Medicaid or ACA coverage, including for mid-year enrollment; and
  • policies or practices that may reduce the affordability of coverage or financial assistance for coverage, including for dependents.

The Executive Order instructs the Agencies to suspend, revise, or revoke, as soon as possible, agency actions that are inconsistent with the policy of the Biden Administration to protect and strengthen Medicaid and the ACA and to make high-quality healthcare accessible and affordable for every American. The Executive Order also instructs the Agencies to consider whether to issue additional agency actions to more fully enforce this policy.

Finally, the Executive Order revokes Executive Order 13765 Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal issued on January 20, 2017, and Executive Order 13813 Promoting Healthcare Choice and Competition Across the United States issued on October 12, 2017. As part of the review of agency actions, the Executive Order instructs the Agencies to consider, as soon as possible, whether to suspend, revise, or rescind agency actions related to these executive orders.

 

American Rescue Plan Act of 2021 – COBRA Premium Assistance

On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 (Act). The Act is a $1.9 trillion legislative package that includes pandemic relief for individuals and families. The Act contains several provisions including funding to the Centers for Disease Control and Prevention, stimulus checks, unemployment benefits, the child tax credit, tax credits for paid sick leave and family and medical leave, the Paycheck Protection Program, grants to state educational agencies, and low-income family assistance. The Act also contains several provisions affecting group health plans. This series of Advisors will focus on the provisions affecting group health plans. Below is an overview of the Consolidated Omnibus Budget Reconciliation Act (COBRA) coverage premium assistance provisions contained in the Act.

The Act provides COBRA relief for assistance-eligible individuals. An assistance-eligible individual is an individual who is eligible for COBRA due to the COBRA qualifying event of termination of employment or reduction in hours, except for an individual’s voluntary termination of employment, and if he or she elects coverage during the period beginning April 1, 20201, and ending on September 30, 2021.

COBRA Premium Assistance

COBRA premiums for any period of coverage for an assistance-eligible individual covered under COBRA in the period of time beginning April 1, 2021, and ending on September 30, 2021, will be considered paid (that is, assistance-eligible individuals will not be required to pay the COBRA premiums). If an assistance-eligible individual pays any portion of the COBRA premiums, the amount must be reimbursed within 60 days of the date on which the individual made the premium payment.

Permitted Alternative (Different) COBRA Coverage

If an assistance-eligible individual enrolled in a group health plan experiences the COBRA qualifying event of termination of employment or reduction in hours, other than voluntary employment termination, an employer may choose to offer the COBRA-qualified individual different coverage (in addition to the offer of normal COBRA coverage) that is not the same plan as the plan the individual was covered under at the time the COBRA qualifying event. The individual must elect this coverage no later than 90 days after receiving notice of the option. The premium for this different coverage must not exceed the premium for coverage in which the individual was enrolled in at the time the qualifying event occurred. The different coverage in which the individual elects to enroll in must be coverage that is also offered to similarly situated active employees of the employer at the time the individual elects the different coverage. The different coverage cannot be a) coverage that only provides excepted benefits, b) a qualified small employer health reimbursement arrangement (QSEHRA), or c) a flexible spending arrangement (FSA). This coverage will be treated as COBRA coverage.

Extension of COBRA Election Period

An individual who a) does not have a COBRA election in effect on April 1, 2021, but who would otherwise be an assistance-eligible individual if an election were in effect; or b) elected COBRA continuation coverage, but discontinued the coverage before April 1, 2021, may elect COBRA continuation coverage during the period beginning April 1, 2021, and ending 60 days after the date on which the administrator of the applicable group health plan (or other entity) provides the additional notification, described below, to the individual.

Any COBRA continuation coverage elected by a qualified beneficiary during an extended election period noted above must begin on or after April 1, 2021, and will not extend beyond the maximum period of COBRA coverage that would have applied had the coverage had been elected and maintained without the extension.

Limitation of the COBRA Premium Subsidy

This COBRA premium subsidy will expire upon the earlier of:

    • The first date that the individual is eligible for benefits under Medicare or eligible for coverage under any other group health plan (not including coverage that a) only provides excepted benefits, b) is a QSEHRA, or c) is an FSA); or
    • The earlier of:
      • the date following the expiration of the applicable maximum COBRA coverage period due to the qualifying event, or
      • The end of the COBRA period that would have applied had the coverage had been elected and maintained without the extension.

An assistance-eligible individual must notify the group health plan when his or her premium subsidy period has expired as noted above. The Act provides that the Department of Labor (DOL) will determine the way the notice must be provided and the deadline by which the notice must be provided.

Notices to Individuals

The required COBRA election notice provided by the plan administrator to individuals that become eligible to elect COBRA continuation coverage during the period of time beginning April 1, 2021, and ending on September 30, 2021, must include an additional written notification (included in the election notice or by a separate document) to the recipient in clear language of the availability of the premium assistance and the option to enroll in different coverage if the employer permits assistance-eligible individuals to elect enrollment in different coverage as described above. In a situation in which the election notice is not required to be provided by the plan administrator, the DOL and Department of Health and Human Services (HHS) will provide rules requiring the provision of such notice.

The additional notice must include:

    • the forms necessary for establishing eligibility for premium assistance;
    • the name, address, and telephone number necessary to contact the plan administrator and any other person maintaining relevant information in connection with such premium assistance;
    • a description of the extended election period noted above;
    • a description of the obligation of the qualified beneficiary to notify the group health plan when his or her premium subsidy period has expired and the penalty provided under section 6720C of the Internal Revenue Code of 1986 for failure to carry out this obligation;
    • a description, displayed in a prominent manner, of the qualified beneficiary’s right to a subsidized premium and any conditions on entitlement to the subsidized premium; and
    • a description of the option of the qualified beneficiary to enroll in different coverage if the employer permits the beneficiary to elect to enroll in different coverage.

In the case of any assistance-eligible individual (or any individual who qualifies for an extended election period noted above who became eligible to elect COBRA continuation coverage before April 1, 2021) the administrator of the applicable group health plan (or other entity) must provide, within 60 days after April 1, 2021, the additional notification required above. Failure to provide the additional notice will be treated as a failure to meet the election notice requirement under COBRA.

The Act instructs the DOL, HHS, and the Department of the Treasury to issue models for the additional notification described above no later than 30 days after the enactment of this Act.

The administrator of the applicable group health plan (or other entity) also must provide an assistance-eligible individual a written notice in clear language that the premium assistance will expire soon and must prominently identify the date the assistance will expire and that the individual may be eligible for COBRA or coverage under a group health plan without premium assistance. This notice must be provided no earlier than 45 days before the expiration date of the assistance and no later than 15 days before the expiration date. Notice is not required to be provided if an individual’s premium assistance expires due to expiration of the COBRA coverage period or the date that the individual is eligible for benefits under Medicare or eligible for coverage under any other group health plan (not including coverage that a) only provides excepted benefits, b) is a QSEHRA, or c) is an FSA).

The Act instructs the DOL, HHS, and the Treasury to issue models for the premium assistance expiration notification described above no later than 45 days after the enactment of this Act.

Premium Assistance Credit

The employer maintaining the plan that is subject to COBRA (or the plan in the case of a multiple employer plan under Section 3(37) of ERISA; in all other cases, the issuer providing coverage) is entitled to a premium assistance credit against the FICA Medicare tax imposed on it. The amount of the premium assistance credit for each calendar quarter is equal to the amount of premiums not paid by assistance-eligible individuals. The credit allowed for each calendar quarter cannot exceed the tax imposed by Internal Revenue Code (IRC) Section 3111(b), or so much of the taxes imposed under section 3221(a) as are attributable to the rate in effect under Section 3111(b), for such calendar quarter (reduced by any credits allowed against such taxes under Sections 3131, 3132, and 3134) on the wages paid with respect to the employment of all employees of the employer. If the premium assistance credit that an employer is entitled to exceed this limitation, the excess amount must be treated as an overpayment by the employer and refunded to the employer. The premium assistance credit may be advanced according to forms and instructions provided by the IRS. Note that the IRS will waive penalties for failure to pay the FICA Medicare tax up to the premium assistance credit amount if the IRS determines that the failure was due to the anticipation of the credit. If an entity overstates the amount of credit it is entitled to, this will be treated as an underpayment of the FICA Medicare tax.

No premium assistance credit will be allowed for any amount that is taken into account as qualified wages under the employee retention credit or qualified health plan expenses under the federal paid sick leave and paid family and medical leave credit.

The premium assistance credit applies to premiums and wages paid on or after April 1, 2021.

 

American Rescue Plan Act of 2021 – DCAPs and Exchange Health Insurance

On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021. The Act is a $1.9 trillion legislative package, which contains several provisions intended to relieve employers and families from some of the economic burdens associated with COVID-19. The Act contains funding for the Centers for Disease Control and Prevention, stimulus checks, unemployment benefits, a child tax credit, tax credits for paid sick leave and family and medical leave, the paycheck protection program, grants to state educational agencies, and low-income family assistance. The Act also contains several provisions affecting group health plans.

Increase in the Maximum Exclusion Under DCAPs

The Act increases the maximum amount that can be excluded from an employee’s income under a dependent care flexible spending arrangement (DCAP) from $5,000 to $10,500 if the employee is married and filing a joint return or if the employee is a single parent ($2,500 to $5,250 for individuals who are married but filing separately) for any taxable year beginning after December 31, 2020, and before January 1, 2022. An employer may amend a DCAP to apply this increased limit retroactively to January 1, 2021, if the amendment is adopted no later than the last day of the plan year in which the amendment is effective and the plan is operated consistent with the terms of the amendment during the period beginning on the effective date of the amendment and ending on the date the amendment is adopted.

Expanded Premium Tax Credit Eligibility and Lower Required Contribution Percentages on the Health Insurance Marketplace/Exchange

For the taxable years of 2021 and 2022, the Act has expanded eligibility for the premium tax credit for individuals who purchase health insurance on an Exchange. Under the Act, there is no upper-income limit on individuals who are eligible for a premium tax credit for 2021 and 2022 (under the existing Patient Protection and Affordable Care Act (ACA) rules, the premium tax credit is limited to individuals with household income between 100% and 400% of the federal poverty level (FPL)). The Act also lowers the percentage of household income that individuals must contribute for health insurance coverage purchased on an Exchange.

In the case of an individual who has received, or has been approved to receive, unemployment compensation for any week beginning during 2021, for that taxable year an Exchange must not take into account any household income of the individual in excess of 133 percent of the poverty limit for a family of the size involved.

 

Mandatory Coverage of COVID-19 Vaccines Under Group Health Plans

3/5/2021 Update: ACIP recommended the Janssen (Johnson & Johnson) vaccine.

On December 11, 2020, the Food and Drug Administration (FDA) issued an Emergency Use Authorization for the Pfizer-BioNTech COVID-19 vaccine (Pfizer vaccine). The following day, December 12, 2020, the Centers for Disease Control Advisory Committee on Immunization
Practices (ACIP) issued an interim recommendation for use of the Pfizer vaccine in persons aged 16 years or older for the prevention of COVID-19.

On December 18, 2020, the FDA issued an Emergency Use Authorization for the Moderna COVID-19 (mRNA-1273) vaccine (Moderna vaccine). The following day, December 19, 2020, ACIP issued an interim recommendation for use of the Moderna vaccine in persons aged 18 or older for the prevention of COVID-19.

On February 27, 2021, the FDA issued an Emergency Use Authorization for the Johnson & Johnson COVID-19 vaccine. The following day, February 28, 2021, ACIP issued an interim recommendation for use of the Johnson & Johnson vaccine in persons aged 18 or older for the prevention of COVID-19.

Alternative COVID-19 vaccines are likely to be approved by the FDA under emergency authority in the coming weeks. Group health plans are encouraged to prepare to cover the cost of the Pfizer, Moderna, Johnson & Johnson, and other approved COVID-19 vaccines.

Under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), non-grandfathered individual and employer-sponsored group health plans are required to cover the entire cost of preventative services by not imposing cost-sharing in the form of deductibles, copays, coinsurance or other amounts on the following:

  • An item, service, or immunization that is intended to prevent or mitigate the coronavirus disease and is an evidence-based item or service that has a rating of “A” or “B” in the current recommendations of the United States Preventive Services Task Force (USPSTF); and
  • An immunization that is intended to prevent or mitigate the coronavirus disease that has a recommendation from ACIP with respect to the individual involved.

The CARES Act requires that the above services be covered as preventive care 15 business days after the date on which a recommendation is made by the USPSTF or ACIP relating to the service. Accordingly, non-grandfathered individual and group health plans must cover the Pfizer vaccine as preventive care no later than January 5, 2021 (based on the December 12, 2020, recommendation from ACIP), the Moderna vaccine as preventive care no later than January 12, 2021 (based on the December 19, 2020, recommendation from ACIP), and the Johnson & Johnson vaccine as preventive care no later than March 19, 2021 (based on February 28, 2021 recommendation from ACIP).

ACIP has recommended that only health care personnel and residents of long-term care facilities receive the vaccine in the initial phase (Phase 1a) of the COVID-19 vaccination program. ACIP previously recommended that during Phase 1b, the vaccine should be distributed to essential workers such as members of the education sector, food and agriculture, utilities, police, firefighters, corrections officers, and transportation. ACIP has revised this recommendation so that during Phase 1b the vaccine should be offered to persons aged 75 years or older and frontline essential workers (non–health care workers).

ACIP previously recommended that during Phase 1c, the vaccine should be distributed to adults with high-risk medical conditions and adults aged 65 years or older. ACIP has revised this recommendation so that during Phase 1c, the vaccine should be offered to persons aged 65 to 74 years old, persons aged 16 to 64 years old with high-risk medical conditions, and essential workers not recommended for vaccination in Phase 1b.

Phase 2 includes all other persons aged 16 years or older that are not included in Phases 1a, 1b, or 1c.

Employers should ensure that their non-grandfathered group health plans, whether self-insured, or fully insured through carriers, are prepared to cover COVID-19 vaccines as provided under the CARES Act and that the plan documents reflect such coverage. Further, participant communications should be distributed that provide information regarding the availability of COVID-19 vaccinations with no cost-sharing. Grandfathered plans are not required to cover COVID-19 vaccines under the CARES Act. However, employers with such plans should review their plan documents to determine whether COVID-19 vaccines are or should be covered.

 

EBSA Disaster Relief Notice 2021-01

3/2/2021 Update: The DOL issued EBSA Disaster Relief Notice 2021-01 providing that the outbreak period relief noted below ends on the earlier of one year from the date an individual or plan was first eligible for relief (extension period) or the original outbreak period of 60 days after the announced end of the COVID-19 National Emergency. As of the date of this writing, the COVID-19 National Emergency has not ended.

On March 13, 2020, former President Trump issued the Proclamation on Declaring a National Emergency Concerning the Novel Coronavirus Disease (COVID-19) Outbreak and by a separate writing made a determination, under Section 501(b) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, that a national emergency exists nationwide beginning March 1, 2020, as the result of the COVID-19 outbreak.

The Department of Labor (DOL) recognizes that the COVID-19 outbreak may impede efforts to comply with various requirements and deadlines under the Employee Retirement Income Security Act (ERISA). As a result, the DOL’s Employee Benefits Security Administration (EBSA) issued Disaster Relief Notice 2020-01 (Notice 2020-01) that applies to employee benefit plans, employers, labor organizations, and other plan sponsors, plan fiduciaries, participants, beneficiaries, and covered service providers. Notice 2020-01 supplements the extended timeframes final rule issued by the DOL and the Department of the Treasury.

ERISA Notice and Disclosure Relief

In addition to the final rule, Notice 2020-01 provides an extension on deadlines for furnishing other required notices or disclosures to plan participants, beneficiaries, and other persons to grant plan fiduciaries and plan sponsors additional time to meet their obligations under Title I of ERISA during the COVID-19 outbreak. This extension applies to the furnishing of notices, disclosures, and other documents required by provisions of Title I of ERISA over which the DOL has authority, except for those notices and disclosures addressed in the final rule. See the DOL Reporting and Disclosure Guide for Employee Benefit Plans for an overview of the various notice and disclosure requirements under Title I of ERISA.

Under the EBSA Disaster Relief Notice 2021-01, an employee benefit plan and the responsible plan fiduciary may disregard the period from March 1, 2020, and ending on the earlier of one year from the date the plan was first eligible for relief (extension period) or the original outbreak period of 60 days after the announced end of the COVID-19 National Emergency when determining the date that a notice or disclosure must be provided under Title I of ERISA. This relief will only apply if the plan and responsible fiduciary act in good faith and furnish the notice, disclosure, or document as soon as administratively practicable under the circumstances. Good faith acts include use of electronic alternative means of communicating with plan participants and beneficiaries whom the plan fiduciary reasonably believes have effective access to electronic means of communication, including email, text messages, and continuous access websites.

Plan Loans and Distributions

The DOL has taken a temporary non-enforcement position on retirement plan loan and distribution procedural deficiencies. Under Notice 2020-01, retirement plans that do not follow procedural requirements for plan loans or distributions imposed by the terms of the plan, will not be treated as in violation of Title I of ERISA if: 1) the failure is solely attributable to the COVID19 outbreak; 2) the plan administrator makes a good-faith diligent effort under the circumstances to comply with those requirements; and 3) the plan administrator makes a reasonable attempt to correct any procedural deficiencies, such as assembling any missing documentation, as soon as administratively practicable. The relief is limited to the DOL’s authority under Title I of ERISA and does not extend to Title II of ERISA, which contains provisions analogous to those under the Internal Revenue Code and subject to the jurisdiction of the IRS, such as the spousal consent rules for distributions.

Under Notice 2020-01, the DOL will not consider any person to have violated Title I of ERISA, including the requirement that the loan be adequately secured by the account balance, solely because: 1) the person made a plan loan to a qualified individual during the loan relief period in compliance with the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and the provisions of any related IRS notice or other published guidance; or 2) a qualified individual delayed making a plan loan repayment in compliance with the CARES Act and the provisions of any related IRS notice or other published guidance.

Notice 2020-01 provides that an employee pension benefit plan may be amended to provide the relief for plan loans and distributions described in section 2202 of the CARES Act and the DOL will treat the plan as being operated in accordance with the terms of the amendment prior to its adoption if: 1) the amendment is made on or before the last day of the first plan year beginning on or after January 1, 2022, or such later date prescribed by the Secretary of the Treasury, and 2) the amendment meets the conditions of section 2202(c)(2)(B) of the CARES Act.

Participant Contributions and Loan Repayments

Under Notice 2020-01, as amended by Notice 2021-01, the DOL will not take enforcement action with respect to a temporary delay in forwarding participant payments and withholdings to employee pension benefit plans during the period from March 1, 2020, and ending on the earlier of one year from the date the plan was first eligible for relief (extension period) or the original outbreak period of 60 days after the announced end of the COVID-19 National Emergency if the delay is solely attributable to the COVID-19 outbreak. However,  employers and service providers must act reasonably, prudently, and in the interest of employees to comply as soon as administratively practicable under the circumstances.

Blackout Notices

Notice 2020-01 provides individual account plan administrators with relief from the requirement that 30 days’ advance written notice be provided to participants before implementing a blackout period that restricts participants’ ability to direct investments and to obtain loans and other distributions from the plan. The relief is available when a plan administrator is unable to comply with the advance notice requirement due to events beyond the reasonable control of the plan administrator. The DOL will not require plan administrators to make a written determination when seeking relief from the 30 days’ advance notice requirement due to a pandemic, such as COVID-19.

General ERISA Fiduciary Compliance

Notice 2020-01 provides that plan fiduciaries should make reasonable accommodations to prevent the loss of benefits or undue delay in benefits payments and should attempt to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established timeframes. The DOL recognizes that there may be instances when plans and service providers may be unable to achieve full and timely compliance with claims processing and other ERISA requirements. The DOL notes that it will implement grace periods and other relief where appropriate, including when physical disruption to a plan or service provider’s principal place of business makes compliance with pre-established timeframes for certain claims’ decisions or disclosures impossible.

The DOL will continue to monitor the effects of the COVID-19 outbreak and may provide additional relief when necessary.

 

Final Rule on the Extension of Certain Timeframes for Employee Benefit Plans, Participants, and Beneficiaries Due to COVID-19

3/2/2021 Update: The DOL issued EBSA Disaster Relief Notice 2021-01 providing that the outbreak period relief noted below ends on the earlier of one year from the date an individual or plan was first eligible for relief (extension period) or the original outbreak period of 60 days after the announced end of the COVID-19 National Emergency. As of the date of this writing, the COVID-19 National Emergency has not ended. If a deadline noted below fell on March 1, 2020, it would be extended until February 28, 2021 (one year from March 1, 2020). However, if a deadline fell after March 1, 2020, the deadline would be extended to a date after February 28, 2021 because the extension is up to one year following the deadline or 60 days after the announced end of the COVID-19 National Emergency, if earlier.

On March 13, 2020, former President Trump issued the Proclamation on Declaring a National Emergency Concerning the Novel Coronavirus Disease (COVID-19) Outbreak and by separate letter made a determination, under Section 501(b) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, that a national emergency exists nationwide beginning March 1, 2020, as the result of the COVID-19 outbreak.

The Department of Labor (DOL) and the Department of the Treasury (Treasury) issued a final rule that extends certain timeframes under the Employee Retirement Income Security Act (ERISA) and Internal Revenue Code (IRC) for group health plans, disability, and other welfare plans, pension plans, and participants and beneficiaries of these plans during the COVID-19 national emergency. The timing extensions are issued to help alleviate problems faced by health plans to comply with strict ERISA and IRC timeframes and problems faced by participants and beneficiaries in exercising their rights under health plans during the COVID-19 national emergency. The final rule provides the timeframe extensions based on the end date of the “national emergency” (as of the date of this publication, the national emergency end date has not been announced) and the end date of the “outbreak period” which is the 60th day after the end of the national emergency. Under EBSA Disaster Relief Notice 2021-01, the end of the outbreak period relief is the earlier of one year from the date they were first eligible for relief (extension period), or the original outbreak period of 60 days after the announced end of the national emergency. Under the final rule the outbreak period will be disregarded, meaning the timeframes for the group health plan requirements noted below will be paused until after the outbreak period has ended.

HIPAA Special Enrollment Periods

Under HIPAA, group health plans must provide special enrollment periods in certain circumstances, including when an employee or dependent loses eligibility for any group health plan or other health insurance coverage in which the employee or the employee’s dependents were previously enrolled (including coverage under Medicaid and the Children’s Health Insurance Program), and when a person becomes a dependent of an eligible employee by birth, marriage, adoption, or placement for adoption. Generally, group health plans must allow such individuals to enroll in the group health plan if they are otherwise eligible and if enrollment is requested within 30 days of the occurrence of the event (or within 60 days, in the case of loss of Medicaid or state Children’s Health Insurance Program (CHIP) coverage or eligibility for state premium assistance subsidy from Medicaid or CHIP).

Under the final rule and EBSA Disaster Relief Notice 2021-01, the one-year extension period or original outbreak period, if earlier, must be disregarded when determining if a participant timely requested HIPAA special enrollment (i.e., the 30-day or 60-day period will begin to run the day after the outbreak period). See the Appendix for examples.

COBRA

The COBRA continuation coverage provisions generally provide a qualified beneficiary a period of at least 60 days to elect COBRA continuation coverage under a group health plan. Plans are required to allow payment of premiums in monthly installments, and plans cannot require payment of premiums before 45 days after the day of the initial COBRA election. COBRA continuation coverage may be terminated for failure to pay premiums on time. Under the COBRA rules, a premium is considered paid on time if it is made no later than 30 days after the first day of the period for which payment is being made. Notice requirements prescribe time periods for employers to notify the plan of certain qualifying events and for individuals to notify the plan of certain qualifying events or a determination of disability. Notice requirements also prescribe a time period for plans to notify qualified beneficiaries of their rights to elect COBRA continuation coverage.

Under the final rule and EBSA Disaster Relief Notice 2021-01, the one-year extension period or original outbreak period, if earlier, must be disregarded when determining the 60-day COBRA election period, the date for making COBRA premium payments, and the date for qualified beneficiaries to notify the plan of a qualifying event or determination of disability. The outbreak period must also be disregarded when determining the date by which a COBRA election notice must be provided to a qualified beneficiary. See the Appendix for examples.

Claims Procedure

ERISA-covered employee benefit plans and non-grandfathered group health plans and health insurance issuers offering non-grandfathered group or individual health insurance coverage are required to establish and maintain a procedure governing the filing and initial disposition of benefit claims, and to provide participants with a reasonable opportunity to appeal an adverse benefit determination to an appropriate named fiduciary. Plans may not have provisions that unduly inhibit or hamper the initiation or processing of claims for benefits. Further, group health plans and disability plans must provide participants at least 180 days following receipt of an adverse benefit determination to appeal (60 days in the case of pension plans and other welfare benefit plans).

Under the final rule and EBSA Disaster Relief Notice 2021-01, the one-year extension period or original outbreak period, if earlier, must be disregarded when determining the date for participants to file a benefit claim under the plan’s claims procedures and the date by which a participant may file an appeal of an adverse benefit determination under the plan’s claims procedure.

External Review Process

ERISA sets forth standards for external review that apply to non-grandfathered group health plans and health insurance issuers offering non-grandfathered group or individual health insurance coverage and provides for either a state external review process or a federal external review process. Standards for external review processes and timeframes for submitting claims to the independent reviewer for group health plans or health insurance issuers may vary depending on whether a plan uses a state or federal external review process. For plans or issuers that use the federal external review process, the process must allow at least four months after the receipt of a notice of an adverse benefit determination or final internal adverse benefit determination for a request for an external review to be filed. The federal external review process also provides for a preliminary review of a request for external review. The regulation provides that if such request is not complete, the federal external review process must provide for a notification that describes the information or materials needed to make the request complete, and the plan or issuer must allow a claimant to perfect the request for external review within the four-month filing period or within the 48-hour period following the receipt of the notification, whichever is later.

Under the final rule and EBSA Disaster Relief Notice 2021-01, the one-year extension period or original outbreak period, if earlier, must be disregarded when determining the date by which a participant may file a request for an external review after receiving an adverse benefit determination or final internal adverse benefit determination and the date by which a participant must file a corrected request for external review upon a finding that the request was not complete.

Plan Administrator/Fiduciary Obligations Regarding the End of the Outbreak Period

The DOL instructs that if the plan administrator or other responsible plan fiduciary knows, or should reasonably know, that the end of the outbreak period for an individual action is exposing a participant or beneficiary to a risk of losing protections, benefits, or rights under the plan, the administrator or other fiduciary should consider sending a notice regarding the end of the outbreak period. The DOL also notes that plan disclosures issued prior to or during the pandemic may need to be reissued or amended if such disclosures failed to provide accurate information regarding the time in which participants and beneficiaries were required to take action (e.g., COBRA election notices and claims procedure notices). The DOL provides that group health plans should consider ways to ensure that participants and beneficiaries who are losing coverage are made aware of other coverage options that may be available to them, including the opportunity to obtain coverage through the Health Insurance Marketplace in their state.

The DOL acknowledges that there may be instances when full and timely compliance with ERISA’s disclosure and claims processing requirements by plans and service providers may not be possible, such as when pandemic or natural disaster-related disruption to a plan or service provider’s principal place of business makes compliance with pre-established time frames for certain claims’ decisions or disclosures impossible. The DOL will take into account fiduciaries that have acted in good faith and with reasonable diligence under the circumstances when enforcing ERISA requirements.


ARPA: What Employers Need to Know

On March 10, 2021 Congress passed the American Rescue Plan Act (ARPA) of 2021, which was signedImage inspiring hope for 2021 and the coronavirus relief offered with American Rescue Plan Act ARPA into law on March 11th. The ARPA attempts to address and help mitigate some of the far-reaching financial impacts of the COVID-19 pandemic. In addition to those provisions, the ARPA contains provisions that are of special interest to employers and employees

 

The ARPA Nitty Gritty

  • COBRA Subsidy - A 100% premium subsidy is provided, funded through employer tax credits. 
  • FFCRA Leave - Employer tax credits have been extended through September 30, 2021.
  • FFCRA Leave - Inclusion of testing and immunization as qualifying reasons for FFCRA leave.
  • FFCRA Tax Credits - Definition of employee earnings eligible have been expanded.
  • Unemployment - The $300 weekly increase has been extended and expanded.
  • ACA - Exchange insurance subsidies are increased. 
  • DCAP - Contribution limits have been increased.
  • Employee Retention Tax Credit - Extended and expanded eligibility for some businesses. 

 

Let's Break It Down

 

COBRA Subsidy

What is it?

COBRA (Consolidated Omnibus Budget Reconciliation Act of 1986) allows employees who would lose employer-sponsored health insurance because of job loss (or reduction in working hours) to continue that insurance for 18 months. However, the employer can require the employee that elects COBRA coverage to pay the entire cost of the premium oftentimes creating a necessary, but an unexpected financial burden for the employee. 

 

ARPA Provisions

  • 100% subsidy of COBRA premiums from April 1, 2021, through September 30, 2021, for employees and their family members who lost health insurance due to involuntary termination or reduction in hours of their employment
  • Allows employees who declined COBRA coverage, or elected it and dropped it, to elect subsidized COBRA
  • Does not apply to employees who voluntarily terminated their employment or who qualify for another group health plan

 

Who Pays For It?

The subsidy is funded through the federal government through a refundable payroll tax credit. 

 

Action Steps

  • New employee notice requirements for plan administrators will be issued by the US Department of Labor
  • Employees may elect subsidized COBRA starting April 1, 2021, through 60 days after receiving notice of the benefit

 

FFCRA Leave

What is it?

FFCRA (Families First Coronavirus Response Act) was passed in March 2020 and provided a tax credit for employers to fund two types of paid employee leave required by the law. These leave requirements expired in December 2020, but for employers that chose to continue providing FFCRA leave voluntarily, the tax credit was extended through March 2021.

 

ARPA Provisions

  • Extends tax credit through September 30, 2021
  • Adds a provision to include employee time off related to COVID-19 testing and immunization
  • Increases the amount of wages eligible for the family leave credit from $10,000 to $12,000 per employee
  • Provides an additional 10 days of voluntary emergency paid sick leave for employees beginning April 1, 2021

 

Unemployment

What is it?

Due to the COVID-19 pandemic, unemployment provisions were expanded under the previous administration to include three new federal unemployment programs. These programs were scheduled to end no later than April 2021. 

  • Pandemic Unemployment Assistance (PUA): Provided weekly benefits to independent contractors, self-employed individuals, and other workers that typically would not be eligible for unemployment benefits
  • Pandemic Emergency Unemployment Compensation (PEUC): Provides weekly benefits to individuals who have exhausted their eligibility for all other unemployment benefits
  • Federal Pandemic Unemployment Compensation: Provides an additional $300 weekly payment to individuals already receiving PUA, PEUC, or regular unemployment benefits

 

ARPA Provisions

  • Previously established provisions that were set to expire have been extended through September 6, 2021
  • Changes how unemployment benefits are taxed, exempting the first $10,200 from federal income tax for each spouse in households with under $150,000 in adjusted gross income.

 

ACA

What is it?

The ACA (Affordable Care Act) established health insurance exchanges for the purchase of individual health insurance coverage, as well as premium tax credits. These tax credits are not available to individuals with income at or above 400% of the federal poverty level. 

 

ARPA Provisions

  • Temporarily eliminates the income cap on subsidies for a period of two years
  • Limits the total amount a household is required to pay for health coverage through the Exchanges to 8.5% of household income
  • Increases federal subsidy amounts available for lower-income individuals, in some cases eliminating premium costs entirely
  • Increases federal funding intended to encourage states to expand Medicaid programs (if they previously had not done so)
  • All provisions are temporary and will expire in two years

 

DCAP

What is it?

A DCAP (Dependent Care Assistance Plan), also sometimes referred to as a dependent care flexible spending account (FSA), is an employee benefit plan that helps employees pay for the care of a qualifying dependent, such as a child or elder, as defined by Internal Revenue Service (IRS) regulations.

 

ARPA Provisions

  • Increases annual contribution limit from $5,000 to $10,500 ($2,500 to $5,250 for married filing separately) for tax years beginning after December 31, 2020 and before January 1, 2022
  • Employers meeting requirements can retroactively amend plans to incorporate the increase

 

Action Steps

  • Employers with DCAPs can retroactively amend plans, if
    • The amendment is adopted by the last day of the plan year in which it is effective; and
    • The plan operates consistently with the terms of the amendment until it is adopted.
  • It is recommended that you speak with your benefits advisor to ensure plans meet the requirements and stay in compliance

 

Employee Retention Tax Credit

What is it?

The Employee Retention Tax Credit was originally enacted with the CARES (Coronavirus Aid, Relief and Economic Security) Act. The credit was tended to encourage employers to retain employees on their payroll who were unable to work due to COVID-19 related reasons. This credit was set to expire in June of 2021.

 

ARPA Provisions

  • Extends the credit through the end of 2021
  • Expands eligibility to some small startups that began operating after February 15, 2020. Qualifying businesses will be eligible for a maximum credit of up to $50,000 per quarter even if they do not experience an eligible decline in gross receipts or a full or partial suspension
  • Creates a new provision for 'severely financially distressed' employers which beginning in the third quarter of 2021 allows employers of any size to count all wages toward the $10,000 cap.

IRS: Added FSA / Dependent Care Flexibility for Employee Benefit Plans

IRS adds FSA flexibility due to pandemicOn February 18th, due to the pandemic, the IRS provided greater flexibility to employee benefit plans offering health flexible spending arrangements (FSA) and/or dependent care assistance programs.

Generally, under these plans, an employer allows its employees to set aside a certain amount of pre-tax wages to pay for medical care and dependent care expenses. Amounts spent by the employee are then reimbursed from their designated health FSAs or dependent care assistance programs.

The added flexibility with Notice 2021-15, is in addition to the changes enacted under the COVID-related Taxpayer Certainty and Disaster Tax Relief Act of 2020, which enabled plans to have additional discretion in 2021 and 2020 to adjust their programs to help employees during the pandemic.

Take a quick read of the overview below to ensure you are aware of these changes that may offer a positive impact for your employees.

 

Moving the Carry Over Goalpost

Resource: Notice 2021-15

As a result of COVID-19, many regular-use medical or dependent care services were lacking accessibility resulting in participating employees being more likely to have unused health FSA amounts or dependent care assistance program amounts at the end of 2020 and 2021.

Notice 2021-15 provides added (FSA / Dependent Care) flexibility for employers to:
  • Handle carryover of unused amounts from 2020 and 2021 plan years;
  • Extend the permissible period for incurring claims (2020 and 2021 plan years);
  • Adopt a special rule regarding post-termination health FSA reimbursements;
  • Incorporate a special claims period and carryover rule for dependent care assistance programs when a dependent "ages out" during the COVID-19 public health emergency; and
  • Allow certain mid-year election changes for health FSAs and dependent care assistance programs for plan years ending in 2021.

 

Prior Guidance (FSA & Dependent Care)

Previously adopted changes provided flexibility with cafeteria plans through the end of calendar year 2020, during which employers could permit employees to apply unused health FSA amounts and dependent care assistance program amounts to pay for or reimburse medical care or dependent care expenses. The Taxpayer Certainty and Disaster Tax Relief Act of 2020, signed into law on December 27, 2020, extends and expands flexibility for these arrangements in 2021 and 2022.

 

Next Steps

The decision to adjust these employee benefit programs is at the discretion of the employer that sponsors the plan.

Notice 2021-15 gives employers the option to amend their plans to provide greater flexibility for employees to elect and use these programs during the pandemic without risking the forfeiture of the amounts they have set aside.

If you need help in understanding if making these adjustments is right for you, contact one of our Consultants for a more detailed analysis of your current plan offerings. 


ACA Reporting Deadlines Quickly Approaching

Affordable Care Act (ACA) reporting under Section 6055 and Section 6056 for the 2020 calendar year is due in early 2021.  Specifically, reporting entities must:

  • File returns with the IRS by March 1, 2021, since Feb. 28, 2021, is a Sunday (or March 31, 2021, if filing electronically); and
  • Furnish statements to individuals by March 2, 2021.

Originally, individual statements were due by Jan. 31, 2021. However, on Oct. 2, 2020, the Internal Revenue Service (IRS) issued Notice 2020-76 to extend the furnishing deadline.

Notice 2020-76 does not extend the due date for filing forms with the IRS for 2020. Notice 2020-76 also provides additional penalty relief related to furnishing forms to individuals under Section 6055.

Action Steps

Despite the delay, the IRS is encouraging reporting entities to furnish statements as soon as they are able. No request or other documentation is required to take advantage of the extended deadline.

Section 6055 and 6056 Reporting

  • Section 6055 applies to providers of minimum essential coverage (MEC), such as health insurance issuers and employers with self-insured health plans. These entities generally use Forms 1094-B and 1095-B to report information about the coverage they provided during the previous year.
  • Section 6056 applies to applicable large employers (ALEs)—generally, those employers with 50 or more full-time employees, including full-time equivalents, in the previous year. ALEs use Forms 1094-C and 1095-C to report information relating to the health coverage that they offer (or do not offer) to their full-time employees.

The ACA’s individual mandate penalty was reduced to zero beginning in 2019. As a result, the IRS has been studying whether and how the Section 6055 reporting requirements should change, if at all, for future years. Despite the elimination of the individual mandate penalty, Section 6055 reporting continues to be required, although transition relief from penalties is available in some situations, as described below. Under this relief, individual statements do not have to be furnished if certain requirements are met.

 

Standard Deadlines

Generally, forms must be filed with the IRS annually, no later than Feb. 28 (March 31, if filed electronically) of the year following the calendar year to which the return relates. In addition, reporting entities must also furnish statements annually to each individual who is provided MEC (under Section 6055), and each of the ALE’s full-time employees (under Section 6056). Individual statements are generally due on or before Jan. 31 of the year immediately following the calendar year to which the statements relate.
As noted above, individual statements do not have to be provided under Section 6055 if certain requirements are met.
However, filing with the IRS is still required, and this relief does not apply to Section 6056.

 

Extended Furnishing Deadline

The IRS has again determined that some employers, insurers and other providers of MEC need additional time to gather and analyze the information, and prepare 2020 Forms 1095-B and 1095-C to be furnished to individuals. For 2020, the furnishing deadline was Feb. 1, 2021, since Jan. 31, 2021, is a Sunday. Notice 2020-76 provides an additional 30 days for furnishing the 2020 Form 1095-B and Form 1095-C, extending the due date from Feb. 1, 2021, to March 2, 2021.

Despite the delay, employers and other coverage providers are encouraged to furnish 2020 statements to individuals as soon as they are able. 

Filers are not required to submit any request or other documentation to the IRS to take advantage of the extended furnishing due date provided by Notice 2020-76. Because this extended furnishing deadline applies automatically to all reporting entities, the IRS will not grant additional extensions of time of up to 30 days to furnish Forms 1095-B and 1095-C. As a result, the IRS will not formally respond to any requests that have already been submitted for 30-day extensions of time to furnish statements for 2020.

 

Impact on the Filing Deadline

The IRS has determined that there is no need for additional time for employers, insurers and other providers of MEC to file 2020 forms with the IRS. Therefore, Notice 2020-76 does not extend the due date for filing Forms 1094-B, 1095-B, 1094-C or 1095-C with the IRS for 2020.

This due date remains:

  • March 1, 2021, if filing on paper (since Feb. 28, 2021, is a Sunday); or
  • March 31, 2021, if filing electronically.

Because the due dates are unchanged, potential automatic extensions of time for filing information returns are still available under the normal rules by submitting a Form 8809. The notice also does not affect the rules regarding additional extensions of time to file under certain hardship conditions.

 

Penalty Relief Regarding the Furnishing Requirement Under Section 6055 for 2020

The individual mandate penalty has been reduced to zero, beginning in 2019. As a result, an individual does not need the information on Form 1095-B in order to calculate his or her federal tax liability or file a federal income tax return. However, reporting entities required to furnish Form 1095-B to individuals must continue to expend resources to do so.

Therefore, Notice 2020-76 provides relief from the penalty for failing to furnish a statement to individuals as required under Section 6055 for 2020 in certain cases. Specifically, the IRS will not assess a penalty under Section 6722 against reporting entities for failing to furnish a Form 1095-B to responsible individuals in cases where the following two conditions are met:

  • The reporting entity prominently posts a notice on its website stating that responsible individuals may receive a copy of their 2020 Form 1095-B upon request, accompanied by an email address and a physical address to which a request may be sent, as well as a telephone number that responsible individuals can use to contact the reporting entity with any questions; and
  • The reporting entity furnishes a 2020 Form 1095-B to any responsible individual upon request within 30 days of the date the request is received. The reporting entity may furnish these statements electronically if it meets the requirements for electronic furnishing.

ALEs that offer self-insured health plans are generally required to use Form 1095-C, Part III, to meet the Section 6055 reporting requirements, instead of Form 1095-B. This 2020 Section 6055 furnishing penalty relief does not extend to the requirement to furnish Forms 1095-C to full-time employees. As a result, for full-time employees enrolled in self-insured health plans, penalties will continue to be assessed consistent with prior enforcement policies for any failure by ALEs to furnish Form 1095-C, including Part III, according to the applicable instructions. However, the 2020 Section 6055 furnishing penalty relief does extend to the requirement to furnish the Form 1095-C to any non-full-time employees enrolled in an ALE’s self-insured health plan, subject to the requirements of the 2020 Section 6055 furnishing penalty relief.

The 2020 Section 6055 furnishing penalty relief also does not affect the requirement or the deadline to file the 2020 Forms 1094-B, 1095-B, 1094-C or 1095-C, as applicable, with the IRS.


Judge strikes down parts of DOL's emergency paid leave regs


Dive Brief:

  • Several features of the U.S. Department of Labor (DOL)'s regulations implementing the paid-leave provisions of the Families First Coronavirus Response Act (FFCRA) exceeded the agency's authority under federal law, a federal judge has ruled (State of New York v. U.S. Department of Labor, et al., No. 20-CV-3020 (S.D.N.Y. Aug. 3, 2020)).
  • Among the struck-down DOL regulations are: the final rule's work-availability requirement; its definition of "health care provider" for the purposes of excluding certain healthcare sector employees from emergency leave benefits; its requirement that an employee secure employer consent for intermittent FFCRA leave; and its requirement that documentation be provided by an employee before taking FFCRA leave.
  • The federal judge permitted the outright ban on intermittent leave for certain qualifying reasons — specifically, intermittent leave based on qualifying conditions that correspond with an increased risk of infection — as well as the substance of the final rule's documentation requirement to stand. The court, the judge said, "sees no reason that the remainder of the Rule cannot operate as promulgated in the absence of the invalid provisions."
Dive Insight:

The ruling is an important one for the nation's first-ever federal paid leave law for private-sector workers. New York originally filed the suit in April following the release of DOL's FFCRA implementation guidance earlier in the month. Shortly before the lawsuit's filing, Congressional Democrats criticized DOL's final rule in a letter to Secretary of Labor Eugene Scalia that said the agency's guidance either deviated from the FFCRA's statute or did not have a basis in it.

Asked about the letter, a DOL spokesperson told HR Dive in April that the agency took "quick action to implement paid sick leave and expanded paid family and medical leave provides necessary support for America's workforce in uncertain times."

The federal judge said in the ruling that DOL faced "considerable pressure" in promulgating its final rule. "This extraordinary crisis has required public and private entities alike to act decisively and swiftly in the face of massive uncertainty, and often with grave consequence," the judge noted. "But as much as this moment calls for flexibility and ingenuity, it also calls for renewed attention to the guardrails of our government. Here, DOL jumped the rail."

Management-side attorneys expect the ruling to be appealed, Bloomberg Law reported. The decision applies nationally, creates uncertainty for employers who experienced pandemic-related shutdowns or reductions in force and requires healthcare employers to "re-examine whether they must provide paid leave" to certain employees, Sami Assad, partner at FordHarrison LLP and chair of the firm's Home Healthcare Practice Group, wrote in an article.

The FFCRA applies to U.S. employers with fewer than 500 employees, but those with fewer than 50 employees may be exempt from two of the law's paid-leave requirements. An authorized officer of the business must use a three-prong test to determine whether the employer may claim an exemption. Also, the IRS has published guidance detailing how small businesses can receive 100% reimbursement for paid leave pursuant to the FFCRA.

SOURCE: Golden, R. (04 August 2020) "Judge strikes down parts of DOL's emergency paid leave regs" (Web Blog Post). Retrieved from https://www.hrdive.com/news/new-york-judge-strikes-down-dol-emergency-paid-leave-reg/582856/


The Saxon Advisor - June 2020

Compliance Check

what you need to know


Eligible Automatic Contribution Arrangement (EACA). For failed ADP/ACP tests, corrective distributions must be made towards participants within 6 months after the plan year ends – June 30, 2020.

SF HSCO Expenditures. The last day to submit SF HSCO expenditures, if applicable*, for Q2 is July 30, 2020. *Applicable for employers with 20+ employees doing business in SF and Non-Profits with 50+ employees.

Form 5500 and Form 5558. The deadline for the 2019 plan year’s Form 5500 and Form 5558 is July 31, 2020 (unless otherwise extended by Form 5558 or automatically with an extended corporate income tax return).

Form 8955-SSA. Unless extended by Form 5558, Form 8955-SSA and the terminated vested participant statements for the plan year of 2019 are due July 31, 2020.

Form 5558. Unless there is an automatic extension due to corporate income tax returns, a single Form 5558 and 8955-SSA is due by 2½ months for the 2019 plan year.

Form 5330. For failed ADP/ACP tests regarding excise tax, Form 5330 must be filed by July 31, 2020.

401(k) Plans. For ADP/ACP testing, the recommended Interim is due August 1, 2020.

In this Issue

  • Upcoming Compliance Deadlines:
    • Eligible Automatic Contribution Arrangement (EACA)
    • The deadline for the 2019 plan year’s Form 5500 and Form 5558 is July 31, 2020.
  • Medicare 101: A Quick Guide For Employers
  • Fresh Brew Featuring Abby Graham
  • This month’s Saxon U: The Steps Of An Internal Investigation
  • #CommunityStrong: Pick your Own Charity! One of our Own, Deborah Raines, made a meal for a family in need at her temple!

The Steps Of An Internal Investigation

Join us for this interactive and educational Saxon U seminar with Pandy Pridemore, The Human Resources USA, LLC, as we discuss the steps of an internal investigation.

Medicare 101: A Quick Guide For Employers

Bringing the knowledge of our in-house advisors right to you...


Medicare is a governmentfunded health insurance program for those aged 65 and above, those under 65 with certain disabilities, and those with End State Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS). Employers that offer group health insurance plans to their employees have an interest in learning how employees’ entitlement to Medicare benefits can affect the administration of those plans.

“Ask a licensed agent for assistance. Advertisements can be confusing, and everyone wants to make the right choice. Using my expertise, I take the fear out of the decision making, so my clients can make an informed decision concerning their healthcare.”

Advice from Olivia

Fresh Brew Featuring Abby Graham

"It’s not that hard to be well!"


This month’s Fresh Brew features Abby Graham, Wellness Director at Saxon.

Abby’s favorite brew is Coffee. Her favorite local spot to grab her favorite brew is Coffee Emporium.

Scott’s favorite snack to enjoy with his brew is Reese’s Pieces Cookies.

Learn More About Abby

This Month's #CommunityStrong:

Each member of Saxon will be choosing their own charity that they want to make a positive impact on!

This May, June & July, the Saxon team and their families will be choosing their own charity that they would like to make a positive impact towards!

Are you prepared for retirement?

Saxon creates strategies that are built around you and your vision for the future. The key is to take the first step of reaching out to a professional and then let us guide you along the path to a confident future.

Monthly compliance alerts, educational articles and events
- courtesy of Saxon Financial Advisors.


The Saxon Advisor - May 2020

Compliance Check

what you need to know


Eligible Automatic Contribution Arrangement (EACA). For failed ADP/ACP tests, corrective distributions must be made towards participants within 6 months after the plan year ends – June 30, 2020.

SF HSCO Expenditures. The last day to submit SF HSCO expenditures, if applicable*, for Q2 is July 30, 2020. *Applicable for employers with 20+ employees doing business in SF and Non-Profits with 50+ employees.

Form 5500 and Form 5558. The deadline for the 2019 plan year’s Form 5500 and Form 5558 is July 31, 2020 (unless otherwise extended by Form 5558 or automatically with an extended corporate income tax return).

Form 8955-SSA. Unless extended by Form 5558, Form 8955-SSA and the terminated vested participant statements for the plan year of 2019 are due July 31, 2020.

Form 5558. Unless there is an automatic extension due to corporate income tax returns, a single Form 5558 and 8955-SSA is due by 2½ months for the 2019 plan year.

Form 5330. For failed ADP/ACP tests regarding excise tax, Form 5330 must be filed by July 31, 2020.

401(k) Plans. For ADP/ACP testing, the recommended Interim is due August 1, 2020.

In this Issue

  • Upcoming Compliance Deadlines:
    • Eligible Automatic Contribution Arrangement (EACA)
    • The deadline for the 2019 plan year’s Form 5500 and Form 5558 is July 31, 2020.
  • Providing an HSA, FSA, or HRA Health Plan for your Employees
  • Fresh Brew Featuring Lexi Kofron
  • This month’s Saxon U: How To Legally Work With Gig And Contract Workers
  • #CommunityStrong: Families Forward Donation Drive

How To Legally Work With Gig And Contract Workers

Join us for this interactive and educational Saxon U seminar with Pandy Pridemore, The Human Resources USA, LLC, as we discuss how to legally work with Gig and Contract Workers.

Providing an HSA, FSA, or HRA Health Plan for your Employees

Bringing the knowledge of our in-house advisors right to you...


When open enrollment hits annually, it is not uncommon for employers to feel exasperated when staring down a list of acronyms such as HSA, FSA and HRA. As it should go without saying, the most common first thought is, “What does any of this mean?” Even the most seasoned experts have difficulty with understanding the complexities of various care options.

““It is your account; yours if you leave the employer and can contribute as long as you have an HDHP and can use the funds until they are gone, even if you are no longer in an HDHP.” said Kelley Bell, a Group Health Benefits Consultant at Saxon Financial.

Advice from Kelley

Fresh Brew Featuring Lexi Kofron

"Stay calm and collected on phone calls, and stay organized!"


This month’s Fresh Brew features Lexi Kofron, a Client Service Specialist at Saxon.

Lexi’s favorite brew is a Cinnamon Dolce Latte. Her favorite local spot to grab his favorite brew is at Starbucks

Scott’s favorite snack to enjoy is Pretzels and Hummus.

Learn More About Lexi

This Month's #CommunityStrong:
Families Forward Donation Drive

This May the Saxon family donated a bunch of household items and outdoor activities to Families Forward. Their staff goes out each week in masks and gloves to hand out these donations to the families in need through their program. Here are some pictures they provided when they passed out the donations and our trunk load of donations!

Are you prepared for retirement?

Saxon creates strategies that are built around you and your vision for the future. The key is to take the first step of reaching out to a professional and then let us guide you along the path to a confident future.

Monthly compliance alerts, educational articles and events
- courtesy of Saxon Financial Advisors.


The Saxon Advisor - March 2020

Compliance Check

what you need to know


Section 6055/6056 Reporting (Electronic Filing Deadline). Applicable large employers (ALEs) that sponsor self-insured health plans are required by Internal Revenue Code Sections 6055 and 6056 to report information about the coverage to the IRS yearly. IRS Forms 1094-C and 1095-C are used to report coverage information. March 31, 2020, is the deadline to submit these forms if employers are filing electronically.

COBRA General Notice. Employers who provide group health plans must provide a written General Notice of COBRA rights to all covered employees and spouses (if applicable). This notice must be provided 90 days after health plan coverage begins.

Summary Plan Description (SPD). Employers who offer group health plans that are subject to ERISA must provide Summary Plan Descriptions (SPD) to employees who newly enrolled at the beginning of the plan year by March 31, 2020.

Form 1099-R (Electronic Filing Deadline). Employers must file Form 1099-R with the IRS by March 31, 2020, if they are filed electronically.

Form 5330 Excise Tax Return. The Form 5330 excise tax return and payment for excess 2018 ADP/ACP contributions are due March 31, 2020.

Excess Contribution Refunds (over IRS limit). April 15, 2020 is the deadline to return excess retirement plan contributions for elective deferrals exceeding the 402(g) limits.

In this Issue

  • Upcoming Compliance Deadlines
  • Paving the Road to a Successful Portfolio Featuring Brian Bushman
  • Upcoming Saxon U Webinar: Employee Navigator Workshop with Jake Meyer
  • Fresh Brew Featuring Jake Meyer
  • #CommunityStrong: American Heart Association Heart Mini Fundraising & School Donation Drive

Employee Navigator Workshop

Join us for this interactive and educational Saxon U webinar with Jake Meyer, Saxon Financial Services, as we walk you through certain aspects of Navigator and teach you how to use the most common features.

Paving the Road to a Successful Portfolio

Bringing the knowledge of our in-house advisors right to you...


Determining a proper asset allocation is an important first step in creating your portfolio and planning how it will grow in the future. Asset allocation is the process of diversifying your investments into different asset classes based on the investor’s time horizon, their goals and how much risk they can tolerate.

“People always ask me what they can invest in that will make them a lot of money without the chance of losing any,” said Brian Bushman, Saxon Financial Advisor.

Advice from Brian

Fresh Brew Featuring Jake Meyer

“Educate your employees about their benefits. The more they understand them, the more they will realize how big of a benefit they are.”


This month’s Fresh Brew features Jake Meyer, an Account Executive at Saxon.

Scott’s favorite brew is Rhinegeist Truth, a local Indian Pale Ale from the Rhinegeist Brewery in Cincinnati, Ohio.

Jake doesn’t have a particular snack that he eats when sipping on his favorite brew. He instead likes to enjoy the hops in his favorite IPA.

Learn More About Jake

This Month's #CommunityStrong:
American Heart Association Heart Mini Fundraising

This March, the Saxon team and their families teamed up to raise money for the American Heart Association Heart Mini!

Do you have a strategic approach to the totality of your financial picture?

Saxon creates innovative strategies that will help you figure out how to get there, plan for the risks along the way, navigate complex tax code and understand the steps you need to take to protect and secure your future.

Monthly compliance alerts, educational articles and events
- courtesy of Saxon Financial Advisors.


The Saxon Advisor - February 2020

Compliance Check

what you need to know


Section 6055/6056 Reporting. Employers must file Forms 1094-B and 1095-B, and Forms 1094-C and 1095-C with the IRS by February 28, 2020 if they are filed on paper.

Form 1099-R Paper Filing. Employers must file Form 1099-R with the IRS by February 28, 2020 if they are filed on paper.

CMS Medicare Part D Disclosure. Employers that provide prescription drug coverage must disclose to the CMS whether the plan’s prescription drug coverage is creditable or non-creditable.

Summary of Material Modifications Distribution. Employers who offer a group health plan that is subject to ERISA must distribute a SMM for plan changes that were adopted at the beginning of the year that are material reductions in plan benefits or services.

Section 6055/6056 Individual Statements (2019 EXTENDED DEADLINE). Applicable large employers (ALEs) that sponsor self-insured health plans must disclose information about plan coverage to covered employees each year. This deadline was extended from January 31, 2020, to March 2, 2020, this year by the IRS.

ADP/ACP Refunds. Corrective refunds for a failed ADP/ACP test must be made by March 15, 2020, to avoid 10 percent excise tax penalties.

Section 6055/6056 Reporting (Electronic Filing Deadline). Applicable large employers (ALEs) that sponsor self-insured health plans are required by Internal Revenue Code Sections 6055 and 6056 to report information about the coverage to the IRS yearly. IRS Forms 1094-C and 1095-C are used to report coverage information. March 31, 2020, is the deadline to submit these forms if employers are filing electronically.

COBRA General Notice. Employers who provide group health plans must provide a written General Notice of COBRA rights to all covered employees and spouses (if applicable). This notice must be provided 90 days after health plan coverage begins.

Summary Plan Description (SPD). Employers who offer group health plans that are subject to ERISA must provide Summary Plan Descriptions (SPD) to employees who newly enrolled at the beginning of the plan year.

Form 1099-R (Electronic Filing Deadline). Employers must file Form 1099-R with the IRS by March 31, 2020, if they are filed electronically.

Form 5330. The Form 5330 excise tax return and payment for excess 2018 ADP/ACP contributions are due March 31, 2020.

In this Issue

  • Upcoming Compliance Deadlines
  • How to Speak to Your Employees About Their Intimidating Benefits – Featuring Jamie Charlton
  • Fresh Brew Featuring Nat Gustafson
  • This month’s Saxon U: What Employers Should Know About the SECURE Act
  • March’s Saxon U: Saxon’s Humana GO365 Annual Wellness Clinic
  • #CommunityStrong: American Heart Association Heart Mini Fundraising

What Employers Should Know About the SECURE Act

Join us for this interactive and educational Saxon U seminar with Todd Yawit, Director of Employer-Sponsored Retirement Plans at Saxon Financial Services, as we discuss what the SECURE Act is and how it impacts your employer-sponsored retirement plan.

How to Speak to Your Employees About Their Intimidating Benefits

Bringing the knowledge of our in-house advisors right to you...


Employers spend thousands annually to secure and offer benefits to their employees. However, a small amount of time and money are devoted to ensuring employees understand and appreciate their benefits. Properly communicating – what you say, how you say it and to whom you say it to – can make a tremendous difference in how employees think, feel and react to their benefits, employer and fellow co-workers.

In this installment of CenterStage, Jamie Charlton, founding partner and CEO of Saxon Financial Services, discusses the importance of offering sound education of benefits to employees, as well as how to effectively communicate their benefits in a clear, concise manner.

Advice from Jamie

Fresh Brew Featuring Nat Gustafson

“Always be prepared.”


This month’s Fresh Brew features Nat Gustafson, an Account Manager at Saxon.

In his free time, Nat enjoys snowboarding. When thinking about his greatest adventure, he remembers traveling around Italy. He lives by the catchphrase of, “Roll up your sleeves.”

Nat’s favorite brew is Rhinegeist Truth. His favorite local spot to grab his favorite brew is Mount Lookout Tavern on Linwood Avenue.

Nat’s favorite snack to enjoy with his brew is Chicken wings.

Learn More About Nat

This Month's #CommunityStrong:
American Heart Association Heart Mini Fundraising

This January, February & March, the Saxon team and their families will be teaming up to raise money for the American Heart Association Heart Mini!

Saxon’s Humana GO365 Annual Wellness Clinic

Learn what Go365 is, how it works, how to create engaged employees and how to maximize the 15% wellness incentive credit from the program.

Monthly compliance alerts, educational articles and events
- courtesy of Saxon Financial Advisors.


The Saxon Advisor - January 2020

Compliance Check

what you need to know


Form W-2s are due January 31, 2020. January 31 is the deadline for employers to distribute Form W-2s to employees. Large employers – employers who have more than 250 W-2s – must include the aggregate cost of health coverage.

Form 1099-Rs are due January 31, 2020. Employers must distribute Form 1099-Rs to recipients of 2019 distributions.

Form 945 Distributions. Form 945s must be distributed to plan participants by January 31, 2020, for 2019 non payroll withholding of deposits if they were not made on time and in full to pay all taxes that are due.

Section 6055/6056 Reporting. Employers must file Forms 1094-B and 1095-B, and Forms 1094-C and 1095-C with the IRS by February 28, 2020 if they are filed on paper.

Form 1099-R Paper Filing. Employers must file Form 1099-R with the IRS by February 28, 2020 if they are filed on paper.

CMS Medicare Part D Disclosure. Employers that provide prescription drug coverage must disclose to the CMS whether the plan’s prescription drug coverage is creditable or non-creditable.

Summary of Material Modifications Distribution. Employers who offer a group health plan that is subject to ERISA must distribute a SMM for plan changes that were adopted at the beginning of the year that are material reductions in plan benefits or services

In this Issue

  • Upcoming Compliance Deadlines
  • Traditional IRA, Roth IRA, 401(k), 403(b): What’s the Difference?
  • Fresh Brew Featuring Scott Langhorne
  • This month’s Saxon U: What Employers Should Know About the SECURE Act
  • #CommunityStrong: American Heart Association Heart Mini Fundraising

What Employers Should Know About the SECURE Act

Join us for this interactive and educational Saxon U seminar with Todd Yawit, Director of Employer-Sponsored Retirement Plans at Saxon Financial Services, as we discuss what the SECURE Act is and how it impacts your employer-sponsored retirement plan.

Traditional IRA, Roth IRA, 401(k), 403(b): What's the Difference?

Bringing the knowledge of our in-house advisors right to you...


If you haven’t begun saving for retirement yet, don’t be discouraged. Whether you begin through an employer sponsored plan like a 401(k) or 403(b) or you begin a Traditional or Roth IRA that will allow you to grow earnings from investments through tax deferral, it is never too late or too early to begin planning.

“A major trend we see is that if people don’t have an advisor to meet with, they tend to invest too conservatively, because they are afraid of making a mistake,” said Kevin Hagerty, a Financial Advisor at Saxon Financial.

Advice from Kevin

Fresh Brew Featuring Scott Langhorne

“Pay close attention to detail.”


This month’s Fresh Brew features Scott Langhorne, an Account Manager at Saxon.

Scott’s favorite brew is Bud Light. His favorite local spot to grab his favorite brew is wherever his friends and family are.

Scott’s favorite snack to enjoy with his brew is wings.

Learn More About Scott

This Month's #CommunityStrong:
American Heart Association Heart Mini Fundraising

This January, February & March, the Saxon team and their families will be teaming up to raise money for the American Heart Association Heart Mini! They will be hosting a Happy Hour at Fretboard Brewing Company Wednesday, January 29, from 4 p.m. - 7 p.m. to raise money.

Are you prepared for retirement?

Saxon creates strategies that are built around you and your vision for the future. The key is to take the first step of reaching out to a professional and then let us guide you along the path to a confident future.

Monthly compliance alerts, educational articles and events
- courtesy of Saxon Financial Advisors.