Compliance Matters: Before You Start Celebrating the End of 2020 Too Much...

Thanks for tuning back into our compliance blog series called Compliance Matters! We wish you all a wonderful end to 2020 and hope you will make use of this guide. Download this article.

New Year's Eve is almost here and everyone is ready to say goodbye to 2020 and hello to 2021. However, before you start your celebration, employers offering health and welfare plans may have end-of-the-year tasks to accomplish connected with COVID-19 regulatory notices & relief issued during the year for their plans too. The following are items that may need to be on an employer’s list:

1. Deadline Extensions

In April, the Department of Labor (DOL), the Internal Revenue Service (IRS), and Department of Health and Human Services (HHS) issued much-needed guidance and relief, requiring employers and plans to suspend the deadline for HIPAA special enrollment elections, for qualified beneficiaries to elect/pay for COBRA, and the filing of ERISA claims & appeals from March 1, 2020, until 60 days after the National Emergency ends (or such other date as specified by the Agencies). The National Emergency is still in effect, however by law, the extension may not last longer than one year.  Employers need to be mindful that timeframes for taking action on certain benefit-related tasks (e.g. COBRA elections, Health FSA Claims Run-Out Deadline) which normally would have already expired, has been extended and employees may still have these rights afforded to them. (See: Benefit Timeline Extensions Scenarios).

2. Summary of Benefits & Coverage (SBC)

In March, the FFCRA and the CARES Act required coverage of certain COVID-19 diagnostic services without cost-sharing, and the CARES Act included a new safe harbor under which high deductible health plans (HDHPs) can cover telehealth and other remote care before participants meet their deductibles both of which may need to be reflected on an SBC. Normally changes that impact an SBC must be provided 60 days prior to the date in which the modification becomes effective, however, FAQs Part 42 Q9. provided relief to this advance notice requirement.

3. Cafeteria Plan Changes

On May 12, 2020, the IRS issued Notice 2020-29 which gave employers latitude on permitting certain changes to elections midyear, that normally would be impermissible under Section 125 Cafeteria Plan irrevocability rules. It also made it possible for employers with FSA plan years or grace periods ending in 2020 to allow employees to continue incurring expenses and using amounts in their FSAs, (normally lost if unused at the end of a grace period) through December 31, 2020. This Notice and the employer requirements, if they chose to implement the relief, is summarized in more detail here: IRS Relaxes Election Change, Other Rules for Cafeteria Plans and FSAs. Or additional information may also be found: COVID-19 and Cafeteria Plan Considerations & COVID-19 and DCAPs, FSAs, and Transit Benefit Concerns

The CARES Act, also allowed certain over-the-counter medical products and menstrual care items to be reimbursed. Depending on the plan language, an employer’s FSA plan document may need to be amended if they wish to permit these changes. (See Legal Alert: Notice Requirements When Making Health Plan Design Changes).

Don’t forget to check these to-dos off your list...

• Section 125 Cafeteria Plan Nondiscrimination Testing (NDT)

All employers offering benefits on a pre-tax basis must do so through a Section 125 plan. Section 125 requires nondiscrimination testing to be performed on the last day of the plan year. If the plan fails, the failure must be corrected.

• ACA Reporting

ACA Reporting is still required and enforced by the IRS. There is no statute of limitations for failure to comply. The IRS did extend the deadline for furnishing Form 1095-C to employees to March 2, 2021, however, they failed to provide any relief for reporting on employees furloughed during the pandemic.

Don't let the IRS spoil your 2021 because you forgot to make sure everything on your 2020 to-do list was completed. 

Disclaimer: This content was written by Michelle Turner, MBA, CEBS, Compliance Consultant, Alera Group Central Region. This blog post intends to provide general information regarding the status of, and/or potential concerns related to, current employer HR & benefi ts issues. This blog should not be construed as, nor is it intended to provide, legal advice. The opinions expressed herein are based upon the author’s experience as a Compliance Consultant and may not reflect the opinions of your counsel.

The information contained herein should be understood to be general insurance brokerage information only and does not constitute advice for any particular situation or fact pattern and cannot be relied upon as such. Statements concerning financial, regulatory or legal matters are based on general observations as an insurance broker and may not be relied upon as financial, regulatory or legal advice. This document is owned by Alera Group, Inc., and its contents may not be reproduced, in whole or in part, without the written permission of Alera Group, Inc.

This article was last reviewed and up to date as of 12/21/20.