Section 125 cafeteria plan elections are irrevocable for the plan year unless the participant experiences a change in status or other event that allows an election change under the Section 125 regulations. Common status change events that may be occurring due to the pandemic include the following: A commencement of an unpaid leave of absence. …
Benefits Briefs in the Time of COVID-19, Part 5: Suspending or Reducing 401(k) Safe Harbor Contributions
As businesses across the country adjust to the financial reality of Coronavirus related shutdowns and restrictions, some employers that sponsor safe harbor formula 401(k) plans are revisiting a money saving strategy last implemented on a wide scale basis over a decade ago during the great recession—the suspension or reduction of safe harbor contributions. Under a …
Benefits Briefs in the Time of COVID-19, Part 4: Reimbursement of Over-the-Counter Medications
Congress has reversed course and amended the Internal Revenue Code (“Code”) to provide that a health flexible spending account (“health FSA”), health savings account (“HSA”) and health reimbursement account (“HRA”) may reimburse employees for over-the-counter medications, effective January 1, 2020. Background For many years, health FSAs, HSAs and HRAs did not consider a non-prescription drug …
Benefits Briefs in the Time of COVID-19, Part 3: Layoffs/Furloughs and Excise Taxes under the Affordable Care Act
Employers that are laying off or furloughing employees during the COVID-19 crisis may be creating the possibility for excise taxes under the Affordable Care Act (“ACA”). Knowing the method by which employers determine full-time status is key to understanding the issue. Excise Taxes under the ACA The ACA generally provides that employers with 50 or …
Benefits Briefs in the Time of COVID-19, Part 2: Temporary Expansion of Educational Assistance Programs to Cover Employees’ Student Loan Debt
The CARES Act gives employers a way to pay employees’ student loan debt on a pre-tax basis during a portion of 2020 through an educational assistance program under Section 127 of the Internal Revenue Code (“Code”). Overview of an Educational Assistance Program Under a Section 127 educational assistance program, an employer may pay or reimburse …
Benefits Briefs in the Time of COVID-19, Part 1: Federal Agencies Relax Summary of Benefits and Coverage (“SBC”) Disclosure Deadlines
Recent guidance from the Department of Labor (“DOL”), Health and Human Services (“HHS”) and Treasury (the “Departments”) provides limited enforcement relief from the summary of benefits and coverage (“SBC”) disclosure rules during the COVID-19 crisis for employers to comply with the CARES Act or to add other benefits to their group health plans. Dickinson Wright’s …
Summary of Employee Benefits Provisions in CARES Act (as passed by U.S. Senate)
On March 25, 2020, the Senate passed the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, as a follow-up to the Families First Coronavirus Response Act. The Act contains a number of employee benefits related provisions to address the COVID-19 emergency. The House of Representatives intends to take up the legislation on March 27, 2020. …
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SECURE Act Provides a Tenfold Increase in Penalty for Late Filing of Retirement Plan Annual Report (Form 5500)
The Setting Every Community Up for Retirement Enhancement Act (“SECURE Act”), adopted in December 2019, has increased the penalty that the IRS may impose on plan sponsors who do not timely file Form 5500 (Annual Return/Report of Employee Benefit Plan). Prior to the law change, the IRS could assess a civil penalty of $25 for …
High Deductible Health Plans and Expenses related to COVID-19
Many of the nation’s largest insurers have announced that they will be waiving the deductible or other cost-sharing for testing or other expenses related to the 2019 Novel Coronavirus (“COVID-19”). Plan sponsors that offer coverage to employees through a high deductible health plan (“HDHP”) asked whether this waiver would affect the health plan’s status as …
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In Surprising Memo, IRS Concludes There is No Statute of Limitations on Affordable Care Act “Pay or Play” Taxes: What Steps Employers Should Take Now
In an unexpected memo from the IRS, the Office of Chief Counsel has concluded that the filing of Affordable Care Act (“ACA”) returns does not start the statute of limitations on the Employer Shared Responsibility Payments (“ESRP”) that may be owed by employers with 50 or more full-time (or equivalent) employees. ESRP is also commonly …