With the delay in re-opening businesses, some companies are finding that they need to terminate employees who had been placed initially on furlough or a reduced-hours assignment. When analyzing the costs that will be incurred due to these terminations, companies that sponsor 401(k) plans or other qualified retirement plans should determine if the partial termination …
The USCIS Budget Crisis and Its Potential Impact on the U.S. Immigration System
U.S. Citizenship and Immigration Services (“USCIS”) recently cancelled its plan to furlough over two-thirds, or 13,400 of its 20,000 employees. The furlough was expected to cause USCIS to all but stop processing immigration benefits, creating a crisis for the U.S. immigration system. While this is welcome news, USCIS has also announced that it will be …
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ACA Affordability Threshold for 2021 Announced
The IRS recently announced the ACA affordability threshold for 2021 at 9.83%, a small increase from the 2020 level of 9.78%. In order to avoid triggering a penalty under Section 4980H(b) of the Internal Revenue Code (the “Code”), an applicable large employer must offer full-time employees health plan coverage that provides minimum value and is …
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Benefits Briefs in the Time of COVID-19, Part 9: Additional Flexibility for Cafeteria Plans; Increase in Health FSA Carryover Amount
In Notice 2020-29, the IRS gave plan sponsors additional flexibility to allow participants to make certain mid-year cafeteria plan election changes during calendar year 2020 without regard to the restrictions that typically apply, and to adopt an extended claims period for flexible spending accounts (“FSAs”). In Notice 2020-33, the IRS has increased the $500 carryover …
Benefits Briefs in the Time of COVID-19, Part 8: COBRA Complications
The DOL and IRS recently issued final regulations (the “Final Rule“) that extend notice and premium payment periods for participants and plans under COBRA. Specifically, a group health plan must disregard the period from March 1, 2020 through 60 days after the announced end of the COVID-19 national emergency (the “Outbreak Period”) in determining, among …
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Benefits Briefs in the Time of COVID-19, Part 7: What Do Layoffs, Leaves, and Furloughs Mean for Retirement Plans?
The COVID-19 pandemic has employers strategizing on how to retain valuable employees while addressing declines in demand for the company’s products or services. Some employers have placed employees on unpaid leave status instead of terminating the employee’s service. Employers may call this unpaid leave a layoff or a furlough. This benefits brief describes how the …
Benefits Briefs in the Time of COVID-19, Part 6: Special Considerations for Mid-Year Changes to Cafeteria Plan Elections
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 …