Congress has passed the next stimulus package, the Consolidated Appropriations Act (CAA), 2021, which Trump is expected to sign into law soon.
Several politicians and interested parties waited in frustration for the final text of the bill as it was not released until a few hours prior to the House vote. Members of the House complained that this left too little time to read through the almost 5,600 page bill and vote accordingly.
The rest of us were anxiously awaiting the text of the bill for provisions related to employee benefits. Prior to the release of the bill, there had been little to no hints at any relief included in the bill aimed at employer-provided employee benefits.
Today, however, there is welcome news as Congress made significant temporary changes to Section 125 and Section 129 plans, amongst other benefit-related topics described below.
Congress did not extend the Families First Coronavirus Response Act (FFCRA) Leave as expected and instead, is offering tax credits to those voluntarily providing paid leave. FFCRA expires at the end of this month.
- As of January 1, 2021, covered employers may voluntarily provide emergency paid sick leave or emergency paid FMLA Leave under FFCRA (as adopted earlier this year) and take the tax credit associated with this leave.
- The tax credit may only be taken for leave through March 31, 2021.
- The text of the bill does not provide additional EPSL or EFMLA paid time for those that have already used or exhausted FFCRA paid time. In other words, those employees who already exhausted FFCRA leave may not receive additional paid FFCRA leave starting January 1, 2021.
A quick word of caution that employers should pay close attention to developments in Congress after the New Year. There has been talk of a larger stimulus package in January that extends the paid leave requirements of FFCRA, and it could be retroactive back to Dec. 31, 2020.
The CAA also addresses surprise billing, and ensures measures are put in place to protect consumers. Although, California has had their own version of a surprise bill law (AB 72) since 2017. The CA law provides protection from surprise bills in the following scenario:
- Enrollee goes to an in-network facility such as hospital, lab or imaging center, but services are provided by an out-of-network health provider.
- An enrollee receives emergency services from a doctor or hospital that is not contracted with the patient’s health plan or medical group.
In these instances, providers cannot bill consumers more than their in-network cost sharing.
The federal act, called the “No Surprises Act”, includes protections in the same scenarios in addition for air ambulance services provided by out-of-network providers. Also, the federal bill provides an exception to surprise billing for non-emergency services performed by out-of-network providers at in-network facilities.
The new federal surprise billing rules go into effect Jan. 1, 2022. There will be significant regulatory guidance developed prior to the effective date.
In other benefit-related news arising from the CAA, there is now relief for health and dependent care flexible spending accounts (FSAs).
The relief is optional and must be adopted by an employer. Employers wishing to exercise these provisions must contact their FSA vendor for next steps. Employers will be allowed, but not required to, permit the following:
- Carryover unused funds with no cap on carryover dollars – this applies to FSAs ending in 2020 as well as 2021 plan years.
- Employers may adopt an additional 12 month grace period (additional time to incur claims) for plan years ending in 2020 or 2021.
- HFSA Post-Termination Reimbursements—An employer may reimburse HFSA expenses incurred after termination by an employee who terminates from the plan during calendar years 2020 or 2021.
- Dependent Care FSAs may be amended to increase the maximum age (by one year) for dependents who aged out during the pandemic.
- As a reminder, the current age for children is under 13.
- Employers may also choose to allow employees to make prospective modifications of their election amounts for plan years ending in 2021.
- Previously, the IRS released Notice 2020-29 which also extended this flexibility, but only to Dec. 31, 2020. The CAA provision allows employers to adopt that flexibility into 2021.
Employers have the option to implement some or all of the flexibility provided or could chose not to change their plans at all. Plans may be amended retroactively to implement any of all of these provisions.
The plan amendment must be made no later than last day of the first calendar year beginning after the end of the plan year in which the amendment is effective. For example, for changes made to plan with a plan year ending Dec. 31, 2020, the amendment must be made by Dec. 31, 2021.
The legislation also includes significant new health plan reporting requirements regarding prescription and other health plan cost information. These requirements go into effect beginning in 2022.
Plans will be required to report information that includes plan year dates, states in which the plan is offered, top 50 brand name drugs most frequently dispensed under the plan and much more.
Employer plan sponsors will be responsible to ensure that required reporting is completed for their plans, but much of the information required will need to be provided by carriers and plan administration vendors.
We expect significant regulatory guidance on this reporting requirement to be released during 2021, which will help employers better understand exactly what needs to be reported.