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Insights for Employers |
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| Optional or
Mandatory: Quick Reference Chart of COVID-19-Related DOL Deadline Extensions
and IRS Election Changes |
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| |
Recent Guidance and
Changes |
Applicable Timeframe |
Mandatory
or Optional |
Compliance
Considerations |
Employer
Action Required |
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|
Section 125:
Mid-Year Election Changes |
Mid-Year
Election Changes
IRS Notice 2020-29 allows cafeteria plans to permit eligible employees
to:
-Make a new election, effective prospectively, to pay for
employer-sponsored health coverage on a pre-tax basis if the employee had
initially declined coverage.
-Revoke an existing pre-tax premium election and make a new election,
effective prospectively, to pay for a different type or level of
employer-sponsored health coverage on a pre-tax basis.
-Revoke an existing pre-tax premium election to correspond to the
cancellation of employer-sponsored health coverage, provided the employee
attests that he/she is enrolled, or will immediately enroll, in other health
coverage. (A sample attestation
template can be found at IRS Notice 2020-29, page 8.) |
Temporary: through 12/31/2020 only |
Optional |
Employer has
discretion (e.g., only allow an election change to make a new election, limit
changes to a certain time period); however, carrier must agree to permit the
changes. |
1. Confirm with
carrier (as applicable)
2. Notify employees of plan changes
3. Amend plan document by 12/31/2021 |
|
|
| Health FSA (including Limited
Purpose Health FSA) |
Extended Run-out Period for Health FSA
The ERISA Claims and Appeals relief noted above may also extend the run-out
period for a Health FSA. For example,
if a calendar year plan permits participants to submit valid claims for 2019
expenses until March 31, 2020 (i.e., the run-out period), the Outbreak Period
must be disregarded. Meaning, participants would have until 31 days following
the end of the Outbreak Period to submit claims for reimbursement (which is
the 31 day remainder of the run-out period). |
Temporary: Outbreak Period is
March 1, 2020 until 60 days following end of the National Emergency (which
has not yet been announced) |
Mandatory |
This
extension does not provide additional time to incur claims. |
1.
Notify plan participants of extended deadlines
|
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|
Mid-Year Election Changes
(Health FSA)
IRS Notice 2020-29 allows cafeteria plans to permit eligible employees
to:
Make any type of mid-year election change (e.g., make a new election,
revoke an existing election, or increase or decrease an existing election),
effective prospectively, under a Health FSA for any reason. |
Temporary: through 12/31/2020 only |
Optional |
Participant's
election change cannot cause a decrease below the greater of what has already
been contributed or reimbursed. Only eligible expenses that are incurred
during the period of coverage can be paid for/reimbursed. |
1.
Notify employees of plan changes
2. Amend plan document by 12/31/2021 |
|
|
Extended Claims Period
IRS Notice 2020-29 allows certain cafeteria plans to provide an extended
period to incur Health FSA claims through December 31, 2020 for unused
amounts remaining in the Health FSA.
-Applicable only for Health FSAs with a plan year ending in 2020 or grace
period ending in 2020.
-Health FSAs with a grace period or carryover provision can be amended to
allow for this extended claims period. |
Temporary: through 12/31/2020 only |
Optional |
If
a General Purpose Health FSA is amended to permit the extended period to
incur claims, HSA eligibility will be impacted during the extended period
(unless there is a $0 FSA balance at the end of the plan year or grace
period). |
1.
Notify plan participants of plan changes
2. Amend plan document by 12/31/2021 |
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Increase in Health FSA
Carryover Maximum Amount
IRS Notice 2020-33 increases the Health FSA carryover limit.
Amount of unused Health FSA funds participants can carryover starting
from the 2020 plan year to the 2021 plan year is increased from $500 to $550
(then, increased by index each year thereafter).
|
Permanent: Applicable for 2020
plan year and beyond |
Optional |
Carryover
amount is subject to increase for future years (as the carryover limit is 20%
of the maximum annual Health FSA contribution limit). This change is not a
temporary change tied to the COVID-19 public health emergency. Implementing
this change does not also allow for a mid-year Health FSA election change
(although, the plan can also be amended to permit a prospective election
change as mentioned above). |
1.
Notify plan participants of plan changes
2. Amend plan document by 12/31/2021 |
|
|
Expanded Eligible Expenses
for Health FSA
The CARES Act expanded the IRS eligible expenses to include OTC (even
without prescription) and menstrual care products. Does
not apply to Limited Purpose Health FSAs. |
Permanent: effective 1/1/2020 |
Optional |
Many
vendors are assuming plans will include OTC and menstrual care products as
part of their eligible expenses and are automatically updating the plan documents, unless the employer
specifically communicates otherwise (i.e., to not include such expenses).
Employers should discuss with any applicable vendors accordingly. |
1.
Notify plan participants of additional eligible expenses (i.e., OTC and
menstrual care)
2. Review plan document and update as needed |
|
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| Dependent Care FSA |
Mid-Year Election Changes (Dependent Care FSA)
IRS Notice 2020-29 allows cafeteria plans to permit eligible employees
to:
Make any type of mid-year election change (e.g., make a new election,
revoke an existing election, or increase or decrease an existing election),
effective prospectively, under a Dependent Care FSA for any reason. |
Temporary: through 12/31/2020 only |
Optional |
Note
that under current Section 125 rules, participants may prospectively change
their election amount or revoke election per the IRS allowable event of a
"change in the cost and coverage." |
1.
Notify employees of plan changes
2. Amend plan document by 12/31/2021 |
|
|
Extended Claims Period
IRS Notice 2020-29 allows certain cafeteria plans to provide an extended
period to incur Dependent Care FSA claims through December 31, 2020.
|
Temporary: through 12/31/2020 only |
Optional |
Applicable
only for Dependent Care FSAs with a plan year ending in 2020 or grace period
ending in 2020. |
1. Notify plan
participants of plan changes
2. Amend plan document by 12/31/2021 |
|
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| HRA |
Extended Run-out Period for an HRA
The ERISA Claims and Appeals relief noted above may also extend the run-out
period for an HRA. For example, if a
calendar year plan permits participants to submit valid claims for 2019
expenses until March 31, 2020 (i.e., the run-out period), the Outbreak Period
must be disregarded. Meaning, participants would have until 31 days following
the end of the Outbreak Period to submit claims for reimbursement (which is
the 31 day remainder of the run-out period). |
Temporary: Outbreak Period is
March 1, 2020 until 60 days following end of the National Emergency (which
has not yet been announced) |
Mandatory |
This
extension does not provide additional time to incur claims. |
1. Notify plan
participants of extended deadlines
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|
Timing for ICHRA Reimbursements Clarified
IRS Notice 2020-33 clarifies that a plan is permitted
to treat an expense for a premium for health insurance coverage as incurred
on (1) the first day of each month of coverage on a pro rata basis, (2) the
first day of the period of coverage, or (3) the date the premium is
paid.
|
Permanent |
Optional |
For
example, an ICHRA with a calendar year plan year may immediately reimburse a
substantiated premium for health insurance coverage that begins on January 1
of that plan year, even if the covered individual paid the premium for the
coverage prior to the first day of the plan year. |
1.
Notify plan participants of any changes to claims substantiation
processes
|
|
|
Expanded Eligible Expenses for HRA
The CARES Act expanded the IRS eligible expenses to
include OTC (even without prescription) and menstrual care products. |
Permanent: effective 1/1/2020 |
Optional |
Many
vendors are assuming plans will include OTC and menstrual care products as
part of their eligible expenses and are automatically updating the plan documents, unless the employer
specifically communicates otherwise (i.e., to not include such expenses).
Employers should discuss with any applicable vendors accordingly. |
1.
Notify plan participants of additional eligible expenses (i.e., OTC and
menstrual care)
2. Review plan document and update
as needed |
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|
| HSA |
HSA
Eligibility
IRS Notice 2020-29 clarifies that previous guidance
regarding coverage related to COVID-19 without cost-sharing (or low
cost-sharing) and the exemption for telehealth services may be applied
retroactively to January 1, 2020. |
Temporary:
applies to plan years beginning on or before 12/31/2021 |
Mandatory |
As
background, IRS Notice 2020-15 (issued March 11, 2020) explained that HDHPs
can cover testing and treatment of COVID-19 at low or no cost-sharing without
impacting ones ability to make or receive contributions into an HSA.
Further, the CARES Act provides a temporary safe harbor for providing
coverage for telehealth services allowing HDHPs to cover telehealth without
a deductible so that an otherwise HSA eligible individual with coverage under
an HDHP may receive coverage for telehealth before satisfying the deductible
of the HDHP and still contribute to an HSA.
|
1.
Notify plan participants |
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|
Expanded Eligible Expenses for HSA
The CARES Act expanded the IRS eligible expenses to
include OTC (even without prescription) and menstrual care products. |
Permanent: effective 1/1/2020 |
Mandatory |
An
HSA, as an individual account owned by the account holder, can be used for
the expanded eligible expenses. |
1.
Notify plan participants of additional eligible expenses (i.e., OTC and
menstrual care)
2. Review plan document and update
as needed |
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|
HIPAA:
Special Enrollment |
Extended Deadlines
Disregard Outbreak Period when calculating the following deadline:
30 or 60-day deadline to request a special enrollment under HIPAA
|
Temporary: Outbreak Period is
March 1, 2020 until 60 days following end of the National Emergency (which
has not yet been announced) |
Mandatory |
This
extension is only applicable to enrollment requests that are HIPAA special enrollment rights
(acquisition of a dependent via marriage/birth/adoption, loss of eligibility
for other group coverage/Medicaid or CHIP, gain of eligibility for Medicaid
or CHIP premium assistance program). For example, a request to drop coverage due to marriage is
not a HIPAA special enrollment right. |
1.
Notify employees of extended deadlines |
|
|
ERISA:
Claim Deadlines/ Appeals |
Extended Deadlines
Disregard Outbreak Period when calculating the following deadlines:
Deadlines for individuals to file claims for benefits, for initial
disposition of claims, and for providing claimants a reasonable opportunity
to appeal adverse benefit determinations under ERISA plans and
non-grandfathered group health plans.
Deadlines for providing a state or federal external review process
following exhaustion of the plan's internal appeals procedures for
non-grandfathered group health plans. |
Temporary: Outbreak Period is
March 1, 2020 until 60 days following end of the National Emergency (which
has not yet been announced) |
Mandatory |
This
will impact HRA and Health FSA administration if the claims runout period
falls within the Outbreak Period (see HRA and Health FSA sections). |
1.
Notify plan participants of extended deadlines |
|
|
| COBRA |
Extended Deadlines
Disregard Outbreak Period when calculating the following deadlines:
60-day COBRA election period
30- or 60-day deadline to notify the plan of a COBRA qualifying
event
60-day deadline to notify the plan of a determination of a
disability
14-day deadline to furnish COBRA election notices
45-day deadline for participants to make first COBRA payment
30-day deadline for subsequent COBRA premium payments |
Temporary: Outbreak Period is
March 1, 2020 until 60 days following end of the National Emergency (which
has not yet been announced) |
Mandatory |
These
extensions present COBRA administration challenges, particularly for
elections and payments. An employee must have until the extended due date to
make an election or payment (coverage would be retroactive as long as the
election and payment is made by the extended due date). Employers should
discuss with their COBRA administrator, TPA, and carrier (as applicable)
regarding how the coverage election and coverage termination/reinstatement
will be administered. |
1.
Notify COBRA qualified beneficiaries and plan participants of extended
deadlines
2. Modify COBRA notices |
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| Additional
Resources: |
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| IRS
Notice 2020-29 |
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| IRS
Notice 2020-33 |
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| Extension of Certain Timeframes for Employee Benefit Plans,
Participants, and Beneficiaries Affected by the COVID-19 Outbreak Final Rule |
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| EBSA Disaster Relief Notice 2020-01 |
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| CARES Act |
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