The deadline to send a new COBRA notice required under the American Rescue Plan Act of 2021 (“ARPA”) is approaching quickly. Employers and COBRA administrators will need to send those notices no later than September 15, 2021, to satisfy that obligation.
Reporting and Disclosure
On February 12, 2021, the Department of Labor issued a press release confirming that the new fiduciary investment advice guidelines under Prohibited Transaction Exemption 2020-02 will go into effect on February 16, 2021. The Department also confirmed that the temporary enforcement relief provided by Field Assistance Bulletin 2018-02 will remain in place until December 20, 2021.
The Biden administration previously issued a memo to regulatory agencies suspending new regulations issued during the waning days of the Trump administration. The purpose of the suspension is to provide the incoming administration with the opportunity to review those regulations. As a result, there was some question whether the Exemption would become effective.
On December 15, 2020, the Department of Labor finalized its new guidelines for fiduciary investment advice. Prohibited Transaction Exemption 2020-02 both clarifies the circumstances under which financial institutions and investment professionals are considered “fiduciaries” under ERISA and the Internal Revenue Code, and also establishes a new framework under which such fiduciaries may provide services and receive compensation.
The preamble to the final Exemption provides the Department’s long-awaited final interpretation of when investment advice – such as a recommendation to roll over retirement plan assets to an IRA (or between IRAs) – creates a fiduciary relationship under ERISA or the Code. The substantive terms of the Exemption allow investment advisers who are fiduciaries to receive compensation and engage in principal transactions that would otherwise violate prohibited transaction rules.
The Exemption applies to SEC- and state-registered investment advisers, broker-dealers, banks, insurance companies, and their employees, agents and representatives that are investment advice fiduciaries under the newly interpreted “five-part” test of fiduciary status. It imposes certain conditions to protect the interests of retirement plans, participants, beneficiaries, and IRA owners. The Exemption is set to become effective February 16, 2021, absent a delay by the Biden Administration. Thus, employers will need to be aware of the Exemption and its conditions in their engagement of (and interactions with) plan service providers.
The Department of Labor (DOL) has now finalized its October 2019 proposal (described in our previous blog) to create a new “safe harbor” for the electronic distribution of ERISA-required notices and disclosures. The final regulation establishes a new, voluntary safe harbor for retirement plan administrators who want to use electronic media, as a default, to furnish covered documents to participants and beneficiaries, rather than providing paper documents through mail or hand delivery. The new safe harbor permits electronic delivery by either (i) posting covered documents on the plan sponsor’s website, if appropriate notification of internet availability is furnished to the participant’s electronic address, or (ii) sending the documents directly to the participant’s electronic address, with the covered document either in the body of the e-mail or as an attachment thereto. Although the final rule is not effective until 60 days after its publication in the Federal Register, the DOL has indicated that it will not take any enforcement action against a plan administrator that relies on the safe harbor before that date.
The Department of Labor’s Employee Benefits Security Administration issued guidance on April 28, 2020, providing temporary, coronavirus-related relief from many deadlines and requirements under ERISA. Notably, the guidance relaxes the standards for employers to provide notices electronically, and affords significant latitude to COBRA qualified beneficiaries for electing, and paying for, COBRA continuation coverage.
As we are all now intimately aware, the coronavirus pandemic has changed the nature of the workplace, and all of the benefits, rights, and responsibilities arising out of employment. We are operating under a new set of rules, and those rules are changing daily. Employers’ efforts to manage their workforce in order to maintain fiscal viability while protecting the health of employees also affect benefits. The cascading effect of these factors raises many thorny benefits questions. We will summarize – and attempt to answer – a few of those questions here (based on the legal landscape as of March 31, 2020).
In Notice 2019-63, the IRS has granted health insurers and large employers 30 more days to issue the appropriate 2019 ACA-reporting forms to their insureds and full-time employees. Rather than January 31, 2020, these Forms 1095-B and 1095-C will now be due by March 2, 2020. The IRS has also extended the “good-faith” standard for compliance with these reporting rules. Finally, in view of the zeroing out of the penalty for failing to comply with the ACA’s individual mandate, insurers and large employers will now have an additional compliance option.
The U.S. Department of Labor (DOL) has proposed a new “safe harbor” rule to allow retirement plan disclosures to be posted online (assuming certain notice requirements are satisfied) to reduce printing and mailing expenses for plan sponsors and to make the disclosures more readily accessible and useful for plan participants.
The Affordable Care Act (“ACA”) imposed reporting requirements on health coverage providers (including self-funded employer plans) and “applicable large employers” (those with 50 or more full-time employees). For health coverage provided during both 2015 and 2016, the IRS extended the deadline for issuing certain of the required reporting forms. In Notice 2018-06, the IRS has now granted a similar extension with respect to reporting health coverage provided during calendar-year 2017.
As explained in our December 19, 2016, article, the 21st Century Cures Act allows small employers (those that are not subject to the Affordable Care Act’s “play-or-pay” requirements because they have fewer than 50 full-time employees, including full-time equivalents) to offer their employees a premium reimbursement arrangement that would otherwise violate the ACA. By establishing a “qualified small employer health reimbursement arrangement” (or “QSEHRA”), such an employer may subsidize its employees’ purchase of individual health insurance coverage. In its recent Notice 2017-20, the IRS has granted these employers additional time to comply with the QSEHRA notification requirement.