We authored an article published by BenefitsPRO on November 11 highlighting takeaways from the firm’s “2022 Welfare Plan Automatic Participant Disclosures Checklist.”
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2022 ERISA Welfare Plan Automatic Participant Disclosures Checklist
We recognize that many companies sponsor ERISA welfare benefit plans and are currently undergoing their open enrollment process and issuing related participant communications. To assist with that process, we have prepared an Automatic Participant Disclosures Checklist for use during open enrollment and throughout the plan year.
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Wit v. United Behavioral Health Appeals
I recently discussed the appeals request in Wit v. United Behavioral Health, a case that could set a precedent for the behavioral health industry and access to mental health and addiction treatment, for a Behavioral Health Business article. In February 2019, the U.S. District Court for the Northern District of California ruled that United Behavioral Health violated the Employee Retirement Income Security Act (ERISA) by incorrectly denying behavioral health claims. The company appealed to the 9th Circuit, and in March 2022 a three-judge panel reversed the decision. The plaintiffs are now appealing that decision, requesting that the full panel of judges review the case.
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State Prescription Drug Legislation and ERISA Preemption
We recently authored an article for Washington Legal Foundation examining whether federal law preempts state prescription drug coverage laws that would apply to employer-sponsored group health plans. According to a provision in the Employee Retirement Income Security Act of 1974 (ERISA), state laws that “relate to” employee benefit plans are preempted by ERISA standards. Unfortunately, as we pointed out in the article, this “related to” statement is broad and vague.
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Enforcement of the Transparency in Coverage Public Disclosure Requirement Rapidly Approaching
Starting July 1, 2022, employers that maintain group health plans (plans) and health insurance issuers (issuers) will be required to disclose pricing information on a public website in the form of three machine-readable files (MRFs). This requirement is one of the Transparency in Coverage Final Rules (the Rules) released by the Department of Health and Human Services (HHS), the Department of Labor (DOL), and the Department of the Treasury (collectively, the Departments) in November 2020.
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Tolling, Tolling, Tolling, Keep Those COVID-19 National Emergency Deadlines Tolling
On February 18, President Biden announced that the COVID-19 National Emergency would continue beyond March 1, 2022, for up to another year. As a result of the continuing National Emergency, the “tolling” of several important deadlines applicable to health and welfare plans, as well as qualified retirement plans, will also remain in effect. This means plan sponsors and administrators should continue to apply these deadlines to affected individuals on a participant-by-participant basis for the foreseeable future.
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DOL Begins Audit of Retirement Plans for Cybersecurity Shortfalls
To increase protections for the estimated $9.3 trillion in American retirement assets, the Department of Labor (DOL) has begun a new cybersecurity audit initiative for retirement plans. After providing its first set of guidance on cybersecurity in April, the DOL quickly began the audit initiative by issuing information and document requests to numerous 401(k) plan fiduciaries. The DOL has stated that ERISA requires plan fiduciaries to take appropriate precautions to mitigate the risks of cybercrime and this new audit activity clearly indicates that companies must take steps to align their cybersecurity programs with the guidance provided or risk being caught flatfooted by a probing and comprehensive audit.
The DOL’s cybersecurity guidance is aimed at plan sponsors, plan fiduciaries, record-keepers, and plan participants. It provides advice on how to best protect the retirement benefits of America’s workers through cybersecurity safeguards. The DOL’s guidance is broken down into the following three documents:
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DOL to Focus on Red Flags in Mental Health Parity Requests
Last month, the Department of Labor (DOL) announced that it will focus on requesting information from employers where there are potential “red flags” of non-compliance with the provisions and rules of the Mental Health Parity and Addiction Equity Act (MHPAEA), as modified by the Consolidated Appropriations Act, 2021 (CAA).
Section 203 of the CAA imposes a new requirement on group health plans to ensure compliance with the MHPAEA: group health plans and insurers that provide both medical/surgical benefits and mental health or substance use disorder (MH/SUD) benefits—and that impose non-quantitative treatment limitations (NQTLs) on the MH/SUD benefits—must prepare a “comparative analysis” of any NQTLs that apply. As of February 10, 2021, plans must supply this comparative analysis and other specific information upon request by an applicable state or federal agency (e.g., the DOL for ERISA plans). The DOL has been actively auditing group health plans for compliance with the MHPAEA and requesting documentation of these comparative analyses.
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Reminder – Annual Deadline (typically, July 31) to Report and Pay PCORI Fee is Approaching
The annual filing (and fee payment) for applicable self-insured health plans and specified health insurance policies used to fund the Patient-Centered Outcomes Research Institute (the PCORI fee) is soon coming due—this year, by Monday, August 2, 2021.
IMPORTANT NOTE: The Form 720 on which the fee is reported typically is due on July 31; however, in 2021, July 31 falls on a Saturday, and, according to the Instructions (on page 2), if the due date falls on a Saturday, Sunday, or legal holiday, you may file on the next business day. And, so, this year’s filing is due by August 2, 2021.
Internal Revenue Service (IRS) Form 720, Quarterly Federal Excise Tax Return, is still used to report and pay (in Part II, IRS No. 133, on page 2) the annual PCORI fee. The applicable rate has increased to $2.66 per covered life (announced in late 2020 via IRS Notice 2020-84).
Key Considerations for Emerging Companies: Equity Compensation
Equity compensation – which links the self-interests of a company’s service providers with the interests of the company and its investors – is a compelling incentive for start-up companies to attract and motivate employees and consultants. Many of these employees and consultants understand and expect that equity or phantom equity arrangements will make up a