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On June 24, 2022, the U.S. Supreme Court issued its decision in Dobbs v. Jackson Women’s Health Organization, overturning Roe v. Wade and holding that there is no constitutionally protected right to abortion.  While the Dobbs decision does not make abortion illegal, it does permit states to make abortion illegal under state law. Whether employers assume new risks in covering abortions (including aiding or abetting someone in receiving an abortion) under their health plans is now a matter of state law.  In the wake of this decision, employers now need to consider what they can legally do to support employees (and their covered dependents) who wish to terminate a pregnancy, including those who need to do so due to a medical condition or emergency.

Fully Insured and Self-Insured Plans

The implications of the Dobbs decision for group health plans will differ depending on whether a plan is fully insured or self-insured.  Since states generally have the power to regulate fully insured health plans, insurance policies would need to comply with the law of the state where the policy is issued; fully insured health plans in states where abortion is banned would not be able to provide abortion benefits.  Employers with such plans would therefore want to review their plan documents, insurance policies, and governing state laws, and should explore alternatives with their carriers and brokers as needed to see if there is still a way to provide assistance for abortion services.  Employers may also want to consider the possibility of switching to a self-insured plan, as doing so would give them more discretion in terms of plan design (as discussed below).  If this is not possible, there could still be other alternatives available such as establishing an HRA that covers any unreimbursed expenses for medical care (which includes abortion procedures which constitute “medical care” under IRS rules).  The HRA would need to either be integrated with the employer’s medical plan to comply with the Affordable Care Act or structured as an Excepted Benefit HRA (with different implications with respect to eligibility, funding, and other features).  Kelley Drye is available to assist employers wishing to learn about an HRA approach.
Continue Reading Impact of Dobbs Decision on Employee Benefits

To address growing cybersecurity risks to plan participants and their retirement assets, the Department of Labor (DOL) issued a set of guidance for retirement plan sponsors and fiduciaries, their service providers, and plan participants aimed at mitigating cybersecurity risks. The DOL has also begun examining plans’ cybersecurity programs. Its information requests, which are very detailed and encompassing, signal that the guidelines are not optional and that the DOL is serious about enforcing them. The below is a summary of the DOL’s guidance and items it has signaled will be reviewed in a cybersecurity audit.

DOL Guidance
The DOL released its guidance on April 14, 2021 in three pieces. The first piece, “Tips for Hiring a Service Provider,” is aimed at assisting plan sponsors and fiduciaries in choosing service providers with robust cybersecurity practices. The initial guidance makes clear that the DOL considers the management of cybersecurity risk – including the scrutinizing of service providers’ cybersecurity policies and practices – to be part of a fiduciary’s duties. The tips include:

  • Making sure that contracts with service providers require their ongoing compliance with cybersecurity and information security standards, and being wary of provisions that limit the service provider’s responsibility for IT security breaches;
  • Looking for contract provisions that give plan sponsors and fiduciaries the right to review the service provider’s audit results demonstrating compliance with industry security standards;
  • Examining the service provider’s track record in the industry, including public information regarding information security incidents;
  • Inquiring as to any past security breaches, how they came about, and how the service provider responded; and
  • Finding out whether the service provider has any insurance policies that would cover losses caused by cybersecurity and identity theft breaches, whether internal or external.
    Continue Reading DOL Issues Cybersecurity Guidelines and Begins Audits

This Advisory provides a summary of recent developments impacting Affordable Care Act (“ACA”) requirements applicable to employers, as well as other recent changes impacting employer-sponsored health plans.

ACA Affordability Threshold Decrease

Employer-sponsored health plans will satisfy the ACA affordability requirement in 2022 only if the lowest-cost, self-only coverage option offered under the plan does not exceed 9.61% of an employee’s household income, down from 9.83% in 2021.  This means that a plan that was affordable in 2021 may not be in 2022, even without any increase in premiums.  Employers should confirm that their health plans will remain affordable for the 2022 plan year under the new lower threshold.

Advanced Explanation of Benefits (EOBs)

Effective for plan years beginning on or after January 1, 2022, plans and insurers, within one business day after receiving a provider’s good faith estimate of the expected charge to the plan or insurer for an item or service (as required under the No Surprises Act), must provide participants and beneficiaries with a notice containing various pieces of information, including the following:

  • For in-network providers or facilities, the plan’s contracted rate for the item or service, based on the billing and diagnostic codes furnished by the provider or facility;
  • For out-of-network providers or facilities, a description of how the participant or beneficiary can obtain information about the plan’s in-network providers or facilities (if any); and
  • A good faith estimate of the amount of cost-sharing for which the participant or beneficiary would be responsible concerning the item or service.

The Departments of Labor, Health and Human Services, and the Treasury (the “Departments”) have announced that they will not issue regulations addressing these advanced EOB requirements before the effective date of January 1, 2022 and will defer enforcement until they have done so.  However, plans should prepare to meet these requirements as soon as possible, as doing so may require substantial effort, including the engagement of third-party administrators (TPAs) to provide disclosures.…

Continue Reading New Health Plan Requirements and Other Updates

The American Rescue Plan Act (ARPA), signed into law on March 11, 2021, requires employers to provide free COBRA coverage to employees (and family members) who qualify for COBRA due to an involuntary termination of employment or reduction in hours.  Employers are required to offer free COBRA coverage between April 1 and September 30, 2021 (the “Subsidy Period”).  This Advisory discusses employer obligations related to the subsidy – including new COBRA election periods and new COBRA notices – and how employers will be reimbursed for this 100% subsidized COBRA coverage through a payroll tax credit.
Continue Reading COBRA Subsidies Under the American Rescue Plan Act

Forget speculation about what is to come: the Biden administration has already acted to unravel the Trump legacy in employment and labor regulation—and to expand worker protections.

Join us on April 15, 2020 at 12:30 p.m. ET for a complimentary webinar, where we will take a deep dive into the regulatory changes immediately impacting your…

On January 12, 2021, the Department of Labor (DOL) issued long-awaited guidance for retirement plan fiduciaries that is relevant to any employer who sponsors a retirement plan that is subject to the fiduciary requirements of ERISA, including 401(k), 403(b), profit sharing, and defined benefit pension plans.  Of particular import, the guidance addresses best practices for locating and distributing retirement plan benefits to missing or non-responsive participants. The DOL also includes other helpful guidance, as discussed in more detail below.
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Continue Reading DOL Issues Guidance on Missing Participants for Retirement Plans

As described in our client advisories of May 6, 2020 and February 11, 2021, the Department of Labor (the “DOL”) temporarily suspended the deadlines for employee benefit plan participants to exercise HIPAA special enrollment rights, elect and pay premiums for COBRA continuation coverage, file claims for benefits and appeal benefit claim denials (each, a “Qualifying Event”).

Under this relief, plan administrators were directed to disregard the period from March 1, 2020 until 60 days after the end of the federally declared national emergency for COVID-19 (the “Outbreak Period”) in determining such deadlines.  Because the statutes authorizing this relief impose a one-year limit on the period that may be disregarded in determining these deadlines, as described in our client advisory of February 11, 2021, the Outbreak Period was generally expected to end on February 28, 2021, absent further action from the DOL.

In a last-minute change of course, the DOL is now requiring the relief period instead to be the one-year period beginning on the normally applicable deadline, or 60 days after the end of the federally declared national emergency for COVID-19, if sooner.  As of this writing, the federally declared national emergency is still in place and the government has given no sign of when that declaration might end.  In other words, the relief period is to be measured on an event-by-event basis with respect to each participant and beneficiary instead of an overall deadline that applies to the plan as a whole.

This means that a participant who became eligible for COBRA on January 30, 2021, and who normally would have had until March 31, 2021 to elect COBRA, will have until March 31, 2022 to do so (assuming the national emergency does not end before January 30, 2022).  More significantly, a participant who experiences a Qualifying Event on or after March 1, 2021 (i.e., more than a year after the start of the Outbreak Period) will also be eligible for the relief.

In apparent recognition of its strained interpretation of its own original guidance regarding extension of certain plan deadlines, the DOL observed that plan disclosures issued during the pandemic may need to be reissued or amended if such disclosures did not accurately inform participants and beneficiaries of when actions are required.

Finally, the DOL observed that plan fiduciaries should make reasonable accommodations to prevent the loss or undue delay in payment of benefits and minimize the possibility of individuals losing benefits because of a failure to comply with pre-established time frames.  Specific examples of accommodations in the DOL guidance include affirmatively sending the affected participant or beneficiary a notice regarding the end of the relief period and, in the case of a group health plan, informing the affected participant or beneficiary of other coverage options, including through the Health Insurance Marketplace in the participant’s state.  It is unclear from this guidance whether the DOL expects plan fiduciaries to make other types of accommodations, such as extending deadlines beyond the statutory limits as facts and circumstances may warrant.

Based on the DOL’s latest guidance, plan administrators should be prepared to continue contending with the uncertainty and administrative difficulties created by the Outbreak Period relief until the President declares an end to the national emergency for COVID-19.

If you have any questions about the DOL’s latest interpretation of the Outbreak Period relief, or if you would like assistance in reviewing, preparing or revising communications to plan participants about the relief, please contact a member of our Employee Benefits Group.

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Continue Reading DOL Issues New Guidance on the Duration of its COVID-19 Outbreak Period Relief

As described in our client advisory of May 6, 2020, the Department of Labor (the “DOL”) temporarily suspended the deadlines for employee benefit plan participants to exercise HIPAA special enrollment rights, elect and pay premiums for COBRA continuation coverage, file claims for benefits and appeal benefit claim denials.  This relief began on March 1, 2020 and, unless further extended by the DOL, will end on February 28, 2021 (the “Outbreak Period”).

If the Outbreak Period is not extended, then, effective March 1, 2021, the clock will begin ticking on deadlines that were suspended during the Outbreak Period.  For example, if a participant became eligible for COBRA continuation coverage on February 1, 2020, the 60-day period for electing such coverage, which in any other year would have ended on March 31, 2020, will now end on March 31, 2021 (i.e., the last day of the 60-day period which began on February 1, 2020 and includes (i) 29 days before the start of the Outbreak Period and (ii) 31 days after the end of the Outbreak Period).
Continue Reading DOL Outbreak Period Relief for Employee Benefit Plan Participants Scheduled to End Soon

On December 27, 2020, the President signed into law the Consolidated Appropriations Act, 2021 (the “Act”), the latest major piece of legislation passed by Congress in response to the coronavirus pandemic. This advisory describes certain provisions of the Act affecting retirement plans and other employee benefits.  In a separate advisory, we described the Act’s impact on health and welfare plans, including health and dependent care flexible spending arrangements.

Relief from Partial Terminations for Retirement Plans

When a retirement plan experiences a partial termination, affected participants must become fully vested in their accrued benefits. Ordinarily, the Internal Revenue Service uses a rebuttable presumption that a partial termination occurs in a plan year in which there is a 20% or greater reduction in the number of participants. Under the Act, a plan will not be treated as having a partial termination during any plan year which includes the period beginning on March 13, 2020, and ending on March 31, 2021, if the number of active participants covered by the plan on March 31, 2021 is at least 80% of the number of active participants covered by the plan on March 13, 2020.

Special Disaster Relief for Retirement Plans

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Continue Reading New Stimulus Legislation Affects Retirement Plans and Other Employee Benefits

On December 27, 2020, the President signed into law the Consolidated Appropriations Act, 2021 (the “Act”), the latest major piece of legislation passedby Congress in response to the coronavirus pandemic. This advisory describes certain provisions of the Act affecting health and welfare plans, including health and dependent care flexible spending arrangements (“FSAs”).  In a separate advisory, we will describe the Act’s impact on retirement plans and other employee benefits.
Continue Reading New Stimulus Legislation Affects Health and Welfare Plans, including Flexible Spending Arrangements