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Compliance Corner

Federal Updates

IRS Provides Guidance on CAA Changes to FSAs and DCAPs

March 02, 2021

On February 28, 2021, the IRS issued Notice 2021-15, which provides guidance for the benefits-related provisions in the Consolidated Appropriations Act of 2021 (CAA), specifically those related to health FSA and DCAP relief. The IRS also provided new guidance regarding additional mid-year election changes permitted for plan years ending in 2021.

The IRS guidance provided in Notice 2021-15 explains that:

  • With respect to health FSAs and DCAPs, a plan cannot adopt both a carryover and an extended grace period for the same plan year (which is consistent with general rules). Further, any health FSA or DCAP can adopt an extended grace period or carryover, even if the plan did not previously offer such provision.
  • An employer may choose to adopt an extended grace period less than 12 months in length. Similarly, an employer may choose to limit the carryover amount to less than the entire unused account balance and may limit the carryover to apply only up to a specified date during the plan year.
  • Unused DCAP amounts carried over from prior years or made available during an extended period for incurring claims are not considered in determining the annual limit applicable for the following year. However, Notice 2021-15 does not indicate whether amounts above $5,000 are subject to taxation. Without further guidance, DCAP benefits used above $5,000 in a calendar year will likely be treated as taxable income when participants file their tax returns. See this edition’s FAQ.
  • Prospective election changes may include an initial election to enroll in a health FSA or DCAP, which means that participants who initially waived coverage could make a new election to enroll mid-year without a qualifying life event. Further, employers may allow amounts contributed to a health FSA or DCAP after the prospective election change to be used for claims incurred prior to the election change.
    • For example, Deborah elects $1,000 for her calendar year health FSA. Deborah’s employer implements the health FSA election relief allowing for a mid-year election change without a qualifying life event. In March, Deborah increased her election to $2,000. Deborah can be reimbursed on a $2,000 claim from January (even though the claim was incurred prior to her increased election). This also applies if she enrolled in coverage mid-year through an election change.
  • A plan can be amended to permit employees, on an employee-by-employee basis, to opt-out of a carryover or extended grace period. In addition, an employer may permit employees to switch from a general-purpose health FSA to an HSA-compatible FSA (e.g., limited-purpose dental/vision or post-deductible FSA) mid-year.
  • A plan may limit the time frame for which mid-year election changes may be made. Likewise, a plan can limit the number of mid-year election changes permitted without a qualifying life event.
  • Plans may limit post-termination participation in a health FSA to employee contribution amounts made during the plan year prior to termination (also known as the health FSA spend-down provision). In addition, this option is available to participants who cease participation in a health FSA because of termination of employment, change in employment status (such as a furlough), or a new election during calendar year 2020 or 2021. The IRS reiterates that a post-termination participant still has COBRA rights.
  • The special age limit relief for certain dependents who turned age 13 during the plan year is separate from the carryover and extended grace period relief. An employer that adopts the special age limit relief does not have to adopt the carryover or an extended grace period for employees to continue to use funds remaining from the previous plan year for such children.

Other Permitted Mid-Year Election Changes

In addition, the IRS provides that plans are permitted to allow participants to make mid-year election changes for employer-sponsored health coverage for plan years ending in 2021. Similar to earlier guidance provided in 2020 via IRS Notice 2020-29, a plan may permit employees to make a new prospective election if they originally declined coverage or revoke an existing election and make a new election to enroll in another group health plan sponsored by the same employer or other health coverage not sponsored by the employer (as long as the employee provides a written attestation to verify that they are or will be enrolled in coverage not sponsored by the employer).

Employer Action

Importantly, employers may choose to implement this relief, but are not required to do so. However, if employers do implement any or all this relief, it should be clearly communicated with employees. In addition, plan amendments are required. Further, the amendments can be retroactive if they are completed by the last day of the calendar year following the end of the plan year for which the change is effective (and, in the meantime, the plan operates in accordance with the terms of the amendment). This means amendments to plan years ending in 2020 would have to be completed by December 31, 2021.

IRS Notice 2021-15 »

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Tenth Circuit Holds Divorce Decree Meets QDRO Requirements

March 02, 2021

In Festini-Steele v. ExxonMobil Corporation, No. 20-1052 (10th Cir. 2021), the US Court of Appeals for the Tenth Circuit recently held that a divorce decree can satisfy the ERISA requirements for a qualified domestic relations order (QDRO). As a result, the court determined that a deceased employee’s former spouse was entitled to his life insurance proceeds.

Under ERISA, plan benefits are generally not assignable. As federal law, ERISA supersedes any conflicting state law. An exception to the ERISA anti-assignment principle is a QDRO, which allows for a participant’s benefits to be payable to a spouse or dependent pursuant to a divorce or separation.

For a state court order to qualify as a QDRO, certain information must be included. Specifically, the order must include the name and address of the participant and alternate payee(s) (i.e., the spouse or dependent with a right to plan benefits), each plan to which the order applies, the amount or percentage of the participant’s benefits to be assigned (or the way such an amount would be determined), and the number of payments or period to which the order applies.

In this case, Billy Steele and Stela Festini-Steele were divorced in Colorado in 2014. Their separation agreement (which was incorporated in the divorce decree) required Billy, who worked for ExxonMobil, to maintain life insurance with Stela as beneficiary until the couple’s minor daughter, A.S., attained age 18. After the divorce, Billy remarried. In 2017, he died in a car accident; his daughter A.S. was four years old at the time.

Following the death, Stela contacted ExxonMobil, provided a copy of the divorce decree, and requested the benefit from Billy’s ExxonMobil life insurance plan. ExxonMobil denied the request and informed Stela that she was not a named plan beneficiary. In the denial letter, ExxonMobil determined the submitted divorce decree did not meet QDRO requirements because it failed to specify the insurance amount or benefit plan name.

Stela filed an ERISA civil enforcement claim against ExxonMobil. The district court ruled that the divorce decree was not a QDRO because it failed to identify a plan, the life to be insured or the named beneficiary. Additionally, in the district court’s view, the order did not clearly specify the amount or percentage of the participant’s plan benefits to be paid.

On appeal, the Tenth Circuit’s review focused upon the plan administrator’s denial of Stela’s claim (as opposed to the district court’s prior determination). Accordingly, the court discussed arguments raised by ExxonMobil during litigation, but emphasized that their ruling was based upon the issues cited in the plan’s administrative records.

In the opinion, the Tenth Circuit first addressed the requirement that a QDRO clearly specify the amount or percentage of the participant’s benefits to be paid by the plan to each alternate payee. The court determined that the divorce decree met this requirement by directing Billy to designate his former spouse as beneficiary and not identifying other beneficiaries, thus indicating she was the sole beneficiary and entitled to the full benefit.

The Tenth Circuit then considered the issue of whether the plan subject to the order was clearly identified. Here, the court highlighted language in the divorce order stating that “[t]he parties agree to the following terms relating to all life insurance accounts.” This provision was interpreted to require the participant to name his former spouse as beneficiary of all life insurance plans or policies insuring his life until their daughter A.S. turned eighteen.

Finally, the court noted that although the parties’ separation agreement warned that a separate QDRO may be necessary with respect to retirement plan benefits, this admonition does not preclude a plan administrator from determining that a DRO within which a separation agreement is incorporated is a QDRO.

As a result, the Tenth Circuit held the terms of the separation agreement incorporated within the divorce decree met the requirements of a QDRO. The district court’s judgment was reversed and the case remanded for entry of judgment in favor of the former spouse.

ERISA plan sponsors of group life insurance benefits, particularly those within the jurisdiction of the Tenth Circuit, should be aware of this ruling. Employers may want to review their QDRO procedures, to determine if any modifications are advisable.

Festini-Steele v. ExxonMobil Corporation »

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HHS Summarizes HIPAA Privacy, Security and Breach Notification Audits

February 17, 2021

The Office for Civil Rights (OCR) at HHS released its 2016 – 2017 HIPAA Audits Industry Report, which reviews compliance with HIPAA privacy, security and breach notification rules of certain healthcare entities and business associates. The HITECH Act requires a periodic audit of covered entities and business associates to monitor for HIPAA compliance. Pursuant to this requirement, OCR completed audits of 166 covered entities and 41 business associates in 2016 and 2017.

The seven provisions audited include: required content of the notice of privacy practices, prominent posting of the notice of privacy practices on websites, individual right of access, timelines of breach notification, content of breach notification, risk analysis, and risk management. A summary of the findings noted in the industry report demonstrates that:

  • Most covered entities met the timeliness requirements for providing breach notification to individuals; and most also satisfied the requirement to prominently post their notice of privacy practices on their website (for those who maintain a website about their service or benefits).
  • Most covered entities failed to adequately safeguard protected health information (PHI), ensure individual right of access, provide required content in the notice of privacy practices, and implement risk analysis and risk management as required by HIPAA Security Rule.

The findings identify common areas of noncompliance. For example, while most covered entities met the breach notification timeliness requirement (notice must be sent without unreasonable delay but no later than 60 days following the breach discovery date), the content of the notice did not meet the rule’s requirements for many covered entities. Similarly, while most covered entities satisfied the requirement to post their notice of privacy practices on their website, only 2% fully met the content requirement.

In addition to an analysis of the audit results, the industry report provides details on the specific requirements of each audited provision and outlines the documents requested during the audit. For more information on the process and findings, see the industry report.

The audit serves to improve industry awareness of compliance obligations, among other goals. Employers should be mindful of OCR’s findings when formulating and administering their own HIPAA policies.

2016 – 2017 HIPAA Audits Industry Report »

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IRS Issues Updated Form 8994 Regarding Employer Credit for Paid Family and Medical Leave

February 17, 2021

The IRS recently released a revised Form 8994: Employer Credit for Paid Family and Medical Leave and its instructions, which are used to claim the tax credit for providing paid family and medical leave. The credit, which was first available only for tax years beginning in 2018 and 2019 and then later extended through 2020, was further extended through 2025 by the Consolidated Appropriations Act of 2021.

It is important to note that this tax credit is different from the COVID-19 related tax credits for paid leave provided via the FFCRA through March 31, 2021. Employers may complete Form 8994 when they provide family and medical leave to their employees, in order to claim a tax credit. In order to claim the credit, employers must have a written policy that provides at least two weeks of paid leave to full-time employees (prorated for part-time employees), and the paid leave must be at least 50% of the wages normally paid to the employee.

Family and medical leave, for purposes of this credit, is leave granted by the employer in accordance with the written policy for one or more of the following reasons:

  • Birth of an employee’s child and to care for the child.
  • Placement of a child with the employee for adoption or foster care.
  • To care for the employee’s spouse, child or parent who has a serious health condition.
  • A serious health condition that makes the employee unable to do the functions of their position.
  • Any qualifying exigency due to an employee’s spouse, child or parent being on covered active duty (or having been notified of an impending call or order to cover active duty) in the armed forces.
  • To care for a service member who’s the employee’s spouse, child, parent or next of kin.

The credit is a percentage of the amount of wages paid to a qualifying employee while on family and medical leave for up to 12 weeks per taxable year. The applicable percentage falls within a range from 12.5% to 25%. An employer can claim credit only for leave taken after the written policy is in place, and the credit is scheduled to now expire December 31, 2025.

Form 8994 and its instructions have been updated to reflect the extension through 2025 and to explain that wages used to determine COVID-19-related employment credits cannot also be used to determine these credits. In addition, the IRS states that Form 8994 and its instructions will no longer be updated annually. Rather, updates will occur only when necessary.

Employers seeking to claim this credit should work with their accountants or tax professionals to do so.

Form 8994 »
Form 8994 Instructions »

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Ninth Circuit Addresses Fiduciary Duty to Notify Employees of Life Insurance Conversion Rights

February 17, 2021

In Estate of Foster v. Am. Marine Servs. Grp. Benefit Plan, et al., (9th Cir. February 9, 2021), the U.S. Court of Appeals for the Ninth Circuit held that an employer’s obligation to notify a participant of life insurance conversion rights is not necessarily satisfied by furnishing an SPD. Rather, ERISA fiduciary obligations may warrant further explanation under the circumstances.

The case involves ERISA claims brought by the spouse of a deceased employee against his former employer and group life insurance plan sponsor. While employed, the participant was entitled to life insurance coverage under the group plan. Sadly, the participant was diagnosed with terminal esophageal cancer and was later laid off. The employer subsequently assisted the participant with filing for long-term disability benefits. The participant was also permitted to remain on the employer’s payroll for a period of time, using previously accrued paid time off. During this interval, the employer continued to pay for the participant’s group life insurance coverage.

The terms of the group life insurance plan allowed the participant to convert the policy to individual coverage and pay the premiums once the employer provided coverage ended. Under normal circumstances, this conversion was permitted within a 31-day period following the occurrence of specific events. The conversion right was disclosed in the insurance certification and SPD, which were indisputably provided to the participant. However, the participant never converted the group life insurance coverage to an individual policy.

Upon the participant’s death, the spouse (as named beneficiary) filed a claim for life insurance benefits with the group health plan’s insurer. The insurer denied the claim, citing the lapse in coverage due to the participant’s failure to convert the group life insurance coverage to an individual policy within the required timeframe.

Following this denial, the spouse alleged that the employer had violated its ERISA fiduciary obligations (amongst other charges) by failing to timely provide adequate notice of the conversion rights to her husband. The district court ruled that the employer had fulfilled the required notice obligations by providing the participant with an SPD that explained the conversion rights.

On appeal, the Ninth Circuit reversed, holding that the employer’s ERISA notification obligations were not limited to the SPD distribution. The court also observed that the plan policy and SPD did not clearly explain when the participant’s conversion rights commenced under these circumstances. Additionally, the terms provided an exception in the event of total disability, which allowed for continuation of the coverage without premium payments. Furthermore, the employer was aware of the participant’s grave circumstances. As a result, the court held that the employer was not entitled to summary judgment because questions of material fact existed as to whether the participant received sufficient notice that the life insurance coverage would end if he did not convert the policy to an individual one within a specific timeframe. The Ninth Circuit remanded the case back to the district court for further proceedings.

Employers who sponsor ERISA group life insurance plans should be aware of the ruling. Although this decision is most relevant to employers within the Ninth Circuit’s jurisdiction, other courts have adopted similar expansive views of ERISA fiduciary notice obligations. Therefore, employers may want to review their group life insurance plan administrative procedures, SPDs and communications to ensure that applicable conversion rights and deadlines are sufficiently and accurately disclosed.

Estate of Foster v. Am. Marine Servs. Grp. Benefit Plan, et al. »

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Seventh Circuit Holds USERRA Rights and Benefits May Include Paid Leave

February 17, 2021

On February 3, 2021, the U.S. Court of Appeals for the Seventh Circuit addressed the issue of whether the USERRA requires an employer to provide paid military leave to the same extent that it provides paid leave for other absences. In White v. United Airlines, Inc., No. 19-2546 (7th Cir. 2021), the court held that paid leave fell within the rights and benefits defined by USERRA, reversing the district court’s prior ruling.

Congress passed USERRA in 1994 with the goal of prohibiting civilian employers from discriminating against employees because of their military service. USERRA mandates that employees on military leave be accorded the same non-seniority rights and benefits as employees on comparable, nonmilitary leaves, such as jury duty and sick leave. Although USERRA defines “rights and benefits” broadly, it was unclear whether this language was intended to encompass paid leave. Lower court opinions on this matter have varied; White is the first case to be reviewed on the appellate level.

In White, an airline pilot employed by United Airlines also served in the U.S. Air Force on reserve duty. The reserve duty requires his attendance at periodic military training sessions, for which he took short-term leave that was unpaid by United. However, under United’s collective bargaining agreement, pilots were entitled to pay for other types of short-term leave, including sick leave and jury duty. Additionally, United sponsored a profit-sharing plan that provided credits based upon the pilots’ wages; accordingly, pilots did not receive credits for military leave periods.

In the class action suit, White alleged that United’s failure to provide the paid leave and profit-sharing plan credit to reservists on military leave was a denial of “rights and benefits” in violation of USERRA. The complaint was dismissed by the district court, which held that interpreting USERRA to require paid leave would create a burden on employers not envisioned by Congress. Additionally, in the district court’s view, jury duty and sick leave were not comparable to short-term military leave for purposes of determining any entitlement to rights and benefits under USERRA because the military leave was voluntary.

The Seventh Circuit reversed, holding that employees on military leave must be given the same rights and benefits as comparable employees taking nonmilitary leave, with paid leave falling within such rights and benefits encompassed by USERRA. In an opinion largely focused upon statutory language, the court observed that USERRA’s definition of “rights and benefits” captures all “terms, conditions, or privileges,” of employment, with no express limitations. Therefore, an employer’s policy of paying employees during a leave of absence is such a term, condition or privilege of employment. The court rejected United’s position that USERRA limited rights and benefits to work performed for the employer. The court also dismissed United’s arguments that requiring payment of wages and benefits for military leave would result in increased payroll costs, noting that USERRA does not specify how generous an employer’s paid leave policy must be; it only requires equitable treatment for military leave.

As a result, the class action suit for paid leave and related profit-sharing credits was remanded back to the lower court for determination of whether the military leave was comparable to other types of employer-provided paid leave. For purposes of this assessment, the district court was directed to focus upon the leave duration, giving consideration to the leave’s purpose and the employee’s ability to control the leave timing (as opposed to the voluntary nature of the leave).

Employers should be aware of this holding and understand that short-term paid military leave may be required under USERRA, if paid leave is provided for comparable non-military absences. Employers, particularly those with reservist workforces within the Seventh Circuit’s jurisdiction, may want to review their military leave policies with counsel to determine if changes are advisable following this decision.

White v. United Airlines, Inc. »

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DOL Reports 2020 Mental Health Parity Enforcement Actions

February 17, 2021

The DOL and CMS recently released the 2020 Mental Health Parity and Addiction Equity Act (MHPAEA) Enforcement Fact Sheet and Appendix. The fact sheet summarizes regulatory investigations and public inquiries related to MHPAEA during fiscal year (FY) 2020.

The DOL’s Employee Benefits Security Administration (EBSA) enforces Title I of ERISA with respect to 2.5 million private employment-based group health plans. The EBSA’s approximately 350 investigators review welfare benefit plans for compliance with ERISA, including the MHPAEA provisions. The Centers for Medicare & Medicaid Services (CMS) enforces applicable provisions of the Public Health Service Act (PHS Act), including MHPAEA provisions, with respect to nonfederal governmental group health plans, such as plans for employees of state and local governments. CMS also performs market conduct examinations, where issuers are audited for compliance with applicable federal requirements in states where CMS is responsible for enforcement and in states with a collaborative enforcement agreement. EBSA and CMS annually release the MHPAEA enforcement fact sheets and related reports, summarizing enforcement activities in each fiscal year.

The 2020 reports indicate that the categories of investigated MHPAEA violations included:

  • Annual dollar limits.
  • Aggregate lifetime dollar limits.
  • Benefits in all classifications (i.e., requirement that if a plan or issuer provides mental health or substance use disorder benefits in any classification described in the MHPAEA final regulations, mental health or substance use disorder benefits must be provided in every classification in which medical/surgical benefits are provided).
  • Financial requirements (e.g., deductibles, copayments, coinsurance or out-of-pocket maximums).
  • Quantitative treatment limitations (QTLs), such as limits on benefits based on the frequency of treatment, number of visits, days of coverage or days in a waiting period, and non-quantitative limitations (NQTLs) that otherwise limit the scope or duration of treatment.
  • Cumulative financial requirements and QTLs: financial requirements and treatment limitations that determine whether or to what extent benefits are provided based on certain accumulated amounts.

The regulators also reviewed situations involving MHPAEA claims processing and disclosure violations.

The reported statistics show that EBSA closed 180 health plan investigations in FY 2020, 127 of which involved plans subject to MHPAEA, and thus were reviewed for related compliance. Twenty-five of these MHPAEA investigations involved fully insured plans, 86 involved self-insured plans, and 16 involved plans of both types (the plan offered both fully insured and self-insured options). EBSA cited eight MHPAEA violations in four investigations, all of which involved self-funded group health plans. The cited violations involved four QTLs, two NQTLs and two failures to offer benefits in all classifications.

Illustrations of actual violations are also provided. For example, one investigation uncovered a plan that imposed a waiting period before participants qualified for substance use disorder benefits but imposed no comparable eligibility requirement for medical/surgical benefits. EBSA benefits advisors also answered 99 public inquiries, including 92 complaints, in FY 2020 related to MHPAEA.

CMS cited one MHPAEA violation as a result of a market conduct examination involving an issuer that provided third-party administrative services to self-funded non-federal governmental plans. The exam resulted in a total of $651,103.71 in additional benefits for participants of both the issuer’s insured plans and the self-funded non-federal governmental plans.

The report explains that investigators who find violations generally require the plan to remove any non-compliant plan provisions and pay any improperly denied benefits. In addition, the investigators work with the plan service providers (such as TPAs) to obtain broad correction, not just for the plan(s) investigated, but for other plans that work with that service provider.

The fact sheet is accompanied by an introductory page and an appendix. The introduction notes that the EBSA’s 2021 MHPAEA enforcement initiative will focus on several areas. The focus areas include: 1) the processes for determining whether provider reimbursement rates might indicate a MHPAEA violation; 2) the accuracy of provider network directories; and 3) treatment limitations regarding autism spectrum disorder. The appendix references the available guidance to address each FY 2020 category of violation committed.

Employers should be aware of the release of the fact sheet and related appendix. These materials provide insights regarding the types of MHPAEA violations upon which the regulators are focusing. Employers can then review their own plans for compliance in these areas.

FY 2020 MHPAEA Enforcement »
An Introduction: DOL MHPAEA FY 2020 Enforcement Fact Sheet »
FY 2020 MHPAEA Enforcement Fact Sheet Appendix »

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DOL Reports ERISA Enforcement Statistics for Fiscal Year 2020

February 17, 2021

In a DOL fact sheet, the agency announced that over $3.1 billion was recovered from enforcement of ERISA by the Employee Benefits Security Administration (EBSA) through investigations, complaint resolution and other enforcement efforts for fiscal year 2020.

The EBSA’s oversight extends to almost 722,000 retirement plans and approximately 2.5 million health plans, among other welfare benefits plans. The fact sheet explains that over $2.6 billion was recovered through investigations, and $456.3 million was restored to workers through informal complaint resolution. Of EBSA’s 1,122 civil investigations, over 65% resulted in monetary or other corrective action. Non-monetary corrective action ranged from removal of a plan fiduciary to implementation of new plan procedures.

Where voluntary compliance efforts do not come to fruition, EBSA refers cases to the Solicitor of Labor. In fiscal year 2020, the agency referred 82 cases to litigation. In addition, EBSA closed 230 criminal cases resulting in 59 guilty pleas or convictions and 70 individuals indicted.

As demonstrated by the data summarized in the fact sheet, ERISA enforcement remains robust. Employers should take note of EBSA’s increased enforcement activity and should be mindful of this information when formulating and administering their own ERISA compliance.

DOL Fact Sheet »

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IRS Updates FAQ on FFCRA Tax Credits

February 02, 2021

On January 29, 2021, the IRS released updated FAQs on FFCRA paid sick leave and family leave tax credits. The COVID-related Tax Relief Act of 2020 (included in the Consolidated Appropriations Act of 2021) extends employers' ability to apply for such credits through March 31, 2021, and the FAQ updates incorporate that change.

The FFCRA included provisions mandating employers with less than 500 employees to provide paid leave to employees who are unable to work or telework due to certain COVID-19-related reasons. To offset the financial burden to covered employers, the FFCRA provides for federal tax credits to fund the leave payments. Originally, the credits applied to qualified leave payments made between April 1, 2020, and December 31, 2020. However, the COVID-related Tax Relief Act of 2020 extends employers' ability to continue to provide paid leave under the FFCRA through March 31, 2021.

This is optional for employers; however, if they do provide such leave, then they can apply for the tax credits available under the FFCRA for leave granted under the extension. Eligible employers can receive a tax credit for the full amount of the paid sick leave and family leave (which includes related health plan expenses and the employer's share of Medicare tax) on the leave provided through March 31, 2021.

Eligible employers can claim these tax credits via Form 941, Employer’s Quarterly Federal Tax Return. Alternatively, employers can benefit by reducing their federal employment tax deposits; however, they should consult with their tax advisors before doing so.

Employers should be aware of these developments and review the updated guidance when applying for available tax credits mentioned above.

IRS News Release »
IRS COVID-19 Related Tax Credits for Required Paid Leave Provided by Small and Midsize Businesses FAQs »

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DOL Announces 2020 Adjustments to ERISA Penalties

February 02, 2021

On January 14, 2021, the DOL published a final rule adjusting civil monetary penalties under ERISA. The annual adjustments relate to a wide range of compliance issues and are based on the percentage increase in the consumer price index for all urban consumers (CPI-U) from October of the preceding year. The DOL last adjusted certain penalties under ERISA in January of 2020.

Highlights of the penalties that may be levied against sponsors of ERISA-covered plans include:

  • Failure to file Form 5500 maximum penalty increases from $2,233 to $2,259 per day that the filing is late
  • Failure to furnish information requested by the DOL penalty increases from $159 to $161 maximum per day
  • Penalties for a failure to comply with GINA and a failure to provide CHIP notices increases from $119 to $120 maximum per day
  • Failure to furnish SBCs penalty increases from $1,176 to $1,190 maximum per failure
  • Failure to file Form M-1 (for MEWAs) penalty increases from $1,625 to $1,644 per day

These adjusted amounts are effective for penalties assessed after January 15, 2021, for violations that occurred after November 2, 2015. The DOL will continue to adjust the penalties no later than January 15 of each year and will post any changes to penalties on their website.

To avoid the imposition of penalties, employers should ensure ERISA compliance for all benefit plans and stay updated on ERISA’s requirements. For more information on the new penalties, including the complete listing of changed penalties, please consult the final rule below.

Final Rule »

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