On August 12, 2021, the DOL announced that United Behavioral Health and United Healthcare Insurance Co. (collectively “United”) settled a lawsuit initiated by the agency and the New York State Attorney General’s Office. The suit was initiated after the Employee Benefits Security Administration investigated United based on allegations that, since at least 2013, United “reduced reimbursement rates for out-of-network mental health services, thereby overcharging participants for those services, and flagged participants undergoing mental health treatments for a utilization review, resulting in many denials of payment for those services.” United agreed to pay $13.6 million to affected participants and beneficiaries; pay $2,084,249 in penalties; and take other corrective action to resolve the dispute.

The agency stated that the allegations against United are violations of the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). The MHPAEA prohibits ERISA plans from imposing treatment limitations on mental health and substance use disorder benefits that are more restrictive than the treatment limitations they impose on medical and surgical benefits. As a result of these violations, participants and beneficiaries of ERISA plans did not receive the mental healthcare that they were entitled to. In addition, United failed to provide sufficient information about what it did to these plans.

In addition to paying restitution and penalties, United agreed to stop following the procedures that resulted in the alleged violations. United used an algorithm called the ALERT system that would deny claims if a clinical review determined that a utilization review was needed because the claim was for a product or service deemed medically unnecessary. United’s use of the ALERT process led to the denial of the mental healthcare claims at issue in the case.

The settlement highlights the focus that the agency is placing on violations of the MHPAEA, particularly violations involving reimbursement rates. Employers should be aware of these developments and work with their carriers and TPAs to ensure that they are in compliance with the law.

DOL Press Release »
Settlement Agreement »

Source: NFP BenefitsPartners

On July 26, 2021, the HHS and DOJ jointly released guidance on long COVID as a disability under the Americans with Disabilities Act (ADA), Section 504 of the Rehabilitation Act, and Section 1557 of the ACA. These federal laws protect people with disabilities from discrimination.

The guidance recognizes that some people continue to experience symptoms that can last weeks or months after first being infected with COVID-19, or some may develop new or recurring symptoms at a later time. The guidance describes this condition as “long COVID.”

The guidance states that “a person with long COVID has a disability if the person’s condition or any of its symptoms is a ‘physical or mental’ impairment that ‘substantially limits’ one or more major life activities.” “Major life activities” are defined broadly and includes performing manual tasks, thinking, communicating and working. The term also includes the operation of a major bodily function — for instance, the functions of the cardiovascular system or neurological system.

If an individual’s long COVID is qualified as a disability, then they are entitled to the same protections from discrimination as any other person with a disability under the respective laws noted earlier, including reasonable modifications and accommodations in certain circumstances.

At this time, it is not explicitly described how this new guidance will affect employee benefit matters. However, this guidance will likely reinforce the EEOC’s COVID-19 related rules. Moreover, employers should consider this guidance when designing and providing wellness programs and benefit plans in order to avoid any discrimination concerning long COVID.

We anticipate that we will have more tangible applications of this guidance for employee benefit purposes through the additional insights from the agencies or through the industry response to the guidance. We will continue to monitor developments relating to the potential impact on employee benefits and provide key updates as they become available.

Guidance on “Long COVID” as a Disability Under the ADA, Section 504, and Section 1557 »
HHS Press Release »

Source: NFP BenefitsPartners

On July 26, 2021, the Congressional Research Service (CRS) issued Surprise Billing in Private Health Insurance: Overview of Federal Consumer Protections and Payment for Out-of-Network Services. The report aims to answer questions about the No Surprises Act (the Act), including its requirements and consumer protections.

As background, the Act was initially part of the CAA passed by Congress in late 2020. Recently, federal agencies issued interim final rules implementing the Act’s requirements. For more information on the Act and the interim final rules, see the article published in the July 7, 2021, Compliance Corner edition, “Federal Agencies Issue Interim Final Rules Implementing the No Surprise Billing Act”.

The CRS report reiterates that federal requirements address surprise billing in specific scenarios:

**Out-of-network emergency services.
**Out-of-network services provided to a consumer during an outpatient observation stay or an inpatient or outpatient stay during emergency services.
**Out-of-network nonemergency, ancillary and non-ancillary services provided at an in-network facility.
**Out-of-network air ambulance services.
**Services scheduled at least three business days in advance.
**Out-of-network services from a provider that initially was in network but subsequently became out of network during treatment (i.e., continuity of care).
**Out-of-network services from a provider that the consumer assumed was in network based on incorrect information from the plan.

Further, the CRS explains that the consumer protections take one of two forms, financial protection, and informational protection (via consumer notices), and protections will vary depending on the situation. The report elaborates on the specific protections based on the surprise billing scenario, among other related topics such as enforcement of surprise billing requirements and the interaction with state surprise billing laws. While the report does not provide new guidance, it does elaborate on the Act’s requirements which will soon be effective.

Employers should reference this report to better understand the Act, as its requirements and the interim final rules are applicable to group health plans and health insurance issuers for plan and policy years beginning on or after January 1, 2022.

CRS Report »

Source: NFP BenefitsPartners

On July 26, 2021, the IRS issued Notice 2021-46, which lists 11 more FAQs concerning the COBRA premium assistance requirements under the American Rescue Plan Act of 2021 (ARPA). These FAQs provide additional clarification on the following topics: eligibility for premium assistance in cases of extended coverage periods, dental and vision coverage, the applicability of premium assistance to certain kinds of state continuation coverage, and additional discussion concerning which entity is entitled to claim the premium subsidy tax credit.

Extended Coverage Periods
FAQ #1 provides that if an individual had not notified the plan or insurer of the intent to elect extended COBRA continuation coverage before the start of that period but would qualify for COBRA continuation coverage for an extended period due to a disability determination, second qualifying event, or an extension under State mini-COBRA, then that individual is entitled to premium assistance. However, the original qualifying event must have been either a reduction in hours or an involuntary termination of employment. In addition, premium assistance is available only to the extent the extended period of coverage falls between April 1, 2021, and September 30, 2021.

Dental and Vision Coverage
FAQ #2 states that eligibility for COBRA premium assistance ends when the assistance eligible individual (AEI) becomes eligible for coverage under any other disqualifying group health plan or Medicare, even if the other coverage does not include all the benefits provided by the previously elected COBRA continuation coverage. If the AEI had dental or vision coverage through COBRA, and enjoyed the premium assistance provided under the ARPA, that AEI will lose the assistance if they become eligible for group health coverage or Medicare, even if that group health coverage or Medicare does not provide dental or vision coverage.

Limited State Continuation Coverage
FAQ #3 concerns state continuation coverage programs that apply only to a subset of state residents, such as state or local government employees. A state program does not fail to provide comparable coverage to federal COBRA continuation coverage solely because the program covers only a subset of state residents if the program provides coverage otherwise comparable to federal COBRA.

Entities That Can Claim the Premium Subsidy Tax Credit
FAQ #4 provides guidance on determining which entity is the “common law employer” that maintains the plan subject to COBRA coverage. The FAQ states that the common law employer maintaining the plan is the current common law employer for AEIs whose hours have been reduced or the former common law employer for those AEIs who have been involuntarily terminated from employment, which, in both cases, serves as the basis for the AEI’s eligibility for COBRA continuation coverage.

FAQ #5 deals with the situation wherein state continuation is applied in conjunction with federal COBRA and the state continuation program continues to run after the federal COBRA coverage period is exhausted. In that circumstance, the entity that can claim the premium subsidy credit is the common law employer, even if the state-mandated continuation coverage would require the AEI to pay the premiums directly to the insurer after the period of federal COBRA ends. Generally, in fully insured plans subject to state continuation coverage requirements, the carrier will be the entity entitled to claim the tax credit, so the new guidance describes a specific set of circumstances where that may not be the case.

FAQ #6 deals with plans that cover one or more members of a controlled group. If a plan (other than a multiemployer plan) subject to federal COBRA covers employees of two or more members of a controlled group, this FAQ states that each common law employer that is a member of the controlled group is the entity entitled to claim the COBRA premium assistance credit with respect to its employees or former employees. Although all the members of a controlled group are treated as a single employer for employee benefit purposes, each member is a separate common law employer for employment tax purposes. FAQ #8 deals with a potential exception to this principle.

FAQ #7 deals with group health plans (other than multiemployer plans) subject to federal COBRA that cover employees of two or more unrelated employers. This FAQ provides that under this circumstance, the entity entitled to claim the premium assistance credit is the common law employer.

FAQ #8 deals with a potential exception to the principle discussed in FAQ #7 as it pertains to third-party payers. A “third-party payer” for this purpose was defined under previous guidance as an entity that pays wages subject to federal employment taxes and reports those wages and taxes on an aggregate employment tax return that it files on behalf of its client(s). An example of a third-party payer is a PEO. Under previous guidance, a third-party payer can claim the premium tax credit if it: 1) maintains the group health plan, 2) is considered the sponsor of the group health plan and is subject to the applicable DOL COBRA guidance, including providing the COBRA election notices to qualified beneficiaries, and 3) would have received the COBRA premium payments directly from the AEIs were it not for the COBRA premium assistance.

FAQ #8 states that an entity that provides health benefits to employees of another entity, but it is not a third-party payer of those employees’ wages, will be treated as a third-party payer entitled to the premium assistance tax credit as described in the previous guidance.

FAQ #9 deals with stock sales and assets sales between entities, in which the selling group remains obligated to make COBRA continuation coverage available to the individuals who became qualified beneficiaries because of the sale. In these cases, the FAQ states that the entity in the selling group that maintains the group health plan is the entity entitled to claim the COBRA premium assistance credit, even if the buying group becomes the common law employer after the sale (if the buyer is not obligated to make COBRA continuation coverage available to AEIs).

FAQ #10 covers state agencies that maintain the health plans for other state agencies in the same state government. The FAQ states that if a state agency is obligated to make COBRA continuation coverage available to employees of various agencies of the state and local governments within the state, and the AEIs would have been required to remit COBRA premium payments directly to the state agency were it not for the COBRA premium assistance, the state agency is the entity entitled to claim the COBRA premium assistance credit.

Finally, FAQ #11 deals with employers who offer fully insured plans through a Small Business Health Options Program (SHOP) that are not subject to federal COBRA. Such employers may receive the premium assistance tax credit if certain factors apply:

1. The employer participates in a SHOP exchange that offers multiple insurance choices to employees enrolled in the same small group health plan
2. The SHOP exchange provides the participating employer with a single premium invoice, aggregates all premium payments, and then allocates and pays the applicable premium amounts to the insurers
3. The participating employer has a contractual obligation with the SHOP exchange to pay all applicable COBRA premiums to the SHOP exchange
4. The participating employer would have received the state mini-COBRA premiums directly from the AEIs were it not for the COBRA premium assistance.

The FAQ emphasizes that in all other cases of a fully insured plan subject solely to state mini-COBRA, the insurer (and not the common law employer) is the premium payee entitled to the premium assistance credit.

Although only two months remain in the ARPA COBRA premium assistance period, which ends on September 30, 2021, employers should be aware of these new clarifications to the ARPA premium subsidy requirements. Those FAQs that explain which party may claim the tax credit for providing premium assistance in mergers, acquisitions and other complex business arrangements will be particularly useful.

IRS Notice 2021-46 »

Source: NFP BenefitsPartners

On July 9, 2021, the Pension Benefit Guarantee Corporation (PBGC) issued interim final rules and assumptions on special financial assistance (SFA) for multiemployer pension plans, as provided by the American Rescue Plan Act (ARPA). The ARPA authorized PBGC to provide SFA to multiemployer pension plans that are in critical and declining or critical status, were approved to suspend benefits under the Multiemployer Pension Reform Act of 2014, or became insolvent after December 16, 2014, but have not been terminated.

The interim final rule discusses how the SFA amount will be calculated, the order in which plans will be permitted to file SFA applications, details on what must be included in applications, how the PBGC will go about reviewing SFA submissions, and the conditions that will apply to plans that receive the SFA.

In determining eligibility for and the amount of SFA, ERISA generally looks to the plan assumptions previously selected by the actuaries. However, the ARPA also allows plans to propose changes to those assumptions (except for the interest rate) if they are no longer reasonable. The PBGC provided guidance on acceptable assumption changes in PBGC SFA 21-02.

Simultaneously with the release of the interim final rules and assumptions guidance, the IRS released Notice 2021-38 to provide guidance to multiemployer plan sponsors that must reinstate certain previously suspended benefits as a condition of receiving SFA. The guidance also clarifies that make-up benefits paid to individuals as a result of the reinstatement of previously suspended benefits may be paid in a lump sum within three months of the receipt of SFA funds or in equal monthly installments over the five year period beginning three months after the receipt of SFA funds. Additionally, the SFA funds received are not taken into account if a multiemployer plan needs to make certain contributions to avoid funding deficiencies. Finally, the IRS guidance indicated that multiemployer plans with suspended benefits must submit an SFA application to the Department of the Treasury, but this requirement will be satisfied if they send the application to the PBGC.

Multiemployer plan sponsors that will seek to apply for SFA funds should familiarize themselves with this guidance and consult with their counsel and tax advisors in complying with the requirements.

Interim Final Rule »
Special Financial Assistance Assumptions »
IRS Notice 2021-38 »

Source: NFP BenefitsPartners

On July 9, 2021, President Biden signed an executive order instructing various federal agencies to review their regulations and policies with an eye towards encouraging competition, including taking action to reduce healthcare costs.

In addition to other competition concerns, the order focuses on two main sources of rising healthcare costs. The first is the rising cost of prescription drugs. According to the administration, Americans pay at least 2.5 times as much for prescription drugs as peer countries. In order to check these cost increases, the order instructs the FDA to work with states and tribes to safely import prescription drugs from Canada and directs HHS to look for ways to increase support for generic drugs. It also instructs the FDA to issue a comprehensive plan within 45 days to combat high prescription drug prices and price gouging. Further, the order encourages the FTC to ban “pay for delay” and similar agreements (under which drug manufacturers pay generic drug producers to delay releasing cheaper versions of their drugs into the market) by rule.

The second source of rising healthcare costs is hospital consolidation. According to the administration, the ten largest healthcare systems now control a quarter of the market, allowing these systems to set higher prices for the services they provide. Although the previous administration instituted price transparency regulation, hospitals have been slow in complying with them, further obscuring the price increases they charge. The order instructs the FTC and the Justice Department to review and revise their merger guidelines to ensure that patients are not harmed by healthcare system mergers, and directs HHS to support existing hospital price transparency rules and to finish implementing surprise billing regulations.

Also of note is the order’s direction to HHS to propose rules within 120 days that allow hearing aids to be sold over the counter. HHS is also instructed to standardize plan options in the federal insurance marketplace so that people can comparison shop more easily.

Employers should be aware of these upcoming regulatory efforts to curb costs, which may impact healthcare plan premium rates.

Executive Order on Promoting Competition in the American Economy »
Fact Sheet »

Source: NFP BenefitsPartners

On June 30, 2021, the IRS issued Notice 2021-42, which extends certain tax relief originally provided in Notice 2020-46. Under Notice 2020-46, which was issued on June 11, 2020, cash payments that employers make to qualified tax-exempt organizations for the relief of victims of the COVID-19 pandemic in exchange for vacation, sick or personal leave that their employees elect to forgo will not be treated as income to the employees. In addition, employees electing to forgo leave will not be treated as having constructively received gross income or wages (or compensation, as applicable). The relief provided under Notice 2020-46 applied to payments made before January 1, 2021.

Notice 2021-42 extends this relief to the end of 2021. Employers who have instituted such plans should be aware of this extension.

Notice 2021-42 »
Notice 2020-46 »

Source: NFP BenefitsPartners

On July 1, 2021, HHS, the DOL and the Treasury Department released interim final rules implementing the No Surprise Billing Act (the Act) that was part of the CAA passed by Congress in late 2020. An interim final rule is a rule that an agency promulgates when it finds that it has good cause to issue a final rule without first issuing a proposed rule. Although interim rules are often effective as of the date of their publication, they will have a comment period after which the interim rule may be amended in response to public comments. In this case, the interim final rules are effective 60 days from the date they are published in the Federal Register. The 60 days serve as the comment period for the interim final rules.

Note that when this summary refers to a “plan” it includes group health plans, as well as health insurance issuers offering group or individual health insurance.

Services and Providers Affected by the Act and Interim Final Rules

The Act addresses situations wherein a person covered by a health plan receives services from providers who are not in the plan’s network. In those circumstances, the out-of-network provider may bill the patient the difference between the amount the provider charges for the service and the amount the health plan will pay for that service, a practice called “balance billing.” This often happens when a patient receives emergency care (and post-stabilization care) and is not able to choose who provides them care, but it also happens when out-of-network providers provide services in network facilities (such as hospitals and ambulatory surgical centers) and when a patient is delivered to a hospital via air ambulance. These bills can be very expensive and come as a surprise to the patient, who may have thought that the health plan covered everything. The Act and the rules impose requirements addressing these services and circumstances.

Preventing Surprise Billing

The Act and these interim final rules tackle this problem in several ways. First, they require plans that provide or cover any benefits for emergency services to cover those services without any prior authorization and regardless of any other term or condition of the plan or coverage other than the exclusion or coordination of benefits, or a permitted affiliation or waiting period. In addition, plans must cover these services regardless of whether the provider is an in-network provider or an in-network emergency facility.

The rules also prohibit balance billing for items and services covered under the Act. Specifically, there can be no balance billing for emergency services, air ambulance services provided by out-of-network providers, and nonemergency services provided by out-of-network providers at in-network facilities in certain circumstances.

Determining Consumer Cost-Sharing Amounts

For the out-of-network services covered under the Act cost sharing that is greater than in-network levels is prohibited and such cost sharing must count toward any in-network deductibles and out-of-pocket maximums.

The rule provides a method by which plans determine how much a participant must contribute towards the services covered under the Act. The amount will be determined in one of three ways. First, the plan must look to the applicable All-Payer Model Agreement, which is the agreement between CMS and a state to implement systems of all-payer payment reform for the medical care of residents of the state by allowing Medicare, Medicaid and private insurers to pay the same price for services to hospitals in that state. Second, if there is no such applicable All-Payer Model Agreement, then the plan must look to state law. Finally, if there is no state law or All-Payer Model Agreement, the plan must charge the lesser amount of either the billed charge or the qualifying payment amount, which is generally the plan’s median contracted rate (note that this is the method for determining the cost sharing amount for air ambulances).

Determining the Amount Plans Pay Out of Network Providers

The rules also provide plans with three methods of determining the amount they must pay out of network providers who provide services to their participants. As described above, the plan must first look to the applicable All-Payer Model Agreement and, if no such agreement exists, to applicable state law. If neither option is available, then the plan and the out-of-network provider must come to an agreement regarding the price. If they cannot agree, then they go through an informal dispute resolution process (IDR) to determine the amount. The agencies plan to issue additional rules describing the IDR at a future date.

Note that in cases where the plan must pay the bill before the participant meets their deductible, the plan must pay the provider or facility the difference between the out-of-network rate and the cost-sharing amount (the latter of which in this case would equal the amount of either the billed charge or the qualifying payment amount, which is generally the plan’s median contracted rate), even in cases where the participant has not satisfied their deductible.

In an example provided in the interim rules, an individual is enrolled in a high deductible health plan with a $1,500 deductible and has not yet accumulated any costs towards the deductible at the time the individual receives emergency services at an out-of-network facility. The plan determines that the recognized amount for the services is $1,000. Because the individual has not satisfied the deductible, the individual’s cost-sharing amount is $1,000, which accumulates towards the deductible. The out-of-network rate is subsequently determined to be $1,500. Under the requirements of the statute and these interim final rules, the plan is required to pay the difference between the out-of-network rate and the cost-sharing amount. Therefore, the plan pays $500 for the emergency services, even though the individual has not satisfied the deductible. The individual’s out-of-pocket costs are limited to the amount of cost sharing originally calculated using the recognized amount (that is, $1,000). Even though such payments would normally cause a high deductible health plan to lose its status, the Act states that a plan shall not fail to be treated as a high deductible health plan by reason of providing benefits pursuant to the Act.

Notice Requirements

The interim rules provide for two different notice requirements. First, under certain circumstances, an out-of-network provider can provide notice to a person regarding potential out-of-network care, obtain the individual’s consent for that out-of-network care and extra costs, and thereby avoid the procedures under these rules. However, this notice and consent exception does not apply to certain types of providers, even if they are not providing services during an emergency, such as anesthesiology or radiology services provided at an in-network healthcare facility.

The second notice is required to be posted by group health plans and health insurance issuers offering group or individual health insurance coverage. It must be made publicly available, posted on a public website of the plan or issuer, and included in each explanation of benefits. It is one page and must provide information concerning requirements and prohibitions under the Act, any applicable state balance billing limitations or prohibitions, and contact information for appropriate state and federal agencies if someone believes the provider or facility has violated the requirements described in the notice.

The interim final rules are generally applicable to group health plans and health insurance issuers for plan and policy years beginning on or after January 1, 2022. Employers who self-insure their health plans, as well as those covered by fully insured plans, should be aware of these developments.

Interim Final Rules »
Fact Sheet »
Model Notice »

Source: NFP BenefitsPartners

On June 11, 2021, the IRS issued guidance related to the calculation of the employer tax credit for emergency paid sick leave (EPSL) and expanded FMLA (EFMLA). The guidance comes in the form of 123 frequently asked questions.

The FFCRA originally required employers with fewer than 500 employees to provide EPSL to employees who were unable to work (including telework) due to an order of quarantine, having COVID-19 symptoms and seeking medical care, caring for someone with COVID-19, or caring for a child whose school or day care was closed due to COVID-19. EFMLA was only available for absences related to childcare. The requirement was effective April 1, 2020, and extended through December 31, 2020. Then the Consolidated Appropriations Act changed the provision of EPSL and EFMLA to allow employers the option to provide EPSL and EFMLA from January 1, 2021, through March 31, 2021.

Finally, the ARPA extended the option to use the leave to September 30, 2021, and revised the reasons for leave effective April 1, 2021, to include absences related to receiving the COVID-19 vaccination, illness or injury related to receiving the vaccine, and awaiting COVID-19 test results. The reasons for EFMLA were also expanded to match those of EPSL and the 80 hours of EPSL reset on April 1, 2021.

Generally, an employer is eligible for a tax credit equal to paid leave wages, the cost of health insurance coverage allocable to the leave time, certain collectively bargained contributions, and the employer’s share of social security and Medicare taxes associated with the paid wages.

Highlights of the new guidance include:

*How to claim the credit, FAQ #2: Generally, employers claim the tax credit on their quarterly federal employment tax return (Form 941). However, there are two more options available. An employer may reduce their federal employment tax deposits. If there are insufficient federal employment taxes to cover the amount of the credits, an employer may request an advance payment of the credits from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19, for the relevant calendar quarter.
*Collectively bargained contributions, FAQ #11: An employer may receive a tax credit for collectively bargained defined benefit pension plan contributions and collectively bargained apprenticeship program contributions that are properly allocable to qualified leave wages.
*Governmental employers, FAQ #18: Effective April 1, 2021, nonfederal governmental employers are eligible for the tax credit for qualified EPSL and EFMLA. Federal governmental employers remain ineligible for the tax credit.
*US Territories, FAQ #20: Employers in US Territories are eligible for the tax credit assuming that they otherwise qualify as an eligible employer (i.e., fewer than 500 employees).
*Tribal government employers, FAQ #23: Tribal government employers are eligible for the tax credit assuming that they otherwise qualify as an eligible employer.
*Nondiscrimination rules, FAQ #24: An employer who varies eligibility or benefits related to EPSL or EFMLA by favoring full-time employees, highly compensated individuals or those with more tenure would not be eligible for a tax credit.
*Maximum daily limit, FAQ # 34: The maximum daily limit for leave related to the employee’s quarantine, symptoms and vaccination is $511 per day as opposed to the $200 per day limit for leave related to the employee caring for someone else. The daily limit applies to the leave wages and any collectively bargained contributions but does not apply to the allocable qualified health plan expenses or the employer’s share of social security and Medicare taxes.
*Information requested from employee, FAQ #64: An employer may request the following from an employee for an absence related to EPSL or EFMLA: employee’s name, dates of leave, statement describing reason for leave and a statement that the employee is unable to work. If the leave is related to a quarantine, the employer may request the name of the governmental entity or healthcare professional ordering the quarantine. If the leave is related to a school or childcare provider unavailability, the employer may request the name of the child, the name of the school or childcare provider, and a statement that no other suitable person will be providing care during the leave period. For leaves related to receiving a test or vaccination, an employer may request the date of the test or vaccination.
*Timing of wage payment, FAQ #69: Wages paid after September 30, 2021, are still eligible for the credit if the wages paid are related to leave taken between April 1, 2021, and September 30, 2021.
*State and local leave requirements, FAQ #82: If an eligible employer pays wages mandated by a federal, state or local law for leave that otherwise satisfies the requirements of the EPSLA or EFMLA, the employer is entitled to claim tax credits for those wages.

Employers with questions related to the tax credit will find this guidance helpful as it includes many detailed answers and examples.

IRS, Tax Credits for Paid Leave Under the American Rescue Plan Act of 2021 for Leave After March 31, 2021 »

Source: NFP BenefitsPartners

On June 17, 2021, the US Supreme Court issued its opinion in the latest legal controversy surrounding the ACA. In the opinion for California v. Texas, the Supreme Court determined that the challengers to the law lacked standing to bring the case to court. Accordingly, the case concludes without discussion of the legal challenges to the ACA, and the ACA remains the law of the land.

The plaintiffs in this case, including Texas and several other states, two individuals and the Trump Administration, challenged the individual mandate requirements under the ACA (which required US citizens to obtain healthcare coverage or face a penalty). Although previous challenges to the mandate resulted in a 2012 Supreme Court decision that the mandate was the lawful exercise of Congress’ taxing power, the plaintiffs stated that Congress waived that power when it reduced the penalty to $0 in 2017. The plaintiffs argued that without Congress exercising its power to tax, the mandate is unconstitutional. They went even further to say that since the mandate is unconstitutional, the entire ACA is unconstitutional too.

The ACA’s defenders, which included California and several other states and the District of Columbia, argued that the plaintiffs could not bring the case to court because they were not harmed by the mandate, particularly once the penalty was reduced to $0. Although the district and appellate courts disagreed and kept the case alive, the defendants asked the Supreme Court to consider the matter.

The Supreme Court agreed with the defendants. For a case to be considered by a court, the plaintiffs must show that they were harmed by the allegedly unlawful acts of another. The individual plaintiffs argued that they were harmed because the mandate required them to pay for health coverage every month (with money that they would have spent on other things). The state plaintiffs argued that the mandate forced people to enroll in state-run medical insurance programs, directly and indirectly increasing the state’s costs to run those programs. However, the Supreme Court reasoned that the federal government lacked a way to enforce the mandate if the penalty was reduced to $0, so it could not act in a way that would harm the plaintiffs. The individual plaintiffs and the state residents could simply opt not to purchase insurance and experience no repercussions. The Supreme Court also pointed out that some of the administrative expenses that the states complained of were traceable to other sections of the ACA, not the mandate at issue in the case.

Because the plaintiffs could not show that the ACA’s mandate harmed them, the court reversed the lower courts’ judgment regarding standing, vacated the judgment and remanded the case back down to the lower courts with instructions to dismiss the case.

Since the Supreme Court did not rule on any of the underlying constitutional arguments regarding the mandate and other parts of the ACA, the law remains unchanged. For employers, that means continued compliance with the various requirements imposed by the ACA, including offering affordable coverage to all full-time employees (and the related employer reporting).

California, et al. v. Texas, et al. »

Source: NFP BenefitsPartners