The Washington Report

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April 14, 2021

Note to subscribers: Due to the current environment, information is changing at a rapid rate. While we do our best to provide timely updates, it is possible that the information shared in the newsletter may change or be revised after our publication deadline. Stay healthy and safe! ~The Washington Report team

Health

EBSA Issues Guidance on ARPA’s COBRA Premium Assistance Provisions
On April 7, 2021, the Employee Benefits Security Administration (EBSA) of the Department of Labor (DOL) issued guidance implementing the continuation of health coverage premium assistance provisions in the American Rescue Plan Act (ARPA) to provide full COBRA premium assistance to certain individuals who have experienced a reduction in hours or involuntary termination of employment. ARPA provides a 100% premium subsidy—between April 1, 2021, and September 30, 2021—for individuals whose reduction in hours or involuntary termination of employment makes them eligible for COBRA continuation coverage during this period.

The guidance includes:

• Frequently Asked Questions (FAQs) on COBRA premium assistance under ARPA;
• Model General Notice and COBRA Continuation Coverage Election Notice;
• Model Notice in Connection with Extended Election Period;
• Model Alternative Notice;
• Model Notice of Expiration of Premium Assistance; and
• A summary of the COBRA premium assistance provisions under ARPA.

For additional information, please refer to DOL Issues Model COBRA Notices and FAQs for ARPA’S COBRA Subsidies in the Publications section of this newsletter.

EBSA’s notice of the availability of the model health care continuation coverage notices, as published in the Federal Register, is available here.

The news release is available here.

The guidance is available here.

Departments Issue FAQs on Comparative Analyses Required Under Appropriations Act Amendments to MHPAEA
On April 2, 2021, the DOL, Health and Human Services (HHS), and the Treasury (collectively, the Departments) issued FAQs on amendments made to the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) by the Consolidated Appropriations Act, 2021 (Appropriations Act). The Appropriations Act, which was enacted on December 27, 2020, requires group health plans and health insurance issuers offering group or individual health insurance coverage that offer both medical/surgical benefits and mental health or substance abuse (MH/SUD) disorder benefits and that impose non-quantitative treatment limitations (NQTLs) on MH/SUD benefits to perform and document comparative analyses of the design and application of NQTLs.

To assist plans and issuers in complying with the analyses requirements added by the Appropriations Act, the Departments answer nine questions in the document, including:

• When must plans and issuers make available their NQTL comparative analyses, as required by the Appropriations Act?
• What information must plans and issuers make available in response to the Departments’ requests for documentation of their comparative analyses?
• What are examples of reasons why the Departments might conclude that documentation of comparative analyses of NQTLs is insufficiently specific and detailed?
• What actions will the Departments take if they determine that a plan or issuer has not submitted sufficient information to review comparative analyses of the design and application of NQTLs, or if the Departments conduct a review and determine that a plan or issuer is not in compliance with MHPAEA?
• Are there specific NQTLs that the Departments intend to focus on when requesting comparative analyses from plans and issuers for purposes of review in accordance with the requirements of the Appropriations Act?

For additional information, please refer to Departments Issue FAQs on Mental Health Parity Compliance in the Publications section of this newsletter.

The guidance, “FAQs About Mental Health And Substance Use Disorder Parity Implementation and The Consolidated Appropriations Act, 2021 Part 45,” is available here.

Retirement

IRS’s TE/GE Updates Webpage for New Employee Plans Initiatives
On April 5, 2021, the Tax Exempt & Government Entities (TE/GE) division of the Internal Revenue Service (IRS) updated its Compliance Program and Priorities webpage to announce new initiatives in the compliance strategies component of its compliance program involving small exempt organizations that sponsor retirement plans, one-participant 401(k) plans, and worker classification. The IRS also announced a new initiative in the compliance contacts component of its compliance program involving plan liabilities and unrelated business income.

The TE/GE Compliance Program and Priorities webpage is available here.

Other HR/Employment

IRS Provides Guidance on Temporary 100% Deduction for Business Meal Expenses
On April 8, 2021, the Internal Revenue Service (IRS) released Notice 2021-25, which provides guidance regarding the temporary 100% deduction for expenses that are paid or incurred in 2021 and 2022, for food or beverages provided by a restaurant. In particular, the Notice explains when the temporary 100% deduction applies and when the 50% limitation continues to apply for purposes of Section 274 of the Internal Revenue Code.

IRS Notice 2021-25 is available here.

IRS Issues Employee Retention Credit Guidance for First Two Calendar Quarters of 2021
On April 2, 2021, the IRS released guidance (Notice 2021-23) for employers claiming the employee retention credit under the Coronavirus Aid, Relief, and Economic Security Act, as modified by the Taxpayer Certainty and Disaster Tax Relief Act of 2020, for qualified wages paid after December 31, 2020, and before July 1, 2021. In Notice 2021-23, the IRS explains changes to the employee retention credit for the first and second calendar quarters of 2021, including:

• The increase in the maximum credit amount;
• The expansion of the category of employers that may be eligible to claim the credit;
• Modifications to the gross receipts test;
• Revisions to the definition of qualified wages; and
• New restrictions on the ability of eligible employers to request an advance payment of the credit.

The news release is available here.

IRS Notice 2021-23 is available here.

Aon Publications

DOL Issues Model COBRA Notices and FAQs for ARPA’S COBRA Subsidies
The Department of Labor (DOL) has issued frequently asked questions (FAQs) and model notice language to guide employers in implementing the COBRA subsidy provisions of the American Rescue Plan Act (ARPA). ARPA provides temporary COBRA subsidies for employees who are involuntarily terminated (other than for gross misconduct) or experience a reduction in hours. The COBRA subsidy amount is 100% of the cost of COBRA coverage and is available from April 1, 2021, to September 30, 2021.

The Aon bulletin is available here.

Departments Issue FAQs on Mental Health Parity Compliance
On April 2, 2021, the Departments of Labor, Health and Human Services, and the Treasury (collectively, the Departments) released additional FAQs guidance related to the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). This guidance is intended to provide additional information to employers and stakeholders on the enhanced MHPAEA requirements that were included in the Consolidated Appropriations Act, 2021, signed into law late in 2020 related to non-quantitative treatment limits.

The Aon bulletin is available here.

Raising the DCSA Limit Creates Testing Issues for Employers
The ARPA gives employers the option to raise the 2021 limit on contributions to dependent care spending accounts (DCSAs) to as much as $10,500. Employers that exercise this option, however, should consider the potential impact to the nondiscrimination tests that DCSA plans must pass annually to retain the tax-qualified status of the DCSA.

This Aon bulletin discusses:

• ARPA’s rules on the increased DCSA limit;
• The impact on the Utilization Test;
• The impact on the Eligibility Test; and
• Designing a mid-year increase.

The Aon bulletin is available here.