The Washington Report
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July 15, 2020
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
Judicial
Supreme Court Allows Religious Employers to Opt Out of ACA-Mandated Contraceptive Coverage
On July 8, 2020, the Supreme Court upheld in a 7–2 decision (Little Sisters of the Poor v. Pennsylvania) federal regulations exempting employers with sincerely held religious or moral objections from the Affordable Care Act’s (ACA’s) mandate to provide coverage with no cost-sharing for contraception in their group health care plans. For additional information, please see SCOTUS Upholds Rules Allowing Religious Employers to Opt Out of ACA Birth Control Mandate in the Publications section of this newsletter.
The Supreme Court opinion is available here.
Health
Departments Release Proposed Rule Allowing Grandfathered Group Health Plans to Increase Some Enrollee Costs
On July 10, 2020, the Departments of Labor, Treasury, and Health and Human Services (the Departments) released a proposed rule to amend the requirements for grandfathered group health plans and grandfathered group health insurance coverage to preserve their grandfather status. The Affordable Care Act (ACA) provides that certain group health plans and health insurance coverage that existed as of the law’s enactment are treated as grandfathered health plans. Grandfathered group health plans are subject to some of the ACA’s requirements, such as the prohibition on preexisting condition exclusions, but are exempt from many others. The proposed rule would amend current rules to provide greater flexibility for certain grandfathered health plans to make changes to certain types of cost-sharing requirements without causing a loss of grandfather status.
According to the news release, based on feedback received in response to a February 2019 request for information, the “Departments are issuing a proposed rule that would provide greater flexibility for grandfathered group health coverage in two ways. First, the proposed rule would clarify that grandfathered group health coverage that is a high-deductible health plan (HDHP) may increase fixed-amount cost-sharing requirements, such as deductibles, to the extent necessary to maintain their status as an HDHP without losing grandfather status. This change would ensure that participants and beneficiaries enrolled in that coverage remain eligible to contribute to a health savings account. Second, the proposed rule provides an alternative method of measuring permitted increases in fixed-amount cost-sharing that would allow plans and issuers to better account for changes in the costs of health coverage over time.”
Comments on the proposed rule are due by August 14, 2020.
The press release is available here.
The proposed rule is temporarily available here. (The proposed rule will be published in the Federal Register on July 15, 2020.)
Retirement
DOL Proposes Guidance on Investment Advice; New Exemption for Fiduciaries
On June 29, 2020, the Department of Labor (DOL) announced the following actions regarding the regulation of investment advice under ERISA and the Internal Revenue Code (Code):
- The DOL provided notice of a proposed prohibited transaction class exemption that would allow investment advice fiduciaries under both ERISA and the Code to receive compensation, including as a result of advice to roll over assets from a plan to an Individual Retirement Account (IRA) and to engage in certain transactions that might otherwise violate the prohibited transaction provisions of ERISA and the Code. The proposed class exemption would include protective conditions designed to safeguard the interests of plans, participants and beneficiaries, and IRA owners. The new guidance was published in the Federal Register on July 7, 2020.
- The DOL has finalized a technical amendment to conform the text of the Code of Federal Regulations to a 2018 decision (Chamber of Commerce) by the U.S. Court of Appeals for the 5th Circuit. That decision vacated the DOL’s 2016 fiduciary rule and the exemptions that accompanied the rule, which had the effect of reinstating the previous regulatory text, including the 1975 regulation and its five-part test for defining an investment-advice fiduciary as well as Interpretive Bulletin 96-1 regarding participant investment education.
- The new guidance also reflects the removal of two prohibited transaction exemptions published with the 2016 final rule and the return of several amended prohibited transaction exemptions to their pre-amendment form.
The news release is available here.
A Fact Sheet is available here.
The Conflict of Interest Rule—Retirement Investment Advice: Notice of Court Vacatur rule is available here.
The Improving Investment Advice for Workers & Retirees Proposed Rule is available here.
IRS Releases COVID-19 Relief and Other Guidance on Mid-Year Reductions or Suspensions of Contributions to Safe Harbor Section 401(k) and Section 401(m) Plans
On June 29, 2020, the Internal Revenue Service (IRS) released Notice 2020-52, which clarifies the requirements that apply to a mid-year amendment to a safe harbor 401(k) or 401(m) plan that reduces only contributions made on behalf of highly compensated employees. This Notice also provides temporary relief in connection with the ongoing COVID-19 pandemic from certain requirements that would otherwise apply to a mid-year amendment to a safe harbor 401(k) or 401(m) plan adopted between March 13, 2020, and August 31, 2020, that reduces or suspends safe harbor contributions.
IRS Notice 2020-52 is available here.
IRS Releases Guidance on Waiver of 2020 Required Minimum Distributions
On June 23, 2020, the IRS published Notice 2020-51, which provides guidance relating to the waiver in 2020 of required minimum distributions (RMDs) from certain retirement plans and IRAs due to the amendment of Section 401(a)(9) of the Internal Revenue Code by Section 2203 of the Coronavirus Aid, Relief, and Economic Security Act. This Notice provides rollover relief (including an extension of the 60-day rollover period to August 31, 2020) with respect to waived RMDs and certain related payments, permits certain repayments to inherited IRAs, and sets out questions and answers to respond to anticipated questions regarding the waiver of 2020 RMDs.
IRS Notice 2020-51 is available here.
Other HR/Employment
DOL Launches Public Awareness Campaign to Promote Workers’ Rights Under FFCRA
On July 13, 2020, the Department of Labor (DOL) announced the launch of a public awareness campaign to provide employers and employees information about the new paid sick leave and expanded family and medical leave benefits available under the Families First Coronavirus Response Act (FFCRA). The campaign will feature “short educational videos, digital guides, stakeholder outreach, and social media to educate employees about their rights and encourage them to contact the DOL with their workplace concerns.” The DOL stated that announcements will also run on local radio and television stations and on popular social media platforms.
The news release is available here.
IRS Issues Guidance on Reporting Qualified Sick Leave Wages and Qualified Family Leave Wages Paid Pursuant to FFCRA
On July 9, 2020, the Internal Revenue Service (IRS) issued Notice 2020-54, which provides guidance to employers on the requirement to report the amount of qualified sick leave wages and qualified family leave wages paid to employees under the FFCRA. Employers are required to report these amounts either on Form W-2, Box 14, or on a separate statement. This required reporting provides employees who are also self-employed with information necessary for properly claiming qualified sick leave equivalent or qualified family leave equivalent credits under the FFCRA.
The IRS news release is available here.
IRS Notice 2020-54 is available here.
OSHA Publishes COVID-19 FAQs, Recommends Mask Usage When Returning to Workplace
On July 2, 2020, the Occupational Safety and Health Administration (OSHA) published frequently asked questions and answers (FAQs) to help protect workers from exposure to COVID-19. The FAQs provide guidance to employers and employees about topics such as the best practices to prevent the spread of infection during the coronavirus pandemic, workers' rights to express concerns about workplace conditions, testing for the coronavirus, worker training, and returning to work. The latest FAQs recommend that employees wear masks and provide information for employees who wish to report an employer for violations or retaliation.
The news release is available here.
The OSHA FAQs are available here.
Aon Publications
SCOTUS Upholds Rules Allowing Religious Employers to Opt Out of ACA Birth Control Mandate
On July 8, 2020, in a 7–2 decision, the U.S. Supreme Court upheld federal regulations exempting employers with sincerely held religious or moral objections from the Affordable Care Act’s (ACA’s) mandate to provide coverage with no cost-sharing for contraception in their group health care plans. The decision in Little Sisters of the Poor v. Pennsylvania upheld two interim final rules issued by the Departments of Treasury, Labor, and Health and Human Services that created the exemption.
The Aon bulletin that covers the Court ruling is available here.