The Washington Report

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October 12, 2022

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.

Health

 

IRS Releases Final Regulations on Affordability of Employer Coverage for Family Members of Employees
On October 11, 2022, the Internal Revenue Service (IRS) released final regulations under Section 36B of the Internal Revenue Code that amend the regulations regarding eligibility for the premium tax credit (PTC) to provide that affordability of employer-sponsored minimum essential coverage for family members of an employee is determined based on the employee’s share of the cost of covering the employee and those family members, not the cost of covering only the employee. The final regulations also add a minimum value rule for family members of employees based on the benefits provided to the family members. The final regulations affect taxpayers who enroll, or enroll a family member, in individual health insurance coverage through a health insurance Exchange and who may be allowed a PTC for the coverage. The final regulations become effective on December 12, 2022.

The final regulations are available here.

The Statement by Health and Human Services Secretary Xavier Becerra on Administration Action to Resolve “Family Glitch” and Lower Health Care Costs, is available here.

IRS Publishes Notice on Additional Permitted Election Changes for Health Coverage Under Section 125 Cafeteria Plans
On October 11, 2022, the IRS published Notice 2022-41, which expands the application of the permitted change-in-status rules for health coverage under a Section 125 cafeteria plan. Notice 2022-41 addresses the situation in which, during a period of coverage (typically a plan year), a cafeteria plan participant may wish to revoke the employee’s election under the cafeteria plan for other than self-only (family) coverage under a group health plan (other than a flexible spending arrangement) in order to allow one or more family members to enroll in a Qualified Health Plan through a health insurance Exchange in the individual market. Under this Notice, the employee will be able to elect out of family coverage and into self-only coverage (or family coverage including one or more already-covered related individuals) under that health plan prospectively during a period of coverage, provided specific conditions are satisfied. The IRS intends to modify the Income Tax Regulations under Section 125 of the Internal Revenue Code consistent with the provisions of this Notice. Taxpayers may rely on the guidance in this Notice for plan amendments allowing elections effective on or after January 1, 2023.

IRS Notice 2022-41 is available here.

Retirement

 

IRS Releases Notice on Certain Required Minimum Distributions for 2021 and 2022
On October 7, 2022, the Internal Revenue Service (IRS) announced in Notice 2022-53 that it intends to issue final regulations related to required minimum distributions under Section 401(a)(9) of the Internal Revenue Code that will apply no earlier than the 2023 distribution calendar year. Additionally, the Notice provides guidance related to certain provisions of Section 401(a)(9) that apply for 2021 and 2022. Please refer to Notice 2022-53 for additional details.

IRS Notice 2022-53 is available here.

Other HR/Employment

 

DOL Releases Proposed Regulations on Employee or Independent Contractor Classification Under FLSA
On October 11, 2022, the Department of Labor (DOL) announced the publication of proposed regulations to revise the DOL’s guidance on how to determine who is an employee or independent contractor under the Fair Labor Standards Act (FLSA). The proposed regulations would rescind an earlier rule on this topic that was published on January 7, 2021, and replace it with an “analysis for determining employee or independent contractor status that is more consistent with the FLSA as interpreted by longstanding judicial precedent.”

The proposed regulations would:

• Align the DOL’s approach with courts’ FLSA interpretation and the economic reality test.
• Restore the multifactor, totality-of-the-circumstances analysis to determine whether a worker is an employee or an independent contractor under the FLSA.
• Ensure that all factors are analyzed without assigning a predetermined weight to a particular factor or set of factors.
• Revert to the longstanding interpretation of the economic reality factors. These factors include the investment, control, and opportunity for profit or loss factors. The integral factor, which considers whether the work is integral to the employer’s business, is also included.
• Assist with the proper classification of employees and independent contractors under the FLSA.
• Rescind the 2021 independent contractor rule.

Comments on the proposed regulations are due by November 28, 2022.

The news release is available here.

The proposed regulations are available here.

Additional information is available here.