BenefitsBCLP

While the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) continuation coverage subsidy requirements imposed by the American Rescue Plan Act of 2021 (previously discussed here and here) are at the forefront of employers’ minds, recent litigation trends should motivate plan sponsors to review their standard COBRA election notices to ensure they comply with the general requirements in the regulations promulgated by the Department of Labor (“DOL”).

The clouds have been forming on the horizon for years now:  from the courts we have seen emerging lines of ERISA litigation asserting fiduciary obligations to protect the privacy rights of participants, and from the regulatory agencies we have heard an acknowledgment of the need for guidance regarding fiduciary responsibility with respect to cybersecurity risks.  A call to action for plan fiduciaries came last week from the Department of Labor (“DOL”) in the form of new Cybersecurity Guidance for Plan Sponsors, Plan Fiduciaries, Record-Keepers, Plan Participants.  See News Release at https://www.dol.gov/newsroom/releases/ebsa/ebsa20210414.

The American Rescue Plan Act of 2021 (“ARPA”) provides that, for the period from April 1, 2021 until September 30, 2021, if an individual’s Consolidated Omnibus Budget Reconciliation Act (“COBRA”) qualifying event is an involuntary termination of employment or a reduction of hours (each, an “Assistance Eligible Individual”), then 100% of the COBRA premium is paid by the employer, health plan, or insurer and the premium expense is reimbursed by the federal government through a refundable FICA tax credit. We previously summarized the COBRA subsidy provisions under ARPA in a blog post, available by clicking here.

Among the requirements under the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (the “MHPAEA”) group health plans and health insurance issuers must apply any processes, strategies, evidentiary standards or other factors underlying non-quantitative treatment limitations (“NQTLs”) to mental health or substance use disorder (“MH/SUD”) benefits comparably and no more stringently than to medical/surgical benefits.

The 2020-2021 transition was anything but tranquil, even when it comes to something as prosaic as employee benefits. We saw two new pieces of significant benefits legislation: the Consolidated Appropriations Act, 2021 (the "CAA"), and the American Rescue Plan Act of 2021 ("ARPA"). We also saw a frenzy of 4th quarter rule-making from the outgoing Trump administration, much of which was stopped in its tracks with the introduction of the Biden administration. As is common when there is a change in administration, a regulatory freeze was imposed pursuant to which unpublished guidance was withdrawn for review and approval, and the effective dates of other guidance was postponed. All the while, plan sponsors were still responding to 2020 COVID-19 related legislation and looming deadlines under the Setting Every Community Up for Retirement Enhancement Act of 2019 (the "SECURE Act").

The American Rescue Plan Act of 2021 (“ARPA”) provides that, for the period from April 1, 2021 until September 30, 2021, if an individual’s Consolidated Omnibus Budget Reconciliation Act (“COBRA”) qualifying event is an involuntary termination of employment or a reduction of hours (each, an “assistance eligible individual”), then 100% of the COBRA premium is paid by the employer, health plan, or insurer and the premium expense is reimbursed by the federal government through a refundable FICA tax credit.  For an insured or self-insured plan, the employer applies for the tax credit; however, a multiemployer plan will apply direct for the tax credit.