August 04, 2020
The IRS recently released an information letter dated June 29, 2020, addressing concern over unused amounts in health FSAs due to issues related to the COVID-19 public health emergency. As background, unused amounts in a health FSA are generally forfeited at the end of the plan year, unless the health FSA offers a grace period or carryover provision (i.e., “use it or lose it”). Due to the COVID-19 public health emergency, certain services may not be available, resulting in unspent health FSA funds for some participants. As such, the information letter addresses a request for an extension of time to use the amounts in the health FSA.
The IRS explains that plan sponsors are not required to extend a health FSA’s claims period, even in light of the COVID-19 public health emergency. However, the IRS reiterates that an employer with a health FSA plan year or grace period ending in 2020 is permitted to amend its plan to extend the claims period through the end of 2020. In addition, employers may amend their plans to provide for midyear health FSA election changes on a prospective basis, including revoking an election or increasing or decreasing an existing election. Further, an employer can also choose to amend its plan to provide for up to $550 in a carryover provision. Importantly, although these plan changes are permitted, they are not required. (See our Compliance Corner article from May 12, 2020, “IRS Announces New COVID-19-Related Guidance for Section 125 Cafeteria Plans and Related High Deductible Health Plans, and ICHRAs” for more information on these options for employers.)
Although this letter does not provide novel guidance, it does confirm the actions that employers can take with regards to their FSAs.
IRS Information Letter 2020-0009 »
July 20, 2020
On July 20, 2020, the DOL updated its questions and answers related to the Families First Coronavirus Response Act (FFCRA). The DOL frequently revises its guidance by adding additional questions and answers as it deems necessary.
In this revision, the DOL added questions 94 through 97, which address the following topics:
- Employees who take FFCRA leave in order to care for a sick relative are entitled to be restored to the same or equivalent position upon return. However, such employees may have been exposed to COVID-19 themselves and may be temporarily assigned duties that minimize interactions with other workers, or required to telework. In addition, employees may be subject to other employer requirements, such as a requirement to telework or take leave until they can demonstrate that they have tested negative for COVID-19. However, the agency cautions that they cannot be forced to telework or be tested for COVID-19 simply because the employee took leave under the FFCRA.
- If an employee took 80 hours of FFCRA sick leave (the maximum amount of paid sick leave allowed under the FFCRA) before they were furloughed, then they would not be entitled to additional FFCRA sick leave upon return to work.
- On the other hand, if an employee took four weeks of expanded FMLA leave under FFCRA before going on furlough, then they may be entitled to use the remainder of this leave (up to twelve weeks) upon return to work. The time spent on furlough does not count as expanded FMLA time.
- Employers cannot extend furloughs just because an employee needs to take FFCRA upon return to work. The agency reminds us that employers cannot discriminate or retaliate against employees who use or need to use FFCRA leave.
This additional information provides insight into how the DOL views certain situations that may come up in regards to FFCRA leave. Employers should review this guidance to ensure that they are adequately administering their employees’ leaves.
DOL FFCRA Questions and Answers
July 20, 2020
On July 8, 2020, the IRS released Notice 2020-54 providing guidance on W-2 reporting obligations related to qualified paid leave under the Families First Coronavirus Response Act (FFCRA). As background, the FFCRA requires employers with fewer than 500 employees to provide paid leave in certain circumstances related COVID-19 through the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act. (For additional information on the paid leave provisions of the FFCRA, see our prior Compliance Corner article from March 31, 2020, “Families First Coronavirus Response Act Passed and Agencies Provide Related Guidance”).
Per the guidance, employers will be required to report the amounts of paid leave either on Form W-2, Box 14, or on a separate statement. Further, the IRS explains that if a separate statement is provided and the employee receives a paper W-2, then the statement must be included with the W-2 provided to the employee. Similarly, if the employee receives an electronic W-2, then the statement must be provided in the same manner and at the same time as the electronic W-2.
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. To that end, the employer may provide additional information as part of the instructions (Notice 2020-54 provides model language) about qualified paid leave wages and explain that these wages may limit the amount of the credits to which the employee may be entitled with respect to any self-employment income.
Employers providing qualified paid leave under the FFCRA should be aware of this new requirement and confirm compliance with any payroll vendors.
IRS Notice 2020-54
May 28, 2020
Hosting five webinars over two weeks – covering practical considerations, benefits compliance, innovation, business insurance and employee well-being – advanced understanding of the challenges of return-to-work transitions and how we can play a role in helping employers overcome them. As things evolve, we want to keep the dialogue going by providing additional resources, including a new FAQ of questions received during the webinars, a compilation of regulatory updates by state from Steptoe and Johnson LLP, and a benefits compliance FAQ. If you missed any of the webinars, you can play them back on the Webinars page.
April 01, 2020
The CARES Act also has several provisions relating to employee benefits, both on the health side and the retirement side, as well as a few miscellaneous provisions on fringe benefits (student loan repayment).
View this benefits compliance summary for more information.
The CARES Act contains provisions meant to loosen access to money in retirement vehicles. It also contains provisions meant to alleviate certain retirement plan requirements, providing plan sponsors with the option to waive the 10% early withdrawal penalty on participant distributions of up to $100,000, increase participant loan limits, and suspend existing participant loan repayments for individuals impacted by COVID-19. In addition, the Act waives required minimum distributions to be paid in 2020, provides plan sponsors relief in delaying contribution due dates for defined benefit and money purchase pension plans, and empowers the Department of Labor with broad authority to extend certain notice deadlines.
For more information on the retirement provisions of the CARES Act, click here.
March 20, 2020
We understand that uncertainty is stressful and that demand is high for information and insight. As developments related to COVID-19 continue to evolve, we are making every effort to keep you informed of the impact on the corporate benefits industry, provide guidance on actions to consider and offer tools you can use with employees.
March 19, 2020
On Wednesday, March 18, 2020, the president signed HR 6201, the Families First Coronavirus Response Act (the FFCRA), which contains several different provisions (also called Acts), which are now law. The new law will have a significant impact on employer benefits and leave policies, particularly for those employers with fewer than 500 employees.
March 17, 2020
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