• DOL Issues ARPA Model Notices and FAQs April 7, 2021 by Patrick Haynes

    On April 7, 2021, the U.S. Department of Labor (DOL) released Frequently Asked Questions (FAQ) and model notices to implement the COBRA subsidy provisions in the American Rescue Plan Act of 2021 (ARPA).

    The FAQ guidance address a number of the questions that employers have been asking since ARPA was signed into law. Specifically, the guidance clarifies:

    • The subsidy applies applies to all group health plans sponsored by private-sector employers or employee organizations (unions) subject to the COBRA rules. (Please note Q2 of the FAQs).
    • The subsidy applies to persons who have lost coverage due to either a reduction in hours or an involuntary termination. The termination must be involuntary in order for the individual to qualify for the subsidy. The reduction in hours (Qualifying Event) does not have to have been involuntary.  (Please note Q3 and Q5 of the FAQs).
    • Persons whose employment was terminated for gross misconduct are not eligible for the subsidy. (Please note Q3 the FAQs.  And, following prior precedent under ARRA–Gross Misconduct is generally reserved for crimes (arrests/referred for prosecution, etc.) not for mere violations of an employee handbook, insubordination, etc.).
    • The DOL noted that any time period or program requirements for state continuation programs will not be affected by the ARPA guidance. (Please note Q6 of the FAQs).
    • Assistance Eligible Individuals (AEIs) who have individual coverage, either obtained through a health insurance marketplace or Medicaid, are eligible for subsidized coverage. However, those who elect to enroll in COBRA continuation coverage with premium assistance will no longer be eligible for a premium tax credit, advance payments of the premium tax credit, or the health insurance tax credit for their health coverage during that period. (Please note Q18 of the FAQs).
    • The amount of the subsidy includes any administrative fees associated with the COBRA premium.  (Please note Q8 and Q9 of the FAQs).
    • The DOL provided further guidance regarding the model notice requirements and included examples. We have linked to those below. (Please note Q10, Q11, and Q12 of the FAQs).
    • AEIs that misrepresent their eligibility for other coverages may be subject to fines, the greater of $250 or 110% of the premium subsidy.

    The complete FAQ guidance, model notices, and other information can be found at

    Please contact your Account Executives for additional information.


  • PCORI Fee Increased for Plan Years Ending After October 1, 2020 March 18, 2021 by Patrick Haynes

    The IRS is raising the fee that insurers or self-insured health plan sponsors will pay in 2021 to fund the federal Patient-Centered Outcomes Research Institute (PCORI) trust fund. The fee will be $2.66 per plan enrollee, up from $2.54 for the 2020 plan year, according to Notice 2020-84, which the IRS issued on November 24, 2020.  The annual fee must be paid to the IRS by July 31 for plan years ending between Oct. 1, 2020, and before Oct. 1, 2021, which includes calendar-year plans.

    For fully insured employers, the fee is paid by the insurance provider, although the cost may be factored into premium increases.  Self-insured employers pay the annual PCORI fee directly to the IRS.

    Self-Funded plans (including employers with fully insured medical/Rx plans that include a self-funded HRA) must remit the PCORI fee to the IRS along with an IRS Form 720.   (Note:  The IRS has not yet updated Form 720 with the new, 2021 rate).

    You may recall that PCORI was previously due to sunset in 2019, but was extended by Congress through 2029 (see prior guidance/updates here).

    And, if you are looking for details on how to calculate PCORI, please read our prior guidance here or contact your Account Manager.


    For more information, contact The information contained in this post, and any attachments, is not intended and should not be misconstrued as legal advice. You should contact your employment, benefits or ERISA attorney for legal direction.

    AP Benefit Advisors’ webinar and website resources are designed for U.S.-based organizations. Our privacy and GDPR policy should be reviewed here. Please opt-out if you do not agree to these terms and conditions.

  • ARPA – The American Rescue Plan is Now Law March 11, 2021 by Patrick Haynes

    President Biden has now signed the $1.9 trillion relief bill commonly referred to as The American Rescue Plan Act of 2021 (ARPA) into law. (PDF Link here).  Overall, the bill will provide relief in many forms, including but not limited to, direct stimulus payments to eligible recipients, unemployment assistance, aid for small businesses, and child tax credits. We touched on the expected inclusions from a health and welfare benefits standpoint a few weeks ago in a recent update but now that the bill is official we wanted to follow up with an overview of what will be formally rolled out in that regard in the near future now that the bill has been signed. As suspected, the final bill underwent some modifications during its time in the Senate before being handed back over to the House so there are some new aspects to discuss.

     COBRA Subsidies – for former employees with an involuntary termination or reduction of hours (only)

    The January Fact Sheet that laid the foundation for the final bill directly targeted premium subsidies under the Consolidated Omnibus Budget Reconciliation Act (COBRA) in its proposal. At the time, it was estimated that individuals would be able to obtain a premium reduction amounting to 85 percent of their total coverage costs but the bill will actually provide 100 percent in COBRA subsidies between April 1, 2021 and  September 30, 2021. This will effectively allow unemployed individuals (and their spouses and dependent children) to continue employer-sponsored coverage after losing employment without having to contribute towards any portion of their premiums through September 2021. ARPA makes this subsidy available to those who have either experienced an involuntary termination of employment or a reduction of hours.  Employees who voluntarily terminated their employment are not eligible, and all other COBRA Qualifying Events do not quality for ARPA’s COBRA subsidy.  Therefore, even an employee who experienced a loss in coverage in the early days of the pandemic would still be eligible for up to six-months of free COBRA coverage. Employers who follow the appropriate notice requirements will receive reimbursements equal to the premium amounts—and will have to seek these reimbursements as tax credits. Employers need to provide COBRA notice forms to eligible individuals and plans will be required to alert people to the availability of the subsidy, their specific enrollment window, and if their subsidy will end before September 2021.  These notices will need to be distributed (generally mailed) within 60 days subsequent to April 1, 2021.

    Second Chance Offers

    Individuals who previously experienced an involuntary termination (or reduction in hours) but did not elect COBRA, or those who elected and subsequently dropped COBRA coverage, and who are still within their COBRA maximum coverage period, must be given a 2nd chance to elect COBRA to take advantage of ARPA’s subsidy. If such individuals elect COBRA coverage within 60 days of being notified of the subsidy opportunity, coverage would be provided prospectively from the second election date, not retroactively to the original COBRA event date. There could be a lapse in coverage between the original COBRA event and the new special, second election. Employers cannot force the QB to pay back premiums to take advantage of this second election opportunity. In no case is an individual eligible for more than the COBRA maximum coverage period measured from the original event date.

    When will the subsidy end – are there penalties for fraud?

    The subsidy will end immediately if an individual becomes eligible for coverage under another group health plan or Medicare and would also end early if the individual’s maximum period of COBRA continuation coverage (typically 18-months) concludes prior to September 2021. The onus is on the enrollee to inform their former employer that they are no longer eligible for subsidized coverage. ARPA takes this a step further, however, subjecting enrollees who fail to update their former employers about a change in eligibility to a $250 fine and up to 110% of the full subsidy amount if the failure is determined to be deliberate.

    Employer Tax Credit

    Employers will recover premiums not paid by COBRA QBs through a payroll tax credit, similar to the manner in which employers recovered mandatory FFCRA (Families First Coronavirus Response Act) paid leave costs. If the tax credit exceeds the amount of payroll taxes due for a particular period, the employer can apply for a refundable tax credit. In most cases, however, the employer will have more payroll taxes due for any particular period than the amount of credit they can claim for lost COBRA premiums.

    ACA Subsidies

    In addition to COBRA, the bill also addresses and expands ACA subsidies. As first laid out in the January Fact Sheet, ARPA will increase the generosity of ACA subsidies at every level and will cap the cost of premiums at 8.5 percent of an individual’s household income. This will be retroactive to January 1, 2021 and those currently enrolled in an Exchange plan will be able to claim an extra subsidy immediately.

    Dependent Care FSAs

    Another way ARPA is designed to benefit workers is through a temporary increase (only for 2021), in the maximum amount that can be contributed to a Dependent Care Reimbursement Account (DCRA-also known as a Dependent Care Assistance Plan (DCAP) or a Dependent Care Flexible Spending Account (DCFSA)).  For 2021 only, ARPA increases the amount that may be elected on a tax-free basis, through a Section 129 DCAP, from $5,000 to $10,500 (or from $2,500 to $5,250 for individuals that are married but filing separately).

    While these reimbursement accounts exist under IRC Section 129, they have been capped at $5,000 and have not been increased since 1986. While many will applaud this welcome relief, this year has taught many employees to carefully plan their dependent care (day-care/custodial care) expenses because the use-it or lose-it features are still present.  Recent COVID related and CAA-2021 related-relief has helped, but not enough.  Also, ARPA doesn’t amend the current non-discrimination guidance, which means that plans must still ensure that no more than 55% of all dollars in their DCAPs benefit highly compensated workers (generally owners, officers, and/or folks earning $125,000/year or more).  So, while this may seem like an enticing opportunity to expand your employees use of DCAPs, we’re cautioning employers to carefully consider the impact that doubling the deferral limit might have on their plan.

    As the DOL releases their FAQs, guidance, and Model Notices you can expect to hear from our team, your Account Managers and Sales Executives. 


    For more information, contact The information contained in this post, and any attachments, is not intended and should not be misconstrued as legal advice. You should contact your employment, benefits or ERISA attorney for legal direction.
    AssuredPartners’ webinar and website resources are designed for U.S.-based organizations. Our privacy and GDPR policy should be reviewed here. Please opt-out if you do not agree to these terms and conditions.
  • DOL Update – National Emergency Period/Outbreak Guidance February 26, 2021 by Patrick Haynes

    Today is the day! The Disaster Relief Notice 2021-01 has finally been unveiled by the Employee Benefits Security Administration (EBSA) branch of the U.S. Department of Labor (DOL), with additional coordination and review of the guidance by the Department of Treasury, the Department of Health and Human Services (HHS), and the Internal Revenue Service (IRS). The Notice serves as an official and long-awaited response to the questions surrounding the timeframe to bring the COBRA and HIPAA Outbreak Periods to an end.

    Throughout 2020 and thus far in 2021, we discussed the potential scenarios that would occur once the National Emergency Period and subsequent Outbreak Period came to a close. Previously outlined by us here, the National Emergency Period is the subject of fervent interest. Originally implemented by the Trump Administration with an effective date of March 1, 2020, the relief halted the timelines for the COBRA and HIPAA Special Enrollment Periods (encompassing deadlines pertaining to election windows, initial payments, claims and appeals, and grace periods) due to the COVID-19 pandemic. The National Emergency has now come to an unceremonious end. Today’s notice highlights ERISA law and the Internal Revenue Code (IRC) that prohibit a National Emergency Period to last for more than one year.

    According to the EBSA guidance, “individuals and plans with timeframes that are subject to the relief under the Notices will have the applicable periods under the Notices disregarded until the earlier of (a) 1 year from the date the were first eligible for relief, or (b) 60 days after the announced end of the National Emergency (the end of the Outbreak Period). On the applicable date, the timeframes for individuals and plans with periods that were previously disregarded under the Notices will resume. In no case will a disregarded period exceed 1 year.

    In practice, the duration of the relief will essentially ‘un-pause’ the timeframes on a person-by-person basis, based on the “earlier of”  either (i) one (1) year from the date an individual was first eligible for relief, of (ii) 60 days after the announced end of the National Emergency (the end of the Outbreak Period).

    The examples provided in the guidance, include:

    • If a QB (Qualified Beneficiary) would otherwise be required to make a COBRA election by March 1, 2020, the Joint Notice delays that requirement until February 28, 2021, which is the earlier of 1 year from March 1, 2020 or the end of the Outbreak Period (which remains ongoing).
    • Similarly, if a QB would otherwise be required to make a COBRA election by March 1, 2021, the Joint Notice delays that election requirement until the earlier of 1 year from that date (i.e., March 1, 2022) or the end of the Outbreak Period.
    • If a plan would have been required to furnish a notice or disclosure by March 1, 2020, the relief under the Notices would end with respect to that notice or disclosure on February 28, 2021. The responsible plan fiduciary would be required to ensure that the notice or disclosure was furnished on or before March 1, 2021.

    We anticipate that tracking these individual dates will bring forth some degree of strain from an administrative standpoint.

    The DOL does recognize that affected plan participants and beneficiaries may continue to encounter an array of problems due to the ongoing nature of the COVID-19 pandemic in circumstances under which relief under the Notices is no longer available due to the statutory one-year limit on the Agencies’ authority to grant relief. The guiding principle for administering employee benefit plans is to act reasonably, prudently, and in the interest of the workers and their families who rely on their health, retirement, and other employee benefit plans for their physical and economic well-being.

    • This means that plan fiduciaries should make reasonable accommodations to prevent the loss of or undue delay in payment of benefits in such cases and should take steps to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established time frames.
    • For example, where the plan administrator or other responsible plan fiduciary knows, or should reasonably know, that the end of the relief period for an individual action is exposing a participant or beneficiary to a risk of losing protections, benefits, or rights under the plan, the administrator or other fiduciary should consider affirmatively sending a notice regarding the end of the relief period

    Additional links and references


  • Recent Stimulus Proposal from Biden Administration Could Expand COBRA and ACA Subsidies February 25, 2021 by Patrick Haynes

    In a January 14, 2021 Fact Sheet entitled the American Rescue Plan, the Biden Administration announced their intent to expand healthcare coverage as a result of the still ongoing COVID-19 pandemic. The key points for our purposes involve the expansion of premium subsidies under the Consolidated Omnibus Budget Reconciliation Act (COBRA) and the Affordable Care Act (ACA) but there are numerous other aspects of the proposal that impact the COVID-19 stimulus package currently making the rounds through Congress. This is of immediate significance to employers and employees alike since these changes, if included in the final bill, may take effect as soon as April 1, 2021.

    Overall, the plan seeks to broaden access to healthcare and touches on a range of other aspects in the healthcare space aside from what will be more substantively discussed below. This includes matters such as containing the COVID-19 pandemic, mounting a national vaccination program, increasing the availability and funding of behavioral health and veterans’ health services, addressing health disparities encountered by underserved communities, along with a host of other items to be tackled.

    COBRA Subsidies

    Relying on data accumulated by the Kaiser Family Foundation (KFF), the American Rescue Plan stipulates that “roughly two to three million people lost employer sponsored health insurance between March and September [of 2020]”. As a result, the proposal hopes to extend COBRA subsidies through September 30, 2021 for the benefit of workers who lost employer-sponsored health coverage due to termination or a reduction in hours. This will aid in offsetting some of the costs to these individuals with a premium reduction amounting to 85 percent of their coverage. The premium reduction would go into effect beginning with the first of the month following the date the new law is enacted (or as early as April 1st of this year) but would not be applicable if an individual is eligible for other medical coverage or Medicare. “Other medical coverage” does not include dental, vision, or coverage offered under a healthcare flexible spending account (FSA).

    Why This Is Important?

    COBRA coverage tends to be prohibitively expensive for many, as the employer paid portion of the health insurance premium typically ceases. Although the amount charged for COBRA continuation cannot exceed 102% of the total cost of the plan itself, that increased monthly price tag can be a big ask for a laid off worker or for someone who has had their hours substantially reduced. The pandemic has of course added to the prevalence of such a scenario.

    ACA Premium Subsidies

    The Biden Administration is “also asking Congress to expand and increase the value of the Premium Tax Credit to lower or eliminate health insurance premiums and ensure enrollees – including those who never had coverage through their jobs – will not pay more than 8.5 percent of their income for coverage.”

    Through this expansion, the current Administration seeks to make some major modifications to the ACA in an effort to boost its general effectiveness. At the outset, these proposed changes will be temporary and in direct response to the pandemic, although it is entirely possible that certain aspects will be made permanent down the road. As noted in the Ways and Means Committee’s proposal, the anticipated adjustments include an increase in the ACA subsidies available to low and middle-income families for 2021 and 2022, an extension of ACA subsidies to higher-income persons who may not have previously qualified, as well as a provision which will allow individuals who receive or who have been approved to receive unemployment benefits during 2021 to obtain the maximum allowable subsidy amount for ACA coverage.

    Why This Is Important?

    The implementation of this portion of the proposal will likely lead to an uptick in and retention of ACA enrollees due to more favorable premiums being offered along with an enhanced ability to pay said premiums with the issuance of improved subsidies. In fact, the Biden Administration has even re-opened a Special Enrollment Period on running from February 15 – May 15, 2021 in anticipation of this.

    The Biden Administration speculates that “together, these policies [addressing COBRA and ACA] would reduce premiums for more than ten million people and reduce the ranks of the uninsured by millions more.” We will continue to monitor the situation as it develops and provide updates accordingly.

    Updates from Saturday, February 27, 2021:

    Updates from Saturday, March 6, 2021:

    Updates – March 10, 2021:

  • EEOC Provides Guidance on Workplace COVID-19 Vaccination Requirements February 23, 2021 by Patrick Haynes

    • EEOC guidance about how a COVID-19 vaccination interacts with requirements of federal laws
    • Options to avoid violating the Americans with Disabilities Act (ADA), Title VII of the Civil Rights Act of 1964 (Title VII), and the Genetic Information Nondiscrimination Act (GINA)
    • Resources and materials related to COVID-19 and the EEOC guidance

    EEOC Provides Guidance on Workplace COVID-19 Vaccination Requirements

    • The U.S. Equal Employment Opportunity Commission (EEOC) recently posted a technical assistance publication addressing questions about the COVID-19 pandemic. This latest document gives employers and employees guidance about how a COVID-19 vaccination interacts with requirements of federal laws including the Americans with Disabilities Act (ADA), Title VII of the Civil Rights Act of 1964 (Title VII), and the Genetic Information Nondiscrimination Act (GINA). As employers develop vaccination workplace requirements, they should carefully review the guidance to avoid violating these federal nondiscrimination laws.


    • The ADA prohibits an employer from requiring a medical examination, asking an employee whether the employee has a disability, or the nature or severity of the disability, unless it is job-related and consistent with business necessity. The EEOC COVID-19 guidance confirms that the vaccine itself is not a “medical examination” under the ADA, and confirms that asking an employee or requiring them to show proof of a COVID-19 vaccination does not violate the ADA. However, pre-vaccination screening or follow-up questions may elicit information about a disability that could violate the ADA. Employers should warn employees not to provide disability-related information to their employer.
    • To avoid an ADA violation related to employer-provided COVID-19 vaccinations, the EEOC presents several options:
      • If the employer makes the vaccination mandatory:
        • and uses its own contracted provider — it must show that screening inquiries are “job-related and consistent with business necessity.”
        • but has the employee use their own chosen provider — the ADA’s “job related and consistent with business necessity” restrictions on disability-related inquiries does not apply.
    • If the employer wishes to make the vaccination voluntary, then the employee’s decision to answer pre-screening, disability-related questions also must be voluntary. If an employee chooses not to answer these questions, the employer may decline to administer the vaccine, but it must not retaliate against, threaten or intimidate the employee.

    If an employee states they are unable to receive the COVID-19 vaccine because of a disability, the employer must be able to show that an unvaccinated employee would pose a direct threat due to a “significant risk” of substantial harm to the health or safety of themselves or others that cannot be eliminated or reduced by a reasonable accommodation. Such reasonable accommodations include working remotely.

    Title VII

    It is possible that some employees may refuse vaccination on the basis of a sincerely held religious practice, observance or belief protected by Title VII. The guidance states that the employer must provide a reasonable accommodation to this employee unless it would pose an undue hardship.


    Under Title II of GINA, employers may not:

    • Use genetic information to make employment decisions.
    • Acquire genetic information except in six narrow circumstances.
    • Disclose genetic information except in six narrow circumstances.

    Administering a COVID-19 vaccination to employees or requiring proof they have received a vaccination does not violate Title II of GINA. However, as with disability information, pre-vaccination screening questions may elicit genetic information. If the pre-vaccination screening does include such questions, the EEOC suggests that employers request proof of vaccination instead of administering the vaccine themselves.

    EEOC’s entire publication, “What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws,” can be found here. All EEOC materials related to COVID-19 are posted at

    For additional support you may contact your Account Manager or Sales Executive.  Employer may wish to consult with labor/employment counsel to ensure that their labor practices are consisent with the ADA, GINA, and the EEOC guidance.


  • Update on COVID – Progression and Vaccines January 12, 2021 by Megan DiMartino
    Written by: Scott Mayer, Director of AP Data Analytics

    It’s 2021 and COVID-19 has not vanished like some had predicted or hoped. The virus continues to affect hundreds of thousands of Americans directly, and millions more indirectly. There are many metrics available to track the direct impact and spread of the virus itself, but they all have their pitfalls and limitations. Testing rates are inconsistent, mortality numbers vary by days of the week, and new cases are reported in bunches.

    We all struggle to sift through the noise and inundation of information to identify what is really important. The two most reliable metrics available to help you truly understand the spread of the virus are hospitalizations and positive rate. Since November, both of those numbers have continued to rise, and, as of the first week of January, we have not seen a plateau.

    Another challenge: the rollout of vaccines has been painfully slow for most. While there are millions of doses available, the distribution challenges have been more logistical. With limited vaccination sites approved, there is a ceiling on the volume of people that can be vaccinated daily. Additionally, there is disagreement in terms of how much of the vaccine stock should be allocated for the first dose versus the second. For example, most locations who receive 1,000 doses will only give out 500 vaccines as a first dose, while holding back 500 vaccines for the second dose. Some agencies are recommending giving out the full 1,000 doses and then wait for the follow-up shipments to utilize for the second dose; however, this is not without risk. If the second shipment of vaccines never arrives, 1,000 people will not get a second dose, potentially rendering the first dose useless.

    Employers are wondering when their essential workers can receive a vaccine. While the CDC has issued recommendations on which industries should be in which vaccination groups, ultimately, each state has the authority to make those determinations.

    When can my employees get the vaccine? This is the question on every employer’s mind and, unfortunately, exactly when employees will have the opportunity to get a vaccine remains extremely variable across the county. Even more fluid is the manner in which those vaccines will be distributed from a logistical standpoint. We encourage employers to review their state’s specific vaccine distribution plan and be on the lookout for daily updates from your local government.

    For more information, contact The information contained in this post, and any attachments, is not intended and should not be misconstrued as legal advice. You should contact your employment, benefits or ERISA attorney for legal direction.

    AssuredPartners’ webinar and website resources are designed for U.S.-based organizations. Our privacy and GDPR policy should be reviewed here. Please opt-out if you do not agree to these terms and conditions.

  • AssuredPartners’ Webinar | Workplace Health & Productivity During a Pandemic January 6, 2021 by Megan DiMartino

    Learn from AssuredPartners’ Health & Productivity consultants what employers are doing to drive engagement, boost morale and create a healthy work environment during a pandemic. Certified Corporate Wellness Specialists, Cary Seager and Kristin Meschler, will discuss the whys and hows to creating short- and long-term strategies that include trends in this COVID-19 environment.

    Learning objectives include:

    • Cost of heightened COVID-19 risk
    • Targeting various populations
    • Wellness compliance need-to-know
    • Employee communications
    • Programming best practices
    • Creating engagement above the standard 30%
    • Using partnerships to drive success
    • Cultural audit

    Webinar Details:

    • Wednesday January 13, 2021
    • 2:00pm – 3:00 pm EST

    Register Now

    For more information, contact The information contained in this post, and any attachments, is not intended and should not be misconstrued as legal advice. You should contact your employment, benefits or ERISA attorney for legal direction.

    AssuredPartners’ webinar and website resources are designed for U.S.-based organizations. Our privacy and GDPR policy should be reviewed here. Please opt-out if you do not agree to these terms and conditions.

  • Year-End Stimulus Bill Offers Optional FSA Relief December 23, 2020 by Patrick Haynes

    Capitol Building Banner - PPACA Compliance12/27/2020 Update:  After much debate, the Consolidated Appropriations Act, 2021 (CAA 2021) was signed by the President on Sunday, December 27, 2020.

    As this Congress wanted to wish us well for the holidays, they passed the Consolidated Appropriations Act, 2021 (CAA).  Below please find some highlights for those factors that may affect health and welfare plans.  This assumes the President signs the bill into law—he is currently threatening to veto it in favor of either a clean bill (stand-alone bill) or that the amount of COVID-stimulus payments to eligible households be increased from $600 to $2000.

    Under the CAA, employers sponsoring HCFSAs (Health Care Flexible Spending Accounts – both regular and limited purpose FSAs) and DCAPs (Dependent Care Assistance Plans – aka Dependent Care Reimbursement Accounts) may elect to adopt some or all of the following changes:

    • HCFSAs and DCAPs may allow any remaining balances at the end of plan years ending in 2020 and 2021 to roll into the following plan year.1
    • HCFSAs and DCAPS may extend grace periods (not to be confused with run-out-periods) for plan years ending in 2020 and 2021 to up to 12 months.1
    • HCFSAs may allow employees who terminate participation during 2020 or 2021 to spend down unspent balances through the end of the plan year (similar to what is already permitted for DCAPs (if adopted)).2
    • DCAPs may extend the age limit for qualifying children from 13 to 14 for a plan year for which open enrollment ended before January 31, 2020, and for any unspent funds from that plan year that are available (either by rollover or grace period) to the employee during the following plan year.
    • HCFSAs and DCAPs may allow prospective election changes during 2021 without regard to any change of status requirements.

    Employers electing to adopt any or all of these changes may implement them immediately and then amend their plan documents in the following calendar year. Employers should also talk with their FSA administrators to ensure that they’ll be able to administer the changes and consult with your Account Managers/Sales Executives about any additional impact these choices may have with regard to other plans that participants have elected for 2021. 

    If you are interested in any other aspects of the CAA, here’s a solid summary from the Journal of Accountancy.

    Footnotes & Links:

    • 1Generally, not recommended, without restrictions, if the Employer also offers HDHP/HSA plans in 2021.
    • 2Generally, not recommended for HCFSAs since the Employer remains at risk for the full balance even if the participant hasn’t paid all of their contributions. And, for underspent HCFSAs, participants already have COBRA-rights here. For DCAPs this provision has been available for years (for ex-employees)—spending down amounts on deposit until either the plan year ends or the monies on deposit are exhausted.
    • Link to the 2021 CAA

    For more information, contact The information contained in this post, and any attachments, is not intended and should not be misconstrued as legal advice. You should contact your employment, benefits or ERISA attorney for legal direction.

    AP Benefit Advisors’ webinar and website resources are designed for U.S.-based organizations. Our privacy and GDPR policy should be reviewed here. Please opt-out if you do not agree to these terms and conditions.

  • Happy Holidays from your friends at AssuredPartners! December 21, 2020 by Megan DiMartino