New Supreme Court ruling may affect employee benefit plans

As you probably already know, the Supreme Court issued several important decisions during this year’s term. One of the most ground-breaking was their decision in Bostock v. Clayton County holding that Title VII of the Civil Rights Act of 1964 protects transgender, gay and lesbian employees from workplace discrimination based on their sexual orientation or sexual identity. You can find the decision here:

While Bostock applied to the termination of a LGBT employee, we should carefully consider its potential impact on employee benefit plans.  To get a sense of where this rapidly evolving nondiscrimination law may be headed, this blog post provides of a snapshot of the legal framework prior to Bostock and some specific considerations for benefit plan professionals after Bostock.

Pre-Bostock background:

As you may recall, in 2016 the HHS issued nondiscrimination regulations under Section 1557 of the ACA that generally prohibited discrimination on the basis of race, color, national origin, sex, age or disability under health programs or activities that receive HHS funding. These regulations interpreted Section 1557 to prohibit discrimination “on the basis of sex” to include discrimination based on transgender status, gender identity or gender expression in healthcare to include certain health plans.

But just this June, HHS issued revised the Section 1557 nondiscrimination regulations and significantly changed the prior regulations. Importantly, the regulations repealed the prior regulations that defined discrimination “on the basis of sex,” to include discrimination based on gender identity. Further, these new regulations made clear that Section 1557 does not apply to employer-sponsored group health plans that do not receive HHS funding and are not principally engaged in the business of providing healthcare.

Post-Bostock considerations:

Now that the U.S. Supreme Court has ruled that employers violate Title VII (of course, different and separate from 1557 under the ACA) when they discharge employees based on sex, the impact that this decision could have on employee benefit plans remains to be seen. It is clear that employers should use caution when considering benefit plan provisions that may treat employees differently based on sex, including their sexual orientation or transgender status. At a minimum, special care should be made to review relevant plan/coverage terms, including those pertaining to gender dysphoria, gender-affirmation surgery or mental health benefits, as well as plan terms covering same-sex spouses and same-sex domestic partners.

Please let us know if you have any questions.

New IRS Guidance on Suspension of RMDs

And just as we thought that the new coronavirus guidance was beginning to slow down, the IRS proved us wrong.

On June 23, 2020, the IRS issued new guidance on the waiver of required minimum distributions (“RMDs”) from certain qualified retirement plans.

I. General Background

As a refresher, section 401(a)(9) of the Internal Revenue Code requires certain qualified retirement plans, including 401(k) plans, to make RMDs starting on the employee’s required beginning date. Back in December, the SECURE Act made a change to when RMDs are required to be made:

OLD RULE: Under the old rule, participants were generally required to start taking RMDs from a retirement plan by April 1 following the later of (a) the calendar year they reach age 70 ½; or (b) the calendar year they retire.

NEW RULE: Under the new SECURE Act rule, for people who attain age 70 ½ after December 31, 2019, the age for RMDs increases to 72. Individuals who attain 70 ½ on or before December 31, 2019 are not affected (i.e., the old rule continues to apply).

II. CARES Act Relief for RMDs

As you might remember, on March 27, 2020, the CARES Act waived RMDs otherwise required in 2020. However, because the CARES Act was not enacted until March 27 of this year, some people who took their RMD earlier in the year may have missed the boat on the waiver. However, as we were expecting, on June 23 the IRS issued guidance to provide relief for those individuals.

In the June 23 guidance, the IRS permits anyone who already who took an RMD in 2020 from certain plans to roll those funds back into the plan. Under the normal rules, rollovers must be made within 60 days from the date of a distribution, but last week’s new guidance extends this 60-day window for any RMD already taken this year to August 31, 2020. For example, if a participant received a single-sum distribution in January 2020, part of which was treated as ineligible for rollover because it was considered an RMD, that participant will now have until August 31, 2020 to roll over that part of the distribution. You probably should notify anyone who falls into this category of this extended deadline.

The waiver applies to the typical defined contribution plans, such as 401(k) and 403(b) plans, as well as IRAs. The relief does not apply to defined benefit plans.

The notice also provides rollover relief for additional payments that would not otherwise be eligible for rollover:

• Distributions to a plan participant paid in 2020 (or paid in 2021 for the 2020 calendar year in the case of an employee who has a required beginning date of April 1, 2021) if the payments would have been RMDs in 2020 (or for 2020) if it weren’t for the 2020 waiver.
• For a plan participant with a required beginning date of April 1, 2021, distributions that are paid in 2021 that would have been an RMD for 2021 but for the RMD waiver.

Therefore, the guidance waives the RMD for 2020 even if the employee’s required beginning date is April 1, 2021. For example, if an employee attained age 70 ½ before January 1, 2020, and retires in the 2020 calendar year, that employee’s required beginning date is April 1, 2021. Because of the CARES Act, the employee is not required to receive an RMD for 2020 before April 1, 2021 but nonetheless must still receive the RMD for the 2021 calendar year by December 31, 2021. If the employee receives a distribution during 2021, then that distribution is treated as an RMD for the 2021 calendar year to the extent the total RMD for 2021 has not been satisfied even if the distribution is made on or before April 1, 2021 (and, accordingly, is not eligible for rollover). However, because of the June 23 guidance, once the RMD for 2021 has been satisfied, any subsequent amounts distributed in 2021 that would otherwise not be eligible rollover distributions may be rolled over consistent with the rules provided in the guidance.

New Guidance Regarding Required, Free COVID-19 Testing

Hi everyone.  Last week, on June 23, 2020, the Department of Labor (DOL), the Department of Health and Human Services (HHS), and the Department of the Treasury (collectively, the Departments) issued new guidance regarding the employee benefits aspects of the Families First Coronavirus Response Act (the FFCRA), the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), and other health coverage issues related to Coronavirus Disease 2019 (COVID-19).

A.  Background

As you know, the FFCRA was enacted on March 18, 2020. The FFCRA generally requires group health plans to provide benefits for certain items and services related to testing for the detection of COVID-19 when those items or services are furnished on or after March 18, 2020, and during the applicable emergency period (the “Free Testing”).  Under the FFCRA, plans must provide this Free Testing without imposing any cost-sharing requirements (including deductibles, copayments, and coinsurance), prior authorization, or other medical management requirements.

The CARES Act was enacted on March 27, 2020. The CARES Act amended the FFCRA to include a broader range of diagnostic items and services that group health plans must cover without any cost-sharing requirements, prior authorization, or other medical management requirements.  The CARES Act generally requires plans providing Free Testing to reimburse any provider of COVID-19 diagnostic testing an amount that equals:

  1. the negotiated rate; or
  2. if the plan does not have a negotiated rate with the provider, the cash price for such service that is listed by the provider on a public website.

The requirement to reimburse the provider an amount that equals the cash price of a COVID-19 test is contingent upon the provider making public the cash price for the test, as required by the CARES Act. If the provider has not complied with this requirement, and the plan does not have a negotiated rate with the provider, the plan may seek to negotiate a rate with the provider for the test. However, the CARES Act is silent with respect to the amount to be reimbursed for COVID-19 testing in circumstances where the provider has not made public the cash price for a test and the plan and the provider cannot agree upon a rate that the provider will accept as payment in full for the test. The Departments note that the CARES Act grants the Secretary of HHS authority to impose civil monetary penalties on any provider of a diagnostic test for COVID-19 that does not comply with the requirement to publicly post the cash price for the COVID-19 diagnostic test on the provider’s website and has not completed a corrective action plan, in an amount not to exceed $300 per day that the violation is ongoing.

Note: If you run into the situation where an out-of-network provider is being unreasonable in setting the cash price, please let us know.

B.        New Guidance

The new guidance clarified the following aspects of the FFCRA and CARES Act Free Testing requirements:

  1. Self-Funded Plans Must Comply. Self-funded health plans must comply with the Free Testing requirements.
  2. What Tests Must Be Covered? Free Testing is generally required for any of the following four tests:
    • Approved Test. A test that is approved, cleared, or authorized under the Federal Food, Drug, and Cosmetic Act. All in-vitro diagnostic tests for COVID-19 that have received an emergency use authorization (EUA) under the Federal Food, Drug, and Cosmetic Act are listed on the EUA page of the Food and Drug Administration (FDA) website, available at (At this time, the FDA has not cleared or approved an in vitro diagnostic test for COVID-19 under the other regulatory pathways outlined here.)
    • Emergency Use Requested. A test where the developer has requested, or intends to request, emergency use authorization under the Federal Food, Drug, and Cosmetic Act, unless and until the emergency use authorization request has been denied or the developer of such test does not submit a request under such section within a reasonable timeframe. Available on the FDA website is a list of clinical laboratories and commercial manufacturers that have notified FDA that they have validated their own COVID-19 test and are offering the test as outlined in FDA guidance.
    • State-Authorized Test. A test that is developed in and authorized by a State that has notified the Secretary of HHS of its intention to review tests intended to diagnose COVID–19. States and territories may authorize laboratories within that state or territory to develop and perform a test for COVID-19, as outlined in FDA guidance. States and territories that have notified FDA that they choose to use this flexibility are listed at
    • Maybe Other Tests. Other tests that the Secretary of HHS determines appropriate in guidance. No other tests have been specified in guidance by the Secretary of HHS at this time.
  3. Which Providers Can Order Free Testing? Free Testing must be provided “when medically appropriate for the individual, as determined by the individual’s attending health care provider.” A health care provider need not be “directly” responsible for providing care to the patient to be considered an attending provider, as long as the provider makes an individualized clinical assessment to determine whether the test is medically appropriate for the individual in accordance with current accepted standards of medical practice. Therefore, an attending provider is an individual who is licensed (or otherwise authorized) under applicable law, who is acting within the scope of the provider’s license (or authorization), and who is responsible for providing care to the patient. A plan, insurance company, hospital, or managed care organization is not an attending provider.
  4. At-Home Testing Must Be Covered. COVID-19 tests intended for at-home testing (including tests where the individual performs self-collection of a specimen at home) must be covered, when the test is ordered by an attending health care provider who has determined that the test is medically appropriate for the individual based on current accepted standards of medical practice and the test otherwise meets the statutory criteria in the FFCRA. This coverage must be provided without imposing any cost-sharing requirements, prior authorization, or other medical management requirements.
  5. No Free Testing For Employer Return-To-Work Programs. The FFCRA requires Free Testing only for diagnostic purposes. Clinical decisions about testing are made by the individual’s attending health care provider and may include testing of individuals with signs or symptoms compatible with COVID-19, as well as asymptomatic individuals with known or suspected recent exposure to SARS-CoV-2, that is determined to be medically appropriate by the individual’s health care provider. However, testing conducted to screen for general workplace health and safety (such as employee “return to work” programs), for public health surveillance for SARS-CoV-2, or for any other purpose not primarily intended for individualized diagnosis or treatment of COVID-19 or another health condition is beyond the scope of the FFCRA.
  6. Free Diagnostic Testing is Unlimited. The Free Testing required under the FFCRA is not limited with respect to the number of diagnostic tests for an individual, provided that the tests are diagnostic and medically appropriate for the individual, as determined by an attending health care provider in accordance with current accepted standards of medical practice.
  7. Facility Fee Related to Free Testing Must Be Covered. A facility fee is a fee for the use of facilities or equipment that an individual’s provider does not own or that are owned by a hospital. If a facility fee is charged for a visit that results in an order for or administration of a COVID-19 diagnostic test, the plan must also cover the facility fee without imposing cost-sharing requirements – to the extent the facility fee relates to the furnishing or administration of a COVID-19 test or to the evaluation of an individual to determine the individual’s need for testing. For example, if an individual is treated in the emergency room and the attending provider orders a number of services to determine whether a COVID-19 diagnostic test is appropriate, such as diagnostic test panels for influenza A and B and respiratory syncytial virus, as well as a chest x-ray, and ultimately orders a COVID-19 test, the plan must cover those related items and services without cost sharing, prior authorization, or other medical management requirements, including any physician fee charged to read the x-ray and any facility fee assessed in relation to those items and services.
  8. Reimbursement Requirements for Diagnostic Testing and Related Items or Services Only. The reimbursement requirements of the CARES Act (i.e., negotiated rate or cash price) do not apply to any items and services other than diagnostic testing for COVID-19.
  9. No Provider Balance Billing. The CARES Act generally precludes balance billing to the patient for COVID-19 testing. However, the CARES Act does not preclude balance billing for items and services not subject to the CARES Act, although balance billing may be prohibited by applicable state law and other applicable contractual agreements.
  10. Interaction of ACA Emergency Payment Rules and Required Free Testing. Under the Affordable Care Act, non-grandfathered group health plans offering non-grandfathered group coverage cannot impose cost sharing (expressed as a copayment or coinsurance rate) on out-of-network emergency services in a greater amount than what is imposed for in-network emergency services. Additionally, the Departments’ regulations provide that a plan satisfies the cost-sharing limitations in the ACA if it provides benefits for out-of-network emergency services in an amount at least equal to the greatest of the following three amounts (adjusted for in-network cost-sharing requirements): (1) the median amount negotiated with in-network providers for the emergency service; (2) the amount for the emergency service calculated using the same method the plan generally uses to determine payments for out-of-network services (such as the usual, customary, and reasonable amount); or (3) the amount that would be paid under Medicare for the emergency service (collectively, minimum payment standards). The minimum payment standards do not prohibit a group health plan from paying an amount for an emergency service that is greater than the amounts specified in the regulations.  Because the Departments interpret the provisions of the CARES Act as specifying a rate that generally protects participants, beneficiaries, and enrollees from balance billing for a COVID-19 test, the requirement to pay the greatest of three amounts under the ACA is superseded by the requirements of the CARES Act with regard to COVID-19 diagnostic tests that are out-of-network emergency services. For these services, the plan must reimburse an out-of-network provider of COVID-19 testing an amount that equals the cash price for such service that is listed by the provider on a public website, or the plan may negotiate a rate that is lower than the cash price.
  11. Can Reduce Expanded Coverage Without 60 Day Advance Notice. The Departments previously announced temporary enforcement relief that allows plans to make changes to coverage to increase benefits, or reduce or eliminate cost sharing, for the diagnosis and treatment of COVID-19 (i.e., the Free Testing) or for telehealth and other remote care services more quickly than they would otherwise be able to under current law. A plan may also revoke these changes upon the expiration of the public health emergency related to COVID-19 without satisfying advance notice requirements. If a plan reverses these changes once the COVID-19 public health emergency or national emergency declaration is no longer in effect, the Departments will consider a plan to have satisfied its obligation to provide advance notice of a material modification with respect to a participant, beneficiary, or enrollee if the plan either (a) had previously notified the participant, beneficiary, or enrollee of the general duration of the additional benefits coverage or reduced cost sharing (such as, that the increased coverage applies only during the COVID-19 public health emergency); or (b) notifies the participant, beneficiary, or enrollee of the general duration of the additional benefits coverage or reduced cost sharing within a reasonable timeframe in advance of the reversal of the changes.
  12. Can Provide Telehealth to Employees Not in Health Plan. In light of the COVID-19 pandemic, a large employer may offer coverage only for telehealth and other remote care services to employees who are not eligible for any other group health plan offered by the employer. This relief is limited to telehealth and other remote care service arrangements that are sponsored by a large employer and that are offered only to employees (or their dependents) who are not eligible for coverage under any other group health plan offered by that employer. Under this temporary relief, the Departments will continue to apply otherwise applicable federal non-discrimination standards.
  13. Mental Health Parity Testing Can Ignore Free COVID-19 Testing. When performing the required mental health parity testing, plans can disregard the Free Testing required under the FFCRA.
  14. Wellness Programs Can Waive Standards. A plan may waive a standard for obtaining a reward (including any reasonable alternative standard) under a health-contingent wellness program if participants or beneficiaries are facing difficulty in meeting the standard as a result of circumstances related to COVID-19. However, to the extent the plan waives a wellness program standard as a result of the COVID-19 public health emergency, the waiver must be offered to all similarly situated individuals.

Additional guidance regarding the CARES Act

Hi everyone. I hope all of you are doing well.

I want to pass along some quick information on a new IRS notice (Notice 2020-50) that was issued last Friday, which provides additional guidance regarding the CARES Act.

You can find the notice here:

There are lots of helpful details in the notice, but the key piece that I want to mention is that it expands the list of individuals who qualify for coronavirus-related distributions.

  • Generally. You may recall that the CARES Act generally allows a qualified individual to take a coronavirus-related distribution of up to $100,000 from certain retirement plans, including 401(k) plans. These distributions have special tax treatment. There are specific rules related to these distributions.
  • Prior Rule – Qualified Individual. Under the CARES Act itself, a qualified individual is an individual:
    1. who is diagnosed with the virus SARS-CoV-2 or with coronavirus disease 2019 (COVID-19) by a test approved by the Centers for Disease Control and Prevention (including a test authorized under the Federal Food, Drug, and Cosmetic Act);
    2. whose spouse or dependent is diagnosed with COVID-19 by a test approved by the Centers for Disease Control and Prevention (including a test authorized under the Federal Food, Drug, and Cosmetic Act); or
    3. who experiences adverse financial consequences as a result of (a) the individual being quarantined, being furloughed or laid off, or having work hours reduced due to COVID-19; (b) the individual being unable to work due to lack of childcare due to COVID-19; or (c) closing or reducing hours of a business owned or operated by the individual due to COVID-19.
  • New Rule – Expands Definition of Qualified Individual. The IRS notice issued on Friday adds to the list of those who qualify, such that a qualified individual now additionally includes an individual who experiences adverse financial consequences as a result of:
    1. the individual having a reduction in pay (or self-employment income) due to COVID-19 or having a job offer rescinded or start date for a job delayed due to COVID-19;
    2. the individual’s spouse or a member of the individual’s household (someone who shares the individual’s principal residence) being quarantined, being furloughed or laid off, or having work hours reduced due to COVID-19, being unable to work due to lack of childcare due to COVID-19, having a reduction in pay (or self-employment income) due to COVID-19, or having a job offer rescinded or start date for a job delayed due to COVID-19; or
    3. closing or reducing hours of a business owned or operated by the individual’s spouse or a member of the individual’s household due to COVID-19.

I think the new #5 above will be particularly helpful/interesting to many of you.

Please let me know if you have any questions.

Thank you,

Final electronic delivery guidance for plan administrators

Good morning everyone. I hope all of you are doing well, and that your business is hanging in there.

This morning the Department of Labor issued their final rule creating a new, additional method for plan administrators to use to deliver certain benefit plan documents to participants and beneficiaries electronically. I am still studying the rule but here is a very quick overview:

  • New Rule = “Notice and Access” Option. The new rule is optional and allows administrators who satisfy certain requirements to provide participants and beneficiaries with a notice that certain disclosures (e.g., 401(k) plan summary plan description) will be made available on a website, or to furnish disclosures via email. Individuals who prefer to receive disclosures on paper can request paper copies and opt out of electronic delivery.
  • New Rule Effective Date. 60 days after the rule is published in the federal register. This rule has not been officially published yet. I think it will be published on May 27, 2020 – so I think it will likely be effective around July 27, 2020.
  • New Rule Only Applies to “Covered Individuals.” The regulation defines a “covered individual” for purposes of the rule as a participant, beneficiary, or other individual entitled to covered documents and who—when he or she begins participating in the plan, as a condition of employment, or otherwise—provides the “employer, plan sponsor, or administrator (or an appropriate designee of any of the foregoing)” with an electronic address. This includes an email address or internet-connected mobile-computing-device (e.g., smartphone) number, and is intended to be broad enough to encompass new and changing technology.
    • The existence of an electronic address for notification to a covered individual is critical to the effective implementation of a notice-and-access framework, much like a mailing address is critical to delivery of a paper document.
    • The final rule offers plan administrators a variety of ways to comply with the condition to obtain an electronic address for each covered individual. This provision, for example, is satisfied if the company provides plan participants an electronic address because of their employment. This requirement also is satisfied if an employee provides a personal electronic address to the plan administrator or plan sponsor, for example, as part of the job application process or on other human resource documents. In addition, a plan administrator or service provider can request an electronic address in plan enrollment paperwork or to establish a plan participant’s online access to plan documents and account information.
    • New Rule Only Applies to 401(k) and Pension Plan Documents. The new rule can generally be used to furnish any pension benefit plan (which would include 401(k) plans) document that a plan administrator is required to furnish under Title I of ERISA, e.g., summary plan descriptions, summary of material modifications, participant fee disclosures, etc. This means the rule does not apply or help with health and welfare plan disclosures.
    • Prior/Current Electronic Delivery Rule. Currently, plan administrators must use delivery methods reasonably calculated to ensure actual receipt of information, e.g., in-hand delivery, sending by first class mail, etc. Back in 2002, the DOL issued guidance (an optional safe harbor) that also allows plan administrators to send documents to participants and beneficiaries electronically – without their consent – if they are “wired at work,” i.e., they use a computer as part of their job. This prior/current electronic delivery option remains in place and you can continue to use it, but you also have the new option (i.e., notice and access) available now too.
    • New Rule Has Other Requirements. As I mentioned above, the new rule was literally issued this morning so we are still reading/processing, but there are additional requirements beyond those that I’ve stated in this quick summary.

Also, on a completely unrelated note, in case you are interested, attached is the motion for leave to file an amicus brief (with the proposed brief attached) that we filed last week on behalf of the State Chamber and Hobby Lobby in the federal lawsuit challenging the Oklahoma state PBM law. Here is a Law360 article about our filing:

Thank you – have a great day.


New documents impacting benefit plan administrators released

Good morning everyone. Yesterday, various government agencies released a number of new documents that impact – right now – the administration of benefit plans including:

  • Final regulations (U.S. Treasury Department and the Internal Revenue Service) – extending certain deadlines including (a) HIPAA special enrollment periods – e.g., deadline for a participant to add a new baby to a health plan; (b) COBRA enrollment periods – i.e., deadline for participants to elect COBRA coverage following a qualifying event; (c) COBRA premium payment deadline; and (d) claim and appeal deadlines under benefit plans.
  • EBSA Disaster Relief Notice 2020-01 (issued in coordination with Treasury, the IRS and the U.S. Department of Health and Human Services) – impacting (a) procedural requirements for retirement plan loans, distributions, plan amendments; (b) the timing of 401k deferrals and loan repayments; (c) blackout periods; (d) 5500s; and (e) M-1s.
  • DOL COVID-19 FAQs for Participants and Beneficiaries – this guidance contains a series of FAQs telling plan participants of their rights during this period. Some very interesting guidance here.
  • A news release on the guidance package

We had not planned to do the Friday call tomorrow, but given how many rules and deadlines are immediately impacted by this new guidance, we will go ahead and do a call tomorrow at 9:30 a.m. and walk through the new provisions.


Coronavirus and employee benefits

Hi everyone. Thank you again for participating in our calls the past few weeks. I am very grateful to each of you.

New Retirement Plan Rule Coming Very Soon. I understand that final regulations expanding electronic disclosure for retirement plans have been sent to the White House Office of Management and Budget, which is typically the final step before rules are formally published. As you may recall, last fall a proposed rule was issued that would permit retirement plan sponsors to satisfy disclosure requirements (e.g., 401(k) Summary Plan Description) by notifying participants and beneficiaries that the information will be made available on a website. Individuals would be able to elect paper disclosures and opt out of electronic delivery entirely, and plans could also continue to rely on the existing rules for electronic delivery – or furnish paper documents by hand-delivery or by mail. Although we do not know what, if any, changes have been made since the proposed rule, it is more important now than ever to have workable electronic disclosure rules due to the massive company shutdowns and social distancing required for COVID-19. Not only is it not possible right now for most companies to post notices in the workplace that will be seen by all employees, the service providers that companies hire to print and mail paper copies of notices are generally shut down as well. More to come on this – possibly very soon.

This Friday – Town Hall Discussion. I’ve already been receiving questions for this Friday’s town hall discussion. Thank you. This week we will go back to the normal format where we will answer questions and cover anything new that we’ve learned since last week. I will also provide some additional information about what other large employers are doing.

Opening Back Up the Workforce. Two things, first we are going to be releasing a survey later this week with questions for our clients to answer anonymously regarding what they plan to do to open back up their business (when, how, rotating shifts?, masks?, testing?, etc.). Then we will compile that into a format that we can share with you and our other clients. So, please look for the survey – probably on Friday. Second, in case you missed it, today we released a three-part webinar on Reopening the Workplace, in the wake of President Trump’s three-phased strategy. The first part is Dr. Milford, who you heard from last week. The second part deals with employment/HR considerations. The third part deals with employee benefits considerations. You can find these webinars on the right side of our webpage:

Thank you,