I Can’t Wait! Top 10 Health, Fringe, and Leave Benefit Compliance Issues for the New Year

The Biden administration has proposed several reforms that would affect health and leave programs. These proposals come after multiple COVID-19 laws enacted in 2020 and 2021 requiring significant changes to health plans, including major new transparency standards and prohibitions on surprise medical bills. Regulators are racing to provide the extensive guidance employers need to comply with these requirements, many of which take effect beginning in 2022. In addition, states continue to enact laws that affect health and leave benefits. Read this article to learn more about what’s on the horizon for employers and employee benefit plan sponsors.

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• Employee Benefits & Executive Compensation Key Legal Developments Tracker
  Stay informed on new developments.
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    In an ESOP-related suit, the 7th Circuit has ruled that ERISA preemption does not bar state-law corporate claims against “dual-hat” fiduciaries (e.g., D&Os having both ERISA and corporate fiduciary roles) but does preempt same claims for third-party fiduciaries not having corporate fiduciary responsibility. Davis v. Richards, 2021 U.S. App. LEXIS 22348 (7th Cir. 2021).
    United Healthcare settled with plaintiffs, insureds nationwide, for $14.3 million, who allegedly had been denied benefits or provided with reduced coverage for mental health and substance abuse disorders. Stipulation of Settlement; DOL News Release; UnitedHealth Strikes Deal to End Mental Health Policy Suits.
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    Recoupment of uncashed checks has been the focus of recent DOL retirement plan investigations, especially in the context of moneys retained by former recordkeepers. See DOL Encourages Retirement Plan Fiduciaries to Recoup Uncashed Checks From Retirement Plan Recordkeepers (Morgan Lewis, Aug. 13, 2021).
    IRS announced that the second remedial amendment cycle submission window for preapproved 403(b) retirement plans will begin May 2, 2022, and end May 1, 2023. IRS also extended the deadline for interim plan amendments relating to I.R.C. § 403(b) requirement changes providing that amendments to preapproved plans are timely if they are adopted by the employer by the end of the second calendar year after required changes go into effect for the plan. Rev. Proc. 2021-37.
  • Health and Welfare Plans
    DOL, HHS, and the IRS have announced their intention of proposing rules to amend Trump administration regulations that expanded religious and moral exemptions to mandatory coverage of certain contraceptive services as Affordable Care Act preventive services. Affordable Care Act Implementing FAQs (Part 48); 83 Fed. Reg. 57,536 (Nov. 15, 2018).

• IRS Corner: Unused transportation cards remain a problem. IRS, Office of Chief Counsel Letter 2020-0031 made clear that, in no case may an employer provide a cash refund of a transportation fringe benefit. See Reg. § 1.132-9, Q&A 14. An employee may receive a cash reimbursement of compensation reduction amounts only as a reimbursement of qualified transportation fringes, as defined under I.R.C. § 132(f)(1). IRS guidance permits employees to roll over any unused mass transit/vanpooling commuter account balance to the parking benefit balance, and vice versa. IRS, Office of Chief Counsel 2020-0024; see also IRS, FAQs About COVID Relief for Van Pools; Fringe Benefit Rules (IRC § 132).

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