Benefits Buzz Newsletter - August 2021

Additional FAQs on the ARPA COBRA Subsidy

On July 26, 2021, the IRS issued Notice 2021-46, providing additional guidance on the application of the American Rescue Plan Act (ARPA) subsidy for continuation health coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA) in the form of 11 questions and answers.

The Notice expands on prior guidance issued on May 18, 2021.

Background

The ARPA subsidy covers 100% of COBRA and state mini-COBRA premiums from April 1–Sept. 30, 2021, for certain assistance-eligible individuals whose work hours were reduced or whose employment was involuntarily terminated. The subsidy is funded via a tax credit provided to employers, insurers or group health plans, according to the terms of the statute.

Q&A Topics

The questions addressed include:

·   Subsidy availability to individuals eligible for an extension who had not elected it;

·   Whether subsidies for vision or dental-only coverage ends due to eligibility for other coverage that does not include vision or dental benefits;

·   Subsidy availability under a state statute that limits continuation coverage to government employees;

·   Whether employers may claim the tax credit if the Small Business Health Options Program (SHOP) Exchange requires employers to pay COBRA premiums; and

·   Which party may claim the tax credit in situations involving parties other than an insurer or former common law employer providing the COBRA coverage.

Proposed Rule Would Update Benefit and Payment Parameters for 2022

On July 1, 2021, the Department of Health and Human Services (HHS) published a proposed rule that would revise several benefit and payment parameters under the ACA for the 2022 benefit year. While many of the proposed changes primarily impact insurers and Exchanges, some provisions may affect employers.

·   

The rule proposes to repeal the Exchange direct enrollment option, which establishes a process for Exchanges to work directly with issuers, agents and brokers to operate enrollment websites through which consumers can apply for coverage, receive an eligibility determination and purchase a qualified health plan.

·   For the 2022 coverage year and beyond, the rule proposes to lengthen the annual open enrollment period for coverage through all Exchanges to Nov. 1 through Jan. 15. The current annual open enrollment period runs Nov. 1 through Dec. 15.

·   The rule proposes modifications to the Section 1332 State Innovation Waiver process, including changes to many of the policies and interpretations of the guardrails recently issued in the 2022 Notice of Benefit and Payment Parameters, which provided more flexibility for states to apply for waivers from certain ACA provisions.

CDC Urges Schools to Fully Reopen in the Fall, Releases New Guidance

On July 9, 2021, the Centers for Disease Control and Prevention (CDC) released new guidance for K-12 schools, urging them to fully reopen in the fall.

The CDC acknowledged that “students benefit from in-person learning,” even as the delta variant of COVID-19 spreads across the United States.

The agency encouraged school districts to use local health data to help make determinations about the level of COVID-19 prevention measures to use. For instance, areas with high vaccination rates may not need to require temperature screenings to enter a building.

Generally, the CDC’s new guidance recommends social distancing and mask-wearing among the unvaccinated in schools (which effectively means many K-12 students, as no vaccine has been authorized for use for ages younger than 12).

Since many students are ineligible for a vaccine, the CDC encourages “layered prevention strategies” (e.g., using multiple prevention strategies together consistently, such as social distancing and screening tests) to help protect everyone, including unvaccinated teachers.

However, the agency noted that some prevention measures, such as social distancing, may prevent schools from fully reopening. In those situations, the CDC said, layering additional protections is even more critical.

The message is clear from the CDC: Schools should reopen in the fall, take necessary precautions and inform decisions with local health data.

What’s Next?

This new guidance from the CDC is likely to be welcomed news among working parents, many of whom have been forced to work at home alongside their children. With reopened schools, parents won’t need to divide their focus between their jobs and caregiving responsibilities.

From an employer perspective, this new guidance means working parents may no longer need to stay home to watch children. Therefore, businesses may be able to reopen more swiftly in the fall—opposed to having staff trickle back in.

Additionally, employers should consider how this new guidance may affect the benefits they provide to working parents.

8 Policies to Review Before Returning to Work

Returning to in-person work is a top priority for many workplaces. As the impact of the COVID-19 pandemic lessens, employers are eager to get employees back in their buildings. But that comes with a series of complications.

The most significant complication is the fact that every workplace decision in the immediate future will be viewed through COVID-19-colored glasses. In other words, while the pandemic may be getting under control, it’s still top of mind for many people. Knowing this, employers will need to balance policies against health concerns. This means potentially updating preexisting policies or adding new ones to conform to the current reality where employees are still dealing with the lingering effects of the COVID-19 pandemic (e.g., greater dependent responsibilities, health conditions, financial disruptions, etc.).

To assist this effort, this article outlines eight workplace policies that employers may consider revisiting prior to reopening their businesses for in-person work. Reevaluating policies now can help better transition employees back into the workplace later.

Note, this is a general information article. The law is constantly evolving, and government guidance will continue to affect all these policies moving forward. Employers should contact legal counsel when amending or drafting any workplace policy.

1. Return-to-Work Policy

Some workplaces have stand-alone return-to-work policies that apply to employees temporarily unable to do their jobs due to injury or illness. These policies typically outline how an employee may still contribute to the organization while ill or injured. In other cases, return-to-work policies refer to the specifics of transitioning employees back to their regular positions or alternative arrangements. In the wake of the COVID-19 pandemic, employers may consider revising return-to-work policies to include individuals who are unwilling or unable to return to in-person work due to COVID-19 fears.

2. Travel Policy

Some workplaces require travel for certain positions. During a pandemic, this can make travelers wary. That’s why some employers have adapted their travel policies to limit nonessential travel and specifying precautions that employees should observe while traveling. These policies often include COVID-19 tests, self-quarantining or other measures to ensure the safety of traveling employees.

3. Remote Work Policy

Remote work policies may have been a fringe consideration just a few years ago, but now they’re nearly everywhere. And, during the COVID-19 pandemic, they have been invaluable. That’s why employees and employers alike are looking for ways to retain these arrangements. To that end, employers may want to explore how they can adapt their current remote work policies to accommodate employees even after the COVID-19 pandemic ends. Remote work policies typically specify how employees may request remote arrangements and outline the steps in the approval process. Policies may also be adapted to cover hybrid work situations, where employees work some in-person hours and some remote-working hours. Employers interested in such arrangements may consider ways to balance scheduling flexibility with adequate staffing coverage.

4. Paid Time Off Policy

Paid time off (PTO) is one of the most popular employee benefits offerings. Sometimes employees need to take time away from work for personal obligations or to simply recharge. PTO is sometimes separate from vacation time, with different restrictions as to when it may be used. For that reason, employers may choose to adapt their PTO policies to reflect the realities of the COVID-19 pandemic; this may include expanding applicable reasons to request PTO, changing how PTO is accrued or adjusting how much PTO may be used within a certain period. 

5. Vacation Policy

After a year of being cooped up at home, employees may be yearning for vacations. However, if everyone decides to take off at once, that could be crippling to a business. For that reason, employers may wish to review their vacation policies (if separate from PTO policies) to ensure adequate operational coverage at all times.

6. Sick Leave Policy

As with vacation time and PTO, sick leave is another way for employees to take time away from work if they need it. However, this type of leave is subject to specific state and federal employment laws. For instance, during the COVID-19 pandemic, some employees were afforded guaranteed time away from work under specific circumstances. That’s why it’s important for employers to review their sick leave policies to ensure compliance with applicable federal and state laws; this includes continuing to monitor official guidance as it’s released.

7. Mask Policy

Mask-wearing has been a contentious topic during the COVID-19 pandemic. With more employees getting vaccinated, some businesses aren’t requiring that masks be worn by anyone—staff or customers. Other establishments are taking the opposite approach, even among vaccinated individuals. Deciding whether to require masks will come down to individual workplaces, but each decision will likely involve the following considerations:

·         Applicable state or federal laws

·         Federal/expert recommendations (nonbinding)

·         Employee attitudes

·         Density of COVID-19 cases in the area

·         Operational variables surrounding the organization

Additionally, employers with mask policies will need to consider to whom the policies apply (e.g., all staff and customers) and in which circumstances (e.g., when within 6 feet of another person).

8. Workplace COVID-19 Safeguards Policy

During the height of the COVID-19 pandemic, many workplaces adopted policies specifically aimed at reducing the spread of COVID-19. These included enforcing social distancing requirements, spacing out workstations, cleaning shared areas frequently and limiting building capacities. Even as the pandemic winds down, some employers may wish to continue these policies to provide enhanced safety and peace of mind to employees. In addition, some workplaces are introducing COVID-19 vaccination policies.

Conclusion

Each workplace is unique and its policies should reflect that uniqueness. When it comes to return to work, employers will need to think about how to adjust protocols to best fit their own situations. This doesn’t mean redrafting everything from scratch. Rather, employers should consider the current state of affairs (i.e., the COVID-19 factor) and adapt their policies accordingly.

Reach out to Better Business Planning, Inc. for additional workplace guidance. 

OSHA Updates Guidance for Mitigating and Preventing the Spread of COVID-19 in the Workplace

On June 10, 2021, the Occupational Safety and Health Administration (OSHA) updated its guidance on mitigating and preventing the spread of COVID-19 in the workplace. The guidance now focuses on protections for unvaccinated and otherwise at-risk employees. OSHA’s update to the guidance reflects the U.S. Centers for Disease Control and Prevention (CDC) guidance for fully vaccinated people. This guidance emphasizes industries noted for prolonged close-contacts like meat processing, manufacturing, seafood, grocery and high-volume retail.

The original guidance issued on Jan. 29, 2021, provided requirements employers should take to implement a workplace COVID-19 prevention program and did not include information about the COVID-19 vaccine.

Updated Guidance

OSHA provides that most employers no longer need to take steps to protect their workers from COVID-19 exposure in any workplace—or well-defined portions of a workplace—where all employees are fully vaccinated. The new guidance updates the roles of employers and workers in responding to COVID-19 for those that are at-risk or unvaccinated.

The guidance also provides an appendix with measures for high-risk workplaces with mixed-vaccination status workers. It provides that employers take additional steps for high-risk situations due to the following factors: close contact, duration of contact, type of contact and other distinctive factors.

Employer Next Steps

Employers should continue to take steps to protect at-risk or unvaccinated workers in their workplace. Employers can do this by implementing multilayered interventions to protect these workers and mitigate the spread of COVID-19.

To view the original article, go to http://www.bbp-dac.com/bbp/OSHAUpdatesGuidanceforMitigatingandPreventingtheSpreadofCOVID19intheWorkplace.pdf 

Benefits Buzz Newsletter - June 2021

HSA/HDHP Limits Increase for 2022

On May 10, 2021, the IRS released Revenue Procedure 2021-25 to provide the inflation-adjusted limits for health savings accounts (HSAs) and high deductible health plans (HDHPs) for 2022. The IRS is required to publish these limits by June 1 of each year.

Eligible individuals with self-only HDHP coverage will be able to contribute $3,650 to their HSAs for 2022, up from $3,600 for 2021. Eligible individuals with family HDHP coverage will be able to contribute $7,300 to their HSAs for 2022, up from $7,200 for 2021. Individuals who are age 55 or older are permitted to make an additional $1,000 “catch-up” contribution to their HSAs.

The minimum deductible amount for HDHPs remains the same for 2022 plan years ($1,400 for self-only coverage and $2,800 for family coverage). However, the HDHP maximum out-of-pocket expense limit increases to $7,050 for self-only coverage and $14,100 for family coverage.

IRS Issues Guidance on Taxability of DCAP Benefits

On May 10, 2021, the IRS released guidance on the taxability of dependent care assistance programs (DCAPs) for 2021 and 2022, clarifying that amounts attributable to previously issued carryover and extended grace period relief generally are not taxable.

Carryovers of unused DCAP amounts typically are not permitted, although a 2½ month grace period is allowed. However, recent coronavirus-related relief allows employers to amend their plans to permit the carryover of unused DCAP amounts to

Specifically, if these dependent care benefits would have been excluded from income if used during taxable year 2020 (or 2021, if applicable), these benefits will remain excludible from gross income and are not considered wages of the employee for 2021 and 2022. They will also generally not be taken into account for purposes of applying the exclusion limits of Internal Revenue Code Section 129.
plan years ending in 2021 and 2022, or to extend the permissible grace period to plan years over the same period.

Remainder of 2022 Payment Notice Finalized

On May 5, 2021, the Department of Health and Human Services (HHS) published a second Notice of Benefit and Payment Parameters (NBPP) for 2022 that finalized the remainder of the standards included in the proposed notice issued at the end of 2020. The first final 2022 NBPP was published Jan. 19, 2021.

This second NBPP describes additional benefit and payment parameters under the Affordable Care Act (ACA) that apply for the 2022 benefit year, including the following:

·   The annual out-of-pocket maximum limit will increase to $8,700 (self-only coverage) or $17,400 (family coverage).

·   The required contribution percentage for catastrophic coverage eligibility will decrease to 8.09%.

·   An additional special enrollment period (SEP) for Exchange coverage for certain Exchange enrollees who lose premium tax credit eligibility.

IRS Releases HSA Limits for 2022

IRS has just issued Revenue Procedure 2021-25, which provides the 2022 cost-of-living contribution and coverage adjustments for HSAs, as required under Code Section 223(g). It also includes the 2022 limit for Excepted Benefit HRAs. Some items have increased for 2022.  

 

Annual HSA Contribution Amounts

 

2021   2022    Contribution Amounts

 

$3,600  $3,650  Individual 

 

$7,200  $7,300  Family

 

$1,000   $1,000  Catch-up 

 

Annual Maximum Out-Of-Pocket Limits for HDHP

  

2021  2022  Coverage Levels

 

$7,000  $7,050 Individual

 

$14,000 $14,100 Family 

 

Annual Minimum Deductible Amount Limits for HDHP

  

2021 2022  Coverage Levels

 

$1,400 $1,400 Individual

  

$2,800  $2,800 Family

 

Excepted Benefit HRA

 

2021 2022 Contribution Limits

 

$1,800 $1,800

 

For a copy of Revenue Procedure 2021-25 see below: 

Rev. Proc. 2021-25

SECTION 1. PURPOSE

This revenue procedure provides the 2022 inflation adjusted amounts for Health 

Savings Accounts (HSAs) as determined under § 223 of the Internal Revenue Code and the maximum amount that may be made newly available for excepted benefit health reimbursement arrangements (HRAs) provided under § 54.9831-1(c)(3)(viii) of the Pension Excise Tax Regulations. 

SECTION 2. 2022 INFLATION ADJUSTED ITEMS

01 HSA INFLATION ADJUSTED ITEMS

Annual contribution limitation. For calendar year 2022, the annual limitation on 

deductions under § 223(b)(2)(A) for an individual with self-only coverage under a high deductible health plan is $3,650. For calendar year 2022, the annual limitation on deductions under § 223(b)(2)(B) for an individual with family coverage under a high deductible health plan is $7,300.

High deductible health plan. For calendar year 2022, a “high deductible health 2

plan” is defined under § 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,400 for self-only coverage or $2,800 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $7,050 for self-only coverage or $14,100 for family coverage.

02 HRA INFLATION ADJUSTED ITEM

For plan years beginning in 2022, the maximum amount that may be made newly 

available for the plan year for an excepted benefit HRA under § 54.9831-1(c)(3)(viii) is $1,800. See § 54.9831-1(c)(3)(viii)(B)(1) for further explanation of this calculation.

SECTION 3. EFFECTIVE DATE

This revenue procedure is effective for HSAs for calendar year 2022 and for 

excepted benefits HRAs for plan years beginning in 2022. 

SECTION 4. DRAFTING INFORMATION

The principal author of this revenue procedure is Bill Ruane of the Office of 

Associate Chief Counsel (Income Tax & Accounting). For further information regarding § 223 of the Code and HSAs contact William Fischer at (202) 317-5500 (not a toll-free number). For further information regarding excepted benefit HRAs, contact Christopher Dellana at (202) 317-5500 (not a toll-free number). For further information regarding the calculation of the inflation adjustments in this revenue procedure, contact Mr. Ruane at (202) 317-4718 (not a toll-free number).

A Note From Larry Grudzien:

I have updated my Employer's Guide to Health Savings Accounts (HSAs) to include the new 2022 contribution and coverage amounts. I have also made other other changes.

Since I first wrote this publication in 2004, I have been updating it every time there has been any changes. It explains every aspect of HSAs in fifty questions and answers. It also includes a chart that compares HSAs with Health FSAs and HRAs.

If you would like a copy, please click on the link below:

http://www.bbp-dac.com/bbp/HSAEmployerGuide2021Final.pdf 

Direct and Indirect Workers' Compensation Costs Explained

Workers’ compensation claims have a variety of different costs associated with them. Some of these costs are expected costs, while others are unexpected. Here’s the difference between these terms:

·         Expected costs are those that are covered by workers’ compensation insurance. Such expenses are commonly referred to as direct costs.

·         Unexpected costs are those that workers’ compensation insurance does not cover. These expenses are commonly referred to as indirect costs.

According to the Occupational Safety and Health Administration (OSHA), both direct and indirect costs can have a substantial impact on employers and their bottom lines. As such, it’s important for employers to understand the difference between direct and indirect costs, how to reduce these costs and why it’s important to do so.

Direct vs. Indirect Costs

Direct and indirect costs are determined by which expenses workers’ compensation insurance will or will not cover. To reiterate, direct costs are those that are covered by such insurance, which can include:

·         Employee wage benefits—These benefits include temporary total, temporary partial, permanent partial and permanent total disability. Employers have to pay these benefits when an employee is unable to work or return to work in full capacity.

·         Medical payments—These payments refer to any medical costs needed to treat an employee’s injury.

·         Vocational rehabilitation costs—These expenses are any costs associated with an employee’s rehabilitation (e.g., training and career counseling).

·         Death/dependency benefits—These benefits are for the spouse or dependents of an employee who was killed by a work-related injury. Such benefits vary by state.

·         Legal fees—These fees include those associated with a workers’ compensation claim, any civil liability expenses and settlement costs.

Indirect costs for a workers’ compensation claim are those not covered by such insurance. These costs can vary depending on the extent of an employee’s injury. Some indirect costs include:

·         Wage and hour costs—These additional costs are incurred by employees who must work extra hours to compensate for another employee’s time away from work. This includes hiring temporary workers or having employees work overtime to fill in for the missing worker.

·         HR support expenses—This includes the increased work and time incurred by individuals who handle workers’ compensation claims and related paperwork.

·         Claim investigation costs—This includes costs associated with the investigation of a workers’ compensation claim if there is a concern of fraud.

·         Hazard mitigation costs—This includes costs associated with mitigating the hazard(s) that caused an employee’s injury.

·         Production deadline extensions—An injured employee’s absence can cause delays in production, thus increasing production costs and negatively affecting business contracts.

·         Training expenses—This refers to the costs of training other employees to fill in for an injured employee if they are unable to return to work in their original capacity. This can be a temporary or permanent arrangement. If it’s permanent, the company may have to cover the costs of hiring a new employee.

·         OSHA fines—If an employee is injured or killed at work, an inspection will be triggered and the employer may be subject to OSHA citations for any safety issues found during the inspection. Also, the more employee injuries and fatalities an employer experiences, the higher their business’s incident rate will be—thus triggering more OSHA inspections.

·         Insurance premium expenses—The more injury-related costs an employer experiences, the higher their experience modification factor will be. As a result, their business may be considered high risk and could receive increased premium rates.

·         Repair costs—Repair expenses associated with property or equipment can also be considered indirect costs, depending on whether or not the property or equipment was involved in an injury-causing incident.

·         Workplace culture concerns—A company with a high rate of injury may encounter poor employee morale, particularly because employees may begin to think that their employer does not care about their well-being. Typically, the lower morale is within a company, the higher incident rates will be.

·         Reputational struggles—A company with a high rate of workers’ compensation claims can garner a bad reputation. With a poor reputation, business contracts and qualified workers may be difficult to secure. A bad reputation can negatively impact an employer’s bottom line and even lead to their business closing down altogether.

Controlling these direct and indirect costs can be beneficial for employers. That’s why it’s crucial to be proactive.

Reducing Direct and Indirect Costs

It’s important for employers to understand that investing in their safety programs can positively affect the outcome of direct and indirect costs. For instance, managing safety programs at a business and having employees actively engage in hazard identification can reduce the likelihood of injuries. By reducing injuries, direct costs related to expenses such as wage benefits and medical payments will also decrease. This will, in turn, lower indirect costs as well.

Having a successful safety program is the foundation of reducing workers’ compensation claims. If an employer cannot eliminate workers’ compensation claims, another way to reduce direct and indirect claims is to proactively manage claims. This can involve working with employees to get them back to work quicker after an injury and following up with claims handlers. Furthermore, participating in the claims process can improve communication between an employer and their employees, as well as the employer and their insurance company.

Having an effective return-to-work program can also help with reducing direct and indirect costs. Having other work options for employees that fit within their medical restrictions encourages employees to return to work quicker, thereby reducing a significant amount of direct and indirect costs.

The Importance of Reducing Direct and Indirect Costs

Minimizing direct and indirect workers’ compensation costs is critical. By reducing injuries, a company can continue to function normally, avoid interruptions and prevent issues with production or business contracts.

According to the National Safety Council (NSC), work-related injury costs for employers in 2019 totaled $171 billion. This total can be broken down as follows:

·         $52.9 billion in wage and productivity losses

·         $35.5 billion in medical expenses

·         $59.7 billion in administrative expenses

Employers’ uninsured costs ($13.9 billion), property or equipment damage ($5 billion) and fire-related losses ($3.7 billion) also contributed to this total.

In breaking these costs down, the NSC found that such expenses came out to $1,100 per employee. Further, the average cost per fatality was $1.2 million, while the average cost of an injured employee’s medical treatment was $42,000.

Overall, by reducing employee injuries, employers can help create a positive work culture and lower workers’ compensation expenses— thus minimizing both direct and indirect costs.

Contact Better Business Planning, Inc. to discuss your workers’ compensation needs.