🗓️ June Updates
Keeping HR pros up to date with important compliance updates and human resource articles.
IRS Issues Guidance on Taxability of DCAP Benefits
Recently, 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 are typically not permitted, although a 2%-month grace period is allowed. However, recent coronavirus-related relief allows employers to amend their plans to permit carryover of used DCAP amounts to plan years ending in 2021 and 2022, or to extend the permissible grace period to plan years over the same period.
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.
DOL Issues Guidance on FMLA & Mental Health Conditions
The Wage and Hour Division of the DOL has released new resources on workers’ rights to leave for mental health conditions under the FMLA. The new guidance includes:
The new resources make clear that mental health conditions are considered serious health conditions under the FMLA if they require inpatient care or continuing treatment by a health care provider, such as an overnight stay in a treatment center for addiction or continuing treatment by a clinical psychologist. Chronic conditions such as anxiety, depression, or dissociative disorders that cause occasional incapacitated periods and require treatment at least twice a year fall under the “continuing treatment” definition.
EEOC Extends EEO-1 Deadline for 2021 Workforce Data Reports
Employers subject to equal employment opportunity reporting (EEO-1) requirements now have extra time to file their workforce data from 2021, the EEOC announced shortly after the original May 17, 2022, deadline passed. The initial deadline had already been delayed from the usual March 31 due to the COVID-19 pandemic. The new deadline for 2021 submissions is June 21, 2022.
In general, a private-sector employer is subject to EEO-1 reporting if it:
- Has 100 or more employees;
- Has 15-99 employees and is part of a group of employers with 100 or more employees; or
- Is a federal contractor with 50 or more employees and a contract of $50,000 or more
Recommendations for Auditing Your Group Insurance Bills
We are finding that carriers are getting very particular about how far we can go back and make changes and, as a result, collect premium reimbursement. When you are auditing your invoices, common errors that you may see are – employees on the bill who are no longer employed, new hires who have not been added after their waiting period has ended and/or dependents who are missing or covered long after they should have been removed.
Evidence of Insurability (EOIs) are an area to pay close attention. Due to PHI on the EOIs, carriers do not let agents know if an EOI has been approved or denied; therefore, this process is managed at the employer/plan administrator level. Once an EOI has been approved or denied, you will need to go into your HRIS or payroll system to make any applicable deduction changes.
We recommend that you remind employees to inform you of life events – marriage, divorce, birth of child, adoption, etc. as soon as possible. Typically, carriers require these to be processed within 31-days of the event or the person will have to wait until the next open enrollment or another life event.
The following are some helpful next steps when auditing:
- Start with an accurate master list of employees that should be on each plan, which dependents should be on each plan, and accurate covered payroll and insured volumes for the life and disability plans.
- The accuracy of your covered payroll and insured volume amounts depends on your life and disability plan contracts’ definition of earnings. Two common definitions are current salary, which requires an update every time there is a salary change, or W2 earnings, which only has to be updated once per year.
- Make sure you know the waiting period for each of your plans so you can determine when your new hires should be added. It is easier if the waiting period is the same for all plans.
- An HRIS system or online enrollment tool can help you maintain current census date to check against your bills.
- Know the maximum age for dependent children to be covered on your health, dental and vision plans. For most, this will be age 26. Understand when the kids will need to be removed from the plan and make sure the parents know that day is coming.