🗓️ October 2021 Updates
Keeping HR leaders up to date with important compliance updates and human resource articles.
Changes Proposed to Form 5500 to Implement SECURE Act Rules
On September 14, 2021, federal agencies announced proposed revisions to the Form 5500 Annual Return/Report. These changes are designed primarily to implement the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) and to make other improvements. The key proposed forms revisions would do the following:
- Consolidate Form 5500 for defined contribution retirement plans
- Modify the Form 500 to reflect pooled employer plans as a new type of retirement plan and implement changes to multiple-employer pension plans’ reporting of participating employer information
- Expand the number of defined contribution retirement plans that would be eligible for small plan simplified reporting options by changing the participant-count methodology
- Add questions to improve financial and funding reporting by certain defined benefit pension plans, and improve oversight and compliance of tax-qualified retirement plans
If adopted, the proposed change generally would be effective for plan years beginning on or after January 1, 2022. For the 2022 plan year, Form 5500s generally are not required to be filed until seven months after the end of the 2022 plan year, and a 2.5 month extension is available.
Medicare Part D Notices Due Before October 15, 2021
Each year, Medicare Part D requires group health plan sponsors to disclose whether the health plan’s prescription drug coverage is credible to individuals eligible for Medicare Part D and to the Centers for Medicare and Medicaid Services (CMS). Plan sponsors must provide the annual disclosure notice to Medicare-eligible individuals before October 15, 2021 – the start date of the annual open enrollment period for Medicare Part D. Medicare beneficiaries who do not have credible prescription drug coverage and do not enroll in Medicare Part D when first eligible will likely pay higher premiums if they enroll at a later date. A group health plan’s prescription drug coverage is creditable if its actuarial value of standard Medicare Part D prescription drug coverage. In general, this actuarial determination measures whether the expected amount of paid claims under the group health plan’s prescription drug coverage is at least as much as the expected amount of paid claims under the Medicare Part D prescription drug benefit.
Medical Loss Ratio Rebates – How Can an Employer Distribute a Medical Loss Ratio (MLR) Rebate?
Qualified customers should have received 2021 MLR rebate checks for the 2020 plan year, as the deadline was September 30th. First, review your applicable plan documents and insurance contracts to see if they contain provisions on MLR rebate distributions. If the plan documents and insurance contracts are silent, employers have some discretion in how to divide the rebate. The division and distribution must be done on a reasonable basis and follow the general guidance given by the DOL and the IRS. Initially, the MLR rebate should be divided between employer and employees based on their respective shares of premiums paid. For example, if the employer pays 80% and the employee pays 20% of the premiums, then 80% of the rebate is attributable to the employer and 20% is attributable to the employees.
Employers generally have discretion in how to use their share of the rebate, though usually the employers’ portion is used to reduce future employer contributions. Options for distributing the employees’ share of the MLR rebate include paying rebate in cash, using it to reduce premiums in the current year (known as a premium holiday), or using it to enhance benefits. Cash distributions generally will result in tax consequences to the employee if premiums are paid on a pre-tax basis.
Important to note: the rebate should be applied or distributed within 90-days after it is received, or it will need to be placed in a trust.
IRS Issues Employer Guidance for Reporting 2021 FFCRA Leave
An IRS Notice issued September 7, 2021, provides guidance for employers on how to report sick and family leave wages for employee leave taken in 2021 under the FFCRA. Employers are required to report qualified 2021 FFCRA leave wages to employees on either a 2021 Form W-2 or in a separate statement provided with the Form W-2. The requirement applies only to employers who claim tax credits for the leave wages under this legislation.
According to the Notice, there are separate reporting requirements for leave provided from January 1, 2021, to September 30, 2021, and for leave provided April 1 2021, to September 30, 2021. For more information, please access Notice 2021-53. The American Rescue Plan Act’s tax credit extension for FFCRA leave expired September 30, 2021.
DOL Announces $11.25 Minimum Wage Rate for Federal Contractors
On September 15, 2021, the DOL announced a minimum wage rate of $11.25 for federal contractors. Similarly, the minimum wage rate for federal contractor-tipped employees will increase to $7.90 per hour. The new rates will be effective January 1, 2022. This minimum wage rate for federal contractors applies to workers performing work on or in connection with covered contracts, which include four major categories of contractual agreements: Procurement contracts for construction covered by the Davis-Bacon Act, service contracts covered by the Service Contract Act, concessions contracts, including any concessions contract excluded from the SCA, and contracts in connection with Federal employees, their dependents or the general public.
Also, as a reminder, the minimum wage rate for federal contractor employees to $15 per hour on January 30, 2022. This rate applies to new contracts entered into on or after January 30, 2022, and to contracts that are renewed or extended on or after January 30, 2022.
What President Biden’s Vaccine Mandate Means for Employers – The Known & Unknown
Recently, the White House ordered all federal workers and contractors to get vaccinated against COVID-19. Now, the government is imposing a similar requirement on private employers and this move is estimated to affect over 80 million workers. OSHA has been tasked with drafting an emergency temporary standard (ETS) and will announce specifics in the weeks to come. This is a developing issue so this is what we know as of today.
Rule Overview: Employers with 100 or more employees (measured companywide, not by location) will need to enforce one of the following:
- Require employees to get vaccinated against COVID-19
- Require unvaccinated employees to produce evidence of a negative COVID-19 test each week
What’s Known About the Upcoming Rule: OHSA is tasked with drafting the new rule. As such, there will be a few details available before OSHA publishes a definitive ETS. Meanwhile, the only pertinent information has come from short government briefings. Here’s what’s known about the upcoming rule, keeping in mind these particulars may change in time:
- The rule will only apply to employers with 100 or more employees, measured companywide.
- Employers will be able to decide if they want to adopt a strict, mandatory vaccination policy or allow testing as an alternative.
- Employers must provide paid leave to receive and recover from vaccinations.
- Remote employees not working in contact with others will be exempt from the ETS (unless they come into the workplace).
What’s Unknown About the Upcoming Rule: Much is still unknown about the upcoming vaccine requirement, and it will remain as such until OSHA publishes the ETS. Here are just some of the questions that remain to be answered:
- When will the ETS begin being enforced?
- What qualifies as proof of vaccination or a negative COVID-19 test?
- Who must pay for weekly testing?
- What specific penalties will there be for noncompliance?
- Will the mandates apply to part-time workers?
- Will there be new guidance on how employers should handle accommodations for employees seeking an exemption?
- Must paid leave be provided for employees’ COVID-19 testing, as it for vaccinations?
Expected Enforcement Timetable: The vaccination mandate will come in two primary waves:
- An ETS with comprehensive details and actionable steps
- A permanent OSHA standard with all aspects flushed out
First, OSHA will publish its ETS that will include important details and enforcement guidelines. This is expected to come in the weeks ahead; however, an actual release date is uncertain. Once issued, the ETS will take immediate effect in states where federal OHSA has jurisdiction. In states where the federal government does not have jurisdiction over workplace safety, state agencies will have to either adopt ETS or develop their own ETS within 30-days that is “at least effective.”
An ETS can only remain in effect for six months. After that time, it must be replaced by a permanent standard, which must undergo a formal rule-making process involving a notice-and-comment period to allow stakeholders to submit feedback.