New IRS Form 941 for COBRA Subsidy Filings Due August 2, 2021

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The Internal Revenue Service issued a new Form 941, the Employer’s Quarterly Federal Tax Return, for second quarter filings due August 2, 2021. The form has several new lines added to obtain credits for the COBRA subsidies offered under the American Rescue Plan Act (ARPA).

Additionally, some revisions have been made to align Form 941 with the extension and amendments made to the Emergency Paid Family Sick Leave and Extended FMLA provisions included in ARPA. Employers should discard any unused Form 941 with revision dates earlier than June 2021.

The new Form 941 may be downloaded here: https://www.irs.gov/pub/irs-pdf/f941.pdf

Contact your Cornerstone representative for more information.

IRS Provides Guidance on Premium Assistance and Tax Credit for Continuation Health Coverage

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The following information was originally released by the Health Care Administrators Association.

The Internal Revenue Service recently provided guidance on tax breaks under the American Rescue Plan Act of 2021 for continuation health coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA).

Notice 2021-31 PDF provides guidance for employers, plan administrators, and health insurers regarding the new credit available to them for providing continuation health coverage to certain individuals under COBRA.

The American Rescue Plan provides a temporary 100 percent reduction in the premium that individuals would have to pay when they elect COBRA continuation health coverage following a reduction in hours or an involuntary termination of employment. The new law provides a corresponding tax credit for the entities that maintain group health plans, such as employers, multiemployer plans, and insurers. The 100 percent reduction in the premium and the credit are also available with respect to continuation coverage provided for those events under comparable State laws, sometimes referred to as “mini-COBRA.”

Notice 2021-31 provides information regarding the calculation of the credit, the eligibility of individuals, the premium assistance period, and other information vital to employers, plan administrators, and insurers to understand the credit.

COBRA provides certain former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of health coverage at group rates. COBRA generally covers health plans maintained by private-sector employers with 20 or more full and part-time employees. It also covers employee organizations or federal, state or local governments. State mini-COBRA laws often provide similar benefits for insured small employers not subject to Federal COBRA.

Contact your Cornerstone representative with any questions.

IRS Releases HSA Limits for 2022

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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.  

2022

2021

2020

Flexible Spending Accounts (FSAs)
Health FSA Maximum Election TBD $2,750 $2,750
Dependent Care FSA Maximum Election TBD $5,000 $5,000
Transportation Benefits
Parking Account TBD $270/mo. $270/mo.
Transit Account TBD $270/mo. $270/mo.

Health Savings Accounts (HSAs)
Minimum Annual Deductible – Single $1,400 $1,400 $1,400
Minimum Annual Deductible – Family $2,800 $2,800 $2,800
Out-of-Pocket Maximum – Single $7,050 $7,000 $6,900
Out-of-Pocket Maximum – Family $14,100 $14,000 $13,800
HSA Maximum Contribution Limit – Single $3,650 $3,600 $3,550
HSA Maximum Contribution Limit – Family $7,300 $7,200 $7,100
HSA Catch-Up Contribution Limit (age 55+) $1,000 $1,000 $1,000
*Reverted back to $6900 04/27/18, per IRS.

Qualified Small Employer HRA (QSEHRA)
Single TBD $5,300
$441.67/mo.		 $5,250
$437.50/mo.
Family TBD $10,700
$891.67/mo.		 $10,000
$883.33/mo.

Click here for a helpful guide about HSAs

Contact your Cornerstone representative with any questions.

HHS Announces Prohibition on Sex Discrimination Includes Discrimination on the Basis of Sexual Orientation and Gender Identity

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The following information was originally published by Larry Grudzien.

Recently, the Department of Health and Human Services announced that the Office for Civil Rights will interpret and enforce Section 1557 and Title IX’s prohibitions on discrimination based on sex to include:

(1) discrimination on the basis of sexual orientation; and

(2) discrimination on the basis of gender identity.

Section 1557 prohibits discrimination on the basis of race, color, national origin, sex, age, or disability in covered health programs or activities. The update was made in light of the U.S. Supreme Court’s decision in Bostock v. Clayton County and subsequent court decisions.

“The Supreme Court has made clear that people have a right not to be discriminated against on the basis of sex and receive equal treatment under the law, no matter their gender identity or sexual orientation. That’s why today HHS announced it will act on related reports of discrimination,” said HHS Secretary Xavier Becerra. “Fear of discrimination can lead individuals to forgo care, which can have serious negative health consequences. It is the position of the Department of Health and Human Services that everyone – including LGBTQ people – should be able to access health care, free from discrimination or interference, period.”

Discrimination in health care impacts health outcomes. Research shows that one quarter of LGBTQ people who faced discrimination postponed or avoided receiving needed medical care for fear of further discrimination.

“The mission of our Department is to enhance the health and well-being of all Americans, no matter their gender identity or sexual orientation. All people need access to healthcare services to fix a broken bone, protect their heart health, and screen for cancer risk,” said Dr. Rachel Levine, Assistant Secretary for Health. “No one should be discriminated against when seeking medical services because of who they are.”

The Office for Civil Rights (OCR) at the U.S. Department of Health and Human Services (the Department) is responsible for enforcing Section 1557 of the Affordable Care Act (Section 1557) and regulations issued under Section 1557, protecting the civil rights of individuals who access or seek to access covered health programs or activities. Covered entities are prohibited from discriminating against consumers on the basis of sexual orientation or gender identity.

“OCR’s mission is to protect people from all forms of discrimination,” said Robinsue Frohboese, Acting OCR Director. “OCR will follow Supreme Court precedent and federal law, and ensure that the law’s protections extend to those individuals who are discriminated against based on sexual orientation and gender identity.”

On June 15, 2020, the U.S. Supreme Court held that Title VII of the Civil Rights Act of 1964 (Title VII)’s prohibition on employment discrimination based on sex encompasses discrimination based on sexual orientation and gender identity. Bostock v. Clayton County, GA, 140 S. Ct. 1731 (2020).

The Bostock majority concluded that the plain meaning of “because of sex” in Title VII necessarily included discrimination because of sexual orientation and gender identity. Id. at 1753-54. Consistent with the Supreme Court’s decision in Bostock and Title IX, beginning today OCR will interpret Section 1557’s prohibition on discrimination on the basis of sex to include: (1) discrimination on the basis of sexual orientation; and (2) discrimination on the basis of gender identity. This interpretation will guide OCR in processing complaints and conducting investigations, but does not itself determine the outcome in any particular case or set of facts.

In enforcing Section 1557 as stated above, OCR will comply with the Religious Freedom Restoration Act, 42 U.S.C. § 2000bb et seq., and all other legal requirements. Additionally, OCR will comply with all applicable court orders that have been issued in litigation involving the Section 1557 regulations, including Franciscan Alliance, Inc. v. Azar, 414 F. Supp. 3d 928 (N.D. Tex. 2019); Whitman-Walker Clinic, Inc. v. U.S. Dep’t of Health & Hum. Servs., 485 F. Supp. 3d 1 (D.D.C. 2020); Asapansa-Johnson Walker v. Azar, No. 20-CV-2834, 2020 WL 6363970 (E.D.N.Y. Oct. 29, 2020); and Religious Sisters of Mercy v. Azar, No. 3:16-CV-00386, 2021 WL 191009 (D.N.D. Jan. 19, 2021).

OCR applies the enforcement mechanisms provided for and available under Title IX when enforcing Section 1557’s prohibition on sex discrimination. 45 C.F.R. § 92.5(a). Title IX’s enforcement procedures can be found at 45 C.F.R. § 86.71 (adopting the procedures at 45 C.F.R. §§ 80.6 through 80.11 and 45 C.F.R. Part 81).

The Notice may be found here.

ARPA Raises Dependent Care FSA Contribution Limits

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As a result of the American Rescue Plan Act of 2021 signed into law by President Biden in March, the 2021 contribution limits for dependent care flexible spending accounts has increased from $5,000 to $10,500 for single taxpayers and married couples filing jointly and $2,500 to $5,250 for married taxpayers filing separately. This increased limit could lead to tax savings of more than $3,500 based on individual tax rates.

It’s important to note that employers are not required to allow employees to contribute the higher amounts.

The contribution limit increase applies only to the 2021 calendar year. This includes plans with effective dates between January 1, 2021, and December 31, 2021.

Contact your Cornerstone representative for more information.

Resources

American Rescue Plan Raises Dependent Care FSA Contribution Limits

Answers to ARPA Questions in Accordance with Newly Released Guidance

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Since the American Rescue Plan Act was signed into law on March 11, 2021, the impacts on COBRA and State Continuation were not fully understood until recent guidance was released. We will review the eligibility, the model notice (which is now available), and update the timeline for notification and premium assistance as it relates to COBRA. The states and several carriers have yet to weigh in on State Continuation and how it will work in Ohio, Kentucky, and Indiana, however the notification and subsidization requirements still exist. Following the review of the ARPA legislation, you will find a detailed guide by carrier and plan type outlining who is responsible for the notification, with and without a vendor, and who ultimately files and receives the tax credit.

As previously stated in the initial review of ARPA, assistance eligible individuals (AEI) will receive 100 percent subsidy for their COBRA and State Continuation premiums under two circumstances:

  1. Employee was involuntarily terminated with a qualifying event between November 1, 2019, to present. One qualifier here is that the employee was not terminated for “cause” during this timeframe. In addition, the employee is still within their 18-month period of coverage as stipulated by COBRA guidelines. State continuation eligibility again varies by carrier, plan, and state.
  2. Employee’s hours were reduced by an amount triggering the employee’s loss of eligibility for benefits.

An AEI ceases to be eligible for the premium subsidy if he/she becomes eligible for other group health coverage through a new employer, a spouse’s plan, or with Medicare.

The new model notice for those currently on COBRA and AEI’s who are eligible is available here and here and on the DOL.gov site, which are required to be sent to all AEI’s by May 30, 2021. The notice required to be sent in the case of State Continuation is called the Alternative Model Notice and is located here. So, it is important that employers begin immediately identifying their list of eligible terminated employees to assist the carrier/vendor, if applicable, with the notification requirement or so that the employer can send the model notice in a timely fashion if applicable. Individuals have 60 days to elect COBRA from the date of receipt of the notice. Due to the timing of the model notice and the notification period, it is expected that any eligible individual currently on COBRA will continue to make payments for the months of April and May. Individuals who previously declined COBRA are eligible as long as their 18-month coverage period has not expired. As well, individuals who elected and are currently on COBRA or who elected and later dropped COBRA are eligible as long as their 18-month coverage period has not expired.

COBRA subsidies will be paid at 100 percent for the AEI from April 1, 2021, to September 30, 2021. There is also a requirement for employers (plan) and issuers (carriers) to notify those individuals who elect and are awarded the subsidy when the premium subsidization is due to expire. This notice is due between 15 to 45 days prior to the expiration of the subsidy and the AEI would then be eligible for an SEP to enroll in coverage through the marketplace.

Generally speaking, whichever entity is responsible for paying the COBRA premium subsidy for the AEI, carrier or employer, will also be the party who files and receives the tax credit. The credit is taken against the Medicare tax an employer is responsible for.

The guide below will provide available information to date by carrier and by plan. If you have any questions about the requirements or available notices, please give your broker advisor a call. We recommend that you seek specific advice on filing for the premium tax credit with your accounting professional.

ARPA Cobra Guide

Medical Mutual Update: Six-Month COBRA Subsidy Period Effective April 1, 2021

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The American Rescue Plan Act (ARPA) of 2021 was signed into law by President Biden on March 11, 2021. ARPA introduces a COBRA subsidy period from April 1, 2021, to September 30, 2021, which provides full COBRA premium payments for eligible individuals.

For Medical Mutual groups, COBRA Options is allowing groups to flag members that will be eligible for the subsidy. Once groups have flagged their subsidy-eligible members and the Department of Labor model notice has been released, letters will be mailed to those members. For MHS groups, the MHS COBRA vendor TRAVISOFT is updating its system to allow the MHS COBRA team to run reports of individuals who are eligible for the subsidy to supply to groups for confirmation.

COBRA Options and the MHS COBRA team will continue to collect the standard 2 percent administrative fee from groups. Tax credits should be taken for the full premium amount (including the administrative fee). Members should keep paying their COBRA premium as scheduled and will receive a refund or premium credit.

Medical Mutual does not administer State Continuation.

Contact your Cornerstone representative with any questions.

The BusinessPlans ARPA COBRA Response Plan

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If your office represents a MEWA participating employer, here is the ARPA COBRA Response Plan, provided by BusinessPlans. This plan applies to both COBRA and State Continuation groups administered by BusinessPlans (myCobraPlan) on behalf of the MEWA.  Please pass this update along to your clients as needed:

Outbreak Extended Deadlines

Your client’s members have extra time to enroll and pay for COBRA.  Typically, this is an extra year of time, but that could be shorted depending on when the end date to the National Emergency is declared.  At this time, there is no estimated date for when the National Emergency will end.

Scenario New Deadlines During

National Emergency

 New Deadlines After National Emergency End Date is Declared
Elections Extra year from original deadline 120 day after end of National Emergency
Initial Payments Extra year from original deadline 105 (60 + 45) days after end of National Emergency
Ongoing Payments Extra year from original deadline 90 (60 + 30) days after end of National Emergency

 ARPA Premium Assistance

Some of your client’s members may not owe premiums for April 2021 through September 2021. Eligibility determination, notification of eligible members and Employer tax credit processes are pending additional guidance from the DOL. This guidance is due on or before 05/01/2021.

  • Eligibility cannot be determined until May.
  • Once eligible members are identified, employers will pay for the coverage and related administration fees on the members behalf.
  • Employer will claim up to 102% of the premium cost as a tax credit.
  • Your client’s eligible members will have to pay April and May premiums and we will refund their payment once they are confirmed as an Assistance Eligible Individual (AEI).

Determining ARPA Premium Assistance Eligibility

Members who experienced a reduction in hours or were involuntarily terminated AND are not eligible for Medicare or other group health plan coverage are likely eligible. That determination is still pending the DOL’s guidance. Meanwhile, BusinessPlans will need additional information on many of your client’s member records to properly determine this eligibility. They are working on some database enhancements to make this process a little easier for your team. They will have more details on this lookback process to share in the next few weeks.

  Notices

  • Outbreak Notice (mailing this week). This communicates to your client’s members that they have extra time to elect and pay for COBRA. This mails to records sent to our database from late 2019 forward.
  • ARPA Premium Assistance Notice (mailing in May). This communication goes to members identified as eligible for the ARPA premium assistance.
  • ARPA Premium Assistance End Notice (mailing in Aug). This communication goes to members participating in the ARPA premium assistance.  It reminds them that the premium assistance will end as of 9/30/21.

Anticipated Timeline

By the Week Of: What Action is Required by:
DOL myCobraPlan Employers Members
4/26/21 Issue additional ARPA guidance X
4/26/21 Pay April premiums X
5/14/21 Identify involuntary terminations & reduction in hours events in lookback X
5/17/21 Data feeds adjusted to identify involuntary terminations & reduction in hours X
5/17/21 ARPA eligibility determined & member notices mailed X
5/24/21 Refund April (and May if paid) premiums to ARPA eligible members X
5/24/21 Delayed April non-payment notices to carriers and members initiated X
5/31/21 Delayed May remittance to Employers initiated X
6/7/21 Initiate tax credit process to offset premium expenses X

 Impacts

  • Members continue to pay April and May premiums.
  • ARPA eligible members will be refunded April and May payments by the BusinessPlans office in May.
  • Employers will pay the subsidized premiums on behalf of your members and then claim those expenses as tax credits.
  • To accommodate ARPA, monthly remittance of funds will be intentionally delayed for May and June. This ensures their reporting accurately reflects eligible amounts Employers should claim as a tax credit.
  • To accommodate ARPA, non-payment processing will be intentionally delayed for April and sent in late May.  This ensures they can determine ARPA eligibility before coverage drops are initiated.
  • Letters to members:
    • This Week – Outbreak Extension Notice – almost everyone since late 2019.   Sample letter can be found here.  EE_OutbreakNotice.pdf
    • In May – ARPA Subsidy Eligibility Notice – any ARPA subsidy eligible members
    • In August – ARPA Subsidy End Notice – any participating ARPA subsidy members
  • Additional Enrollments – Be prepared for new enrollments. Keep in mind these may involve retroactive reinstatements that date back years.  You may see some old names show up on your invoices again.  Please do not terminate their COBRA coverage inadvertently.
  • Online Entry – if you add any records through our online Employer portal, please start identifying voluntary and involuntary terminations and any reduction in hours event types.
    • Involuntary Termination – select “Termination – Involuntary” for event.
    • Voluntary Termination – select “Termination” for event.
    • Reduction in Hours – select “Reduction in Hours – Status change” for event.
  • Support for members – in anticipation of a large influx of member support needs, BusinessPlans has engaged their Navia COBRA support team to provide overflow support for your client’s members.

Contact your Cornerstone representative with any questions.

HHS Announces Reduced Costs and Expanded Access for Marketplace Coverage Under the American Rescue Plan

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The following post was originally published by Healthcare.gov.

U.S. Department of Health and Human Services (HHS) Secretary Xavier Becerra recently announced that additional savings and lower health care costs are available for consumers on HealthCare.gov. The American Rescue Plan (ARP) has increased tax credits available to consumers, helping to reduce premiums and giving consumers access to affordable health care coverage.

The Department also announced an additional $50 million in advertising to bolster the Special Enrollment Period outreach campaign. The campaign will run through August 15, 2021.

“We’re delivering lower health care costs to more Americans because everyone deserves access to quality, affordable health care. Today help is here and millions of Americans can start saving money on their health insurance premiums thanks to the American Rescue Plan,” said HHS Secretary Xavier Becerra. “The Biden Administration is committed to bringing down health care costs for families. Consumers can save money by visiting HealthCare.gov and choosing a plan that works for them and their budget. HHS will be reaching out to encourage Americans to use the Special Enrollment Period to sign up for quality, affordable coverage through HealthCare.gov.”

Premium tax credit calculations for the Marketplaces on HealthCare.gov are now adjusted so that most consumers qualify for more substantial advance payments of premium tax credits. Many Americans on the Marketplaces will see their premiums decrease, on average, by $50 per person per month and $85 per policy per month. An average of four out of five consumers currently enrolled in a plan through HealthCare.gov will be able to find a plan for $10 or less per month with the newly expanded financial assistance under the American Rescue Plan. Additionally, after advance payments of the premium tax credits, an average of three out of five uninsured adults eligible for coverage on HealthCare.gov may be able to access a zero-premium plan and nearly three out of four may find a plan for $50 or less per month on HealthCare.gov.

Current enrollees should review their application, make any changes needed to their current information, submit their application and select a plan, or reselect their current plan, to receive the increased advance payments of premium tax credits for 2021 Marketplace coverage. Consumers who take action in April and confirm updated savings on the plan of their choice will start receiving the savings and lower costs starting with their May 1 premiums.

Consumers who want to enroll in coverage and see if they qualify for more affordable premiums can visit HealthCare.gov or CuidadoDeSalud.gov to view 2021 plans and prices and, if eligible, enroll in a plan that best meets their needs. Additionally, consumers can call the Marketplace Call Center at 1-800-318-2596, which provides assistance in over 150 languages. TTY users should call 1-855-889-4325. Consumers can also find a local assister or agent/broker in their area: Get help applying and more | HealthCare.gov. Eligible consumers can apply through HealthCare.gov through August 15, 2021, to gain access to the Special Enrollment Period to change or update their plan choices.

Click here to review the full press release.

Deadline Suspensions and COBRA Subsidies Due to COVID-19

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Deadline Suspensions

Last year the Department of Labor (DOL) and Internal Revenue Service (IRS) announced that during the COVID “Outbreak Period” (the National Emergency period plus 60 days), the following deadlines will be suspended:

The date by which a member would need to:

  • File benefit claims
  • File appeals and requests for external review
  • Request enrollment following a HIPAA Special Enrollment event (birth, adoption, placement for adoption of a child, marriage, loss of other health coverage or eligibility for a state premium assistance subsidy)
  • Elect COBRA coverage
  • Pay COBRA premiums
  • Notify the plan of certain COBRA Qualifying life Events (e.g., divorce or legal separation, a dependent child ceasing to be a dependent under the terms of the plan) or a disability determination

At the time, the DOL and IRS probably did not envision the Outbreak Period lasting as long as it has. Unfortunately, there is a complicating factor that has only recently come into play. ERISA does not allow these types of deadline suspensions to continue for more than 12 months. Since the suspension first took effect March 1, 2020, this 12-month limitation is now relevant. There was some uncertainty how the 12-month limitation would be applied, so the DOL and IRS recently announced that it should be applied on a member-by-member basis. This means that for any given member, for any given deadline, the suspension will continue for no longer than 12 months or until the end of the Outbreak Period, whichever period is shorter.

As a result, some individuals started reaching their one-year maximum suspension period on March 1, 2021. Once their maximum suspension period is reached, individuals must take action to avoid missing their deadlines.

Your clients may want to consider responding to this development by taking certain actions, including alerting their membership to the changes, updating employee facing communications, and updating plan documents.

COBRA Subsidy and new COBRA Election Period

The American Rescue Plan Act (ARPA) was signed into law on March 11, 2021. Under ARPA, individuals and their dependents who are eligible for COBRA or state COBRA (sometimes referred to as state continuation benefits or mini-COBRA), due to involuntary termination or reduction of work hours may be eligible for a 100% COBRA premium subsidy, beginning April 1, 2021 through to September 30, 2021. They may also be eligible for a new COBRA Election period. The DOL will issue a Model Notice mid-April, explaining the subsidy and election period in detail. The Plan Administrator must distribute this notice to impacted individuals.

This information was originally published by Aetna.

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