Just three weeks ago, we wrote that employers likely would not receive certain Affordable Care Act reporting relief to which they’ve become accustomed.

But in a welcome turn of events, the IRS just released proposed regulations that make permanent a 30-day automatic extension for furnishing Forms 1095-B and 1095-C to individuals.  Such forms will now be due each year on March 2nd (or the next business day if March 2nd falls on a weekend/holiday), and the relief is immediate—furnishers can rely on the proposed regulations for 2021 reporting (due in 2022).

The proposed regulations do not change the February 28th/March 31st due dates for submitting these forms to the IRS when filing by paper or electronically, respectively.

The proposed regulations also offer an alternative manner of satisfying the requirements for health insurance issuers and governmental agencies to furnish Forms 1095-B to health plan participants and for self-insured employers to furnish Forms 1095-C with certain health care coverage information to part-time employees and non-employees (such as former employees).  Under the new rules, these forms need not be automatically provided, as long as the furnisher prominently posts a notice on its website indicating the availability of the forms (with certain required language and contact information) and provides any such form within 30 days of an individual’s request.  This rule is being put in place to simplify administration, given that the individual shared responsibility payment (i.e., the individual mandate) is currently $0 and, therefore, the forms aren’t required for individuals to complete their tax returns.  It is subject to change if the individual mandate is increased in the future.

Self-insured employers furnishing Forms 1095-C to full-time employees may not use this alternative means and must provide Forms 1095-C to all such employees by the new deadline set forth above.

One caveat is that it isn’t yet clear whether these new (or analogous) rules will apply for states with their own individual mandate and reporting requirements (currently, California, Massachusetts, New Jersey, Rhode Island, Vermont, and the District of Columbia).

And, in perhaps their only downside, the proposed regulations confirm the end of the transitional good-faith relief for incorrect or incomplete ACA reporting. However, the general penalty exception remains for filers with reasonable cause for failing to timely or accurately complete their reporting requirements.

Please contact a team member or the Jackson Lewis attorney with whom you regularly work if you have questions or need assistance.

News Flash:  There’s no actual statutory mandate that employers offer group health coverage at all, much less coverage for specific conditions.  However, federal law requires health plans that provide mental health and substance use disorder coverage to ensure that the financial requirements (like coinsurance) and treatment limitations (like visit limits and provider access) applicable to those benefits are no more restrictive than the predominant requirements applicable to medical and surgical benefits.  By default, employers that sponsor group health plans generally are responsible for compliance with these and other federal requirements.

It’s been easy enough for employers to assess whether financial requirements are in parity or to obtain an insurer’s, third-party administrator’s or actuary’s assurance that financial requirements are in parity.  But treatment limitations are another matter because, along with visit limits (which must be disclosed in certificates of coverage and summary plan descriptions provided by insurers and plan service providers), treatment limitations include certain nonquantitative ones which ordinarily are not disclosed to employers or plan participants.  Instead, these are limits or restrictions that cannot be expressed numerically and result from plan design characteristics and network development procedures that, historically, have been the exclusive purview of insurers and third-party administrators.  Most employers don’t have the resources to design a group health plan and build a provider network themselves, so they simply purchase a pre-packaged plan design and access to a provider network “off-the-shelf”.  Nevertheless, employers remain responsible for compliance, particularly employers with self-insured group health plans.

As the demand for mental health and substance use disorder benefits has increased, many employers and plan participants are discovering that their group health plan coverage for those benefits is sorely lacking … and confusing.  Problems stem from the fact that mental health and substance use disorder services are more likely to be provided out-of-network, as has been reported by Milliman and others.  There are a variety of reasons for this, but the United States Department of Labor’s Employee Benefit Security Administration (the agency enforcing the Mental Health Parity and Addiction Equity Act) seems especially interested in identifying claim-handling procedures, provider credentialing, and reimbursement rates that tend to limit mental health and substance use disorder benefits more than medical and surgical benefits.

In the past couple of years, the DOL has obtained multi-million dollar settlements from insurers alleged to have imposed greater restrictions on mental health and substance use disorder claims, based on the DOL’s analysis of claims data.  Increasingly, though, the DOL is probing more deeply, beyond claims data and more into how plan networks are developed – provider admission procedures and reimbursement rates that aren’t transparent to employers or plan participants.  We’ve seen the DOL focus its group health plan investigations around these nonquantitative treatment limitations.

The Consolidated Appropriations Act enacted in December 2020 amended the federal mental health parity law to require plans to perform and document comparative analyses of nonquantitative treatment limitations by February 10, 2021. The DOL wasted no time launching investigations after that to see whether plans are complying.  The new law requires the DOL to do so in time to report back to Congress at the end of 2021 and publish a list of non-compliant plans.  Besides providing the comparative analysis documentation to the DOL upon request, plan sponsors also must provide comparative analysis documentation to plan participants. Again, all group health plan sponsors – regardless of whether the plan is fully-insured or self-insured – are responsible for ensuring that the comparative analysis is completed and provided upon request.  However, in the case of the fully-insured plan, the insurer also is responsible by law.  Therefore, plan sponsors of fully-insured plans at least can expect the comparative analysis to already have been done by the insurer.

The comparative analysis documentation must identify the nonquantitative treatment limitations and the benefits to which they apply and the factors and evidentiary standards or strategies considered in the design or application of the limitations.  It must also explain whether there is any variation in applying a guideline or standard between mental health/substance use disorder benefits and medical/surgical benefits and, if so, why.  In its investigations, the DOL asks for and analyzes provider network admission applications and reasons for admission denials, credentialing requirements and reasons for those requirements, provider contracts, provider fee schedules and the methodology for their development, and geographic and other standards considered to establish provider networks.  This is not information to which employers have historically had access, but it’s now information that employers must obtain.

The time for an employer to bundle up against enforcement action is now, before the plan and its sponsor are exposed.  For a self-insured group health plan sponsor, this means obtaining assurance from plan service providers that the plan complies with the federal mental health parity law and documentation of the nonquantitative treatment limitations comparative analyses is readily available.  Unfortunately, some plan sponsors are finding out – too late – that their plan service providers have not performed or documented the comparative analysis and don’t accept responsibility for doing so either.

We are available to help plan sponsors understand and implement these requirements.  Please contact a team member or the Jackson Lewis attorney with whom you regularly work if you have questions or need assistance.

On October 19, 2021, the Fifth Circuit Court of Appeals denied a widow supplemental group life insurance benefits of $300,000 upon her husband’s death even though he had paid the premiums for the coverage for four years through payroll deductions by his employer, National Oilwell Varco.  The case, Talasek v. National Oilwell Varco, L.P., appealed a motion for summary judgment filed by the employer and Unum, the insurer.  The only issue before the Court was whether the surviving spouse had made a proper estoppel claim under ERISA for recovery.  In the Fifth Circuit, an ERISA claim for benefits based on estoppel requires (1) a material misrepresentation made to the plaintiff and (2) both reasonable and detrimental reliance on the misrepresentation.  Claims for ERISA breach of fiduciary duty and negligence had been earlier dismissed from the case.

The Court readily found that four years of making and reporting payroll deductions for the coverage constituted a misleading representation by the employer and that the plaintiff presented a genuine issue of fact about whether she relied to her detriment on the misrepresentations.

However, the Court held that the surviving spouse and her husband failed the reasonable reliance requirement because the misrepresentations were contrary to what the Court described as “unambiguous terms” in the plan documents.  The Court stated that Unum’s “Summary of Benefits” was the “governing document.”  Because that Summary provided that evidence of insurability was required for the coverage and because the deceased husband had in fact received, three years before his death, a letter from Unum denying the coverage because of abnormal lab results, reliance on the employer’s misrepresentations for four years was held not to be reasonable.

The decision is questionable because the facts include more than a mere misrepresentation.  The employer actually deducted the premiums from the deceased’s wages and then paid them to Unum for multiple years.  Yet, the Court does not weigh this actual payment of premiums against the early written denial of coverage to determine whether, under ERISA or state insurance law, the coverage was valid.  Nor does the Court explain why it considers the Summary of Benefits the controlling plan document that trumped the misrepresentations and the payment of the premiums.  It is not identified as the ERISA summary plan description, and it was not the group policy document.

The Fifth Circuit is fairly described as an employer-friendly court.  It may well be concluded that other federal circuits would have likely come to a different decision.  Nevertheless, the case does seem to teach that, in the Fifth Circuit at least, clear wording of the conditions for coverage and payment of plan benefits in even ancillary plan documents can overcome significant detrimental employer and insurer misrepresentations and actions.

Please contact a team member or the Jackson Lewis attorney with whom you regularly work if you have questions or need assistance.

The Internal Revenue Service recently announced its cost-of-living adjustments applicable to dollar limitations on benefits and contributions for retirement plans generally effective for Tax Year 2022 (see IRS Notice 2021-61). Most notably, the limitation on annual salary deferrals into a 401(k) or 403(b) plan will increase from $19,500 to $20,500. The more significant dollar limits for 2022 are as follows:

LIMIT 2021 2022

401(k)/403(b) Elective Deferral Limit (IRC § 402(g))

The annual limit on an employee’s elective deferrals to a 401(k) or 403(b) plan made through salary reduction.

$19,500 $20,500

Government/Tax Exempt Deferral Limit (IRC § 457(e)(15))

The annual limit on an employee’s elective deferrals concerning Section 457 deferred compensation plans of state and local governments and tax-exempt organizations.

$19,500 $20,500

401(k)/403(b)/457 Catch-up Limit (IRC § 414(v)(2)(B)(i))

In addition to the regular limit on elective deferrals described
above, employees over the age of 50 generally can make an additional “catch-up” contribution not to exceed this limit.

$6,500 $6,500

Defined Contribution Plan Limit (IRC § 415(c))

The limitation for annual contributions to a defined contribution
plan (such as a 401(k) plan or profit sharing plan).

$58,000 $61,000

Defined Benefit Plan Limit (IRC § 415(b))

The limitation on the annual benefits from a defined benefit plan.

$230,000 $245,000

Annual Compensation Limit (IRC § 401(a)(17))

The maximum amount of compensation that may be taken into account for benefit calculations and nondiscrimination testing.


($430,000 for certain gov’t plans)


($450,000 for certain gov’t plans)

Highly Compensated Employee Threshold (IRC § 414(q))

The definition of an HCE includes a compensation threshold for
the prior year. A retirement plan’s discrimination testing is based
on coverage and benefits for HCEs.


(for 2022 HCE determination)


(for 2023 HCE determination)

Key Employee Compensation Threshold (IRC § 416)

The definition of a key employee includes a compensation threshold. Key employees must be determined for purposes of applying the top-heavy rules. Generally, a plan is top-heavy if the plan benefits of key employees exceed 60% of the aggregate plan benefits of all employees.

$185,000 $200,000

SEP Minimum Compensation Limit (IRC § 408(k)(2)(C))

The mandatory participation requirements for a simplified
employee pension (SEP) includes this minimum compensation threshold.

$650 $650

SIMPLE Employee Contribution (IRC § 408(p)(2)(E))

The limitation on deferrals to a SIMPLE retirement account.

$13,500 $14,000

SIMPLE Catch-up Limit (IRC § 414(v)(2)(B)(ii)))

The maximum amount of catch-up contributions that individuals
age 50 or over may make to a SIMPLE retirement account or SIMPLE 401(k) plan.

$3,000 $3,000

Social Security Taxable Wage Base

See the 2022 SS Changes Fact Sheet.

This threshold is the maximum amount of earned income on which Social Security taxes may be imposed (6.20% paid by the employee and 6.20% paid by the employer).

$142,800 $147,000

Please contact a team member or the Jackson Lewis attorney with whom you regularly work if you have questions or need assistance.

As employers with 50 or more full-time (or full-time equivalent) employees are well aware, the Patient Protection and Affordable Care Act (”ACA”) requires annual submission of Forms 1094-C and 1095-C with the Internal Revenue Service, and distribution of Forms 1095-C.  These submissions and distributions are generally due:

 Furnishing of Forms 1095-C to employees: January 31

Paper submission of Forms 1094-C and 1095-C to the IRS (if applicable):

February 28

Electronic submission of Forms 1094-C and 1095-C to the IRS (required for employers submitting 250+ forms):

March 31

Over the years since these requirements became effective, however, the IRS has often extended these deadlines.  First, such extensions were intended to aid employers as they got used to the new rules. Most recently, an extension was announced via Notice 2020-76 regarding the 2020 deadlines to recognize the challenges brought by the COVID-19 pandemic.

No such luck, it appears, for the 2021 reporting as no such extension has been announced (nor is one expected).  This means that employers subject to the ACA’s reporting requirements should be working internally or with their outside vendors to meet these deadlines.

One issue we are seeing is that employers who have fluctuated in size a great deal over the past two years (sometimes getting smaller and then growing again quickly, or vice versa) are unsure of whether the ACA reporting requirements apply to them.  Generally, the reporting requirements apply starting the year after which the employer first averages 50 or more full-time (including full-time equivalent) employees on business days.  As with all things tax code, however, there can be a lot more to the analysis.

The Employee Benefits practice group is available to help employers navigate these rules’ nuances and ensure they don’t get tripped up with unexpected reporting penalties.  Please contact a team member or the Jackson Lewis attorney with whom you regularly work if you have questions or need assistance.

The use of the “Segal Blend” to calculate a company’s withdrawal liability when it withdrew from a multiemployer pension plan violated the Employee Retirement Income Security Act (ERISA), as amended by the Multiemployer Pension Plan Amendments Act (MPPAA), because it was not the actuary’s best estimate, the federal appeals court in Cincinnati has held in a milestone decision for employers with withdrawal liability exposure. Sofco Erectors, Inc. v. Trustees Ohio Operating Eng’r, et al., Nos. 20-3639/3671 (6th Cir. Sept. 28, 2021).  More…


As employers consider implementing a vaccine mandate to encourage employees to get vaccinated against COVID-19, we have recently discussed the merits of imposing a “vaccine surcharge” on monthly health insurance premiums for those employees who remain unvaccinated.  There were unanswered questions about specific legal issues, but now the Department of Labor (DOL), Health and Human Services (HHS), and the Treasury (collectively, the Departments) issued FAQ guidance (the “FAQ”) to confirm that employers can incentivize employees by offering discounts on monthly insurance premiums for those who have been vaccinated for COVID-19 or impose insurance “surcharges” for those who choose not to be vaccinated (for reasons other than due to a medical condition.)  In making such clarifications, the FAQ also confirmed:

Insurance discounts/surcharges for COVID-19 vaccinations must adhere to existing Health Insurance Portability and Accountability Act (HIPAA) wellness guidelines for activity-based wellness programs.  Q/A-3 of the FAQ confirms that requiring an employee to be vaccinated for COVID-19 to receive the benefit of lower health insurance premiums does require the employee to perform or complete an activity related to a health factor and thus must satisfy the existing five criteria for activity-based wellness arrangements under HIPAA:

  • The program must be reasonably designed to promote health or prevent disease (the FAQ suggests helping schedule vaccination appointments and establishing a toll-free hotline to answer questions);
  • The program must provide a reasonable alternative standard to qualify for the discount on health insurance premiums (the FAQ suggests providing the discount if the individual can verify it would be unreasonably burdensome or medically inadvisable to be vaccinated for COVID-19 due to an existing medical condition);
  • The program must provide notice of the availability of a reasonable alternative standard (the FAQ suggests mandating compliance with the CDC’s mask guidelines for any employee who cannot otherwise be vaccinated because of an existing medical condition);
  • The incentive award (or penalty) cannot be more than 30% of the total cost of employee-only coverage when combined with all other wellness program awards or penalties; and
  • All employees must be offered the opportunity to qualify for the incentive at least once per year.

Note that the FAQ does not require an accommodation for religious or other non-medical reasons.  There is also no prohibition against allowing employees to meet the vaccination criteria at any time during the year.  However, the FAQ does advise employers considering adopting COVID-19 vaccination incentive programs to consult Section K of the Equal Employment Opportunity Commission’s What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws.

The premium discount/surcharge amount must be included in affordability calculations under the Affordable Care Act.  As we have discussed previously, Q/A-5 confirms that wellness incentives for COVID-19 vaccinations are considered the same as any other non-tobacco incentive.  To determine whether the employee’s monthly premium cost is “affordable” under Code Section 4980H(b), employers with over 50 full-time employees or full-time equivalents must disregard any premium discount amounts and include any vaccine surcharge amounts in the total cost of employee-only coverage.

Employers may not exclude employees from eligibility or coverage under a group health plan solely because of an employee’s COVID-19 vaccination status.  As an alternative to using a vaccine surcharge to incentivize employees, several employers have considered providing an exclusion from coverage under a group health plan for COVID-related claims for nonvaccinated employees.  Q/A-4 clarifies that such exclusionary practices would violate HIPAA nondiscrimination mandates and thus are not permissible.

Employers must provide 100 percent coverage of all COVID vaccination costs, including boosters.  The FAQ confirms that employers must provide coverage under their non-grandfathered group health plan for 100 percent of the cost of all vaccine shots (in compliance with Section 3203 of the CARES Act,) and Q/A-1 confirms this coverage mandate also includes the cost of any booster doses authorized or approved by the Food and Drug Administration or through an Emergency Use Authorization through the Centers for Disease Control.  But in a welcomed clarification, Q/A-1 and 2 indicate that because of confusion from prior guidance, the mandate for 100 percent coverage under a group health plan will not be enforced for periods before the release of this FAQ, October 4, 2021.

Conclusion:  Other questions remain, such as how the vaccine surcharge program should work during mid-year periods and whether it uniformly applies to other dependents (or other questions raised in our previous articles).  The FAQ clarifies many questions for employers considering implementing these arrangements just in time for the upcoming health plan renewal season.  For more information about imposing a vaccination surcharge on unvaccinated employees or other wellness program related questions, please contact the authors or the Jackson Lewis attorney with whom you regularly work.

In light of the lingering COVID-19 pandemic and its impact on employee productivity and health care expenses, employers are considering imposing a premium surcharge on employees participating in the company’s health plan who are not vaccinated against COVID-19.

As we have discussed here, several federal laws must be taken into consideration when designing such a surcharge including the Affordable Care Act (ACA), the Americans with Disabilities Act (ADA), the Health Insurance Portability and Accountability Act (HIPAA), and wellness rules.  As employers engage in the requisite legal analysis, the opening question is, “How much can the surcharge be?”

Health insurance coverage must still be “affordable,” as defined by the ACA.  Under IRS regulations, when determining whether an employee’s cost of coverage is “affordable,” an employer generally may not consider any incentives offered under wellness programs.  The lone exception to this rule is a non-smoking incentive, where employers may use the premium amount for non-smokers in the affordability calculation. While the current administration’s policies point toward encouraging vaccination, at this time, there is no exception to complying with the ACA’s affordability rules for a vaccine surcharge.  As a result, health insurance must still be “affordable,” as defined by the ACA, or else penalties might apply, as we discussed earlier.

What is Affordable:  For plan years beginning in 2021, employer-sponsored coverage will be considered affordable if an employee’s required contribution for self-only coverage for the least-expensive plan option that meets ACA requirements does not exceed 9.83% of the employee’s household income for the year.  The IRS publishes the percentage rate each year; for 2022, the rate is 9.61%.  Because employers rarely have the household income information of their employees, the regulations under Internal Revenue Code Section 4980H provide three safe harbors under which an employer may determine affordability based on information readily available to the employer.

  1. The federal poverty line safe harbor.  This safe harbor provides employers a predetermined maximum amount of employee contribution that in all cases deems the coverage to be affordable.  The federal poverty line is $12,880 for an individual in 2021. (The amount is slightly different for any employees in Hawaii and Alaska.)  That amount divided by 12 and multiplied by 9.83% equals an allowable premium of $105.51 for 2021.
  1. The rate of pay safe harbor.  To calculate this amount, multiply 130 hours by the lower of (a) the employee’s hourly rate of pay as of the first day of the coverage period (generally the first day of the plan year) or (b) the employee’s lowest hourly rate of pay during the calendar month.
  1. The Form W-2 wages safe harbor.  Application of this safe harbor is determined after the end of the calendar year and on an employee-by-employee basis, taking into account the Form W–2 wages and the required employee contribution for that entire year.

Total Surcharges Cannot Exceed 30 Percent.  In determining the amount of a premium surcharge, employers must also consider the rule established under HIPAA (as amended by the ACA), which provides that it is allowable for employers to encourage participation in certain types of wellness programs by offering incentives of up to 30 percent of the total cost of an employee’s health insurance premiums for self-only coverage.  Thus, any surcharge imposed on an unvaccinated worker cannot be more than 30 percent of the total cost of an employee’s health insurance premiums for self-only coverage when combined with any existing surcharge.

What’s the Answer?  The allowable surcharge amount will vary for every employer depending on the cost of health insurance, any other surcharges or incentives under an existing wellness program, the level at which health insurance is currently subsidized, and the rate at which employees are compensated.

For more information about imposing a health insurance premium surcharge on unvaccinated employees or other health insurance related questions, please contact the author or the Jackson Lewis attorney with whom you regularly work.

Testing for COVID-19 certainly has evolved over the past 18 months or so. As supply and allocation continue to face challenges, guidance on serological/antibody versus viral testing, testing in the workplace, informed consent, among other things have emerged to help guide coronavirus testing in the workplace. President Biden’s Path out of the Pandemic (the “Path”) seeks to drive higher levels of COVID-19 vaccination, while allowing COVID-19 testing as an option under certain components of the Path. Testing as an option to vaccination is likely to create more demand for a product already in high demand, and organizations may need to think more carefully about how the President’s Path may change their current COVID programs. More at home testing may be what is needed to help get further down the Path.

A significant part of the Path for employers is the anticipated rule from the Department of Labor for employers with 100 or more employees. The Path explains:

The Department of Labor’s Occupational Safety and Health Administration (OSHA) is developing a rule that will require all employers with 100 or more employees to ensure their workforce is fully vaccinated or require any workers who remain unvaccinated to produce a negative test result on at least a weekly basis before coming to work. OSHA will issue an Emergency Temporary Standard (ETS) to implement this requirement. This requirement will impact over 80 million workers in private sector businesses with 100+ employees.

Employers’ struggle to get more of their workers vaccinated for COVID-19 continues. There are several reasons, more than can be identified and explained here. But some include the vaccine’s only having FDA Emergency Use Authorization (EUA) versus full FDA approval (although that is wearing away), required reasonable accommodations for disability and sincerely held religious beliefs, fears about complications from the vaccine, etc.

This has not stopped employers from rolling out a bevy of creative measures to drive vaccination levels higher – gift cards, paid time off, raffles, health plan premium surcharges, increase in paid holidays, and other perks for those who get the vaccination. Some of these efforts have helped. Delta Airlines recent announcement of a $200 health plan premium surcharge is reported to have moved 4,000 of its 20,000 unvaccinated employees to get the vaccination. Still, according to health experts, levels of vaccination are not where they should be and the Delta variant continues to spread.

It is likely, at least in the short run, that a significant segment of the population will remain unvaccinated, notwithstanding the President’s Path, DOL guidance, and employer incentives. So, as weekly testing is likely to become more common, employers will need to manage that cadence at a reasonable cost and with minimal administration, and at home testing may be the answer for a lot of organizations. As reported by the Washington Post:

Most take-home tests, including BinaxNOW and Quidel’s QuickVue test, are antigen tests that look for protein pieces of the virus. PCR tests detect the virus’s genetic material.

Home tests are less sensitive than PCR tests and tend to be better at turning up positive results in people who are symptomatic than those without obvious signs of illness. But they offer some key advantages. Results usually show up in 10 to 15 minutes. And they can be administered at the point of care — nursing homes, clinics, schools, private residences. Most PCR tests are administered at testing sites and need to be sent to labs, meaning turnaround time is almost always 48 hours or more.

There are still lots of issues that need to be considered, not the least of which are the anticipated guidance from the DOL/OSHA and cost. On the issue of cost, one question has been whether at home or other point-of-care tests have to be covered under a group health plan. CMS guidance from earlier this year provides some insight:

Q4. Do point-of-care tests for COVID-19 have to be covered without cost sharing under the FFCRA?

Yes. The FFCRA and the CARES Act make no distinction between point-of-care and other tests; all COVID-19 diagnostic tests that meet one of the criteria outlined in section 6001 of the FFCRA, as amended by section 3201 of the CARES Act, must be covered without cost sharing, prior authorization, or medical management (including for asymptomatic individuals with no known or suspected exposure to COVID-19). 

However, the same guidance clarifies “plans and issuers are not required to provide coverage of testing such as for public health surveillance or employment purposes. But there is also no prohibition or limitation on plans and issuers providing coverage for such tests.

Nonetheless, as employers begin to ramp up to get on the President’s Path, at-home antigen testing for employees may be a significant part of their plans.