The IRS just released IRS Notice 2022-04 that provides the updated fee for Patient-Centered Outcomes Research Institute (PCORI) paid by fully insured and self-funded health plans for the upcoming tax reporting period.

As we stated before, even though the original PCORI fee assessments under the Affordable Care Act were scheduled to end after September 30, 2019, Congress extended these fees to be assessed by the IRS under the Further Consolidated Appropriations Act of 2020 for another ten years, until at least September 30, 2029.

The updated PCORI fee is now $2.79 per covered life for all plan years ending on or after October 1, 2021, and before October 1, 2022, up from $2.66 for the prior period.  As a reminder, fully insured plans are to be assessed the applicable PCORI fee amount through their monthly premium payments made to their health insurance carrier.  Self-insured plans pay this fee as part of the annual IRS Form 720 filing due by July 31 of each year.

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

The CAA Transparency Rules Will Let Plans and Participants Know.  The Department of Labor, Health and Human Services, and the IRS (collectively the Departments) recently released the Interim Final Rules with a request for Comment (IFC), Prescription Drug and Health Care Spending.  These rules implement Section 204, Title II, another phase of the transparency provisions of the Consolidated Appropriations Act (CAA) of 2021.  The IFC is open for public comment through January 24, 2022.

This most recent IFC requires Reporting Entities — group health plans, both fully insured and self-funded, and issuers of insured group health plans or individual coverage — to report annually information about prescription drug and health care spending.  Unlike the Affordable Care Act (ACA), the CAA does not include exceptions for grandfathered plans.  Instead, the CAA rules apply broadly to grandfathered plans, church plans, non-federal government plans, and individual coverage through or outside of an exchange.  This IFC, however, does NOT apply to Health Reimbursement Accounts (HRAs), other account-based group health plans, e.g., Individual Coverage Health Reimbursement Accounts (ICHRAs), coverage consisting solely of excepted benefits, e.g., dental or vision plans, or short-term, limited-duration insurance coverage.

Reporting Content

The Departments designed these rules to solicit data that would allow an accurate comparison of apples to apples across all the Reporting Entities.  The IFC includes specific instructions concerning:

  • Calculation of covered lives,
  • What to do if a merger occurs, and
  • The timeframe (Reference Year, aka, calendar year) for the data calculations, regardless of the plan year.

The data the plans and insurance issuers must submit ranges from general plan identifying information and the states in which the plans operate to more precise information, e.g.:

  • The top 50 most often dispensed prescription drugs and the number of paid claims for each drug,
  • The top 50 most costly drugs by total annual spending and the total annual spending by the plan for each drug, and
  • The top 50 drugs with the greatest increase in plan expenditures over the previous year and each drug’s increased amount.

Other data required includes:

  • Total spending on healthcare services by the plan broken down by type;
    • Hospital
    • Healthcare
    • Specialty
    • Primary care
    • Prescription drugs
    • Wellness, etc.
  • Total Spending by Plan and Participant on;
    • Premiums
    • Prescription drugs
  • Impact on premiums of rebates, fees, and other remuneration paid by drug manufacturers to the plan or issuer or its administrators or service providers;
  • The top 25 drugs yielding the highest amounts of rebate or other remuneration during the Reference Year for each therapeutic class of drugs; and
  • Any reduction in premiums or out-of-pocket costs associated with the rebates or other remuneration.

The level of information sounds daunting, and the Departments acknowledge the magnitude of the burden for each plan to collect and report this information on an annual basis. Plans and insurers may collect and submit the data themselves, or they may rely on another party (TPA, PBM, health insurance providers, etc.), pursuant to a written agreement, to report the data on their behalf.  Regardless of who submits the data, the plan or issuer is ultimately responsible for complying with the IFC’s reporting requirements.  The Departments plan to build a portal to ease the submission burden on the Reporting Entities.  The Departments must then assemble an aggregate report from the submitted data and publish it on the internet within 18 months of the first submission deadline and biannually after that.


This brings us to the deadlines by which the Reporting Entities must submit the mass of data.  The IFC states the first deadline for plans and insurers for 2020 data is one year after the enactment of the CAA, which would be December 27, 2021.  The deadline for 2021 data is June 1, 2022, and each subsequent year’s data is due on each following June 1st.  Fortunately, the Departments have the discretion to defer the enforcement of deadlines.  They have elected to defer enforcement of the deadline for 2020 and 2021 data submission until December 27, 2022, when reporting for both years is due.  The Departments strongly encourage Reporting Entities to work on their procedures now.  Meanwhile, the Departments will build the reporting portal and provide further instructions for the actual data submission, which will provide Reporting Entities with the level of detail the Departments expect in the submissions.

The Bottom Line:

  • All group and individual health plans are subject to this IFC.
  • The required information is extensive and detailed.
  • Plans may enlist other entities to submit the required data on their behalf pursuant to a written agreement.
  • The ultimate deadline for compliance is December 27, 2022, which must include the submission for Reference Years 2020 and 2021. Reference Year 2022 will be due June 1, 2023.
  • The Departments will assemble and aggregate the information into a public report published on the internet. The report should help plan sponsors and individuals see where their healthcare dollars are used year over year.

The Departments have now deferred several deadlines into 2022, adding to other employee benefit deadlines already required in 2022. We previously published information on upcoming deadlines to assist with planning, but this means the year ahead is shaping into another busy year for plan sponsors.  We are available to help plan sponsors and administrators understand and implement the IFC requirements and other deadlines in the year(s) ahead.  Please contact a Jackson Lewis employee benefits team member or the Jackson Lewis attorney with whom you regularly work if you have questions or need assistance.

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.