Seyfarth Synopsis: The IRS has announced adjustments decreasing the affordability threshold for plan years beginning in 2023, which may cause employers to have to pay more for ACA compliant coverage in 2023.

The IRS recently released adjustments decreasing the affordability threshold for plan years beginning in 2023 in Revenue Procedure 2022-34.

Under the Affordable Care Act (ACA), applicable large employers (ALEs) that do not offer affordable minimum essential coverage to at least 95% of their full-time employees (and their dependents) under an eligible employer-sponsored health plan may be subject to an employer shared responsibility penalty. Generally speaking, coverage is affordable if the employee-required contribution for self-only coverage is no more than 9.5% (as adjusted each year) of the employee’s household income. The adjusted percentage for 2022 is 9.61%. For more information regarding the 2022 affordability threshold, see our prior Blog Post here.

Adjusted Percentage for 2023

Under Revenue Procedure 2022-34, the adjusted percentage for 2023 will be 9.12%. This is a decrease of 0.49% from the 2022 affordability threshold of 9.61%, and is the lowest affordability threshold to date by far.

Federal Poverty Line (FPL) Safe Harbor

Making calculations based on each employee’s household income would be administratively burdensome. Accordingly, there are three safe harbors for determining affordability based on a criterion other than an employee’s household income; namely an employee’s Form W-2 wages, an employee’s rate of pay, or the FPL. If one or more of the safe harbor methods can be satisfied, an offer of coverage is deemed affordable.

The FPL safe harbor is the easiest to apply, since an employer has to do just one calculation and can ignore employees’ actual wages, and is intended to provide employers with a predetermined maximum required employee contribution that will in all cases result in coverage being deemed affordable. Under the FPL safe harbor, employer-provided coverage offered to an employee is affordable if the employee’s monthly cost for self-only coverage does not exceed the adjusted percentage (9.12% for 2023) of the federal poverty line for a single individual, divided by 12. The federal poverty guidelines in effect 6 months before the beginning of the plan year may be used for an employer to establish contribution amounts before the plan’s open enrollment period.

For plan years beginning in 2023, a plan will meet the ACA affordability requirement under the FPL safe harbor if an employee’s required contribution for self-only coverage does not exceed $103.28 per month.

Given the large decrease in the adjusted percentage, employer-sponsored health coverage that was considered to be affordable prior to 2023 may no longer be considered affordable in 2023. Therefore, employers may have to pay more for ACA compliant employer-sponsored health coverage in 2023. If you have any concerns about the affordability of your health care coverage offerings, please reach out to one of our Employee Benefits attorneys directly.

Seyfarth Synopsis: On August 3, the IRS issued Notice 2022-33, extending the deadlines for amending retirement plans and individual retirement accounts (“IRAs”) for changes under the (i) Setting Every Community Up For Retirement Enhancement Act of 2019 (the “SECURE Act”); (ii) Bipartisan American Miners Act of 2019 (the “Miners Act”); and (iii) Section 2203 of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), which waived required minimum distributions for 2020. For most plans, the extension provides retirement plan sponsors with an additional three years, until December 31, 2025, to amend plan documents to reflect changes under these Acts. Over the past several months, we had heard from IRS representatives and industry groups that this extension was likely forthcoming, as we wait for additional guidance on some lingering questions that remain.

It seems like ages ago, but the SECURE Act and the Miners Act were signed into law on December 20, 2019, just before the outbreak of COVID-19 and the resulting pandemic. As detailed in our prior Legal Update, available here, the SECURE Act and the Miners Act contain a number of amendments to the Internal Revenue Code of 1986, as amended (the “Code”) and the Employee Retirement Income Security Act of 1974, as amended, that impact employer-sponsored retirement plans, including many important participant-facing changes.

After the SECURE Act’s enactment, a number of open questions remained about some of the more important changes that could potentially have a significant impact on plan administration, including provisions relating to the participation and vesting of long-term part-time workers and changes to the required minimum distribution (“RMD”) rules (e.g., elimination of the “stretch” IRA for most beneficiaries), and we anticipated the IRS would issue helpful guidance. That was pre-coronavirus. In the wake of the coronavirus pandemic beginning in early 2020, the CARES Act, enacted in March 2020, understandably took center stage, as legislators and plan sponsors focused on making it easier for participants to access retirement plan money from qualified plans.

Since 2020, the IRS has been hard at work issuing several pieces of guidance addressing a number of open questions relating to the SECURE Act, the Miners Act and the CARES Act, including Notices 2020-50, 2020-68 and 2020-86. Our prior Legal Updates and Blog Post discussing the Notices are available here, here, and here.

While many of our plan sponsor clients have already amended their retirement plans to reflect the loan and distribution relief under CARES Act, as well as the waiver of 2020 RMDs, many have pressed pause on amendments for certain changes under the SECURE Act, particularly the complex changes to the RMD rules. In February 2022, the IRS published proposed regulations for RMDs under Code Section 401(a)(9), and solicited comments. The proposed regulations are intended to reflect the changes made to the rules by the SECURE Act, and completely overhaul the current regulations. The proposed regulations do not, as we had hoped, include model “snap-on” amendments for retirement plans, as was provided in Revenue Procedures 2002-29 after the RMD regulations were last updated in 2001. Now that the IRS has extended the amendment deadlines, the hope is that in the interim, the IRS will issue more guidance that includes model amendments or sample language relating to the SECURE Act’s RMD changes.

The extended amendment deadlines are highlighted in the table below. Note that Notice 2022-33 does not extend the amendment deadline for the optional loan and withdrawal relief provisions of the CARES Act, which are still currently due by December 31, 2022 (for calendar year plans).

Please contact your Seyfarth Employee Benefits Attorney with any questions you may have about this guidance and its application to your plan. Please also be sure to register for our Coffee Talk With Benefits Podcast here, where we discuss interesting issues that our clients are facing, as well as breaking employee benefits developments. The podcast drops the first week of every month, and we have some very interesting topics in the pipeline!

Amendment Deadlines Chart


Type of Plan

SECURE Act and Miners Act

CARES Act Section 2203 Provisions Relating to 2020 RMD Waiver*

Old Deadline

Extended Deadline

Old Deadline

Extended Deadline
Nongovernmental Retirement Plans and IRAs (i.e., 401(k) and 403(b) not maintained by public school) Last day of first plan year beginning on or after January 1, 2022 (i.e., December 31, 2022 for calendar year plans) December 31, 2025 Last day of the first plan year beginning in 2022 (i.e., December 31, 2022 for calendar year plans) December 31, 2025
Collectively Bargained Plans Last day of first plan year beginning on or after January 1, 2024 (i.e., December 31, 2024 for calendar year plans) December 31, 2025 Last day of the first plan year beginning in 2022 (i.e., December 31, 2022 for calendar year plans) December 31, 2025
Governmental 414(d) Plans Last day of first plan year beginning on or after January 1, 2024 (i.e., December 31, 2024 for calendar year plans) 90 days after the close of the third regular legislative session of the body with the authority to amend the plan that begins after December 31, 2023 Last day of first plan year beginning in 2024 (i.e., December 31, 2024 for calendar year plans) 90 days after the close of the third regular legislative session of the body with the authority to amend the plan that begins after December 31, 2023
Governmental 457(b) Plans Last day of first plan year beginning on or after January 1, 2024 (i.e., December 31, 2024 for calendar year plans)** 90 days after the close of the third regular legislative session of the body with the authority to amend the plan that begins after December 31, 2023** Last day of first plan year beginning in 2024 (i.e., December 31, 2024 for calendar year plans) 90 days after the close of the third regular legislative session of the body with the authority to amend the plan that begins after December 31, 2023**

*Note, the deadline for adopting the optional loan and withdrawal relief provisions under the CARES Act has NOT been extended. The deadline for those changes is generally December 31, 2022 (for calendar year plans).

**Special deadline may apply if notified by IRS that the plan was administered in a manner that is inconsistent with requirements of Code Section 457(b).

Cybersecurity has become an integral concern for employers and employee benefit plans alike. With an increase in DOL cybersecurity audits, plan fiduciaries are looking to strengthen their cybersecurity practices more than ever before. What specific risks are plans facing? Who is responsible for keeping plans safe, and what legal duties do they have? What steps should plan fiduciaries take to ensure the safety of their plan? Grab your cup of coffee and tune in to hear Richard and Sarah chat with Seyfarth colleague Benjamin Spater about these pressing questions and more!

Click here to listen to the full episode.

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Seyfarth Synopsis: As more employers announce that they cover travel benefits under their medical plans that will allow participants to be reimbursed for certain travel expenses necessary in order to access otherwise covered medical benefits, proponents on the pro-choice and anti-abortion platforms seek ways to support or block those benefits.

In the weeks since the Dobbs decision was released, the ripple effects of the decision continue to arise in unexpected ways. Litigants are challenging as discriminatory under Title VII, employer travel benefits that enable employees to travel in order terminate pregnancies in states where it remains legal. Specifically, litigants have begun to assert that providing travel benefits for the purpose of terminating a pregnancy is unlawful if the employer does not also allow travel benefits for pregnant women who intend to carry their pregnancy to term.

There is a long history of employees using Title VII as a tool to ensure equal benefit treatment in situations where only certain classes of employees are eligible for a benefit. The nuance in the recent challenges are that employees during pregnancy do not typically need to travel for a benefits purpose (e.g., to receive adequate prenatal care). Further, to date these claims do not appear to be an allegation that only certain pregnant employees have access to a travel benefit to terminate a pregnancy. This makes the success of this type of claim far from certain. However, even if these cases are dismissed for failure to state a cognizable claim, this type of action remains significant in showing the new types of litigation claims that employers will need to contend with post-Dobbs. It is expected that other cases may be filed under Title VII asserting claims of religious discrimination. For instance, an employee may claim that their religious rights are being infringed on if they are tasked with approving abortion related travel benefits and abortion violates their religious beliefs.

To navigate this increasingly divisive environment, it remains a best practice to clearly communicate the scope of any post-Dobbs policy and to work with counsel to ensure that the policy is properly tailored to best mitigate litigation risk in a rapidly changing legal climate. Please stay tuned as we continue to provide updates on litigation and statutory trends post-Dobbs.

Seyfarth Synopsis: Contributing employers to multiemployer pension plans have seen some big developments in July. The PBGC released its new Final Rule on Special Financial Assistance on July 8, 2022, which will help financially troubled plans avoid insolvency, but will now also subject contributing employers to higher withdrawal liability assessments compared to the Interim Final Rule. On the same day that the Final Rule was issued, the D.C. Circuit rejected a plan’s use of a risk-free discount rate for calculating withdrawal liability, placing into dispute withdrawal liability discount rates used by many plan actuaries that differ considerably from their funding rate assumptions. Finally, the pending PBGC regulations on prescribed discount rate assumptions are coming soon. Employer beware.

For employers who participate in multiemployer pension plans, July has been a busy month. The PBGC published its Final Rule (FR) on the Special Financial Assistance (SFA) Program for financially troubled plans that was established as part of the American Rescue Plan Act of 2021 (ARPA), and the D.C. Circuit Court of Appeals issued its long awaited decision in United Mine Workers of America, 1974 Pension Plan v. Energy West Mining Company, Case No. 20-7054 (D.C. Cir., decided July 8, 2022). Employers, when monitoring their multiemployer plan participation, should review these developments and the pending PBGC withdrawal liability assumption regulations.

PBGC Final Rule

Earlier this month we published a summary of the key changes under the Final Rule from the Interim Final Rule (IFR) (click here). While we encourage you to read it, three changes in the Final Rule should be of considerable important to participating employers.

First, the PBGC revised the interest rate assumptions plans must use for purposes of calculating the total SFA amounts to be received. Under the IFR, plans were required to use the same interest rate assumption for both SFA and non-SFA assets, even though SFA assets were also required to be segregated and invested much more conservatively than non-SFA assets. By using the same investment assumptions for both, this meant that the amount of SFA provided likely would not be sufficient to pay all benefits due through the plan year ending 2051, given plans would have to invest the SFA in investments with lower returns. To address this, under the FR there is a separate interest rate assumption for non-SFA plan assets, and a more conservative interest rate assumption for SFA assets. This should increase the total amount of SFA plans receive, making it more likely that plans will have sufficient assets to avoid insolvency through 2051.

Second, the FR gives plans greater flexibility to invest SFA assets more aggressively. Under the IFR, 100% of SFA assets were required to be invested in investment grade fixed income securities. The Final Rule, however, allows plans to invest up to 33% of SFA assets in return seeking investments (e.g., publicly traded common stock, equity funds that invest primarily in public shares, bonds, etc.), with the remaining 67% restricted to investment grade fixed income securities. This development provides plans with an important element of flexibility in the investment of SFA assets, and it could significantly increase the likelihood that plans will be able to avoid insolvency through 2051.

Third, the FR switched course on how SFA funds must be recognized for purposes of determining total unfunded vested benefits and, hence, withdrawal liability. The IFR previously required all SFA funds to be counted immediately when calculating unfunded vested benefits. As a result, the infusion of SFA assets into a financially troubled plan would generally reduce its overall underfunding percentage and, hence, reduce withdrawal liability assessed on withdrawing employers. To balance that, however, and to discourage participating employers from subsidizing their withdrawals with SFA funds, any plans receiving SFA funds are required to calculate and assess withdrawal liability using PBGC plan termination rates as the applicable discount rate — in other words, plans must use basically a risk-free discount rate. Mandatory use of this artificially low discount rate was designed to inflate the underfunded status of a plan, in order to increase the amounts of withdrawal liability assessed, and thus prevent withdrawing employers from directly benefiting from the SFA. Whether a withdrawing employer would benefit or be harmed from that “asset increase/discount rate reduction” tradeoff would depend upon the specific plan, its financial status, and the discount rates it traditionally uses for withdrawal liability.

In a departure from the IFR, the FR institutes a “phase-in” feature for crediting SFA funds for purposes of determining unfunded vested benefits, and in turn, withdrawal liability. The phase-in period begins the first plan year in which the plan receives SFA and extends through the end of the plan year in which the plan expects SFA to be exhausted. How long the phase-in period can last will depend upon when the plan anticipates to have spent all of the SFA it receives. To determine the amount of SFA assets excluded each year, the plan multiplies the total amount of SFA by a fraction, the numerator of which is the number of years remaining in the phase-in period, and the denominator is the total number or years in the phase-in period. The phased recognition of SFA assets does not apply to plans that received SFA funds under the terms of the IFR unless a supplemental application is filed.

While individual employer experiences may vary depending upon the plan, phase-in period, and when they withdraw, among other things, what this means is an employer withdrawing from a plan that receives SFA will automatically be assessed withdrawal liability using PBGC plan termination rates (which as of the date of this publication are currently running at 2.81% for the first 20 years and 2.94% thereafter), when many plans use 6.5% to 7.5% funding rate of return assumptions for that purpose. Yet, that same employer may only see very little of the SFA assets credited toward the plan assets for calculating withdrawal liability under the FR.

Instead of preventing withdrawing employers from receiving a windfall, the FR phase-in will end up subjecting many employers that withdraw during the phase-in period to higher withdrawal liability assessments (than had plans received no SFA). As seen from Energy West below, the difference in discount rates (absent any offsetting SFA) can lead to significant increases in withdrawal liability. Depending upon the plan, this phase-in “penalty” could last for a few or many years. Participating employers need to understand this risk, the phase-in period, and the potential costs of remaining in a plan that intends to seek SFA.

Energy West Mining Company

On July 8, 2022, the same day the PBGC issued its FR, the D.C. Circuit Court issued its long-awaited decision in Energy West. At issue in Energy West was whether a plan could use the PBGC plan termination rate as the discount rate for purposes of determining an employer’s withdrawal liability. When Energy West withdrew in 2015, the United Mine Workers Plan actuary applied the risk-free PBGC plan termination rate — 2.71% for the first 20 years and then 2.78% thereafter — as the discount rate to calculate withdrawal liability. That resulted in an assessment of over $115 million. Had the actuary used the 7.5% discount rate assumption he had set for plan funding purposes based on the plan’s historic investment performance, the assessment would only have been about $40 million. The actuary chose the PBGC rates as his best estimate for withdrawal liability purposes because an employer withdrawing from a plan no longer bears any risk if the plan investments do not perform as anticipated.

While an arbitrator and district court ruled for the plan, the Circuit Court reversed. The Court found that the Multiemployer Pension Plan Amendments Act provision that the actuary use assumptions “which, in combination, offer the actuary’s best estimate of anticipated experience under the plan,” required that the actuary not only choose the discount rate, but that that rate be based on the plan’s actual investments. As the actuary’s assumption in this instance was not chosen on the plan’s past or projected investment returns, by definition it was not the actuary’s best estimate.

The Court reversed the decision, but did not mandate that the plan use the actuary’s 7.5% funding rate of return assumption. The Court recognized that the funding rate of return and the withdrawal liability discount rate assumptions need not be identical. There is some acceptable range of reasonableness based on a plan’s characteristics: “The assumed discount rates must be similar, even if not always the same.” The Court directed the district court to vacate the arbitration award and have the actuary recalculate withdrawal liability using a discount rate assumption based on the plan’s actual characteristics.

Energy West is now the second appellate court in the past year (the Sixth Circuit issued a similar ruling last year) to reject withdrawal liability discount rates that are not based solely on plan characteristics (i.e., on the actuary’s best estimate of anticipated experience under the plan). While not every employer will see a possible $75M reduction in withdrawal liability, many employers in plans that have differing funding and withdrawal liability rates, in theory, will see their estimated and actual withdrawal liability drop to the extent plan actuaries adopt withdrawal liability discount rates similar to plan funding interest rate assumptions.

How will actuaries respond to Energy West? It is highly possible that other appellate courts will disagree with Energy West, leading to a circuit split that may have to be decided by the Supreme Court. Hundreds of millions of dollars, if not billions, are at stake. Moreover, it remains to be seen how “similar” discount rates need to be to the funding rates of return.

But Wait, There’s More

Last and certainly not least, the PBGC is still drafting regulations that will prescribe actuarial assumptions which may be used by a plan actuary in determining withdrawal liability. It is anticipated the PBGC will bless some methods — perhaps even the use of the risk-free PBGC plan termination rates — that will permit the application of considerably lower discount rates than what would otherwise be assumed based solely on plan experience. Such regulations, which are imminent, may moot this issue — at least for employers that have not withdrawn before the regulations become final.

Given the FR, Energy West and similar cases, and of course the pending PBGC regulations on actuarial assumptions, participating employers need to keep their eyes open on the latest developments to avoid possible surprises.

Synopsis: On June 3, 2022, the IRS announced the launch of a “pre-examination” compliance program. Under the new program, the IRS sends letters to plan sponsors about an upcoming examination of their retirement plan or plans. The letter gives the plan sponsor 90 days to voluntarily review its retirement plan(s) for plan document and operational compliance, and self-report any errors and/or corresponding corrections back to the IRS no later than the end of the 90 day period. Following the IRS’s review of the plan sponsor’s response, the IRS can issue a closing letter or may choose to conduct a limited or full scope audit. Like all pilot programs, the IRS will evaluate the program’s effectiveness and determine whether it will be a permanent fixture of its compliance strategy. So is this new pre-examination compliance program a good thing or a bad thing for plan sponsors? Will the IRS use this to expand its audit abilities by having plan sponsors do its work for them, or will the program end up reducing the odds of a plan being subject to a full scope audit that could drag on for months or longer?

Background

If you listen carefully, you may occasionally hear employee benefits practitioners applaud the IRS’ Employee Plans Compliance Resolution System (aka EPCRS), described in Revenue Procedure 2021-30, as being one of the most successful compliance programs in IRS history. This may be so. The program is designed to allow plan sponsors the opportunity to make reasonable corrections of retirement plan tax errors without penalty (and in many cases without even identifying the plan sponsor), other than the imposition of a user fee if a filing is made with the IRS. Moreover, since the form of its initial pilot program in the early 1990s, EPCRS has periodically and consistently evolved to further address difficulties facing plan sponsors intending to be compliant, but who are occasionally set-back by the complexities of the retirement plan regimes.

New IRS Pilot Program

The latest compliance-related enterprise is a new pilot program, announced last month, which concerns compliance errors discovered upon IRS examinations of retirement plans (i.e., plan audits). When such errors are discovered by the IRS upon audit, EPCRS is often no longer available and the consequences can be particularly costly. Inevitably, it would be significantly less expensive for a plan sponsor who self-identifies errors and utilizes EPCRS before being notified of the examination. But that doesn’t always happen.

The essence of the new pilot program is to give plan sponsors a “90-day warning” to self-identify and report any errors that would have been precluded from EPCRS, had the errors been identified by the IRS on exam.

If a plan sponsor fails to respond within the 90-day window, the IRS will schedule an exam.

Errors that the plan sponsor identifies, may be either self-corrected if otherwise eligible under EPCRS. If not eligible for self-correction under EPCRS, the plan sponsor can enter into a closing agreement with the IRS to make the appropriate corrections at the cost of the voluntary compliance program (aka VCP) fee–which is likely to be a small fraction of the cost that would be facing the plan sponsor if the error(s) were discovered by the IRS upon examination.

After reviewing the plan sponsor’s response, the IRS may just enter into a closing agreement bringing the matter to an end, but reserves the right to conduct a limited or full scope exam, presumably if the response is not up to snuff.

We’re told from our industry sources that the IRS has unofficially stated that the pilot program presently is limited only to 100 defined contribution plans that have been identified for potential errors relating to compliance with the requirements of Internal Revenue Code section 415 (the annual contribution limit applicable to tax-favored retirement plans). If the pilot program is successful, the IRS intends to apply it more broadly.

Benefits Counsel’s Perspective

Through a non-cynical lens, an expanded version of this program can be a win-win for plan sponsors and the IRS. Plan sponsors get a valuable heads up that an exam is coming and a “second chance” to correct errors. On the other hand, the IRS presumably can more efficiently allocate its resources.

Naturally, if you receive one of these letters, our advice is to conduct a robust review of the issues identified in the letter and prepare an appropriate response with the help of your Seyfarth Shaw employee benefits counsel.

We encourage you to contact us immediately if you receive one of these notices from the IRS.

As we have been covering, the Supreme Court has overturned Roe v. Wade in their Dobbs v. Jackson Women’s Health Organization, leaving it to states to regulate access to abortion in their territory. The Biden Administration’s response to the overturning of Roe v. Wade in Dobbs v. Jackson Women’s Health Organization is taking shape and it has directed the Federal governmental agencies to look at what they can and should do to protect women’s health and privacy. Over the last few weeks, those agencies have been weighing in.

Initially, during the week of June 27th, we saw the following agency activity:

  • Tri-Agency Guidance re Contraceptive Coverage: On June 27th, the agencies responsible for enforcing the provisions of the Affordable Care Act (ACA) — the Departments of Health and Human Services, Labor, and Treasury — issued a letter directed to health plans and insurers “reminding” them that group health plans must cover, without cost-sharing, birth control and contraceptive counseling for plan participants. They note that they are concerned about a lack of compliance with this mandate, and that they will be actively enforcing it.
  • HHS Guidance re HIPAA Privacy: Shortly after, HHS issued guidance regarding the privacy protections offered by HIPAA relating to reproductive health care services covered under a health plan, including abortion services. This guidance reminds covered entities that HIPAA permits, but may not require, disclosure of PHI when such disclosure is required by law, for law enforcement purposes, or to avert a serious threat to health or safety. The guidance described the following disclosure scenarios, without an individual authorization, as breaching HIPAA’s privacy obligations:
    • “Required by Law:” An individual goes to a hospital emergency department while experiencing complications related to a miscarriage during the tenth week of pregnancy. A hospital workforce member suspects the individual of having taken medication to end their pregnancy. State or other law prohibits abortion after six weeks of pregnancy but does not require the hospital to report individuals to law enforcement. Where state law does not expressly require such reporting, HIPAA would not permit a disclosure to law enforcement under the “required by law” provision.
    • “For Law Enforcement Purposes:” A law enforcement official goes to a reproductive health care clinic and requests records of abortions performed at the clinic. If the request is not accompanied by a court order or other mandate enforceable in a court of law, HIPAA would not permit the clinic to disclose PHI in response to the request.
    • “To Avert a Serious Threat to Health or Safety:” A pregnant individual in a state that bans abortion informs their health care provider that they intend to seek an abortion in another state where abortion is legal. The provider wants to report the statement to law enforcement to attempt to prevent the abortion from taking place. However, HIPAA would not permit this as a disclosure to avert a serious threat to health or safety because a statement indicating an individual’s intent to get a legal abortion, or any other care tied to pregnancy, does not qualify as a serious an imminent threat to the health and safety of a person or the public, and it generally would be inconsistent with professional ethical standards.

On Friday, July 9th, the Biden administration issued an “Executive Order on Protecting Access to Reproductive Healthcare Services.” The Executive Order creates the Interagency Task Force on Reproductive Healthcare Access and instructs different agencies in broad brushstrokes in at least three areas:

  • Access to Services: The Secretary and Health and Human Services is to identify possible ways to:
    • protect and expand access to abortion care, including medication abortion, and other reproductive health services such as family planning services;
    • increase education about available reproductive health care services and contraception;
    • ensure all patients receive protections for emergency care afforded by law.

The Secretary of Health and Human Services is directed to report back to the President in 30 days on this point.

  • Legal Assistance: The Attorney General and Counsel to the President will encourage lawyers to represent patients, providers and third parties lawfully seeking reproductive health services.
  • Physical Protection: The Attorney General and Department of Homeland Security will consider ways to ensure safety of patients, providers, third parties, and clinics, pharmacies and other entities providing reproductive health services.
  • Privacy and Data Protection: Agencies also will consider ways to: address privacy threats, e.g., the sale of sensitive health-related data and digital surveillance, protect consumers’ privacy when seeking information about reproductive health care services, and strengthen protections under HIPAA with regard to reproductive healthcare services and patient-provider confidentiality laws.

It did not take long for the agencies to respond:

  • On Monday, July 11th, in a letter to health care providers, HHS Secretary Xavier Becerra said that the federal Emergency Medical Treatment and Active Labor Act requires health care providers to stabilize a patient in an emergency health situation. Given the Supremacy Clause of the Constitution, that statute takes precedence over conflicting state law. As a result, that stabilization treatment could include abortion services if needed to protect the woman’s life.
  • Also on Monday, the Federal Trade Commission announced that it is taking action to ensure that sensitive medical data, including location tracking data on electronic applications, is not illegally shared. The FTC gave several examples of existing enforcement activity and noted it will aggressively pursue other violations.

We are certain to see more responses to the Executive Order and will update this space. Should you have any questions, please contact your Seyfarth attorney. We will continue to monitor and provide updates as developments unfold.

To learn more about the Dobbs decision, we invite you to join us on Wednesday, July 13 at 3 p.m. Central for a webinar entitled “Post-Dobbs Implications for Employers and Employer Plan Sponsors.” For more information and to register, click here.

Retirement plan investment in cryptocurrencies has been a hot topic of discussion in recent months. The Department of Labor’s reaction to Super Bowl commercials with celebrities touting crypto-investments, followed by Fidelity’s announcement that it would make cryptocurrency available for plan investment in the near future, has sparked some hot debate. In this episode of Coffee Talk With Benefits, Richard and Sarah speak with Linda Haynes, a partner in the Seyfarth Employee Benefits and Executive Compensation Department, who specializes in plan investments and fiduciary matters.

Click here to listen to the full episode.

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Seyfarth Synopsis: The IRS has announced adjustments decreasing the affordability threshold and increasing employer shared responsibility payments for plan years beginning in 2022.

On May 9, 2022, the IRS updated the Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act page on the IRS website to include 2022 indexing adjustments for the affordability threshold and employer shared responsibility payments.

Affordability

Under the ACA, applicable large employers (ALEs) that do not offer affordable minimum essential coverage to at least 95% of their full-time employees (and their dependents) under an eligible employer-sponsored plan may be subject to an employer shared responsibility penalty. The IRS determines whether health insurance coverage is affordable using an affordability threshold that is indexed and adjusted each year.

For plan years beginning in 2022, coverage is considered affordable if an employee’s required contribution for self-only coverage does not exceed 9.61% of the employee’s household income. This is a decrease of 0.22% from the 2021 affordability threshold of 9.83%.

Penalty Amounts

Employer shared responsibility penalties (which are calculated monthly) are indexed and adjusted each year. The IRS will assess an ALE with an employer shared responsibility penalty under IRC Section 4980H:

  • Subsection (a) – if the ALE fails to offer at least 95% of its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan, and at least one full-time employee is allowed a premium tax credit.

The (a) penalty is determined by multiplying the total number of full-time employees (minus 30) by the penalty amount. For plan years beginning in 2022, the (a) penalty amount is $2,750, or $229.17 per month.

  • Subsection (b) – if the ALE does offer coverage to at least 95% of its full-time employees, but the coverage is not affordable and at least one full-time employee receives a premium tax credit.

The (b) penalty is determined by multiplying the number of full-time employees who receive a premium tax credit for any month by the penalty amount. For plan years beginning in 2022, the (b) penalty amount is $4,120, or $343.33 per month.

The increases in the Employer shared responsibility penalties are summarized in the chart below:

4980H Employer Shared Responsibility Penalties 2021 2022 Change
4980H(a) Employer Shared Responsibility Penalties $2,700 ($225.00 per month) $2,750 ($229.17 per month) +$50
4980H(b) Employer Shared Responsibility Penalties $4,060 ($338.33 per month) $4,120 ($343.33 per month) +$60

 

Culminating a flurry of late June opinions released by SCOTUS this week, the court today in Dobbs v. Jackson Women’s Health Organization has taken the extraordinary step of ending decades of precedent surrounding the protections for abortion-related services under the U.S. Constitution. The opinion has been widely anticipated since a draft opinion was leaked, and overturns the prior SCOTUS opinions in Roe v. Wade (1973) as well as Planned Parenthood v. Casey (1992).

The result is that states will be allowed to regulate abortion access within their borders. As we have previously covered, employers with facilities and employees in states which restrict access to abortion, prenatal, contraceptive and other similar services will be faced with a decision on how to ensure equal access for health plan services to their workforce. For more information on the issues underlying this analysis, please read our Legal Update here, and listen to our Podcast here.

As always, please feel free to reach out to one of our Employee Benefits attorneys for more personalized assistance.