Dismissal of ACA Lawsuit Based Only on Standing Grounds

Seyfarth Synopsis:  In Texas v. California, the Supreme Court rejected another challenge to the Affordable Care Act (“Obamacare” or “ACA”). The Court never reached the merits of the challenge, relying instead on its now robust Article III standing doctrine. The plaintiffs failed to allege injury traceable to the allegedly unlawful conduct and likely to be redressed by their requested relief.

On June 17, in Texas v. California, the Supreme Court dismissed the declaratory judgment challenge to the ACA’s constitutionality brought by Texas and 17 other states (and two individuals), finding that the plaintiffs lacked Article III standing. Our earlier blog post on this case after oral argument explained that the plaintiffs alleged that the ACA’s “individual mandate” was unconstitutional in the wake of Congress reducing the penalty for failure to maintain health insurance coverage to $0.

The Court side-stepped all issues on the merits, and ruled 7-2 that the plaintiffs did not have standing because they failed to show “a concrete, particularized injury fairly traceable to the defendants’ conduct in enforcing the specific statutory provision they attack as unconstitutional.” The majority said that the plaintiffs suffered no indirect injury, as alleged, because they failed to demonstrate that a lack of penalty would cause more people to enroll in the state-run Marketplaces, driving up the cost of running the programs. Similarly, the majority found no direct injury resulting from the administrative reporting requirements of the mandate. The majority found that those administrative requirements arise from other provisions of the ACA, and not from the mandate itself.

Justices Alito and Gorsuch dissented, opining that the states not only have standing, but that the individual mandate is now unconstitutional and must fall (as well as any provision inextricably linked to the individual mandate).

This is the third significant challenge to the ACA over the last decade.

Moreover, the latest ACA decision has implications beyond just that statute. A solid majority of the Court has emboldened its already tough standing requirements that precondition any merits consideration in federal court. Our prior blogs here and here, have explained that the Court is intent on narrowing the door to the courthouse for many cases, including ERISA cases. This is significant because ERISA fiduciary breach cases, in particular, can be brought only in federal court. As such, we expect to see more ERISA defense arguments based on Article III standing deficiencies. And it certainly will not be enough for plaintiffs to mount a challenge under the Declaratory Judgment Act as a way to avoid the very stringent Article III injury in fact requirement.

Seyfarth Synopsis: The DOL has waded into a long-simmering debate about whether audio recordings of phone calls between a plan participant and the plan’s administrator or insurer should be provided to the participant when challenging a benefit determination under the plan, and they have come down squarely on the side of the participant. 

A recent DOL information letter lays out the Department’s view that audio recordings are considered relevant documents that plan administrators, insurers, and third party administrators must provide to a claimant upon request, regardless of how the recording is used in the course of plan administration or a benefit determination.

The DOL’s position was expressed in response to a claimant’s request for an advisory opinion after a claims administrator denied the claimant’s request for audio recordings of a phone call  associated with an adverse benefits determination. The DOL felt that this issue was best addressed through an information letter (as opposed to an advisory opinion) as it invoked established principles under ERISA, which would apply more broadly than to the discreet facts of the claimant’s situation.

In the claimant’s situation, the administrator made a transcript of the call available as an alternative to the audio recording.  It asserted that it was not obligated to provide the actual recordings because they were “not created, maintained, or relied upon for claim administration purposes” and were instead made “for quality assurance purposes.”

In addressing the matter, the DOL turned to its long-standing claims regulations under ERISA Section 503.  These regulations require that a claimant be provided with copies of all documents, records and other information “relevant” to the claim for benefits. The DOL was not persuaded by the claims administrator’s arguments that the phone recordings were not relevant, and it cited to two parts of 29 CFR 2560.503-1(m)(8) in its assertion that audio recordings are indeed relevant records that should be provided to claimants.

  • First, in response to the plan administrator’s argument that the recordings were “not relied upon for claim administration purposes,” the DOL cites 29 CFR 2560.503-1(m)(8)(ii). This section notes that a record is considered relevant if it “was submitted, considered, or generated in the course of making the benefit determination, without regard to whether such document, record, or other information was relied upon in making the benefit determination.” (emphasis added). With this, the DOL is not concerned with whether the recording was used in the course of the benefit determination. Rather, if a recording was generated in the course of a benefit determination, then it is considered relevant and should be produced by the applicable plan administrator, insurer, or third party administrator.
  • Second, in response to the plan administrator’s argument that the recordings were made for quality assurance purposes, the DOL cites 29 CFR 2560.503-1(m)(8)(iii). This section notes that a record is considered relevant if it “demonstrates compliance with the administrative processes and safeguards required pursuant to” the plan’s claims procedures.  Relevance is further established if the record can be used as an administrative safeguard that verifies consistent decision making under a plan. The plan administrator’s quality assurance argument ironically works against the administrator because an audio recording made for the purposes of quality assurance and plan consistency falls squarely into the definition of section (m)(8)(iii) and, therefore, renders the recording relevant. As such, an administrator’s attempt to argue withholding on the basis of quality assurance will be futile and the recording should be produced to the claimant.

Further, the DOL shot down any argument that relevant records include only paper or other written materials, saying that the preamble to their recent amendments to the regulations makes it clear that audio recordings can be part of the administrative record.

Overall, the information letter shines a spotlight on the common practice of insurers and third party administrators to deny access to audio recordings, often even to representatives of the plan administrator. Looking forward, plan administrators should work with their vendors and review the terms of their service agreements to ensure that any requests for relevant documents, records, or information are reviewed under this broad definition and appropriately provided to the claimant upon request. Not doing so risks non-compliance with the DOL regulations and potentially the imposition of substantial penalties if challenged in court.

By Liz Deckman and Mark Casciari

Seyfarth Synopsis:  The Court of Appeals for the Ninth Circuit has once again upheld against an ERISA preemption challenge, a State private sector benefits mandate, notwithstanding that ERISA provides that the decision to establish an ERISA plan rests solely with the employer.

The Supreme Court has often stated that ERISA is not a pension mandate statute; rather it simply encourages private sector employers to establish ERISA pension plans.  See Gobeille v. Liberty Mutual Ins. Co., 136 S.Ct. 936 (2016) (“ERISA does not guarantee substantive benefits.”)

(The federal no-mandate rule is different in the health plan context, primarily due to the Affordable Care Act.)

ERISA accomplishes its purpose to encourage, and not to mandate, plans through streamlined rules of administration, limited court remedies and a broad preemption clause.  That clause preempts all state and local laws that merely relate to an ERISA plan as a “don’t worry about state law” reward for choosing to establish an ERISA plan.  The statutory scheme is that the final word on whether to establish an ERISA pension plan remains within the complete discretion of the employer.

We have reported previously on the Supreme Court’s latest preemption decision finding no preemption — SCOTUS Upholds Arkansas PBM Law Against ERISA Preemption Arguments | Beneficially Yours. We also have reported on a recent Ninth Circuit decision with the same holding — A Ninth Circuit Panel Finds No ERISA Preemption Of Seattle Health Care Ordinance | Beneficially Yours.

Now, in Howard Jarvis Taxpayers Assoc. v. CalSavers Program, the Ninth Circuit has again found no preemption.  The issue was whether a California law, like those of six other States (and Seattle and New York City), see generally The Big Apple Joins a Small Crowd, With Possible Headaches for Local Employers | Beneficially Yours, mandates private sector employers, which choose not to establish an ERISA plan, to contribute employee wages to the state to provide pension benefits.  The court found no preemption because the contributed money becomes a state, not an ERISA, plan benefit.  It is of no moment, the court said, that the employer’s contribution becomes a pension benefit, because the state’s contributory scheme imposes minimal administrative duties on the employer. The court added that the proliferation of state benefits mandates presents serious policy issues that Congress may want to address down the road.  It is unclear whether the CalSavers preemption decision will be litigated further.

It also is unclear whether the CalSavers decision will encourage private sector employers now without ERISA plans to establish (or refrain from establishing) plans.

One current example of this preemption dilemma arises in Washington State, which recently passed the Long-Term Services and Supports Trust Act.  The Act imposes a payroll tax on each employee in Washington of .58% of wages.  These amounts are collected by the employer and sent to a trust established by the State to pay long-term care (LTC) benefits for its residents. Employees who have qualifying private LTC insurance (including coverage from an ERISA long term care plan) can be exempt from the payroll tax.  Employees still must satisfy certain eligibility requirements.  Employers with unhappy workers who must pay the tax, but never become eligible for benefits, may now feel State pressure to establish an ERISA plan, when they otherwise would not.  Or they may feel pressure not to establish an ERISA plan, relying on the State to provide benefits instead.  And, of course, the Act may be challenged on preemption grounds.

Expect more State benefit mandates and perhaps more litigation throughout the country on whether these laws are preempted by ERISA.

Seyfarth Synopsis: New York City has joined the growing list of jurisdictions to establish a mandatory auto-IRA retirement savings program for private sector employers who do not offer employees access to a retirement plan. By doing so, it becomes part of the trend to provide the opportunity for employees who do not have access to an employer-sponsored plan to save for their retirement during their working years through a payroll-deduction process.

Three states — California, Oregon and Illinois — have established, and operate, such programs at the state level, whereby covered employers are required to auto-enroll employees in IRA retirement savings accounts. The California program, CalSavers, recently prevailed in the U.S. Court of Appeals for the Ninth Circuit against a challenge that the program was pre-empted by ERISA. The primary bases for this decision are that the program is not run by a private employer and that employers maintaining ERISA retirement plans are exempted from coverage by the program (hence no interference with an ERISA plan).

Several other states have begun to implement similar programs, in some cases mandatory and in others (like New York State) voluntary. All the programs appear to have in common that they create an administrative board to operate the program, and then leave such board to work out the details of implementation.

The New York City legislation follows the same pattern — one piece of legislation establishes the program and another establishes a “retirement savings board” to implement and oversee the program. The program applies to private sector employers located in the City employing at least five employees and that do not currently offer a retirement plan such as a 401(k) plan or a pension plan. The default employee contribution rate, which will apply to employees who are age 21 or older and working at least 20 hours a week, is set at 5%, although an employee can choose a higher rate (up to the IRA annual maximum) or a lower rate (including none).

Although the City’s legislation takes effect 90 days after enactment (i.e., in August 2021), the program will not go into effect until implemented by the retirement savings board, which is contemplated to take as long as two years. Further, the program will not go into effect if the City’s corporation counsel determines that there is a substantial likelihood that the program will conflict with, or be preempted by, ERISA. Such determination should take the Ninth Circuit decision into consideration, given the strong resemblance between the City’s program and the CalSavers program.

Like several other states, New York State has authorized an auto-IRA program (the New York State Secure Choice Savings Program), but the New York State program differs from most other such programs by using Roth (after-tax) IRAs, which have a limit on the contributor’s income, although such limit is unlikely to be exceeded by the employees targeted by the program. Further, the New York State program is voluntary — no employer is required to make it available to employees.

No conflict should arise between the City’s program and the New York State Secure Choice Savings Program, because the current state program is voluntary. However, there are current proposals to make the New York State program mandatory, in which case a conflict could arise. Even under the current New York State program, it is unclear whether the City would accept Roth IRA contributions as meeting the City’s mandate, leaving aside questions regarding the contribution rate and which employers and employees are covered.

A more formidable operational difficulty for City employers is that Connecticut and New Jersey have authorized, but not yet implemented, mandatory auto-IRA programs for employers located in those states, although Connecticut is reported to be launching a pilot program in July, 2021. Although all these programs exempt employers that maintain an ERISA retirement plan, there may be employers located within the metropolitan New York City area whose employees will be subject to differing mandates depending on whether employed in New Jersey, Connecticut or the City itself, all of which will require compliance by that employer but with possibly differing rules.

At the moment there is nothing a New York City employer needs to do. We are monitoring developments related to this new program, including the corporate counsel’s determination as to whether or not there is a substantial likelihood that the New York City program will be preempted by ERISA, and will report back.

If you have any questions, please contact your Seyfarth attorney for additional information.

Seyfarth Synopsis: The SECURE Act, passed at the end of 2019, significantly altered the retirement landscape. Now, proposed legislation, “SECURE Act 2.0,” sets out to make even more changes. As before, several of the proposed provisions will require employers to closely consider the new rules. For newly established plans, there will be requirements that did not exist before. For a reminder on how the SECURE Act 1.0 changed the retirement landscape in 2020 click here and here.

Last week, on May 5, the House Ways and Means Committee sent the Securing a Strong Retirement Act of 2021, “SECURE Act 2.0,” to the House for consideration. Here are some of the more significant changes that the bill as currently drafted would bring to the retirement landscape:

  • Raises the minimum distribution age. After being based on attainment of age 70½ for decades, the Act would raise the required minimum distribution (“RMD”) age once again over several years. The SECURE Act 1.0 raised the RMD to age 72. If passed, SECURE Act 2.0 would continue the raise in the RMD age to 73 in 2022, 74 in 2029, and 75 in 2032.
  • Increases and “Roth-ifies” catch-up contributions. The limit on 401(k) catch-up contributions for 2021 is $6,500, indexed annually for inflation. The proposed provisions would keep the catch-up age at 50 but increase the limit by an additional $10,000 per year for employees at ages 62, 63, and 64. The Act also provides that effective in 2022, catch-up contributions to 401(k) plans must be made on an after-tax, Roth basis.
  • Also allows Roth-ification of matching contributions. Plan sponsors may, but are not required, to permit employees to elect that some or all of their matching contributions to be treated as Roth contributions for 401(k) plans.
  • Student loan matching. The Act would allow, but not require, employers to contribute to an employee’s 401(k) or 403(b) plan account by matching a portion of their student loan payments.
  • Expanding automatic enrollment for new plans. Defined contribution plans established after 2021 will be required to enroll new employees at a pretax contribution level of 3% of pay. This level will increase annually by 1% up to at least 10% (but no more than 15%). There are exceptions for small businesses with 10 or fewer employees, new businesses, church plans and governmental plans.
  • Expedited part-time workers. One of the more significant changes under SECURE Act 1.0 was the expansion of eligibility for “long-term, part-time workers” to contribute to their employers’ 401(k) plan. SECURE Act 2.0 would expedite plan participation by these workers by shortening their eligibility waiting period from 3 years to 2 years, meaning employees could contribute if they have worked at least 500 hours per year with the employer for at least 2 consecutive years and are at least age 21 by the end of that 2 year period. If passed, the first group of affected workers would become eligible on January 1, 2023, not 2024 as is the case under current law.

As noted, this bill has not been signed into law. Although there is bipartisan support, it is likely that the provisions will be modified as the bill makes its way through Congress. Presently, this proposal is expected to be taken up by the Senate after its August recess. To stay up to date, be on the lookout for additional Beneficially Yours blog posts and Seyfarth Legal Updates.

By Mark Casciari and James Hlawek

Seyfarth Synopsis:  A federal district court denied a motion to dismiss an ERISA complaint that was based in large part on secondhand “information and belief” allegations about the defendants’ business operations.  The decision serves as a warning to defendants that they may be forced into costly discovery based on allegations that a plaintiff merely believes to be true.    

We have commented on a Supreme Court decision making it more difficult for ERISA plaintiffs to withstand motions to dismiss in federal court and to proceed with expensive discovery.  See The Supreme Court Further Narrows Federal Court Jurisdiction Over an ERISA Complaint, Relying on Article III of the Constitution | Beneficially Yours.  A recent district court decision on a routine motion to dismiss, however, underscores that defendants continue to face challenges in obtaining dismissals of ERISA claims in federal court and avoiding discovery.

In Teamsters Local Union No. 727 Health and Welfare Fund v. De La Torre Funeral Home & Cremation Services, Inc., No. 19-cv-6082, 2021 U.S. Dist. Lexis 42046 (N.D. Ill. Mar. 5, 2021), the court refused to dismiss an ERISA and LMRA complaint seeking to hold defendants, who did not sign a collective bargaining agreement, liable for a settlement agreement related to delinquent contributions to various health, welfare, and pension funds.  The plaintiff brought the allegations under alter ego, joint employer, and successor liability theories.  The complaint was based in large part on “information and belief” allegations about the defendants’ business operations.  The court noted that the allegations relied on secondhand information that plaintiff merely believed to be true, and that the allegations regarded matters particularly within the knowledge of the defendants.  The court denied the defendants’ motion to dismiss, finding that such allegations were sufficient to allow the plaintiff’s claim to proceed.

This decision is important because of the substantial consequence of losing a motion to dismiss.  Losing a motion to dismiss is a ticket to the often distasteful world of discovery.  As the Supreme Court noted in Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007), discovery, at least in the class action context, is so expensive that it often leads to settlement regardless of the merits of the case.  This is all the more true today given the enormous increase in electronic data a party maintains, especially after a pandemic that has created much more video and other electronic data that may be subject to discovery.

So, while the Supreme Court has made it more difficult under some circumstances for ERISA plaintiffs to withstand motions to dismiss, district courts may still favor discovery over dismissal.  Individual district courts may decide to encourage settlement and preclude appellate review by allowing claims to continue, even when the allegations are based on information that a plaintiff merely believes to be true.

Motion to dismiss litigation in ERISA cases will continue to command the attention of federal courts.  At issue is whether the plaintiff can allege enough to access substantial discovery rights.

Seyfarth Synopsis: In an effort to plan for the projected long-term care needs of its residents, State of Washington passed the Long-Term Services and Supports Trust Act (SHB 1323) requiring each worker in Washington to contribute $0.58 per $100 (0.58%) of wages to a trust set aside to pay long-term care benefits for its residents. The law was enacted in 2019 and becomes effective in 2022. Benefits under the Act are first payable in 2025. Washingtonians may opt out, but must have qualifying long-term care coverage in place by November 1, 2021.

Overview:

  • Starting January 1, 2022, employers must remit on a quarterly basis a payroll tax of 0.58% (adjusted based on Washington’s CPI) of Washington employees’ wages to the trust. There is no cap on wages for this purpose.
  • There is a one-time opt-out window from October 1, 2021 to December 31, 2022 for individuals who have qualifying long-term care coverage from any source (e.g., their employer, spouse’s employer, an individual policy) by November 1, 2021. There are special effective dates for union employees.
  • To be considered qualifying long-term coverage, the coverage must meet the requirements listed here: RCW 48.83.020: Definitions. (wa.gov).
  • The right to opt-out belongs to the individual (not the employer). To opt out, the individual will apply to the State. If approved, the State will send an opt-out approval letter to the individual. The individual will then provide a copy of the letter to current and future employers. Other specifics on the opt-out procedure are still in the works.
  • Long-term care benefits are only available to Washington residents who have paid premiums for either: (i) a total of 10 years with no more than a five-year interruption; or (ii) three of the six years before the date of application for benefits. Additionally, the resident must have worked at least 500 hours during each of the 10 or three year measurement period, as applicable.
  • The maximum benefit payable is $100/day up to a maximum lifetime benefit of $36,500.

Options for Employers:

  • Do not offer long-term care insurance to Washington-based employees and simply collect and remit the payroll tax (other than for those employees with an opt-out approval letter),
  • Review long-term care coverage already in effect to determine if it is considered qualifying coverage under the Act, or
  • Quickly procure new long-term care coverage that meets the Act’s definition of qualifying coverage.

Regardless of the option selected, employers may wish to inform their Washington employees of the upcoming payroll tax and their ability to opt out.

Please contact your Seyfarth attorney with any questions.

By Jules Levenson and Mark Casciari

Seyfarth SynopsisIn a decision with major significance for ERISA plans, the Court of Appeals for the Ninth Circuit has upheld the validity of forum selection clauses in those plans.

ERISA is replete with details. Among them is the proper forum for litigation under the statute. ERISA lists multiple potential venues.  The question then becomes whether an ERISA plan can mandate that litigation must be commenced in one of those venues. Pondering this question is not merely an academic exercise as ERISA jurisprudence is not uniform, raising the risk of inconsistent interpretations by different courts. Additionally, certain courts see more ERISA litigation than others, allowing greater familiarity with the statute.

In the case of In re Becker, No. 20-72805, – F.3d – (9th Cir. April 1, 2021), the Ninth Circuit considered whether the district court properly transferred a 401(k) plan lawsuit from the Northern District of California to the District of Minnesota (where the plan sponsor resides and the plan is administered) pursuant to the plan’s forum-selection clause.

ERISA provides that lawsuits “‘may be brought’ where: (1) the plan is administered; (2) the breach took place; or (3) a defendant resides or may be found.” The Court held that the statute’s use of “may” indicates that any of these options is acceptable. (Indeed, the Court said, even an arbitration forum is permitted). Accordingly, it held that a plan clause mandating where a lawsuit may be commenced is permitted by the statute if the selected forum is one of those listed in the statute.

The Court noted that a forum selection clause can support the important ERISA goal of uniform plan administration by having the same court interpreting the plan.  Plan sponsors can readily appreciate this point as they prefer to select individuals to serve as plan fiduciaries who can be expected to review many claims in a consistent fashion.

The Ninth Circuit decision comports with all other Courts of Appeal decisions that have considered the ERISA plan forum selection issue and should make ERISA litigation more predictable, while frustrating any potential forum shopping by plaintiffs.

By Mark Casciari and Kathleen Cahill Slaught

Seyfarth Synopsis:  A recent panel decision from the Ninth Circuit rejects an ERISA preemption argument that a Seattle ordinance regulating private sector health care should be nullified in order to safeguard the ERISA administrative scheme.

On March 17, 2021, a three judge panel of the Court of Appeals for the Ninth Circuit found that ERISA did not preempt a provision in the Seattle Municipal Code that mandates hotel employers and ancillary hotel businesses to provide money directly to designated employees, or to include those employees in the employer’s health benefits plan.  If the employer provides self-insured health benefits, that plan ordinarily would be protected from state laws intruding on its administration, under the broad ERISA preemption clause that nullifies state and local laws that “relate to” ERISA plans.

This case is captioned — The ERISA Industry Committee v. City of Seattle, No. 20-35472.

The three panel judges reasoned that the Seattle ordinance was not preempted by relying on the  Ninth Circuit decision in Golden Gate Rest. Ass’n v. City & Cnty. of San Francisco, 546 F.3d 639 (2008).  The panel said that the Seattle ordinance does not “relate to” any ERISA plan, in accord with Golden Gate, because the employer may fully discharge its expenditure obligations by making the required level of employee health care expenditures to a third party, here the employees directly.  The decision was unsigned (per curiam).

There are a number of interesting aspects to the Seattle decision.

First, the panel labeled the decision as an unpublished Memorandum.  Circuit Rule 36-3(a) states that unpublished Memoranda are not precedent.  The panel thus limited the impact of its decision, which is unfortunate given a conflict in the circuits (noted below).

Second, the Ninth Circuit panel made no mention of the conflict between Golden Gate and Retail Indus. v. Fielder, 475 F.3d 180 (4th Cir. 2007).  In Fielder, the Court of Appeals for the Fourth Circuit ruled that a Maryland law that required large employers to spend at least 8% of their total payrolls on employee health insurance costs or pay the shortfall to the state was preempted by ERISA.  The court reasoned that the Maryland law was preempted because it “effectively” required employers in Maryland to restructure their ERISA plans, and thus conflicted with ERISA’s goal of permitting uniform nationwide administration of those plans.

Third, the Ninth Circuit panel applied a presumption “against” ERISA preemption.  By contrast, a recent (unanimous) ERISA preemption decision of the Supreme Court, Rutledge v. Pharmaceutical Care Management Assn., discussed in a previous blog post, makes no reference to any such presumption.

Fourth, the Ninth Circuit panel seems to apply field preemption concepts set forth in Justice Thomas’s concurring opinion in Rutledge.  That test can be explained by asking whether a provision in ERISA governs the same matter as the state law, and thus could replace it.  ERISA, of course, does not regulate direct payments to employees. This construct of preemption appears to narrow the ERISA preemption standard now applied by a solid majority of the Supreme Court.

We live in an age of state experimentation with matters arguably regulated by ERISA.  Expect to see more such experimentation and more litigation to defend the federal scheme in ERISA.

Seyfarth Synopsis: Avid readers of Beneficially Yours may recall that just over a year ago we asked the pressing question of whether surgical mask purchases could be covered under a health care FSA, among other “novel” coronavirus questions — see what we did there? [Click here for our previous post.] The IRS has confirmed our ground-breaking declaration that masks purchased to prevent contracting the coronavirus could be reimbursable under your health care FSA.

The IRS has finally weighed in — Announcement 2021-7 — allowing personal protective equipment (PPE) to be treated as qualifying medical expenses under Internal Revenue Code Section 213. PPE includes such items as masks, hand sanitizers and sanitizing wipes for the primary purpose of preventing the spread of the virus that causes COVID-19. So, if these items are not otherwise covered by insurance or deducted on an individual’s tax return, they can be reimbursed under the individual’s health care flexible spending account (FSA), health care reimbursement account (HRA), health care savings account (HSA), or Archer medical savings account (MSA).

To the extent these health care arrangements have been permitting these reimbursements already, this announcement provides welcome confirmation. Other plan sponsors may want to use this opportunity to review the rules for their FSAs and HRAs to determine if they should be expanded to specifically allow for reimbursements for these PPE purposes. The IRS states that FSAs and HRAs may be amended for any period beginning on or after January 1, 2020, as long as the plan has been operated consistently and the amendment is in place before the end of the calendar year following the end of the year for which the change is effective. For example, by December 31, 2021 for a change effective January 1, 2020. No retroactive amendment may be adopted later than December 31, 2022.