Health and Welfare

IRS Provides Guidance for Employers to Claim Tax Credits for Emergency Paid Sick Leave Act and Expanded FMLA Payments

The IRS has posted at its website much-anticipated guidance for claiming tax credits for amounts paid by employers under the Emergency Paid Sick Leave Act (EPSLA) and the Emergency Family and Medical Expanded Leave Act (Expanded FMLA), as provided in the Families First Coronavirus Response Act (FFCRA). The guidance contains 66 FAQs that cover all aspects of the tax credits.

The FFCRA was passed in response to the coronavirus pandemic and provides that employers may claim tax credits for amounts required to be paid for qualifying EPSLA or Expanded FMLA leave of absence that is taken April 1, 2020, through December 31, 2020.

DOL Provides Guidance to Implement Paid Sick Leave and Extended Family Medical Leave Provisions of FFCRA

As directed by the Families First Coronavirus Response Act (FFCRA) signed into law last week, the U.S. Department of Labor (DOL) issued its first round of guidance to help employers implement the paid sick leave and the extended family and medical leave included in the legislation. Also, the DOL issued a fact sheet to help employees understand the scope of the changes from the employees’ perspective.

The three DOL guidance documents issued are as follows.

Employers should review these guidelines to become familiar with how the FFCRA affects sick leave, and family and medical leave.

Ascensus’ team of experts will continue to monitor federal, state legislative, and regulatory responses to the coronavirus outbreak. Visit the newsroom to stay up to date on the latest guidance and what it means for you.



IRS Provides Guidance on HSAs and Associated HDHPs, and Coverage of COVID-19 Testing

The IRS has issued Notice 2020-15, addressing requests made to the agency for health savings account (HSA)-related guidance as the nation responds to the challenges of the COVID-19 (coronavirus) outbreak in the U.S. and worldwide.

The IRS was asked for confirmation that a high deductible health plan (HDHP) associated with an HSA could cover the cost of COVID-19 patient testing with no deductible—or a lower deductible—first being paid, and still remain an HSA-eligible health plan. An HDHP must generally meet certain plan deductible requirements in order for an individual to make HSA contributions. There are certain exceptions that allow health plan coverage without satisfying the plan deductible. One of these is for preventive care costs. There has been uncertainty as to whether COVID-19 testing would be considered preventive care.

In Notice 2020-15, the IRS states, “Until further guidance is issued, a health plan that otherwise satisfies the requirements to be a high deductible health plan (HDHP) under section 223(c)(2)(A) of the Internal Revenue Code (Code) will not fail to be an HDHP under section 223(c)(2)(A) merely because the health plan provides health benefits associated with testing for and treatment of COVID-19 without a deductible, or with a deductible below the minimum deductible (self only or family) for an HDHP. Therefore, an individual covered by the HDHP will not be disqualified from being an eligible individual under section 223(c)(1) who may make tax-favored contributions to a health savings account (HSA).”

Health Groups Sue to Block Hospital Price Transparency Rules

A group of health care associations and providers has filed suit in U.S. District Court for the District of Columbia to block Trump administration-backed guidance requiring hospitals to disclose their standard charges. The guidance was issued by the Department of Health and Human Services Center for Medicare and Medicaid Services (CMS), and published as final regulations in the Federal Register on November 27, 2019.

Under this guidance, hospitals operating in the United States would be required to “establish, update, and make public a list of their standard charges for the items and services that they provide.” The guidance further states that this CMS action was “…necessary to promote price transparency in health care and public access to hospital standard charges,” and that the public will thereby “have the information necessary to make more informed decisions about their care.” The effective date is January 1, 2021.

Plaintiffs in the suit include the American Hospital Association, Association of American Medical Colleges, Federation of American Hospitals, National Association of Children’s Hospitals, and several hospital groups located in California, Missouri, and Nebraska.

The plaintiffs allege that the CMS final regulations would require disclosure of confidential information, violate the speech protections of the First Amendment to the U.S. Constitution, would undermine competition and blunt innovation, and would financially “overwhelm many hospitals.” They further allege that the final regulations are arbitrary and capricious and “lack any rational basis.”

IRS Grants Filing Extension for Certain Affordable Care Act Reporting

The IRS has issued Notice 2019-63, granting a 30-day extension to file information returns (forms) that report required information on compliance with certain requirements of the Affordable Care Act (ACA). The IRS makes clear that the 30-day extension applies to the deadline for providing the forms to taxpayers; the to-IRS deadlines remain unchanged.

Under Internal Revenue Code Section (IRC Sec.) 6056, certain “applicable large employers” (generally, those with 50 or more full-time-equivalent employees) are required to file with the IRS and distribute to employees information on offers of coverage under—and enrollment in—the employer’s health insurance plan(s). Under IRC Sec. 6055, providers of health coverage are required to report to the IRS and to employees the months that the employee was covered under ACA-defined minimum essential coverage. The information returns used to report this information include Forms 1094-B, 1094-C, 1095-B, and 1095-C.

The deadline for providing these forms to employees and covered individuals is extended from January 31, 2020, to March 2, 2020. The February 28, 2020, paper-copy IRS deadline and March 31, 2020, electronic submission IRS deadlines are not extended.

This notice also extends relief from penalties to reporting entities that report incorrect or incomplete information on the return or statement when these entities can show that they made good-faith efforts to comply with the information-reporting requirements. This relief applies to missing and inaccurate taxpayer identification numbers and dates of birth, as well as other information required on the return or statement.

The Treasury Department and the IRS have requested comments as to whether an extension of the due date for furnishing statements to individuals and the good-faith reporting relief will be necessary for future years and, if so, why.

Federal Agency Health Care Price Transparency and Cost Sharing Rules Posted in Federal Register

A late posting in Wednesday’s Federal Register contains the official publication of guidance by several federal agencies with regulatory authority over elements of health care delivery. These include the IRS, the Department of Labor (DOL), and Department of Health and Human Services (HHS). This guidance is being issued in response to an Executive Order by President Donald Trump concerning health care price transparency and patient cost sharing. Members of Congress have also been vocal in requesting that steps be taken to equip citizens to become better informed consumers of health care services.

Cost-Sharing Proposed Regulations
The IRS, DOL, and HHS are jointly issuing proposed regulations under which group health plans and health insurance issuers in the individual and group health insurance markets would be required to disclose certain cost-sharing information.

The stated objective of these proposed regulations is to allow “…a participant, beneficiary, or enrollee (or his or her authorized representative) to obtain an estimate and understanding of the individual’s out-of-pocket expenses and effectively shop for items and services.” This information is to be made available on a website and—if requested—through non-Internet means.

These proposed regulations would also require health insurance plans and issuers to disclose in-network provider negotiated rates, and “historical out-of-network amounts through …machine-readable files posted on an Internet web site, thereby allowing the public to have access to health insurance coverage information that can be used to understand health care pricing and potentially dampen the rise in health care spending.”

Comments will be received for a 60-day period that begins with this publication. The document notes that all comments will be made public, and submitters are, therefore, warned not to include personally-identifiable information. Comments may be submitted electronically, by regular mail, or by express or overnight mail delivery.

Hospital Charges Disclosure Final Regulations
The HHS’s Centers for Medicare and Medicaid Services (CMS) has also issued guidance—these as final regulations—requiring hospitals operating in the United States to “establish, update, and make public a list of their standard charges for the items and services that they provide.” The effective date of these final regulations is January 1, 2021.

The guidance states that this action by the agency is “…necessary to promote price transparency in health care and public access to hospital standard charges” and that the public will thereby “have the information necessary to make more informed decisions about their care.”

2020 Cost-of-Living Adjustments for Flexible Spending Arrangements and Fringe Benefits

The IRS has issued Revenue Procedure 2019- 44, which contains cost-of-living-adjusted (COLA) amounts for 2020 for flexible spending arrangements (FSAs) and certain other fringe benefits, as described below.


Cafeteria Plans

For taxable years beginning in 2020, the dollar limitation under Internal Revenue Code Section (IRC Sec.) 125(i) on voluntary employee salary reductions for contributions to health FSAs is $2,750.


Qualified Transportation Fringe Benefits

For taxable years beginning in 2020, the monthly limitation under IRC Sec. 132(f)(2)(A) regarding the aggregate fringe benefit exclusion for transportation in a commuter highway vehicle and any transit pass is $270. The monthly limitation under IRC Sec. 132(f)(2)(B) regarding the fringe benefit exclusion amount for qualified parking is $270.


Adoption Assistance Programs

For taxable years beginning in 2020, under IRC Sec. 137(a)(2), the amount that can be excluded from an employee’s gross income for the adoption of a child with special needs is $14,300. For taxable years beginning in 2020, the maximum amount that can be excluded from an employee’s gross income under IRC Sec. 137(b)(1) for the amounts paid or expenses incurred by an employer for qualified adoption expenses furnished pursuant to an adoption assistance program for other adoptions by the employee is $14,300. The amount excludable from an employee’s gross income begins to phase out under IRC Sec. 137(b)(2)(A) for taxpayers with modified adjusted gross income in excess of $214,520 and is completely phased out for taxpayers with modified adjusted gross income of $254,520 or more. (Section 3.04 of Revenue Procedure 2019-44 contains additional information on the adoption credit.)


Qualified Small Employer Health Reimbursement Arrangements

For taxable years beginning in 2020, in order to be considered a qualified small employer health reimbursement arrangement under IRC Sec. 9831(d), the arrangement must provide that the total amount of payments and reimbursements for any year cannot exceed $5,250 ($10,600 for family coverage).