Client Alert: Transparency Rules Are In Full Force – Be Sure You Are Ready!

As you know, both the Affordable Care Act from 2010 (ACA) and the Consolidated Appropriations Act of 2020 (CAA, 2021) contain various transparency rules and requirements upon group health plans. Some of the rules are similar; others vary and have different effective dates.

Thankfully, the Departments of Labor, Treasury, and Health and Human Services (collectively, the Departments) issued FAQ Part 49 to reconcile some of these issues.

BACKGROUND

In November of 2020, the Departments promulgated numerous rules to create greater transparency in health coverage requirements as required under the ACA. The rules disseminate price and benefit information directly to consumers and to the public, enabling consumers to evaluate health care options and to make cost-conscious decisions. The Departments rely on the legal authority provided in 2715A of the Public Health Service Act (42 USCA § 300gg-15) and section 1311(e) of the Patient Protection and Affordable Care Act (42 USCA 18031(e)(3)). While the rules went into effect January 11, 2021, the Departments were set to begin enforcement January 1, 2022.

Meanwhile, on December 27, 2020, the Further Consolidated Appropriations Act, 2021 (PL 116-260) (CAA, 2021) was signed into law. The CAA, 2021, in part, provides protections against surprise billings and also contains numerous transparency rules. These rules are similar to the ACA transparency in coverage rules, but have varying terms and effective dates.

The Departments have decided to delay enforcement of certain provisions to reconcile contradictions between the ACA’s transparency in coverage rules and those provided under CAA, 2021. See FAQ Part 49.

Below is a summary of the Departments’ guidance as well as new dates by which plans and issuers must comply.

DEPARTMENTS’ GUIDANCE

Machine Readable Files

As it pertains to public disclosure, the ACA rules require that certain non-grandfathered group health plans and health insurance issuers offering non-grandfathered coverage in the group and individual markets disclose in three machine readable files on a public website:

  • their in-network provider rates for covered items and services (enforcement begins July 1st, 2022);
  • out-of-network allowed amounts and billed charges for covered items and services (enforcement begins July 1st, 2022); and
  • negotiated rates and historical net prices for covered prescription drugs (enforcement deferred until further notice).

See 85 FR 72158 (Nov. 12, 2020). Machine-readable files are defined as: a digital representation of data or information in a file that can be imported or read by a computer system for further processing without human intervention, while ensuring no semantic meaning is lost. The files must be accessible free of charge, without having to establish a user account, password, or other credentials, and without having to submit any personal identifying information such as a name, email address, or telephone number. Plans and issuers have flexibility to publish the files in the locations of their choosing based upon their superior knowledge of their website traffic and the places on their website where the machine-readable files would be readily accessible by intended users.

Generally, the machine-readable files must contain the following content elements:

FOR ALL FILES

– name and identifier for each coverage option (Ex: EIN or HIOS ID)

– billing codes or other common payer code identifiers (Ex: a CPT code, HCPCS code, DRG or NDC)

– national provider identifiers (NPI), tax identifier numbers (TIN) and place of service codes

FOR IN-NETWORK RATE FILES

– rates that apply to each item or service that is associated with the last date of the contract term or the contract expiration date for each provider as identified by NPI, TIN, and Place of Service Code

– For contractual arrangements under which a plan or issuer agrees to pay an in-network provider a percentage of billed charges and is not able to assign a dollar amount to an item or service prior to a bill being generated, plans and issuers may report a percentage number, in lieu of a dollar amount.

– In situations in which alternative reimbursement arrangements are not supported by the schema, or in instances where the contractual arrangement requires the submission of additional information to describe the nature of the negotiated rate, plans and issuers may disclose in an open text field a description of the formula, variables, methodology, or other information necessary to understand the arrangement.

FOR ALLOWED AMOUNT FILES

– historical out-of-network allowed amounts for covered items and services

FOR PRESCRIPTION DRUG FILES

– negotiated rates for prescription drugs (rates for prescription drugs should not be included in the other two files)

– historical net prices of prescription drugs (the retrospective average amount a plan or issuer paid for a prescription drug, inclusive of any reasonably allocated rebates, discounts, chargebacks, fees, and any additional price concessions received by the plan or issuer with respect to the prescription drug)

PRACTICE NOTE: While the ACA rules do not apply to grandfathered plans, the CAA, 2021 transparency rules do!

Price Comparison Tools

Plans and issuers are required to develop price comparison information for a list of health-related items and services and make it available to plan participants, beneficiaries, and enrollees through an internet-based self-service tool, and in paper form upon request. See 26 CFR 54.9815-2715A2(b), 29 CFR 2590.715-2715A2(b), and 45 CFR 147.211(b).

  • Departments have provided a list of 500 items and services that plans and insurers must include in their self-service tools. Enforcement will begin January 1, 2023. A list of the items can be found in table 1 of the preamble of the final rule.
  • By January 1, 2024, plans and insurers must include the price information for all items and services in their self-service tool.

To fulfill the requirements of the cost-sharing rules, several items of content are required, including: an estimate of the cost sharing liability; a participant’s, beneficiary’s, or enrollee’s accumulated amount; in net-work rates (including negotiated rates, underlying fee schedule rates and prescription drug rates); out of network allowed amounts; items and services content list; notice of prerequisites of coverage; and a disclosure notice.

PRACTICE NOTE: The CAA, 2021 added price comparison tool requirements as well (by telephone or Internet website) of the plan or issuer with respect to plan year, geographic region and participating providers to compare the amount of cost-sharing  required for a specific item/service.  See PHSA 2799A-4; IRC 8919; ERISA 719.

Insurance Identification Cards

Plans and issuers are required to include applicable deductibles, applicable out-of-pocket maximum limitations, and telephone numbers and web addresses for individuals to receive consumer assistance on plan ID cards issued to participants, beneficiaries and enrollees. This requirement has been in effect since January 1st, 2022. The Departments have not issued further guidance on an enforcement date but expresses that plans and issuers are expected to implement the ID card requirements using a good faith, reasonable interpretation of the law. See Code section 9816(e), ERISA section 716(e), and PHS Act section 2799A–1(e), as added by section 107 of division BB of the CAA.

Good Faith Estimates

Providers and facilities, upon an individual’s request or scheduling of items or services, are required to inquire if the individual is enrolled in a health plan or health insurance coverage, and to provide a notification of the good faith estimate of the expected charges for furnishing the scheduled item or service and any items or services reasonably expected to be provided in conjunction with those items and services, including those provided by another provider or facility, with the expected billing and diagnostic codes for these items and services. See PHS Act section 2799B–6, as added by section 112 of division BB of the CAA.

Providers and facilities must provide this good-faith estimate information to the plans of individuals who have coverage. And for those who don’t have coverage or who don’t wish to make an insurance claim with their coverage, this information must be provided to the individual. As of now, enforcement is deferred.

Advanced Explanation Of Benefits

When plans and issuers receive a good faith estimate from a provider or facility regarding a covered individual’s request or scheduling of an item or service, the plan or issuer must send the participant, beneficiary, or enrollee an advanced explanation of benefits. The explanation must contain:

  1. the network status of the provider or facility;
  2. the contracted rate for the item or service, or if the provider or facility is not a participating provider or facility, a description of how the individual can obtain information on providers and facilities that are participating;
  3. the good faith estimate received from the provider;
  4. a good faith estimate of the amount the plan or coverage is responsible for paying, and the amount of any cost-sharing for which the individual would be responsible for paying with respect to the good faith estimate received from the provider; and
  5. disclaimers indicating whether coverage is subject to any medical management techniques.

Note: The last content element for the explanation is a disclosure advising recipients that the information provided based on the good faith estimate is only an estimate of costs and that all items and services are subject to change. See Code section 9816(f), ERISA section 716(f), and PHS Act section 2799A-1(f), as added by section 111 of division BB of the CAA.

As of now, enforcement is deferred.

Prohibition on Gag Clauses on Price and Quality Information – CAA, 2021

The CAA, 2021 prohibits group health plans and issuers from entering into agreements with health care providers, networks or association of providers, TPAs, or other services providers which offer access to a network of providers if that agreement directly or indirectly restricts a group health plan or insurer from:

  • Providing provider-specific cost or qualify of care to referring providers, the plan sponsor, participants or beneficiaries, or individual eligible to become participants or beneficiaries under the plan;
  • Electronically accessing de-identified claims data, including financial information, provider information, service codes, or other data included in claim or encounter transactions; or
  • Sharing such information or data with a business associate.

Group health plans must annually submit to the Secretary an attestation that such plan is in compliance with these rules.

However, in FAQ Part 49 Q/A-7, the Departments indicated that they will not be issuing regulations on this issue. Instead, plans and issuers are expected to implement these requirements using a good faith and reasonable interpretation of the statute. Additionally, the Departments to intend to issue guidance explain how plans should submit their attestation starting in 2022.

Accurate Provider Directory Information – CAA, 2021

The CAA, 2021 also added the requirements that plans must provide accurate provider directories and update them regularly. See new Code section 9820(a) an d(b), ERISA section 720(a) and (b), and PHSA section 2799A-5(a) and (b). Plans must respond to participant and beneficiary requests about provider network participation status. If a participant, beneficiary, or enrollee receives services or is furnished an item from an out-of-network provider but was incorrectly given information that the provider was in-network, only in-network levels can be charged by the plan and the plan must count these cost-sharing amounts toward any in-network deductible or in-network out-of-pocket maximum. This is effective for plan years beginning on or after January 1, 2022.

In FAQ Part 49, Q/A-8, the Departments indicate that they will not be providing regulations prior to the effective date. Plans must use good faith efforts to comply. Plans will not be penalized if the plan sponsors limit cost-sharing to in-network amounts if wrong information is given as above.

Balance Billing Disclosures – CAA, 2021

Code section 9820(c), ERISA section 720(c), and PHS Act section 2799A-5(c) were added by CAA, 2021 and require plans to make certain disclosures regarding balance billing protections to participants, beneficiaries, and enrollees. In general, plans must make publicly available, post on a public website of the plan, and include on each Explanation of Benefits information regarding the No Surprise Billing law including relevant state laws and contact information for state and federal agencies in case of violations. The Departments issued a model notice to assist with the disclosure requirements. These rules are effective for plan years beginning on or after January 1, 2022.

FAQ Part 49 Q/A-9 similarly states that regulations were not to be issued prior to the effective date and plans must use a good faith, reasonable interpretation of the law.

Continuity of Care – CAA, 2021

Continuity of care protections are set forth in CAA, 2021. These ensure continuity of care in cases of an individual with benefits under a group health plan when termination of certain contractual relationships result in change in provider or facility network status. See Code section 9818, ERISA section 718, and PHSA sections 2799A-3 and 2799B-8.

FAQ Part 49, Q/A-10 states that while these requirements are also effective January 1, 2022, regulations won’t be issued until later. Such guidance will include prospective applicability date to afford plans and other entities with a reasonable amount of time to comply with any new requirements. Plans are again expected to use a good faith, reasonable interpretation of the law.

Grandfathered Health Plans – CAA, 2021

While certain provisions of the ACA are not applicable to grandfathered health plans, the CAA, 2021 does not include such an exception. Therefore, while transparency rules under the ACA were not applicable, grandfathered plans must be prepared to comply under the CAA. See FAQ Part 49, Q/A-11.

Prescription Drug Pricing – CAA, 2021

Under the CAA, 2021, Plan sponsors must submit numerous information regarding prescription drug expenses to Departments including:

  • Plan year beginning and ending dates;
  • Enrollment census information, including the number of enrollees and each state where the plan is offered; and
  • Specific information regarding the 50 most frequently dispensed brand drugs (and the total number of paid claims for each), the 50 most expensive drugs annually (and the annual amount spent for each), and the 50 drugs with the greatest yearly increase in expense from one plan year to the next (and the change in cost for each drug per year).

Plans must also report other information, including the average monthly premiums, prescription expenditures and impact of drug manufacturer rebates on expenditures.

In FAQ Part 49, Q/A-12, the Departments state that the intend to issue regulations to address these pharmacy benefit and drug cost reporting requirements. Until such guidance is issued, the Departments strongly encourage plans to start working to ensure they are in a position to report the 2020 and 2021 plan year data by December 27, 2022.

PRACTICE TIPS AND TAKEAWAYS…

Undeniably, plan sponsors will not have the detailed information to comply and must rely on their insurers and TPAs. However, this regulatory guidance makes clear thatplan sponsors are ultimately responsible and must ensure the transparency rules are followed!

The transparency rules do set forth protections for insured arrangements when the group health plan requires the insurer to provide such information via a written agreement. If insurer fails to comply, then the insurer violates transparency disclosure requirements, not the group health plan.

It’s a bit more difficult for self-funded arrangements. The group health plan here too can enter into a written agreement requiring the TPA to provide the information. However, the plan is still responsible if the TPA fails to comply.Therefore, it is imperative to have an indemnification agreement with the TPA.

Plans failing to comply with the transparency rules could be subject to an enforcement action under ERISA and to the $100 per day excise tax penalty under Section 4980D of the Code (which applies to any failure to comply with the ACA’s market reforms).

Therefore, plan sponsors should immediately ensure their insurers and/or TPAs are prepared to comply with these rules and should enter into written agreements with each, as well as add indemnification language to protect themselves from potential penalties due to noncompliance.

This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.


Lauren  D.  Harrington is an associate attorney at Fraser Trebilcock focusing on Employment Law. You can reach her at 517.377.0874, or email her at lharrington@fraserlawfirm.com.


Elizabeth H. Latchana, Attorney Fraser TrebilcockElizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2019 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or elatchana@fraserlawfirm.com.

[Client Alert] IRS Clarifies Cafeteria Plan Flexibility into 2022: Amendments Required to Take Advantage

The Taxpayer Certainty and Disaster Tax Relief Act of 2020 (also known as the Consolidated Appropriations Act, 2021 or CAA) was signed into law on December 27, 2020. With regard to flexible spending accounts (FSAs), Section 214 of the CAA provided great flexibility for plan years 2021 and 2022. Please see our January 11, 2021 Client Alert. However, tax consequences of these relaxed rules were unclear.

On February 18, 2021, the IRS provided the necessary clarity by releasing Notice 2021-15.

Notice 2021-15 imposes some additional limitations and provides some expansions to Section 214 of the CAA. Significantly, the Notice expands the mid-year change in election relief to group health plans as long as certain requirements are met. The Notice further addresses the impact on HSAs, COBRA, and nondiscrimination testing with regard to FSA carryovers and grace periods. Moreover, it tightened the plan amendment timeline. Finally, it allows additional time for health FSA and HRA plans to be amended to include OTCs and menstrual care products.

The Notice reiterates the loosened rules as provided in the CAA, with the following clarifications:

Expanded Carryover Rules

  • Carryover to the 2021 Plan Year: This provision allows any unused benefits or contributions in both dependent care and health FSAs from plan years ending in 2020 to be carried over to the plan year ending in 2021;
    • The carryover must follow rules similar to the health FSA rules… however, while health FSA carryovers are normally subject to a $550 cap [as indexed], the Notice specifically states that any unused benefits or contributions may be carried over.
    • Significantly, dependent care FSAs were not previously allowed to have a carryover provision.
  • Carryover to the 2022 Plan Year: This provision allows any unused benefits or contributions in FSAs from plan years ending in 2021 to be carried over to the plan year ending in 2022;
    • We find this provision important especially in situations involving the dependent care FSAs. These FSAs have a maximum reimbursement of $5,000 per calendar year in order to be excluded from gross income.  See Code section 129(a). If an employee is allowed to carry over unused contributions into 2021 from 2020, but had also elected a full $5,000 for plan year 2021, s/he would have an overfunded account. This can be handled in one of two ways: (1) carrying over the extra funds from 2021 to 2022, and/or (2) prospective election changes for FSAs for plan years ending in 2021 without regard to the strict status change rules (see the Change in Election section below). With regard to the latter, employees can reduce their dependent care election for 2021 and prevent future contributions from being made.
      • Note: While Example 3 of the Notice indicates that more than $5,000 can be reimbursed, we recommend exercising caution here. Code section 129(a), which clearly limits the dependent care exclusion from gross income to $5,000 of services rendered during a taxable year, was not amended. Code 129(a)(2)(A) says: “The amount which may be excluded under paragraph (1) for dependent care assistance with respect to dependent care services provided during a taxable year shall not exceed $5,000.”
    • While widely understood, the Notice clarifies that carryover of amounts in a general-purpose FSA will make an employee ineligible for HSAs. Employers may amend their plans to convert general-purpose FSAs to ones compatible with HSAs (limited-purpose or post-deductible) or may amend their cafeteria plans to allow employees to opt out of the carryover feature to preserve their eligibility for HSAs.
    • This limited relief allows the Expanded Carryover to be adopted, regardless of whether the plan currently has a grace period or carryover or not (having carryovers and grace periods in the same years normally would not be allowed – see Notice 2013-71).
    • Moreover, the Notice provides that an employer may limit the carryover amount and may limit the carryover to a specified date during the plan year.
    • Plan amendments are required.
  • However, an employer may not adopt both the Extended Grace Period and Expanded Carryover rules with respect to a particular FSA.

Extended Grace Periods

  • Grace Periods: Health or dependent care FSAs may adopt an extended grace period for plan years ending in 2020 or 2021, which is extended from the traditional two months and 15 days to a full 12 months after the end of such plan year in order for unused benefits or contributions to be utilized.
    • As with the Expanded Carryovers, Extended Grace Periods in a general-purpose FSA will make an employee ineligible for HSAs. Employers may amend their plans to convert general-purpose FSAs to ones compatible with HSAs (limited-purpose or post-deductible) or may amend their plans to allow employees to opt out of the grace period feature to preserve their eligibility for HSAs.
    • This limited relief allows the Extended Grace Period to be adopted, regardless of whether the plan currently has a grace period or carryover or not (having carryovers and grace periods in the same years normally would not be allowed – see Notice 2013-71).
    • An employer may limit the grace period to a specified date during the plan year.
    • Plan amendments are required.
  • Post-Termination Health FSA Reimbursements: Health FSAs are now allowed to continue to reimburse former participants for claims incurred post-termination similar to dependent care FSAs, namely:
    • Employees who ceased participation in the plan during calendar years 2020 or 2021 may continue to receive reimbursements from unused benefits or contributions through the end of the plan year in which participation ceased (including any grace period).
    • Cessation of participation includes termination of employment, change in employment, or a new election during calendar year 2020 or 2021.
    • This is only allowed if Extended Grace Period is adopted. It is not applicable for Expanded Carryovers…
    • COBRA still applies.
    • An employer may limit this to a specified date during the plan year.
    • Employers may limit the amount in a health FSA to the amount of contributions made by the employee from the beginning of the plan year in which the employee ceased to be a participant (i.e., not including carryover/grace period amounts).
    • Participation in a general-purpose FSA will make an employee ineligible for HSAs. Employers may amend their plans to convert general-purpose FSAs to ones compatible with HSAs (limited-purpose or post-deductible) or may amend their plans to allow employees to opt out of the extended participation feature to preserve their eligibility for HSAs.
    • Plan amendments are required.
  • However, an employer may not adopt both the Extended Grace Period and Expanded Carryover rules with respect to a particular FSA.

Dependent Care FSA Age Out Rule

  • Dependent Care FSA Age Out Rule: In order for eligible employees to receive reimbursement for dependent care assistance, their dependent must be under the age of 13 when the expenses were incurred. However, for employees who were enrolled in the dependent care FSA (as long as the regular enrollment period was on or before January 31, 2020), age 14 is substituted for age 13 for the last plan year, and, if the employee had an unused balance in the FSA for such plan year, age 14 may also be substituted for the subsequent plan year with respect to those unused amounts.
  • Plan amendments are required.

Nondiscrimination

  • Amounts available due to either the Expanded Carryover or Extended Grace Period, as well as the Dependent Care FSA Age Out Rule, are not taken into account for Section 125 and/or Section 129 nondiscrimination testing. However, otherwise, the nondiscrimination rules remain in effect.

Normal Rules Resume for Plan Years Ending In/After 2022

  • Normal FSA rules resume for plan years ending in or after 2022,
    • Calendar year plans with regular grace periods will allow all amounts remaining at the end of the 2022 plan year to be used during the first 2.5 months of 2023.
    • Calendar year plans with regular carryovers will allow up to $550 (as inflated) to be carried over and used in any month of 2023.
    • Carryovers, as previously, will only be allowed for health FSAs.

Change in Election

  • Change in Election for FSAs: Similar to IRS Notice 2020-29, but for plan years ending in 2021, health and dependent care FSAs may allow employees to make mid-year election changes prospectively without regard to the rigid change in status rules Under Treas. Reg. 1.125-4.
  • Change in Election for Group Health Plans (health / dental / vision):
    • Although the CAA did not so provide, Notice 2021-15 also allows mid-year changes under a cafeteria plan for group health plans without regard to change in status rules as long as certain requirements are met.
    • Similar to relief provided by Notice 2020-29, an employer may amend one or more of its Section 125 cafeteria plans to allow employees to:
      • (1) make a new election for employer-sponsored health coverage on a prospective basis, if the employee initially declined to elect employer-sponsored health coverage;
      • (2) revoke an existing election for employer-sponsored health coverage and make a new election to enroll in different health coverage sponsored by the same employer on a prospective basis (including changing enrollment from self-only coverage to family coverage);
      • (3) revoke an existing election for employer-sponsored health coverage on a prospective basis, provided that the employee attests in writing that the employee is enrolled, or immediately will enroll, in other health coverage not sponsored by the employer.
    • The Notice includes sample written attestation language.
  • Plan amendments are required.
  • The Notice clarifies that health FSAs may only be used for medical care expenses and dependent care FSAs may only be used for dependent care expenses.
  • Employers can limit election changes in a plan year to increases in coverage, decreases in coverage, number of changes, and others.
  • Under this relief, employers may allow employees to change from general-purpose health FSAs to HSA-compatible FSAs for a portion of the year.
  • No cash outs of FSAs are allowed.

COBRA

  • The Notice clarifies the application of COBRA with regard to these unique changes:
    • Extended Grace Period: Health FSA spend down amounts for terminated employees will not prevent individuals with qualifying events from having a loss of coverage (i.e., they will still have the right to COBRA), and the employer must provide the COBRA notice.
    • Expanded Carryover or Extended Grace Period: If a terminated employee qualifies for COBRA, s/he may elect and access the additional funds made available due to the carryover or grace period. However, these excess amounts will not be included when determining the applicable COBRA premium.

Amendments

  • To allow any of the above provisions, the cafeteria plan or arrangement must be amended to allow for such provisions.
  • Rarely are cafeteria plan amendments allowed to take retroactive effect, however, this Notice provides some of those rare opportunities. A cafeteria plan amendment to adopt one of the above provisions may be implemented retroactively if:
    • (1) the amendment is adopted not later than the last day of the first calendar year beginning after the end of the plan year in which the amendment is effective, and
    • (2) the plan or arrangement is operated consistent with the terms of the amendment during the period beginning on the effective date of the amendment and ending on the date the amendment is adopted.
  • For a calendar year plan, if 2020 FSA amounts carry over to 2021, the amendment must be adopted by December 31, 2021. For a non-calendar year plan where the last day of the applicable plan year ends in 2021, the plan amendment must be adopted by December 31, 2022.
  • With regard to amendments to allow over-the-counter drugs and menstrual care products to be reimbursed from health FSAs, the Notice also clarifies that retroactive amendments are allowed:
    • Under the CARES Act, FSAs/HRAs (and HSAs) may reimburse over-the-counter drugs and menstrual care products incurred after December 31, 2019 if the FSA/HRA is amended. Typically, as mentioned above, Code section 125 only allows reimbursement after the plan is amended (and Code section 105(b) only allows exclusion from gross income if the plan covers the expense on the date the expense was incurred). However, this Notice clarifies amendments and coverage can be retroactive to January 1, 2020.

Form W-2 Reporting

  • Amounts contributed to dependent care FSAs are required to be reported in Box 10 (the employee’s salary reduction amount elected plus any employer matching contributions).  However, this does not need to include account amounts that remain available during the grace period. The Notice clarifies that this rule continues to apply for with regard to amounts available due to Expanded Carryovers and Extended Grace Periods.

Conclusion

Obviously there are numerous relaxed rules contained within this Notice, each with its own set of requirements and implications. As always, consultation is important to determine if these changes will be of benefit to employers and their employees. Many factors should be considered, such as nondiscrimination rules, adverse selection with allowing mid-year changes, whether extending health FSA reimbursement provisions will negatively affect health savings accounts, and additional required employee communications.

Plan sponsors must determine whether they wish to proceed with any of the above provisions, largely in part depending on whether typical FSA rules would result in unprecedented forfeitures due to the pandemic. If so, they must communicate such provisions with their workforce and must administer the cafeteria plan or arrangement accordingly as of the amendment’s effective date, even if the amendment is adopted at a later date.

As you are well aware, the law and guidance are rapidly evolving in this area. Please check with your Fraser Trebilcock attorney for the most recent updates.


We have created a response team to the rapidly changing COVID-19 situation and the law and guidance that follows, so we will continue to post any new developments. You can view our COVID-19 Response Page and additional resources by following the link here. In the meantime, if you have any questions, please contact your Fraser Trebilcock attorney.


Elizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2019 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or elatchana@fraserlawfirm.com.


Brian T. Gallagher is an attorney at Fraser Trebilcock specializing in ERISA, Employee Benefits, and Deferred and Executive Compensation. He can be reached at (517) 377-0886 or bgallagher@fraserlawfirm.com.