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IRS Announces 2024 Employee Benefit Plan Limits

On November 9, 2023, the Internal Revenue Service (IRS) announced cost-of-living adjustments to the applicable dollar limits for certain health and welfare plan benefits, including those for health flexible spending arrangements and commuter benefit plans, among other important updates. Employers, many of whom are in the midst of or have already completed open enrollment for 2024, will need to review these limits as soon as possible. Employer action may include, for example, determining whether enrollment portal updates and communications to participants are necessary. For employees who have already made 2024 elections without the benefit of the new dollar limits, employers may need to reach out to these employees to inform them of the new amounts and consider implementing a new election window.

See the 2024 limits.




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Employers Be Forewarned and Forearmed: Recent IRS Announcements Require Action on ERTC Claims

Asserting that many employers have improperly claimed Employee Retention Tax Credit (ERTC) refunds, the Internal Revenue Service (IRS) released two new announcements that address ERTC claims. Following these new IRS announcements, most employers should consult their legal and tax advisors and consider filing protective refund claims to preserve their employment and income tax positions and to defend against potential IRS penalties and interest.

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Discerning Congressional Purpose from the Proposed MHPAEA Regulations Comment Letters

We continue our investigation of proposed regulations under the Mental Health Parity and Addiction Equity Act (MHPAEA) issued by the US Departments of Labor, Health and Human Services and the Treasury (the Departments). Our previous MHPAEA content is available here.

The comment period for the proposed regulations closed on October 17, 2023, and one thing is clear: Stakeholders are divided not so much over particulars of the proposal but rather on the broad scope and reach of the rule. The is no doubt that the rule is intended to enact an overarching policy goal of the Biden administration. One need look no further than the administration’s July 25, 2023, fact sheet, which touts the administration’s “comprehensive national strategy to transform how mental health is understood, accessed, treated, and integrated in and out of health care settings.” Nor is there any doubt that the proposed rule is granular and prescriptive, as we previously explained.

While many of the comment letters address the particulars of the rule, certain high-profile comments ask whether it should be adopted at all. On one side are the providers (see the American Hospital Association’s comments, which offer a full-throated endorsement of the rule); on the other are the carriers (see AHIP’s comments, which claim the rule is vague and impossible to administer and calls for its withdrawal.)

If the final rule looks anything like the proposal, there will be a challenge, the particulars of which will likely include one central question: Is the final rule consistent with Congress’ intent in the matter? Dueling comments by the majority and minority members of the House of Representatives Committee on Education and the Workforce and (in the case of the minority) the Subcommittee on Health, Employment, Labor, and Pensions frame the question as follows:

Comment letter of Virginia Foxx, Chairwoman, Committee on Education and the Workforce

Citing MHPAEA’s legislative history, the majority claims that “Congress did not intend to include NQTLs [nonquantitative treatment limitations] when enacting the MHPAEA.” According to the comment letter, “the [MHPAEA] Committee report does not contain one mention of an NQTL.” (While the letter refers to the “Consolidated Appropriations Act, 2021 (CAA),” it does not attach any significance to that law’s requirement for plans and issuers to prepare and furnish on-demand reports detailing their NQTL compliance.) The majority also expresses its view that measuring and analyzing outcomes data is both impractical and exceeds the scope of the law. The majority is perplexed that the Departments believe they have the authority “to require plans to measure outcomes data stems from the statutory language.”

Comment letter of Bobby Scott, Ranking Member, Committee on Education and the Workforce, and Mark DeSaulnier, Ranking Member, Subcommittee on Health, Employment, Labor, and Pensions.

The minority’s comments welcome the proposed rules’ “emphasis on access to behavioral health care” and make the claim that the imposition of rules governing NQTLs is “entirely consistent with the statutory [...]

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Employer Due Diligence Lessons from UK Share Scheme Case

The recent decision in Ponticelli Limited v Gallagher provides a salient reminder that the right to participate in a share incentive plan can transfer to a new employer under the Transfer of Undertakings (Protection of Employment) Regulations. The right applies even if the employee’s right to participate in the plan arose outside of the contract of employment. The employee will be treated as a leaver under their old employer/transferor’s scheme, and the transferee employer must then provide a scheme of substantial equivalence for the employee to participate in post-transfer.

While this is a Scottish case, the decision is binding on the employment tribunals throughout the UK.

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HHS Proposes Updates to Disability Nondiscrimination Regulations for First Time in Nearly 50 Years

Discrimination on the basis of disability has contributed to significant disparities in healthcare and child welfare. To address these disparities, the US Department of Health and Human Services (HHS) recently proposed updated regulations implementing Section 504 of the Rehabilitation Act of 1973 to prohibit discrimination on the basis of disability in programs or activities that receive HHS funds. Although most of the revisions align with expectations imposed on stakeholders through other federal laws, some proposed changes are unique to HHS programs, including regulations impacting medical treatment, value assessments, medical diagnostic equipment, digital media and child welfare programs.

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IRS Announces 2024 Employee Benefit Plan Limits

The Internal Revenue Service recently announced the cost-of-living adjustments to the applicable dollar limits for various employer-sponsored retirement and welfare plans for 2024. Certain health and welfare plan limits have not yet been released.

Most of the dollar limits that are subject to adjustment for cost-of-living increases will increase for 2024. The Social Security Administration released separate adjustment amounts.

See the limits here.




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Opportunity Knocks: At Long Last, IRS Determination Letter Program Is Open for 403(b) Plans

The Internal Revenue Service (IRS) recently opened a new determination letter approval program for 403(b) retirement plans—commonly used by nonprofit organizations—which allows sponsors of certain individually designed plans to apply for a favorable determination letter. Long available to 401(k) retirement plan sponsors, determination letters can provide sponsors with advance assurance from the IRS that plans are compliant with the Internal Revenue Code. Plan sponsors of eligible 403(b) programs should take advantage of this new opportunity to submit a determination letter application to the IRS.

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CMS Announces New GUIDE Model to Support People Living with Dementia and Their Caregivers

To support people living with dementia and their unpaid caregivers, the US Centers for Medicare & Medicaid Services recently announced the Guiding an Improved Dementia Experience (GUIDE) Model, a new, voluntary and nationwide test model designed specifically for these two rapidly growing demographic groups. The model will offer care coordination and care management for individuals living with dementia and provide education, support and respite services for their caregivers.

The GUIDE model will launch on July 1, 2024.

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DEA Further Extends Flexibilities for Controlled-Substance Prescribing via Telemedicine

The US Drug Enforcement Administration and the Substance Abuse and Mental Health Services Administration have further extended flexibilities that allow providers to prescribe controlled substances via telemedicine without first performing an in-person visit. The flexibilities were initially provided during the COVID-19 public health emergency. The extension runs through December 31, 2024.

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States’ Rights, Trans Protections Collide at Fourth Circuit

The US Circuit Court of Appeals for the Fourth Circuit recently heard two cases from North Carolina and West Virginia state-run health plans that challenge lower court decisions on coverage exclusions for gender dysphoria treatments. According to this Law360 article, the cases could determine how much health plans can restrict access to gender-affirming care. McDermott Partner Sarah Raaii said employers are investigating how to preserve gender-affirming care access in places where it might no longer be accessible.

“I think a lot of the conversation is also coming back to travel benefits,” Raaii said.

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