As we enter the fourth quarter of 2022, sponsors and administrators of employee benefit plans have a lot to juggle. From open enrollment and required notices to plan document deadlines, it is a busy time of year. Yet, there always seems to be something new to add to the mix. This year is no different. Following are some 4th quarter topics for consideration:
RxDC Reporting Is Due Dec. 27, 2022
The Prescription Drug Data Collection (RxDC) reporting requirement was added as part of the Consolidated Appropriations Act, 2021. It requires plans to annually submit to the Department of Health and Human Services, Department of Labor, and Department of Treasury a report detailing the plan's prescription drug usage, including the most frequently dispensed, the most expensive, and those with the greatest increase in cost, among others. The Centers for Medicare & Medicaid Services (CMS) is collecting this information on behalf of the Departments and has issued detailed reporting instructions.
Although plans can contract with their third-party administrators, pharmacy benefit managers or other plan providers to meet these requirements, not all providers are willing to report all of the data elements. This means that employers may need to register for a Health Insurance Oversight System (HIOS) account to submit some of the required information.
With the first RxDC reporting deadline of Dec. 27, 2022, fast approaching, plan administrators should discuss RxDC reporting with their providers now to develop a compliance plan. As the CMS warns, HIOS accounts can take up to two weeks to create. So, waiting until December to start working on this is not recommended.
HDHP Amendments to Cover Insulin
Making a splash across the headlines was the Inflation Reduction Act of 2022 (IRA), which President Biden signed on Aug. 16, 2022. The 273 pages of text make sweeping changes. However, few will affect employer-sponsored benefit plans, and most of those will have only indirect effects.
One change that does directly affect a High Deductible Health Plan (HDHP) is the exception added to Section 223 of the Internal Revenue Code effective for plan years beginning after Dec. 31, 2022, to enable HDHPs to cover the cost of insulin without first meeting the deductible. This first dollar coverage for insulin will protect Health Savings Account (HSA) eligibility for those who require an insulin regimen. Employers should determine if their plan requires an amendment to implement this change.
Contraceptive Coverage Requirements, Reimbursements
On July 28, 2022, the Departments of Labor, Treasury, and Health and Human Services (collectively, the Departments), jointly issued Frequently Asked Questions About Affordable Care Act Implementation Part 54 (the FAQs). The FAQs address required coverage of contraceptives by non-grandfathered group health plans and insurers, including guidance designed to:
- Confirm the contraceptive coverage mandate.
- Clarify the rules regarding medical management techniques for contraceptive coverage.
- Address federal preemption of state law.
- Discuss enforcement actions for noncompliance.
The FAQs also confirm that health reimbursement arrangements, health savings accounts, and health flexible spending accounts can reimburse the costs of over-the-counter contraception that is not otherwise paid or reimbursed by a health plan or issuer. Employers should review their plans to determine if any amendments are needed to conform to the FAQs.
Sponsors of retirement plans will get some welcome relief, however:
The CARES Act and Relief Act Amendment Deadline Delayed for Retirement Plans until Dec. 31, 2025
In August, the IRS issued IRS Notice 2022-33 extending the deadline for sponsors to amend their retirement plans to reflect certain changes under the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), Section 104 of the Bipartisan American Miners Act (Miners Act), and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). That guidance failed to delay the deadline to adopt other amendments due by the end of 2022, including amendments to implement certain optional pandemic-related distribution and loan provisions permitted under the CARES Act and the provisions of Section 302 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Relief Act) affording favorable tax treatment to qualified individuals with respect to qualified disaster distributions.
To align the amendment deadlines for the referenced Acts, the IRS issued Notice 2022-45 on Sept. 26, 2022. Notices 2022-33 and 2022-45, together, postpone the deadline for sponsors of nongovernmental plans to adopt amendments to conform their retirement plans to the Acts until Dec. 31, 2025. The deadline for governmental plans likewise is extended generally until 90 days after the close of the third regular session of the applicable legislative body that begins after Dec. 31, 2023.
By that time, sponsors may have additional amendments to make, owing to a number of legislative proposals (referred to colloquially as SECURE 2.0) that have been under consideration since the passage of the SECURE Act of 2019. These proposals include the Securing a Strong Retirement Act, the RISE & SHINE Act, and now the Senate's Enhancing American Retirement Now (EARN) Act, which was approved by the Finance Committee in June, but not formally introduced until the Act language was released in September.
Suzanne G. Odom is a principal in the Greenville, S.C., office of law firm Jackson Lewis, where she focuses her practice on ERISA plans, employee benefits, and executive compensation matters. Alec Nealon is a principal in the firm's Houston, Tex., office, where he advises clients on a broad range of executive compensation and employee benefits matters.