Employee benefit plan year-end deadlines

People in the employee benefits space are used to managing year-end benefit plan changes and other deadlines. This year, with the extension of the deadline for amending qualified plans, 403(b) plans, and government 457(b) plans to comply with the SECURE Act and the CARES Act, year-end tasks are rather light; however, there are still some timelines to be aware of depending on the types of plans an employer sponsors, including the first item mentioned below, a disclosure that applies to the majority of employers.

Disclosure of Prescription Drugs

The transparency provisions of the Consolidated Appropriations Act, 2021 (CAA) require group health plans (fully insured and self-funded) and insurers to report information on prescription drug prices and health care expenditures to the Centers for Medicare & Medicare Services. The first report is due before December 27, 2022 for 2020 and 2021 data, then annually (the next report is expected on June 1, 2023 for 2022 data). These reports will be used to create semi-annual publicly available reports prepared by the Departments of Labour, Treasury, and Health and Human Services.

Plans and insurers must report a variety of information about prescription drug expenditures, including “plan-specific information” and “aggregate information”. Plan-specific information includes plan identification information, registration numbers, and each state where the plan is offered. Aggregated information includes such things as the 50 most frequently dispensed prescription drugs and number of paid claims for each drug, the 50 most expensive drugs by total annual spend, and the plan’s total annual spend for each drug. drug, and the 50 most expensive drugs. the drugs for which the plan’s expenditure increased the most compared to the previous year and the increased amount of each drug, among others.

Much, if not all, of the aggregate information required to be reported is only available through plan providers (such as insurers, third-party administrators of self-funded plans, pharmacy benefit managers, etc.), although the ultimate responsibility for reporting is on the group’s health plan itself. Plans can contract with providers to report on their behalf, according to a written agreement, which should be done as soon as possible, if not already done. To facilitate reporting of aggregate data, a reporting entity submitting data on behalf of more than one group health plan in a state and market segment may combine aggregate information for group health plans for each segment. market in the state.

125 Plan Deadline for COVID-19 Special Rules

The IRS Section 125 plans received a number of reprieves under the CAA due to the COVID-19 pandemic, including relaxed rules allowing some mid-year election changes to flexible health spending and dependent care accounts (FSA and DCAP, respectively) and relaxed requirements related to FSA and DCAP deferrals and grace periods. IRS Notice 2021-15 extended some of these optional changes to cover 2021 and clarified that changes to these changes are due by the end of the calendar year beginning after the end of the plan year during which the amendment is in effect and that the employers must have operated their plans in accordance with the terms of the retroactive amendment, from the date of its entry into force.

For example, if your 125 plan (i) implemented FSA and DCAP carryovers that allowed amounts unused at the end of 2021 to be carried forward and used in 2022, and (ii) allowed employees to make a change of prospective election in 2021 to change FSA and DCAP contributions with no change in status, a Plan 125 amendment for these changes is due by December 31, 2022 (if the amendment has not already been passed in 2021 with an amendment similar for changes in 2020). Employers should contact their 125 plan providers to ensure changes will be enacted in a timely manner should any of these optional changes be made.

457(b) SECURE Act Amendments

As noted in the introduction to this article, the Plan Amendment Deadline for the SECURE and CARES Acts has been extended by IRS Notices 2022-33 and 2022-45, generally to December 31, 2025. However, you may have be noticed that one type of plan has not been mentioned above, and that is 457(b) plans sponsored by tax-exempt entities. No notice from the IRS has extended the SECURE Act amendment deadline for tax-exempt 457(b) plans, which are subject to the IRS Section 401(a)(9) of the Code. The SECURE Act changed the RMD rules by pushing back the required start date to age 72 and requiring faster post-death RMDs in most cases.

In the absence of additional guidance, the original deadline of December 31, 2022 to modify plans to comply with the new RMD rules under the SECURE Act applies to 457(b) plans sponsored by exempt entities. tax. Employers who maintain these plans should contact the provider who maintains their plan to ensure that these changes will be adopted in a timely manner.

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