Are your employee benefits ready for 2022?

There is no denying that time has moved particularly fast over the past year and a half. In the world of employee benefits, the law has changed, adapted and been updated in a multitude of ways to move with the needs of plan participants and sponsors. Below we discuss some of these changes so that employers can prepare for the changes ahead.

Health Plans

COBRA

The specific measures affecting COBRA include extension of COBRA deadlines until 60 days after the end of the COVID-19 National Emergency (the Outbreak Period) and a 100 percent COBRA Subsidy in the American Rescue Plan Act (ARPA).

The COBRA deadline extensions tolled major COBRA deadlines, including the election of COBRA. After their implementation in 2020, these extensions were extended again in February. This February extension revised the application of the previously extended deadlines to extend them for the lesser of one year from the original deadline or the end of the Outbreak Period. The Outbreak Period was still ongoing as of July 15, 2021, but each individual COBRA beneficiary is limited to one year of Outbreak Period relief.

The ARPA introduced the other major change related to COBRA in the past year: subsidized COBRA coverage. The subsidy took effect on April 1 and will last until Sept. 30. It is available to anyone, including dependents, who lost employer-provided group health coverage because they experienced a reduction in hours or an involuntary termination.

The subsidy has altered the way employers administer COBRA in several ways. First, under ARPA rules, employers were required to provide notices to those individuals who experienced a qualifying event prior to the start of the subsidy, but who could enroll in subsidized coverage starting April 1. Second, it includes a second notice requirement regarding the end of subsidized coverage. Finally, and most relevant to employers’ day-to-day operations, it calls for changes to the COBRA forms that employers use when an individual experiences a loss of coverage.

Optional Provisions for Section 125 Plans and Dependent Care Plans

Among the notable optional changes, for plan years ending in 2020 or 2021 employers may lengthen the grace period or increase the carryover limit to allow employees to utilize otherwise unused 125 Plan funds. And for plan years beginning after December 31, 2020, and before January 1, 2022, employers may amend their 125 Plan to increase the limit of the amount that an employee can exclude from their income for dependent care assistance from $5,000 to $10,500 and from $2,500 to $5,250 for taxpayers who are married filing separately.

Self-Insured Health Plan Mandates

While sponsors of self-insured health plans have often been able to stay out of the regulatory fray, recent federal legislation has put the compliance spotlight on these plans. In particular, new mental health parity testing requirements rolled out this spring, and transparency and “no surprises” mandates will take effect in 2022.

Conclusion

As the Biden administration continues, it is apparent that we will continue to see developments regarding employer sponsored health and welfare plans. Further, although deadlines for plan sponsor action related to some of the changes that have already occurred may have recently seemed far off, they are now approaching.

To learn more about the topics discussed herein and more, register for Barran Liebman’s upcoming webinar presented by Iris Tilley: “Preparing for 2022: Your Benefits & Compensation Planning Guide,” by emailing [email protected].