Employer Action Considerations
Decisions While participants will certainly welcome many of the newly allowed provisions to pre-tax plans, each potential change comes with additional ongoing administration responsibilities. Employers should carefully consider which plan changes are right to adopt for the population and which can be administered within current infrastructure. Many issues will need to be considered and decisions will need to be made relatively quickly. Default actions are outlined and required steps are outlined if an alternative is desired. Plan Administration Additional flexibility for plan participants typically means additional administrative burden for benefits and payroll teams. For example, if new election change provisions are allowed, these will typically need to be approved, communicated to payroll, and any change/corrections adjudicated. In addition, ongoing coordination with pre-tax administration vendors will be necessary and costs may be adjusted for plan changes and additional administration required. Notice and Communication Each plan change also comes with the requirement to notify plan participants. While the changes may be welcome, it also comes at a time when communication bandwidth is generally stretched. Plan Document Amendment Plan Documents as well as Summary of Benefits materials will need to be amended to reflect changes and, in many cases, amended back at the end of the plan year. Insurance Policy Alignment Employers wishing to avail the ability to make changes in health plan elections are advised to ensure that any group health insurance policies (or stop-loss insurance in the case of self- funded coverages) will conform to allowing such provisions. Potential Health FSA Losses Allowing employees to change or stop health FSA contributions sounds like a good idea, however, employers should be aware that carte blanche adoption of the FSA election changes creates potential for employees who have already overspent their health FSA or, in the most extreme case, used their entire annual election, to reduce their election or terminate their participation. This would effectively stop employee contributions for the remainder of the year and leave the employer with a loss (of up to $2,750 less year-to-date contributions). To prevent this, employers may choose to limit health FSA changes to certain dollar amounts and/or limit election changes to no less than amounts already reimbursed. Health FSA and HRA Claims Submission Deadlines for 2019 Plan Year Overview The DOL and the IRS issued joint guidance that suspends multiple deadlines related to welfare plans until after the COVID-19 “Outbreak Period.” This includes Health FSA and HRA plans. The guidance defines the “outbreak period” as follows:
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