IRS Updates FAQs Concerning Tax Credits for Family and Sick Leave
On July 29, 2021, the IRS issued Information Release 2021-160, clarifying that eligible employers can claim tax credits available under the American Rescue Plan Act of 2021 (ARPA) for providing leave to employees to accompany a family or household member or certain other individuals to obtain immunization relating to COVID-19 or to care for a family or household member or certain other individuals recovering from the immunization.
The tax credits, introduced and made mandatory by the FFCRA until December 30, 2020, and extended and made optional by the CAA and the ARPA to September 30, 2021, are available to employers with 500 or fewer employees who provide those employees with emergency paid sick leave and expanded FMLA for reasons relating to COVID-19. These tax credits reimburse those employers for the wages paid to employees who use this leave. The FAQs contain information about how to calculate and apply for these credits. The original FAQS were discussed in the June 22, 2021, edition of Compliance Corner.
Employers who chose to extend the emergency paid sick leave or the expanded FMLA should be aware of these clarifications.
Now Available: Employee Benefits Annual Limits Publication - Updated for 2022
The Benefits Compliance team has recently updated the "Employee Benefits Annual Limits" publication to reflect 2022 adjustments. This document includes revised limits on HSA contributions, qualified HDHPs, non-grandfathered out-of-pocket limits, health FSAs, qualified transportation benefits, retirement plans, QSEHRAs and several additional limits.
Employers may want to review these limits and make any necessary adjustments to plan documents and communications.
Reminder: It’s MLR Rebate Time Again!
The ACA requires insurers to submit an annual report to HHS accounting for plan costs. If the insurer does not meet the medical loss ratio standards, they must provide rebates to policyholders. Rebates must be distributed to employer plan sponsors between August 1, 2021, and September 30, 2021. Employers should keep in mind that if they receive a rebate, there are strict guidelines as to how the rebate may be used or distributed.
For more information, please contact your advisor for a copy of “Medical Loss Ratio Rebates: A Guide for Employers” or “Medical Loss Ratio: PPACA’s Rules on Rebates.”
Reminder: COBRA Subsidy Period Ends on September 30, 2021
The American Rescue Plan Act (ARPA) COBRA premium assistance period runs from April 1, 2021, to September 30, 2021. The statute requires that plans provide a notice of expiration of the ARPA premium assistance (and available coverage options at that point) to all individuals who are receiving premium assistance during this time. Specifically, plans and issuers are required to provide individuals with a notice of expiration of periods of premium assistance explaining that the premium assistance for the individual will expire soon, the date of the expiration, that the individual may be eligible for coverage without any premium assistance through COBRA continuation coverage or coverage under a group health plan, and that coverage may be available through Medicaid or the Health Insurance Marketplace.
This notice must be provided 15 – 45 days before the individual’s premium assistance expires, so employers should be mindful of this requirement.
How should an employer claim a tax credit for ARPA premium assistance during a quarter when they did not learn about a qualified beneficiary’s eligibility until a subsequent quarter?
This material was created by PPI Benefit Solutions to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The service of an appropriate professional should be sought regarding your individual situation. PPI does not offer tax or legal advice. "PPI®" is a service mark of Professional Pensions, Inc., a subsidiary of NFP Corp. (NFP). All rights reserved.