On July 24, 2020, President Donald Trump signed four executive orders to lower the cost of prescription drugs, including insulin and epinephrine.
Reducing drug prices has been a long-standing campaign promise of the administration. The executive orders focus on insulin prices, drug importation, drug rebates and international pricing.
The four orders include:
1. Executive Order on Access to Affordable Life-saving Medications directs federally qualified health centers (FQHCs) to pass along discounts on insulin and epinephrine received from drug companies to certain low-income Americans.
2. Executive Order on Increasing Drug Importation to Lower Prices for American Patients allows for individual state plans for the importation of certain drugs. The administration has been working with Florida on a method to enable the importation of cheaper Canadian drugs, and may be using Florida as a model for other interested states.
3. Executive Order on Lowering Prices for Patients by Eliminating Kickbacks to Middlemen, prohibits secret deals between drug manufacturers and pharmacy benefit managers.
4. The fourth and final order ensures that the United States will pay the lowest price available in economically comparable countries for all Medicare Part B drugs.
Refer to the attached News Brief for additional details.
Trump Signs Executive Orders Aimed at Lowering Drug Prices
On July 21, 2020, the IRS issued Revenue Procedure 2020-36 to index the contribution percentages in 2021 for determining affordability of an employer’s plan under the Affordable Care Act (ACA).
For plan years beginning in 2021, employer-sponsored coverage will be considered affordable if the employee’s required contribution for self-only coverage does not exceed 9.83% of the employee’s household income for the year, for purposes of both the pay or play rules and premium tax credit eligibility.
This is a slight increase from the affordability contribution percentages for 2020. As a result, some employers may have additional flexibility in setting their employee contributions for 2021 to meet the adjusted percentage.
Affordability Percentages Will Increase for 2021
On July 20, 2020, the U.S. Department of Labor (DOL) announced the agency’s publication of additional guidance on applying federal employment laws in the context of the COVID-19 pandemic. The guidance is in the form of questions and answers added to sets of Q&As the agency issued earlier in the year about the operation of the federal Family and Medical Leave Act (FMLA), the Fair Labor Standards Act (FLSA) and the Families First Coronavirus Response Act (FFCRA) in workplace situations involving COVID-19.
The DOL’s new guidance on COVID-19 and the FLSA addresses topics such as teleworking and compensable time, maintaining employees’ exempt and non-exempt status, and hazard pay.
In addition to substituting “COVID-19” for “influenza” in many places, the new guidance on COVID-19 and the FMLA adds questions on whether a telemedicine appointment can establish a serious medical condition under the statute (yes, if the appointment meets certain requirements), and whether the FMLA prohibits employers from requiring a COVID-19 test of employees returning from FMLA leave (no, where the testing requirement is unrelated to FMLA leave and applies to all employees).
Employers should be aware that while the DOL’s Q&As on the FMLA continue to assert that there is no paid employee leave requirement under federal law, the FFCRA does require paid leave for specified COVID-19-related reasons.
Issues addressed by the DOL’s additional Q&As on the FFCRA include requiring employees returning from FFCRA leave to be tested for COVID-19 and the availability of FFCRA leave after a furlough.
DOL Releases Additional Guidance on Coronavirus and Federal Employment Laws
On July 17, 2020, a federal appeals court upheld a 2018 final rule expanding short-term, limited-duration insurance (STLDI) for purposes of the Affordable Care Act (ACA).
The final rule:
- Provides a maximum coverage period for STLDI of up to 12 months; and
- Allows STLDI to continue for up to 36 months in total, taking into account renewals or extensions.
Court Upholds Rule Expanding Short-term Limited-duration Insurance
The Wage and Hour Division (WHD) of the U.S. Department of Labor (DOL) has revised the forms employers and employees may use to meet their notification and certification obligations under the federal Family and Medical Leave Act (FMLA).
In a July 16, 2020, statement announcing the changes, the DOL said the forms were revised with substantial public input, which was solicited in August 2019. They include more questions that users can answer by checking a response box and electronic signature features to reduce contact.
The following forms were revised:
WHD FAQs also clarify that the prior versions of these forms, including forms with expiration dates that have passed, may still be used. Employees who used the prior certification forms do not have to provide their employers with the same information using the revised forms.
DOL Issues Revised Optional FMLA Forms
On July 13, 2020, the Internal Revenue Service (IRS) released 2020 draft Forms 1094-C and 1095-C. Draft instructions have not yet been released, and Forms 1094-B and 1095-B and related draft instructions have not been released at this time.
Draft Forms 1094-C and 1095-C are substantially similar to the final 2019 versions. However, certain additions were made to the 2020 draft Form 1095-C related to ICHRAs. Beginning in 2020, employers of all sizes may implement a new HRA design—an ICHRA—to reimburse their eligible employees for insurance policies purchased in the individual market or Medicare premiums.
The draft Form 1095-C includes:
- A new section to enter the employee’s age on Jan. 1;
- Additional codes in Code Series 1 related to offers of individual coverage health reimbursement arrangements (ICHRAs); and
- A new section to enter the zip code used to determine affordability for an ICHRA, if one was offered to the employee.
Keep in mind that the IRS may make additional changes to these forms before releasing final 2020 versions.
Some Draft Forms for 2020 ACA Reporting Released
Employers are required to report the amount of qualified sick and family leave wages paid to employees under the Families First Coronavirus Response Act (FFCRA) on Form W-2, according to guidance from the IRS and the U.S. Treasury Department.
Employers will be required to report FFCRA leave compensation in either Box 14 of Form W-2, or in a statement provided with the Form W-2.
The reporting requirement provides self-employed individuals who are also employees with the information necessary to claim sick and family leave tax credits for which they are eligible. According to the Notice, these individuals must also report on Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals, included with their income tax returns.
Refer to the attached Compliance Bulletin for additional guidance.
Employers Must Report Pay for FFCRA Leave on W-2
On July 8, 2020, the U.S. Supreme Court upheld two regulations expanding exemptions from the contraceptive coverage mandate under the Affordable Care Act (ACA). In a 7:2 decision, the Supreme Court ruled that the Trump administration had the authority under the ACA to provide exemptions from the contraceptive mandate for employers with religious and conscientious objections. As a result, additional employers may now be able to opt out of providing the ACA-mandated contraceptive coverage.
Supreme Court Upholds ACA Contraceptive Rule Exemptions
Congress has passed legislation to extend the application deadline for a Paycheck Protection Program (PPP) loan through Aug. 8, 2020. Prior to the extension, the deadline to apply for these funds was June 30, 2020. The extension enables eligible small businesses to apply for funding for five more weeks. The legislation has been sent to President Trump, who is expected to sign the measure into law.
The PPP is designed to get cash in the hands of suffering small businesses quickly, with less stringent eligibility requirements than the existing U.S. Small Business Administration (SBA) loan programs. PPP loans are designed to incentivize business owners to keep employees on payroll. These loans provide 100% federally guaranteed loans to small businesses. In addition, provided that small businesses use their PPP loan funds appropriately, the loans may be eligible for forgiveness.
Refer to the attached article for details.
Application Deadline for Small Business Loans Extended
The COVID-19 pandemic has significantly decreased health care utilization, as health care providers and patients have canceled appointments and postponed elective procedures. Because employees are not using their insurance benefits, some group medical, dental and vision carriers are providing employers with a credit against future premiums owed under their insurance contracts.
Employers receiving these premium credits should consider their fiduciary obligations under ERISA when determining how to apply the credits. Any credit amount that qualifies as a plan asset under ERISA must be used for the exclusive benefit of the plan’s participants. Employers cannot retain any portion of the rebate that is a plan asset.
If the employer is the policyholder—as is most often the case—the portion of the rebate that must be treated as a plan asset depends on who paid the insurance premiums. For example:
- If the premiums were paid entirely out of trust assets, the entire rebate amount is a plan asset;
- If the employer paid 100 percent of the premiums, the rebate is not a plan asset and the employer can retain the entire rebate amount;
- If participants paid 100 percent of the premiums, the entire rebate amount is a plan asset; and
- If the employer and participants each paid a fixed percentage of the premiums, the percentage of the rebate equal to the percentage of the cost paid by participants is a plan asset.
Refer to the attached compliance bulletin for details and contact your NEEBCo representative with questions.
Premium Credits Related to COVID 19 ERISA Fiduciary Rules