The Department of Health and Human Services (HHS) renewed the public health emergency due
to COVID-19 which took effect on October 23, 2020. The Internal Revenue Service (IRS) issued
Notice 2020-76 regarding deadline extensions and requirements for reporting of group health
coverage offered in 2020 under the Patient Protection and Affordable Care Act (ACA) as it has
done in prior years.

The IRS released final instructions for both the 1094-B and 1095-B forms and the 1094-C and
1095-C forms and the final forms for 1094-B, 1095-B, 1094-C, and 1095-C. The IRS released Notice
2020-79 and Rev. Proc. 2020-45 regarding health plan limits as well as various compensation,
benefit, and contribution levels under qualified retirement plans for 2021.

The Department of Labor (DOL), HHS, and the Department of the Treasury (Treasury) (collectively,
the Departments), released interim final rules regarding implementation of the CARES Act
regarding plan and issuer coverage of COVID-19 diagnostic tests and coverage of coronavirus
preventive services.

The IRS released final regulations clarifying the income test for being a qualifying relative. The
Departments released final rules on coverage transparency requiring group health plans and
insurance issuers in the individual and group markets to disclose cost-sharing information and
negotiated rates.

The DOL released the Final 2020 Mental Health Parity and Addiction Equity Act (MHPAEA) SelfCompliance Tool. The U.S. Supreme Court heard oral arguments in the Rutledge v. Pharmaceutical Care Management Association case.

HHS Renews COVID-19 Public Health Emergency Determination

HHS extended the duration of the public health emergency due to COVID-19 effective on October
23, 2020. Generally, a public health emergency declaration lasts for 90 days (this would make the
new end date January 21, 2021).

Under the Families First Coronavirus Response Act (FFCRA), as amended by the Coronavirus Aid,
Relief, and Economic Security Act (CARES Act), a group health plan must provide coverage
without cost sharing for in vitro diagnostic tests for detection of SARS-CoV-2 or the diagnosis of
COVID-19 and the administration of such tests for the duration of the public health emergency
due to COVID-19. HHS recently extended the duration of the public health emergency due to
COVID-19 to January 21, 2021. HHS has previously extended the end date of the public health
emergency multiple times so employers should stay apprised of any further extensions.

IRS Issues Notice 2020-76

As the deadline for reporting of group health coverage offered in 2020 under the ACA approaches, the Internal Revenue Services (IRS) has issued IRS Notice 2020-76 (Notice) regarding deadline extensions and requirements as it has done in prior years. Under the Notice, the IRS extended its good faith relief for group health coverage offered in 2020. As in prior years, the relief is applied only to incorrect or incomplete information reported on the statement or return in good faith. The Notice provides that this is the final year the Treasury Department and the IRS intend to provide this relief.

Under the Notice, the IRS extended the due date for furnishing statements to individuals (Form
1095-B and 1095-C) from February 1, 2021 (the normal due date is January 31, however in 2021,
that date falls on a weekend), to March 2, 2021. The IRS notes that unless it receives comments as
to why relief continues to be necessary, no relief for furnishing statements will be granted in
future years. The permissive 30-day extension that the IRS may grant to an employer for good
cause will not apply to this extended due date for furnishing statements to individuals. The Notice
also provides that the IRS will not assess a penalty for failing to furnish Form 1095-B to
individuals if certain conditions are met.

The Notice does not extend the due date for filing Forms 1094-B, 1095-B, 1094-C, or 1095-C with
the IRS for calendar year 2020. Forms 1094-B, 1095-B, 1094-C, and 1095-C must be filed by
February 28, 2021, or March 31, 2021, if filing electronically.

IRS Releases Final Forms and Instructions for 2020 ACA Reporting

The IRS released final instructions for both the 1094-B and 1095-B forms and the 1094-C and
1095-C forms and the final forms for 1094-B, 1095-B, 1094-C, and 1095-C. The forms have
generally remained unchanged from prior years. However, there are changes to the 2020
reporting forms that employers should be aware of, including the now mandatory “plan start
month” box and how to report individual coverage health reimbursement arrangements.

IRS Releases 2021 Inflation-Adjusted Limits 

The Internal Revenue Service (IRS) released IRS Notice 2020-79 and Rev. Proc. 2020-45 regarding
health plan limits such as the health flexible spending arrangement (FSA) contribution limit of
$2,750, as well as various compensation, benefit, and contribution levels under qualified
retirement plans for 2021.

The IRS also released the excepted benefit health reimbursement arrangement limit for 2021 at $1,800.

IRS, DOL, HHS Release Final Rules on Coverage Transparency 

The Departments released final rules on coverage transparency. The final rules seek to give an
estimate of plan participants’ potential cost-sharing liability for covered items and services they
might receive from a particular health care provider. The final rules require group health plans
and insurance issuers in the individual and group markets to disclose cost-sharing information
and negotiated rates.

The final rules also allow issuers that encourage participants to shop for lower cost services to
take credit for “shared savings” payments they provide to participants in their medical loss ratio
(MLR) calculations. HHS released a fact sheet and press release regarding the final rules.

The final rules regarding disclosure of cost-sharing information and public disclosure of
negotiated rates and allowed amounts become effective under a three-year phased in
approach beginning January 1, 2022, through January 1, 2024. The final rule regarding the MLR
calculation takes effect beginning with the 2020 MLR reporting year.

The Departments released interim final rules regarding implementation of the CARES Act
regarding plan and issuer coverage of COVID-19 diagnostic tests and coverage of coronavirus
preventive services.

The interim final rules became effective on November 2, 2020, and will remain in effect until the
end of the public health emergency for COVID-19 as determined by the HHS Secretary. Comments
on the interim final rules may be submitted by 5:00 p.m. on January 4, 2021.

The U.S. Supreme Court heard oral arguments in the Rutledge v. Pharmaceutical Care
Management Association case. The case addresses the issue of whether an Arkansas state law
regulating pharmacy benefit managers’ (PBM) drug reimbursement rates is preempted by ERISA.
Under ERISA, state laws that are either impermissibly connected to ERISA or reference ERISA
plans are preempted, meaning ERISA plans will not be required to comply with the state laws.
While the case only addresses the Arkansas state law, many states have enacted laws similar to
the Arkansas law.

The Arkansas state law prohibits PBMs from reimbursing pharmacies at a rate less than what it
costs pharmacies to purchase drugs from a wholesaler. The Arkansas law also includes an
appeal procedure under which pharmacies can challenge PBM reimbursements that are less than
what the pharmacy paid to acquire the drug and allows pharmacies refuse to provide a
prescription to an individual if the PBM’s reimbursement rate for the drug is less than what the
pharmacy paid to acquire the drug from a wholesaler.

A decision from the U.S. Supreme Court is expected by June 2021.

U.S. Supreme Court Hears Oral Arguments in ERISA Preemption Case

The DOL released theFinal 2020 MHPAEA Self-Compliance Tool, which updates its 2018 MHPAEA
Self-Compliance Tool. The DOL also released a preface to the tool and a press release. The DOL
publishes the MHPAEA Self-Compliance Tool to help group health plan sponsors and
administrators, as well as other entities, determine whether a group health plan or health
insurance issuer is in compliance with the Mental Health Parity and Addiction Equity Act of 2008
(MHPAEA) and its regulations. The MHPAEA generally requires that the financial requirements
and treatment limitations imposed by a group health plan or health insurance issuer on mental
health and substance use disorder benefits not be more restrictive than the predominant financial
requirements and treatment limitations that apply to substantially all medical and surgical
benefits.

The updated tool integrates prior guidance published inFAQs on the implementation of the
MHPAEA. The updated tool adds explanations of how plans and issuers can correct compliance
violations and provides additional examples of how to comply with the MHPAEA. The updated
tool provides best practices for establishing an internal compliance plan and provides examples
of the types of records that a plan or issuer may need to provide in the event of a DOL
investigation. Finally, the updated tool provides additional examples of treatment limitations
encountered in

IRS, DOL Releases the Final 2020 MHPAEA Self-Compliance Tool

IRS, DOL, HHS Release Interim Final Rules on Coverage of COVID-19 Diagnostic Tests and Preventive Services

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