The Washington Report

January 24, 2024

Note to Subscribers

While we do our best to provide timely updates, it is possible that the information shared in the newsletter may change after our publication deadline.

Executive

 

President Signs Stop-Gap Appropriations Bill Into Law; Funds Government Through March
On January 19, 2024, President Biden signed into law the amended Further Additional Continuing Appropriations and Other Extensions Act, 2024 (H.R. 2872), averting a federal government shutdown. Both chambers of Congress passed the legislation on January 18. The continuing resolution funds some federal agencies until March 1, 2024, and the rest through March 8.

The full-text of H.R. 2872 is available here.

Health

 

Departments Issue FAQs About ACA Implementation, Part 64; Coverage of Preventive Services
On January 22, 2024, the Departments of Labor, Health and Human Services, and Treasury (Departments) issued Frequently Asked Questions (FAQs) About Affordable Care Act (ACA) Implementation, Part 64. The six FAQs address the coverage of preventive services and outline how plans and issuers are to meet contraception coverage obligations. The FAQS are listed below:

Q1: Other than what has been described in previous guidance, how can plans and issuers ensure compliance with the requirement to cover the full-range of U.S. Food and Drug Administration (FDA)-approved contraceptive drugs and drug-led devices without cost-sharing under Public Health Service (PHS) Act Section 2713 and its implementing regulations?

Q2: How will the Departments determine whether a contraceptive drug or drug-led device is therapeutically equivalent to another drug or drug-led device?

Q3: Does the approach to reasonable medical management with regard to therapeutically equivalent products described in Q1 and Q2 apply to all forms of contraception required to be covered under PHS Act Section 2713?

Q4: If a plan or issuer covers without cost-sharing all FDA-approved contraceptive drugs or contraceptive drug-led devices other than those for which there is a covered therapeutic equivalent, is the plan or issuer still expected to maintain an exceptions process as previously described in guidance?

Q5: Can plans and issuers continue to satisfy the requirements under PHS Act Section 2713 with respect to coverage of the full range of FDA-approved, -cleared, or -granted products—including with respect to contraceptive drugs and drug-led devices—by following the Departments’ prior guidance?

Q6: What should an individual do if the individual has concerns regarding, or has difficulty with, accessing contraceptive coverage under their group health plan or group or individual health insurance coverage?

The FAQs About Affordable Care Act Implementation Part 64 are available here.

HHS Announces Additional Series of Actions on Contraceptive Care Coverage
Also on January 22, the Department of Health and Human Services (HHS) announced an additional series of actions related to contraceptive care coverage. In addition to the FAQs Part 64, the following guidance was also released:

• A letter to Medicare plans, health insurance issuers, and State Medicaid and Children’s Health Insurance Program (CHIP) programs about obligations under federal law. (Full text of the letter is available in the news release.)
• HHS also made updates to the Medicare Part D formulary clinical review process for plan year 2024 to include additional birth control types, such as intramuscular long-acting contraceptives and to include intrauterine devices for subsequent plan years.
• HHS also stated that the “Departments continue to consider the comments received in response to a recent Request for Information regarding the coverage of preventive products available over-the-counter without cost-sharing and without a prescription to determine if and what additional actions the Departments may take regarding such products.”

The news release is available here.

A January 2023 report on reproductive health care is available here.

Departments Extend Comment Period on Federal IDR Operations Regulations
On January 18, 2024, the Departments published a proposed rule which reopens the comment period for the proposed regulations entitled Federal Independent Dispute Resolution (IDR) Operations that appeared in the November 3, 2023, issue of the Federal Register. The November 2023 proposed regulations address certain new requirements for group health plans and health insurance issuers; providers, facilities, and providers of air ambulance services; and certified IDR entities as they relate to the federal IDR process under the No Surprises Act. The comment period has now been extended until February 5, 2024.

The proposed rule extending the request for comments is available here.

The November 3, 2023, Federal Register listing of the proposed regulations on the federal IDR operations is available here.

CMS Releases Final Regulations Expanding Access to Health Information and Improving the Prior Authorization Process
On January 17, 2024, HHS’ Centers for Medicare & Medicaid Services (CMS) released final regulations on Interoperability and Prior Authorization. The final regulations are meant to improve the electronic exchange of health care data and streamline processes related to prior authorization through new requirements for Medicare Advantage organizations, state Medicaid fee-for-service (FFS) programs, state CHIP FFS programs, Medicaid managed care plans, CHIP managed care entities, and Qualified Health Plan issuers on the federally facilitated Exchanges. The final regulations also add new measures for eligible hospitals and critical access hospitals to report under the Medicare Promoting Interoperability Program and for Merit-based Incentive Payment System (MIPS) eligible clinicians to report under the Promoting Interoperability performance category of the MIPS. The final regulations become effective on April 8, 2024. For specific details, please refer to the final regulations and other resources.

The news release is available here.

The final regulations are available here.

A Fact Sheet is available here.

Retirement

 

Departments and PBGC Issue RFI on Effectiveness of Reporting and Disclosure Requirements Under SECURE 2.0 Section 319
On January 19, 2024, the Departments of Labor and Treasury (Departments) and the Pension Benefit Guaranty Corporation (PBGC) issued a Request for Information (RFI) seeking public input as the federal government reviews the effectiveness of existing reporting and disclosure requirements for retirement plans, as required by the SECURE 2.0 Act of 2022. Findings and recommendations from the RFI will be reported to congress in 2025. The RFI includes 24 questions on a broad range of topics relevant to effective reporting and disclosure. The topics include:

• Number and frequency of disclosures received by workers.
• Information disclosed and its effectiveness, accessibility, and understandability, including to non-English speakers.
• How plans obtain and update contact information for workers.
• Plans’ experiences completing and filing reports and obtaining assistance from the agencies.

Comments on the RFI are due no later than April 22, 2024.

The news release is available here.

The RFI is available here.

DOL Releases Proposed Rule on Retirement Plans and Automatic Portability Transactions
On January 18, 2024, the Department of Labor (DOL) released a proposed rule on automatic portability transactions under the SECURE 2.0 Act of 2022. The DOL’s proposed rule would implement Section 120 of the SECURE 2.0 Act, which allows an automatic portability provider to receive a fee in connection with executing an automatic portability transaction for certain distributions into Safe Harbor IRAs, through an added exemption to Internal Revenue Code Section 4975. By way of background, automatic portability transactions are thought to be particularly helpful to employees who may have lost contact with their retirement plans when they change jobs or cannot otherwise be located. The process is intended to address situations where there has been a mandatory distribution of not more than $7,000 ($5,000 for distributions prior to 2024) from an eligible retirement plan to a default IRA following the employee’s termination of employment. The objective of the guidance is to connect individuals with their prior retirement savings. The proposal covers the 11 specific topics identified in the statutory exemption for regulations or other guidance to carry out the purposes of the automatic portability amendments. The proposed rule tracks the requirements that must be satisfied for the automatic portability transaction to be covered by the prohibited transaction exemption. These topics include, among others:

• Scope of the exemption.
• Disclosures about automatic portability transactions, fees, compensation, and services, including an acknowledgement of the automatic portability provider’s fiduciary status, website requirements for the automatic portability provider, and a requirement that disclosures be written in a culturally and linguistically appropriate manner.
• Investments permitted in connection with automatic portability transactions.
• Restriction on receipt or payment of third-party compensation by an automatic portability provider in connection with an automatic portability transaction.
• Prohibition on exculpatory provisions disclaiming or limiting liability if an automatic portability transaction results in an improper transfer.
• Required actions to ensure that participant and beneficiary data is current, accurate, and secure.
• Limitations on the use of data related to automatic portability transactions for any purpose other than to execute such transactions or locate missing participants.
• Record retention requirements.
• Annual audit and corrections procedures if an auditor determines the automatic portability provider did not comply with the requirements of the statutory exemption and the proposed rule.

Once published in the Federal Register, there will be a 60-day public comment period on the proposed rule. The DOL is proposing that any final rule adopted based on the proposed rule would be effective 60 days after publication in the Federal Register and that the requirements of the final rule would have prospective applicability. In the interim, automatic portability providers and plan fiduciaries are expected to comply with a good faith, reasonable interpretation of the law taking into account the list of consumer protection conditions and requirements set forth in the SECURE 2.0 Act.

The news release is available here.

The proposed rule is temporarily available here.
Disclaimer: This notice was submitted to the Office of the Federal Register (OFR) for publication and will be placed on public inspection at the OFR and published in the Federal Register. This version of the notice may vary slightly from the published version if the OFR makes minor technical or formatting changes during the review process. Only the version published in the Federal Register is the official version.

Departments Issue Guidance on New Emergency Savings Accounts (PLESAs)
On January 18, 2024, the Employee Benefits Security Administration (EBSA) and the Departments issued guidance (consisting of 20 Frequently Asked Questions (FAQs)) to improve retirement security through pension-linked emergency savings accounts (PLESAs), as part of the implementation of the SECURE 2.0 Act of 2022. The SECURE 2.0 Act amended ERISA to authorize the establishment of PLESAs, which are short-term savings accounts established and maintained as part of an individual’s retirement savings plan, such as a 401(k) plan. “These savings accounts will enhance retirement security by reducing retirement plan leakage and, at the same time, offering additional flexibility to workers,” said Assistant Secretary for EBSA Lisa M. Gomez. “Far too often, unexpected expenses, like emergency dental care, a broken refrigerator or automotive repairs, force workers to tap into their retirement savings plans through loans and hardship withdrawals simply because they don’t have personal savings at the ready to absorb those unplanned expenses. Plans can offer these accounts to workers as an additional option that provides them access to needed funds when emergency situations arise.”

Employers may automatically enroll their employees into PLESAs, make employee contributions to the PLESAs through payroll deductions, and make matching employer contributions to the linked retirement plans. Participating employees can withdraw funds saved in their PLESA without the penalties of drawing from retirement savings. Employers may set a limit of up to $2,500 for contributions. The PLESA feature is available for plan years beginning after December 31, 2023. Additional guidance is also being considered by the Departments.

The news release is available here.

The FAQS are available here.

IRS Releases Final Regulations Updating Minimum Present Value Requirements for Defined Benefit Plan Distributions
On January 18, 2024, the Internal Revenue Service (IRS) released final regulations providing guidance relating to the minimum present value requirements applicable to certain defined benefit pension plans. The regulations provide guidance on changes made by the Pension Protection Act of 2006 to the prescribed interest rate and mortality table and other guidance, including rules regarding the treatment of preretirement mortality discounts and Social Security level income options. These regulations affect participants, beneficiaries, sponsors, and administrators of defined benefit pension plans. The final regulations became effective January 19, 2024.

The final regulations are available here.

Aon Publications

 

Now Available: Aon 2024 Compliance Calendar
Aon is pleased to present its 2024 Compliance Calendar to assist plan sponsors and fiduciaries with identifying significant compensation and benefit due dates for their retirement and health and welfare plans. This calendar is based on a January 1 through December 31 calendar plan year and includes due dates for notice distributions, plan disclosures, and various plan-related federal regulatory filings, along with certain plan/benefit-related items that are date-specific. While some compliance dates may be subject to change due to the ongoing release of additional or clarifying legislative or regulatory guidance by the Internal Revenue Service (IRS), Department of Labor (DOL), or other federal regulatory agencies throughout the year, this Compliance Calendar should serve as a very useful tool to ensure timely compliance during 2024.

Some topics addressed in the 2024 Compliance Calendar include:

• Timing of participant communications and notices (e.g., summaries of material modifications, pension benefit statements, and summaries of benefits and coverage);
• Changes to health plan reporting obligations;
• Plan contribution due dates; and
• Filing dates for certain IRS and DOL forms (e.g., Forms 5500, W-2, 1094-B, 1095-B, and 1099-R).

While the Calendar does address the prior SECURE 2.0 change to increase the age for required minimum distributions from age 72 to age 73 and subsequently to age 75 in 2033, we did not otherwise modify other compliance dates for SECURE 2.0.

The 2024 Aon Compliance Calendar: Significant Retirement and Health & Welfare Plan Compliance Dates is available here.