The Washington Report
July 1, 2020
Note to subscribers: Due to the current environment, information is changing at a rapid rate. While we do our best to provide timely updates, it is possible that the information shared in the newsletter may change or be revised after our publication deadline. Stay healthy and safe! ~The Washington Report team
Note to Subscribers: July Holiday Publication Schedule
The Washington Report will not be published on July 8, 2020. Look for your next Aon Washington Report on Wednesday, July 15, 2020. Have a safe and enjoyable holiday!
House Passes Affordable Care Act Enhancement Bill
On June 29, 2020, the House passed with a 234–179 vote the State Health Care Premium Reduction Act - Patient Protection and Affordable Care Enhancement Act (H.R. 1425). Among other provisions, the bill would lower health costs through premium tax credits, encourage state Medicaid expansion, and establish a drug pricing negotiation program. The bill has little chance of being approved by the Senate and the White House stated it would veto the bill.
The full text of H.R. 1425 is available here.
The Statement of Administration Policy is available here.
Departments Issue FAQs About FFCRA and CARES Act
On June 23, 2020, the Departments of Labor, Health and Human Services, and Treasury (Departments) issued frequently asked questions (FAQs) regarding implementation of the Families First Coronavirus Response Act (FFCRA), the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), and other health coverage issues related to COVID-19. The guidance includes 18 FAQs addressing:
- The FFCRA and the CARES Act;
- Notice requirements;
- Telehealth and other remote care services;
- Grandfathered health plans;
- The Mental Health Parity and Addiction Equity Act of 2008;
- Wellness programs; and
- Individual coverage health reimbursement arrangements.
For additional information, please see the Aon bulletin titled Departments Issue More FAQs on FFCRA and CARES Act in the Publications section of this newsletter.
The FAQs are available here.
DOL Announces Proposed Rule on Financial Factors for Selecting Plan Investments
On June 23, 2020, the Department of Labor (DOL) announced a proposed rule that would update and clarify a fiduciary’s responsibilities under the DOL’s investment duties regulation. The rule is intended to provide clear regulatory guideposts for plan fiduciaries in light of recent trends involving environmental, social, and governance (ESG) investing.
The DOL has periodically issued guidance addressing the fiduciary’s selection of plan investments involving non-financial objectives, such as environment, social, and public policy goals, that the investments may further. The DOL has acknowledged that prior regulatory guidance may have created confusion with respect to these investment issues.
The proposed rule is designed, in part, to make clear that ERISA plan fiduciaries may not invest in ESG vehicles if they understand that the investment strategy of the vehicle is to subordinate return or increase risk for the purpose of non-financial objectives. The proposed rule, which is open for comment for 30 days after publication in the Federal Register, will apply to fiduciaries’ selection of investments for both defined benefit and defined contribution plans. The proposed rule addresses five primary areas:
- Codify the DOL’s longstanding position that ERISA requires plan fiduciaries to select investments and investment courses of action based on financial considerations relevant to the risk-adjusted economic value of a particular investment.
- State that compliance with the exclusive-purpose (i.e., loyalty) duty in ERISA prohibits fiduciaries from subordinating the financial interests of plan participants and beneficiaries to non-pecuniary investment goals.
- Require fiduciaries to consider other available investments to meet their prudence and loyalty duties under ERISA.
- Acknowledge that ESG factors can be pecuniary factors, but only if they present economic risks or opportunities that qualified investment professionals would treat as material economic considerations under generally accepted investment theories.
- Reiterate the DOL’s view that the prudence and loyalty standards set forth in ERISA apply to a fiduciary’s selection of an investment alternative to be offered to plan participants and beneficiaries in defined contribution/401(k) plans. The proposed rule describes the requirements for selecting investment alternatives for such plans that purport to pursue one or more environmental, social, and corporate governance-oriented objectives in their investment mandates or that include such parameters in the fund name.
The DOL news release is available here.
A Fact Sheet is available here.
Due to technical issues with some browsers, please cut and paste the following link to open the proposed rule: https://www.dol.gov/sites/dolgov/files/ebsa/temporary-postings/financial-factors-in-selecting-plan-investments-proposed-rule.pdf.
(Disclaimer from the Federal Register: This proposed rule has been 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 proposed rule may vary slightly from the published document if minor technical or formatting changes are made during the OFR review process. Only the version published in the Federal Register is the official proposed rule.)
PBGC Publishes 2018 Pension Insurance Data Tables
The Pension Benefit Guaranty Corporation (PBGC) published its 2018 Data Tables on June 23, 2020. The tables provide researchers, journalists, and the public with statistics on the PBGC’s single-employer and multiemployer insurance programs and the private defined benefit pension system. In this first installment, the PBGC provides summaries and breakdowns of the following:
- Claims activity;
- Financial position;
- Premium revenue;
- Guaranteed benefit payments; and
- Administrative expenses.
The 2018 data tables are available here.
The PBGC Employers and Practitioners page is available here.
IRS Updates Deferral of Employment Tax Deposit FAQs
On June 26, 2020, the Internal Revenue Service (IRS) updated questions 1, 3, 4, and 5 of the Deferral of Employment Tax Deposit Frequently Asked Questions (FAQs) to reflect changes by the Paycheck Protection Program Flexibility Act of 2020.
The FAQs are available here.
DOL Releases Guidance on Child Labor and FFCRA Amid School/Camp Closures
On June 26, 2020, the Department of Labor (DOL) issued two Field Assistance Bulletins to clarify issues on the pandemic’s impact on the workplace. The bulletins specifically address:
- Paid sick or expanded family and medical leave eligibility under the Families First Coronavirus Response Act (FFCRA) based on the closure of summer camps, summer enrichment programs, or other summer programs; and
- The assessment of when schools that are physically closed for coronavirus-related reasons are considered “in session” for purposes of federal child labor requirements.
Field Assistance Bulletin 2020-3 clarifies how child labor laws under the Fair Labor Standards Act apply to the employment of children when schools are in session while physically closed due to the coronavirus pandemic. In general, school is in session if the local public school district requires students to participate in virtual or distance learning, even if schools in the district are physically closed.
Field Assistance Bulletin 2020-4 provides guidance on when an employee qualifies to take paid leave under the FFCRA to care for his or her child based on the closure of a summer camp, summer enrichment program, or other summer program for coronavirus-related reasons.
In the news release, the DOL indicated it will continue to provide guidance as “new situations and issues arise.”
The news release is available here.
Field Assistance Bulletin 2020-3 is available here.
Field Assistance Bulletin 2020-4 is available here.
Departments Issue More FAQs on FFCRA and CARES Act
On June 23, 2020, the Departments of Labor, Health and Human Services, and Treasury (Departments) jointly issued frequently asked questions (FAQs) regarding implementation of the Families First Coronavirus Response Act (FFCRA), the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), and other health coverage issues related to COVID-19.
The Aon bulletin on the FAQs is available here.
“A Plan’s Gotta Know Its Limitations”—Federal Government Releases 2021 ACA and HDHP Limits
The U.S. government recently released in Revenue Procedure 2020-32 the 2021 annual limits for out-of-pocket (OOP) maximums under the Affordable Care Act (ACA) and the 2021 limits for required deductibles, OOP maximums, and contributions for High Deductible Health Plans (HDHPs) and Health Savings Accounts.
The Aon bulletin on Revenue Procedure 2020-32 is available here.
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