Guid­ance for Group Health Plans Impact­ed by Hur­ri­cane Maria and Cal­i­for­nia Wildfires

The U.S. Depart­ment of Labor (DOL) issued a news release to rec­og­nize that plan par­tic­i­pants and ben­e­fi­cia­ries may encounter prob­lems due to Hur­ri­cane Maria and the Cal­i­for­nia Wild­fires. The DOL advis­es plan fidu­cia­ries to make rea­son­able accom­mo­da­tions to pre­vent work­ers’ loss of ben­e­fits and to take steps to min­i­mize the pos­si­bil­i­ty of indi­vid­u­als los­ing ben­e­fits because of a fail­ure to com­ply with pre-estab­lished time frames.

The DOL also acknowl­edged that there may be instances when full and time­ly com­pli­ance by group health plans may not be pos­si­ble due to phys­i­cal dis­rup­tion to a plan’s prin­ci­pal place of busi­ness. The DOL’s enforce­ment approach will empha­size com­pli­ance assis­tance, includ­ing grace peri­ods and oth­er relief where appropriate.

Dead­line Exten­sions for Those Affect­ed by Hur­ri­cane Maria

The DOL and IRS announced dead­line exten­sions to pro­vide plan par­tic­i­pants, ben­e­fi­cia­ries, and employ­ers affect­ed by Hur­ri­cane Maria with addi­tion­al time to make health cov­er­age and ben­e­fits decisions.

Under the exten­sion, group health plans have addi­tion­al time to com­ply with cer­tain dead­lines affect­ing COBRA con­tin­u­a­tion cov­er­age, Health Insur­ance Porta­bil­i­ty and Account­abil­i­ty Act of 1996 (HIPAA) spe­cial enroll­ment, claims for ben­e­fits, appeals of denied claims, and exter­nal review of cer­tain claims. Under the exten­sion, par­tic­i­pants and ben­e­fi­cia­ries have addi­tion­al time to make claims for ben­e­fits and appeal denied claims.

Guid­ance on Leave-Based Dona­tion Pro­grams’ Tax Treatment

In recent months, the IRS pro­vid­ed guid­ance for employ­ers who adopt leave-based dona­tion pro­grams to pro­vide char­i­ta­ble relief for vic­tims of Hur­ri­cane and Trop­i­cal Storms Irma and Maria. This month, the IRS issued Notice 2017–70, which extends the guid­ance to employ­ers’ pro­grams adopt­ed for the relief of vic­tims of the Cal­i­for­nia wildfires.

These leave-based dona­tion pro­grams allow employ­ees to for­go vaca­tion, sick, or per­son­al leave in exchange for cash pay­ments that the employ­er will make to char­i­ta­ble orga­ni­za­tions described under Inter­nal Rev­enue Code Sec­tion 170©.

The employ­er’s cash pay­ments will not con­sti­tute gross income or wages of the employ­ees if paid before Jan­u­ary 1, 2019, to the Sec­tion 170© char­i­ta­ble orga­ni­za­tions for the relief of vic­tims of the Cal­i­for­nia wild­fires. Employ­ers do not need to include these pay­ments in Box 1, 3, or 5 of an employ­ee’s Form W‑2.

By Danielle Capilla

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