With a full quarter of 2023 in the books some momentous policymaking occurred in the month of March. The biggest announcement was the new guidance from the Department of Labor (DOL) outlining the end of America's national emergency on COVID-19 and subsequent "outbreak period." The Internal Revenue Service (IRS) also made some changes to the healthcare landscape with updated information regarding the use of spending accounts for nutrition and wellness costs. Finally, the state of Illinois enacted new legislation regarding paid leave requirements for employers within the state. Learn more about these updates below in this month's Regulatory Roundup.
COVID-19 National Emergency Ending
After three years the national emergency and outbreak period for the COVID-19 virus are ending. Per the DOL's new FAQ the COVID-19 national emergency is expected to end on May 11, 2023, with the corresponding outbreak period set to end on July 10, 2023. At that time, the extensions and deadline relief instituted for HIPAA special enrollment, COBRA continuation coverage, internal claims and appeals, and external reviews will no longer apply. Instead, providers and employees will return to the standard timeframes and deadlines used before the national emergency began.
For example, if an employee loses COBRA coverage from an employer's group health plan due to a qualifying event on May 12, 2023, she or he will still be able to use the emergency relief extensions to elect new COBRA coverage since the event occurred before the outbreak period's deadline of July 10, 2023. If, however, the qualifying event occurred on July 15, 2023, then no extensions would be allowed. Providers, employers, and plan sponsors should communicate these changes to employees and review all plan materials (policies, notices, procedures, etc.) to see if any revisions are needed.
Spending Account Use for Wellness and Nutrition
The IRS recently published updated guidance on how spending accounts, including Health Savings Accounts (HSAs), Health Reimbursement Arrangements (HRAs), Archer Medical Savings Accounts (Archer MSAs) and Flexible Spending Accounts (FSAs), can be used when covering costs for nutritional and wellness expenses. Generally, these kinds of expenses are covered by spending accounts so long as their purchase is directly related to the diagnosis, treatment, or prevention of a specific disease or illness. If such expenses are instead for a person's general well-being, they're not covered by the previously mentioned spending accounts. For example, if an employee needs to purchase a gym membership to treat a diagnosed illness, she or he may use a spending account to cover the membership's fees. If, however, the employee merely wishes to remain healthy or get in shape, the fees are not covered.
Illinois' Paid Leave Requirements
On March 13, 2023, Illinois' Governor Pritzker signed into law new requirements regarding employer provided paid leave within the state. The new Paid Leave for All Workers Act will take effect January 1, 2024, and require all covered employers to provide their employees up to 40 hours of paid leave per 12-month period, which can be used for any reason. Some types of employees (such as temporary college student-workers) are exempt from coverage, but those who are eligible may accrue one hour of paid leave for every 40 hours of worked up to a total of 40 hours per 12-month period.
Employers can choose to instead frontload the paid leave at the beginning of the 12-month period, and employees can carry over unused hours to the next 12-month period if no frontloading occurred. During the paid leave employees must receive their hourly rate of pay, not including commissions or gratuity. However, at no point may the employee's rate of pay drop below the required minimum wage. Employers are also allowed to use pre-existing or other types of paid leave policies to comply with these new requirements.
Get more details on the compliance updates from March here:
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This information is provided as a courtesy, may change, and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney, or Advisor.