December 31, 2020
The Consolidated Appropriations Act, 2021 (“CAA” or the “Act”) passed December 27, 2020, includes a number of measures intended to provide varying degrees of “relief” to plan sponsors, plan administrators, and participants. But as is often the case, peel away the packaging and you have somewhat of a mess. It is like opening the box to find 6,000 pieces nicely separated into ten plastic bundles, pages of stickers, and four manuals on how to put the castle together. There is a lot of room between the excitement of opening the box and satisfaction with the finished product. And between those two points, there are a lot of decisions to be made.
The CAA makes numerous tools available to address various needs of those in the benefits industry. But which tools to use, how to use them, when to use them, and even whether to use them, requires evaluating them in context. What may be easy for an administrator may not be the best choice for a particular plan sponsor. What may be ideal from a plan sponsor’s perspective may not be cost effective from an administrator’s perspective. Great care needs to be taken to wade through the options. Just because they have been presented as “relief” and their use is “optional” does not necessarily mean a plan sponsor should change its benefit plans. There should be a good reason to change. Part of the evaluation involves identifying the “ripple effects.” It is more complicated than concluding the optional relief should be adopted because it minimizes forfeitures. That is a good reason, but once adopted and implemented, the cost to the plan sponsor due to unexpected “ripple effects” may outweigh the good reason and the good feelings attributable to minimizing forfeitures.
When evaluating the pros and cons of the optional relief, some of the ripple effects to consider include:
The key is to make an informed decision.
|For a detailed analysis of the CAA optional relief provisions highlighting some of these ripple effects, please request a complimentary copy of “The CAA: The Legislative Gift that Keeps on Giving” by emailing email@example.com.|
As a leader in employee benefits law, Darcy Hitesman founded HitesmanLaw in order to help public and private employers, insurers and third-party administrators nationwide stay informed and minimize the risk of non-compliance issues.
HitesmanLaw provides a wealth of legal experience to their clients in the areas of ERISA, COBRA, HIPAA, Health Care Reform, welfare plans, cafeteria plans, HRAs, and VEBAs.
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