Benefits Monthly Minute
New Rules Expand Use of HRAs
Heath reimbursement accounts (“HRAs”) have long been subject to various restrictions under the ACA. However, as of 2020, HRAs may be used to reimburse individual health coverage premiums. This signals a departure from the previous prohibition on integrating HRAs with individual coverage. Employers of all sizes will now be able to offer individual coverage HRAs, although specific notice and procedural requirements apply. The new rules also allow employers to offer “excepted benefit HRAs” to finance other types of medical expenses (for example, copays, deductibles and excepted benefit premiums). Excepted benefit HRAs will essentially allow for reimbursements of up to $1,800 per year. While the excepted benefit HRA must be offered in conjunction with a traditional group health plan, the employee is not required to enroll in group health coverage (or in any other coverage) which distinguishes the excepted benefit HRA from other HRAs. Employers can begin offering these new benefits on January 1, 2020.
IRS Announces Health Savings Account Contribution Limits for 2020
The IRS recently announced in Rev. Proc. 2019-25, the following inflation-adjusted amounts for Health Savings Accounts for 2020:
| 2020 IRS Limits | ||
| Single Plan | Family Plan | |
| Maximum HSA Contribution Limit | $3,550 | $7,100 |
| Minimum Deductible | $1,400 | $2,800 |
| Maximum Out-of-Pocket | $6,900 | $13,800 |
| Catch-up Contribution | $1,000 | $1,000 |
U.S. Supreme Court Agrees to Hear Two ERISA Cases
The United States Supreme Court recently agreed to hear two ERISA class-action cases next term that were decided by the lower courts in favor of plan participants. First, the Supreme Court agreed to review Retirement Plans Committee of IBM et al. v. Larry W. Jander, an employer stock-drop case from the Second Circuit. IBM workers claimed that IBM’s Retirement Plans Committee breached its fiduciary duty by allowing workers’ retirement funds to be invested in artificially-inflated IBM stock. The Second Circuit applied the “more harm than good” standard that was set forth in Fifth Third Bancorp v. Dudenhoeffer and found that the Committee did not meet this standard as it could not have reasonably thought it was better to do nothing rather than something when they learned of IBM’s failing microchip division.
Second, the Supreme Court agreed to hear Intel Corp. Investment Policy Committee et al. v. Sulyma, a Ninth Circuit case. At issue is when a participant has actual knowledge of a potential fiduciary breach for purposes of applying the statute of limitations period. Intel argued that a participant has actual knowledge, and the statute of limitations period begins to run, when the participant receives the financial documents. The Ninth Circuit rejected Intel’s argument and found that a participant has actual knowledge of an alleged breach, and the three-year statute of limitations period begins to run, when the participant reads the provided financial documents.
There is ongoing speculation surrounding how the Supreme Court will rule in these two cases and many plan fiduciaries are hopeful that the Supreme Court will overturn the Circuit Courts’ opinions.
KMK Employee Benefits and Executive Compensation email updates are intended to bring attention to benefits and executive compensation issues and developments in the law and are not intended as legal advice for any particular client or any particular situation. Please consult with counsel of your choice regarding any specific questions you may have.
