United States: For Your Benefit Newsletter, December 2021

Many Retirement and Welfare Plan Limits Increase for 2022

On Nov. 10, 2021, the Internal Revenue Service announced many of the 2022 limits for retirement and welfare plans. Many retirement plan limits increased from 2021, including the limit on contributions to 401(k) and 403(b) plans, increasing from $19,500 in 2021 to $20,500 in 2022. In addition, for purposes of withholding and paying FICA and FUTA taxes, the Social Security Wage Base is increasing from $142,800 in 2021 to $147,000 in 2022.

Congress originally enacted the ERC in the Coronavirus Aid, Relief and Economic Security (CARES) Act in March of 2020 to encourage employers to hire and retain employees during the pandemic. At that time, the ERC applied to wages paid after March 12, 2020, and before Jan. 1, 2021. However, Congress later modified and extended the ERC to apply to wages paid before July 1, 2021. Congress subsequently extended and modified the ERC to apply to wages paid after June 30, 2021, and before Jan. 1, 2022. Most recently, Congress passed the Infrastructure Investment and Jobs Act (IIJA) which retroactively terminated the ERC limiting the credit to qualified wages paid through the third calendar quarter of 2021 (ending Sept. 30, 2021) for most businesses. In other words, the ERC is not available for the fourth quarter of 2021.

Hardship Distribution Requirements. An employer that sponsors a 401(k) plan is permitted but not required to allow participants to take an in-service distribution due to financial hardship, which is also known as a hardship distribution. In 2019, the IRS issued rules that impact the hardship distribution rules that apply to qualified retirement plans, including 401(k) plans. For employers who sponsor a 401(k) plan, the plan is required to be updated to comply with IRS rules by Dec. 31, 2021.

Cycle 3 Restatement for Defined Contribution Plans. For employers who have adopted a preapproved 401(k) retirement plan, the deadline to adopt new "Cycle 3" plan documents is July 31, 2022. Employers that have adopted a preapproved defined contribution retirement plan may want to request the status of the Cycle 3 restatements from the benefits vendor who provides the plan.

Center for Medicare & Medicaid Services (CMS) Memorandum Details Disclosure Notice Requirements for Surprise Billing Effective Jan. 1, 2022

The No Surprises Act, enacted as part of the Consolidated Appropriations Act of 2021 (CAA), contains multiple protections against the practice of surprise billing or "balance billing," including the requirement of new transparency disclosures effective Jan. 1, 2022. Congress passed the No Surprises Act with the intention of protecting against certain surprise bills for non-emergency care provided by out-of-network providers at in-network facilities; emergency care; and air ambulance services from out-of-network providers. Because the health plan or health insurance issuer does not usually cover the entire out-of-network cost for such care, the out-of-network provider bills the patient for the difference between the billed charge and covered amount, a practice known as "balance billing."

The CMS memo references a Model Notice issued by the Departments of Health and Human Services, Labor and the Treasury that plans and issuers may, but are not required to, use to satisfy the disclosure requirements of the act. The Departments will consider use of the Model Notice to be good faith compliance.

CMS has created a website containing information about the surprise billing rules which is to be referenced on the disclosure notice as well as the telephone line operated by HHS beginning on Jan. 1, 2022, which will route complaints by individuals regarding potential violations of the CAA to the appropriate agency. The website functionality for complaints inquiry and triage will not be fully operational until January 2022. The HHS phone number (1-800-985-3059) should likewise not be included in any plan documents for plan or policy years beginning before Jan. 1, 2022.