Industry & Regulatory News

Industry & Regulatory News
SEC Proposes Changes to Clearance and Settlement of Securities

The Securities and Exchange Commission (SEC) has issued a proposed rule “Shortening the Securities Transaction Settlement Cycle”. The SEC notes in a press release that it is proposing to shorten the settlement cycle for most broker-dealer transactions from two business days after the trade date (T+2) to one business day after the trade date (T+1). The changes are designed to improve efficiency and reduce transaction risks. The proposal includes rules directed at broker-dealers and investment advisers that would shorten the process of confirming and affirming the trade information necessary to prepare transactions for settlement. The proposal solicits comments on challenges associated with and recommendations for achieving a same-day settlement cycle.

The SEC will accept public comments for the longer of 1) 60 days following the release of the proposed rule on the SEC’s website, or 2) 30 days following the publication of the proposed rule in the Federal Register.

February 09 2022
Industry & Regulatory News
DOL Provides Guidance Related to Over-the-Counter COVID-19 Tests

Group health plans and health insurance issuers must provide benefits for certain items and services related to testing for the detection and diagnosis of COVID-19, including over-the-counter (OTC) COVID-19 tests. The Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act require that these services be provided without imposing cost-sharing requirements, prior authorization, or other medical management requirements.

On February 4, 2022, the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury (collectively, the Departments) issued Frequently Asked Questions (FAQs). These FAQs provide additional guidance on the requirement to provide coverage for OTC COVID-19 tests without a prescription or individualized clinical assessment from a health care provider.

The FAQs provide guidance in the following areas.

  • Limits on Coverage: Plans or issuers may limit reimbursement to the lesser of the actual price of the test, or $12 per test. Each covered participant, beneficiary, or enrollee may be reimbursed for at least 8 tests per 30-day period (or per calendar month). The plan or issuer must calculate the reimbursement based on the number of tests in a package.
  • Direct-to-Consumer Coverage: Plans or issuers that provide direct coverage of OTC COVID-19 tests through both a pharmacy network and a direct-to-consumer program, and otherwise limits reimbursement for OTC COVID-19 tests from nonpreferred pharmacies or other retailers to the lesser of the actual price of the test, or $12 per test, will not be subject to enforcement action. To provide adequate access, the plan or issuer must make OTC COVID-19 tests available through at least one direct-to-consumer shipping mechanism and at least one in-person mechanism. The direct-to-consumer mechanism may include online or telephone ordering, but the plan or issuer must cover the cost of shipping.
  • Impact of Supply Shortage: Plans or issuers will not be out of compliance if they temporarily cannot provide adequate access because of a supply shortage.
  • Fraud or Abuse: Plans or issuers may take reasonable steps to prevent, detect, and address fraud and abuse. For example, a plan or issuer can require tests to be purchased from an established retailer, substantiate the purchase by carefully reviewing receipts and documentation, and require the individual to attest that the product will not be resold.
  • Self-Collected Sample with Lab Processing: OTC COVID-19 tests must be self-administered and self-read without the involvement of a health care provider. The OTC COVID-19 coverage rules do not apply when an individual sends the specimen to be processed in a laboratory. These tests must be ordered by a health care provider.
  • FSA/HRA/HSA: The cost of OTC COVID-19 tests purchased after January 15, 2022, are eligible for reimbursement from a group health plan or issuer.  Individuals may not seek reimbursement more than once for the same medical expense. When notifying individuals about any direct coverage or reimbursement, the plan or issuer must include a reminder stating that the same medical expense may not be submitted to a health flexible spending account FSA), health reimbursement arrangement (HRA), or health savings account (HSA).

Further developments, including any clarifying guidance will be shared.

February 08 2022
Industry & Regulatory News
Legislation Proposed to Permit HSAs for Children

The Child Health Savings Account Act of 2022 (H.R. 6507), introduced by Beth Van Duyne (R-TX) in the House of Representatives, would expand HSA contribution eligibility requirements by allowing parents to contribute and deduct up to $3,000 each year to their childrens’ HSAs.

The HSA will be treated as the parent’s HSA until the child reaches age 18. At that time, it would become the child’s HSA. As the bill is currently drafted, any distributions taken out of the HSA before the child’s 18th birthday would be included in the parent’s taxable income. Nonqualified distributions would also be subject to an additional 20 percent penalty tax. Once the child turns 18, distributions would be considered qualified only if they were taken while the child was not a dependent on the parent’s insurance (the child could be treated as the parent’s dependent for certain permitted insurance, but not for the parent’s health plan).

If the child were to become disabled or die, the parent would no longer be able to make contributions, but could roll over any HSA assets to their own IRA or HSA, or to another child’s HSA.

If enacted, this legislation would become effective for tax years beginning after the date of enactment. Any progress of the bill through Congress will be monitored, and details provided as they become available.

February 03 2022
Industry & Regulatory News
Legislation Proposed to Expand Group Health Plan Coverage

The Family Plus Health Care Act of 2022 (H.R. 6508), introduced by Beth Van Duyne (R-TX) in the House of Representatives, aims to expand group health plan coverage by requiring plans to offer participants the option of enrolling their parents in the plan, as long as the parents are not eligible to enroll in either Medicare or Medicaid.

The cost of the parents’ group health plan coverage would be excluded from the gross income of the employee participating in the plan. Self-employed individuals would be allowed to claim a deduction for the amount that they paid to insure their parents.

The term ‘parent’ includes an individual’s biological parent, a stepparent, and a parent by adoption, but does not include a spouse’s parent. If enacted, this legislation would apply to any amounts paid or incurred after the bill’s date of enactment.

February 01 2022
Industry & Regulatory News
IRS Issues Yield Curves and Segment Rates for DB Plan Calculations

The IRS has issued Notice 2022-7, which contains updated guidance on factors used in certain defined benefit (DB) pension plan minimum funding and present value calculations. Updates include the corporate bond monthly yield curve, the corresponding spot segment rates used under Internal Revenue Code Section (IRC Sec.) 417(e)(3), and the 24-month average segment rates under IRC Sec. 430(h)(2). IRC Sec. 417 contains definitions and special rules for minimum survivor annuity requirements in DB plans. IRC Sec. 430 addresses minimum funding standards for single-employer DB plans.

January 24 2022
Industry & Regulatory News
PBGC Announces 2022 Inflation Adjustments for Civil Penalties

The Pension Benefit Guaranty Corporation has published in the Federal Register inflation-adjusted penalty amounts for failure to provide certain notices or other material information and for failure to provide certain multiemployer notices.

January 21 2022
Industry & Regulatory News
IRS Issues Deadline Relief for Tennessee Storm Victims

The IRS has issued a news release announcing the postponement of certain tax-related deadlines for victims of severe storms, straight-line winds, and tornadoes in Tennessee. The tax relief postpones various tax filing deadlines that began December 10, 2021. Affected individuals and households who reside or have a business in Cheatham, Davidson, Dickson, Gibson, Henderson, Henry, Lake, Obion, Stewart, Sumner, Weakley, and Wilson counties, as well as taxpayers with records located in the covered area that are needed to meet covered deadlines, qualify for relief.

January 21 2022
Industry & Regulatory News
IRS Provides Guidance Regarding Substantially Equal Periodic Payments from Qualified Retirement Plans

The IRS has issued Notice 2022-06, providing guidance on whether periodic payments from an individual account under a qualified retirement plan are considered a series of substantially equal periodic payments (SEPPs). Notice 2022-6 modifies and supersedes Revenue Ruling 2002-62.

January 20 2022
Industry & Regulatory News
IRS Announces Applicable Federal Rates for February 2022

January 19, 2022 – The IRS has issued Revenue Ruling 2022-3, which contains the applicable federal rates (AFR) for February 2022. These rates are used for such purposes as calculating distributions from retirement savings arrangements that meet the requirements for substantially equal periodic payments (a 10 percent early distribution penalty tax exception), also referred to as "72(t) payments."

January 20 2022
Industry & Regulatory News
Washington Pulse: New Retirement Payment Withholding Procedure is (Finally) Final

The IRS released a new withholding form on January 4, 2022: Form W-4R, Withholding Certificate for Nonperiodic Payments and Eligible Rollover Distributions. The IRS also issued a revised Form W-4P, Withholding Certificate for Pension or Annuity Payments. As a result, payers and individuals will have a new process for calculating and electing federal income tax withholding on retirement distributions. Although the IRS will not require payers to use the new and revised forms until January 1, 2023, payers may start using them in 2022.

January 19 2022