Fast-Approaching Deadlines for Employee Benefit Plans | Venable LLP

The end of 2023 brings important deadlines for employers that sponsor 401(k) plans, 403(b) plans, and group health plans.

  • January 1, 2024, is the operational deadline for 401(k) plans and 403(b) plans to liberalize service-based exclusions for certain long-term, part time employees.
  • December 31, 2023, is the deadline for group health plans to submit an attestation of compliance regarding “gag clauses” in their provider, network, and TPA agreements.
  • January 1, 2024, is the deadline for calendar-year group health plans to make cost-sharing information available for all covered items and services.

401(k) and 403(b) Plans: Eligibility for Long-term, Part-time Employees

The SECURE Act of 2019 (SECURE 1.0) prohibits a 401(k) plan from imposing a service-based exclusion on an employee who has completed at least three consecutive 12-month periods with at least 500 hours of service in each 12-month period (and who has reached age 21). Employees affected by this requirement are called “long-term, part-time employees.” Long-term, part-time employees must be permitted to make their own salary deferrals to a 401(k), although a plan can still exclude them from automatic contribution arrangements, employer match, or employer nonelective contributions.

Under SECURE 1.0, plans must begin operational compliance for plan years beginning on or after January 1, 2024. This means that plans must count all hours of service for long-term, part-time employees for service on or after January 1, 2021. For calendar-year plans, any such employees that completed 500 hours of service in each 12-month period since January 1, 2021, must be eligible to participate in the plan on January 1, 2024. Given that employees who are newly eligible for a plan must be given notice of their eligibility not later than the date they become eligible, employers must act promptly to give the required notice.

Note: The SECURE 2.0 Act of 2022 reduced the three consecutive 12-month period threshold to a two consecutive 12-month period threshold for plan years beginning on or after January 1, 2025, and extended these requirements to 403(b) plans that are subject to ERISA (generally, non-governmental, non-church 403(b) plans).

The IRS recently issued proposed regulations applicable to long-term, part-time employees. Employers may rely on the proposed regulations until final regulations are issued. The proposed regulations clarify that employers may continue to establish eligibility exclusions for employees so long as they are not a proxy for imposing an age or service requirement. For example, a plan may require that an employee work at a specific location or in a specific division to be eligible to participate in the plan. These eligibility conditions would be permissible because they do not impose age or service requirements.

Group Health Plans: Gag Clause Attestation

Under the CAA, group health plans must submit an attestation that they comply with the prohibition against “gag clauses” in their provider, network, and TPA agreements. Plans submit the attestation through CMS’s Health Insurance Oversight System (HIOS) by filing a Gag Clause Prohibition Compliance Attestation (GCPCA). CMS created an online resource page with instructions for submitting the GCPCA here.

December 31, 2023, is the first deadline for submitting the gag clause attestation and covers the period from December 27, 2020, through the date of the submission. Plans must submit an attestation each subsequent year by December 31.

The responsibility to submit the attestation falls on the group health plan. However, TPAs may submit the attestation on behalf of the plan under a written agreement permitting them to do so.

Group Health Plans: Transparency Disclosures

Under the DOL’s transparency in coverage regulations, group health plans must comply with certain transparency requirements. All but one of the transparency requirements have already taken effect. The last transparency requirement to take effect requires group health plans to provide personalized out-of-pocket cost information, including negotiated rates, for all covered healthcare items and services through an internet-based self-service tool and in paper, upon request. For calendar-year plans, the requirement will be effective on January 1, 2024.

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