Agencies Provide Relief for Group Plans and Donation Programs Affected by Hurricanes/Wildfires
By Danielle Capilla, Senior VP for Compliance and Operations, United Benefit Advisors
Guidance for Group Health Plans Impacted by Hurricane Maria and California Wildfires
The U.S. Department of Labor (DOL) issued a news release to recognize that plan participants and beneficiaries may encounter problems due to Hurricane Maria and the California Wildfires. The DOL advises plan fiduciaries to make reasonable accommodations to prevent workers' loss of benefits and to take steps to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established time frames.
The DOL also acknowledged that there may be instances when full and timely compliance by group health plans may not be possible due to physical disruption to a plan's principal place of business. The DOL's enforcement approach will emphasize compliance assistance, including grace periods and other relief where appropriate.
Deadline Extensions for Those Affected by Hurricane Maria
The DOL and IRS announced deadline extensions to provide plan participants, beneficiaries, and employers affected by Hurricane Maria with additional time to make health coverage and benefits decisions.
Under the extension, group health plans have additional time to comply with certain deadlines affecting COBRA continuation coverage, Health Insurance Portability and Accountability Act of 1996 (HIPAA) special enrollment, claims for benefits, appeals of denied claims, and external review of certain claims. Under the extension, participants and beneficiaries have additional time to make claims for benefits and appeal denied claims.
Guidance on Leave-Based Donation Programs' Tax Treatment
In recent months, the IRS provided guidance for employers who adopt leave-based donation programs to provide charitable relief for victims of Hurricane and Tropical Storms Irma and Maria. This month, the IRS issued Notice 2017-70, which extends the guidance to employers' programs adopted for the relief of victims of the California wildfires.
These leave-based donation programs allow employees to forgo vacation, sick, or personal leave in exchange for cash payments that the employer will make to charitable organizations described under Internal Revenue Code Section 170(c).
The employer's cash payments will not constitute gross income or wages of the employees if paid before January 1, 2019, to the Section 170(c) charitable organizations for the relief of victims of the California wildfires. Employers do not need to include these payments in Box 1, 3, or 5 of an employee's Form W-2.