Both the OSHA standard and the CMS guidelines have been in legal limbo since last year

Last week, the Supreme Court blocked enforcement of President Biden’s requirement that individuals at U.S. businesses with at least 100 employees get vaccinated against COVID or submit to weekly testing.

The decision to halt the Occupational Safety and Health Administration’s emergency standard split the court along the usual (6-3) ideological lines. In the majority opinion, the Court’s conservative members wrote that “administrative agencies are creatures of statute, and accordingly possess only the authority that Congress has provided.”

At the same time, however, the justices agreed to allow the health care worker vax rule to proceed, arguing that…“it fits neatly within the language of the statute; ensuring that providers take steps to avoid transmitting a dangerous virus to their patients is consistent with the fundamental principle of the medical profession: first, do no harm.”

The Centers for Medicare & Medicaid Services rule – now enforceable in all 50 states –  is expected to cover more than 17 million employees at approximately 76,000 health care facilities that receive Medicare and Medicaid funding. All individuals working in covered facilities must have their first vaccine dose by late January / early February, and their second vaccine dose by late February / early March.

Those that paused or slowed compliance efforts during the temporary stay will now need to re-evaluate their plans and quickly move towards compliance. This activity must occur in an extremely short timeline unless further extended by CMS.

Note: The federal contractor vaccine mandate remains subject to multiple legal challenges. Therefore, the government is currently blocked from enforcing this policy nationwide.

January 15th effective date requires urgent attention from plan sponsors and service providers

Yesterday, the Depts. of Health & Human Services, Labor and Treasury (the “agencies”) issued guidance – in the form of Frequently Asked Questions (FAQs) – providing that group health plans must cover, without cost-sharing, over-the-counter (OTC) COVID tests.

This new information is based on provisions in the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act requiring group health plans to cover diagnostic COVID tests without cost-sharing. Until now, that language had generally been understood to require coverage of tests administered by a medical provider.

Main elements of the FAQ guidance are summarized below…

Basic Requirement: Group health plans (and health insurers) are required to cover diagnostic OTC COVID tests without imposing cost-sharing, prior authorization, etc. This means plans must provide coverage without out-of-pocket expenses to the participant. The plan can provide the coverage by reimbursing sellers of OTC COVID tests directly or by requiring participants who purchase an OTC COVID test to submit a claim for reimbursement.

Timeline: The requirement is effective on January 15, 2022 and continues for the duration of the public health emergency.

Scope: Only applies to “diagnostic” OTC COVID tests; testing that is for employment purposes is not considered diagnostic and does not fall under this new requirement.  

Quantity: Plans may limit the number of tests reimbursed to no less than eight (8) OTC COVID tests per covered individual per 30-day period (or calendar month).

Dollar Limit: Plans that provide direct coverage of OTC COVID tests may not limit coverage to only tests provided through preferred pharmacies or other retailers that are part of the direct coverage program. However, under a safe harbor, the agencies state that plans may limit reimbursement of tests purchased outside the direct coverage program to $12 (or the cost of the test, if lower).* The agencies also note that plans must take reasonable steps to ensure participants have adequate access to tests under the direct coverage option.  

Fraud and Abuse: The agencies provide several examples of permissible activities, including that plans can require attestation that the test was purchased for the covered individual, is not for employment purposes, has not/will not be reimbursed by another source and is not for resale. Plans may also require reasonable documentation of proof of purchase.

*The safe harbor applies if the plan provides tests through its pharmacy network and/or a direct-to-consumer shipping program, under which there is no upfront out-of-pocket expenditure by the participant.

Courts continue to move the goalposts on employers

President Biden announced a three-part federal vaccine mandate for large employers, certain healthcare providers and federal contractors back in September. Litigation immediately ensued in multiple venues, and courts issued various stays of enforcement as to each mandate…effectively barring any nationwide vaccine edicts.

On Friday, a divided three-judge panel of the U.S. Court of Appeals granted the government’s request to dissolve the Fifth Circuit’s hold on one of the regulations. Thus, the administration’s emergency Covid-19 shot-or-test rule for large employers can go into effect now that the order that had blocked the measure has been lifted.

State-of-Play

Vax-or-Test Mandate for Large Employers

Latest development – The Occupational Safety and Health Administration (OSHA) Emergency Temporary Standard (ETS) nationwide stay was dissolved by the Sixth Circuit on December 17, 2021.

What does this mean? Employers must start taking good faith steps to come into compliance with the standard immediately.

• January 10, 2022 is the new deadline to have a written policy, require masking for unvaccinated employees and provide PTO for employees to get vaccinated.

• February 9, 2022 is the new deadline for requiring unvaccinated employees to begin weekly COVID testing

What’s next? The U.S. Supreme Court will hear arguments in this case during a special session on January 7, 2022.

Vax Mandate for Healthcare Providers

Latest development – The “nationwide” injunction was lifted by the Fifth Circuit as it relates to specific states.

What does this mean? A flurry of litigation has led to an even split between states in which the guidance issued by the Centers for Medicare and Medicaid Services (CMS) may be implemented and states in which such implementation has been prevented (see lists below). The partial dissolution means that CMS could begin enforcement of its rule in those 25 states. However, the manner in which CMS will move forward with implementation has yet to be announced.  

What’s next? The U.S. Supreme Court will hear arguments in this case during a special session on January 7, 2022.

Vax Mandate for Federal Contractors

Latest development – The rule remains in limbo. A federal judge in Missouri added another legal roadblock to this case on December 20, 2021. The latest injunction – issued by U.S. Magistrate David Noce – applies in Alaska, Arkansas, Iowa, Missouri, Montana, Nebraska, New Hampshire North Dakota, South Dakota and Wyoming. It comes on top of a nationwide injunction pursuant to a December 7th ruling issued by the U.S. District Court for the Southern District of Georgia.   

What does this mean? Government contractors are not required to comply with the vaccine mandate – at least for now.

What’s next? It is expected that the government will petition the U.S. Court of Appeals for review of the order(s).

TASC Government Affairs will continue to monitor and provide updates as they become available.

*Stay Remains / CMS Cannot Enforce: Alabama, Alaska, Arizona, Arkansas, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Texas, Utah, West Virginia, Wyoming

**Stay Lifted / CMS May Enforce: California, Colorado, Connecticut, Delaware, Florida, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Tennessee, Vermont, Virginia, Washington, Wisconsin     

Bipartisan bill would incentivize charitable giving and broaden the nation’s philanthropic base

The Everyday Philanthropist Act (S. 3191) – a bipartisan bill to incentivize
charitable giving by providing Americans with an effective tax break – has been introduced in the U.S. Senate by Senators Ben Sasse (R-NE) and Tammy Baldwin (D-WI).* This bill would allow employees to set aside up to $2,700 per year, on a pre-tax basis, to give to the charity or charities of their choice through the establishment of Flexible Giving Accounts (FGAs).

Charities and non-profit groups throughout the U.S. serve some of the most vulnerable populations in our communities and are essential to addressing some of the most pressing needs. Unfortunately, when many of the services these groups provide are most needed, they are facing significant reductions in giving.

The Everyday Philanthropist Act gives taxpayers the ability to make charitable donations on a pre-tax basis. Our current tax code provides only taxpayers who itemize their deductions – those typically in the highest tax brackets – the opportunity to lower their income taxes by giving to charity. The Everyday Philanthropist Act changes that. Providing encouragement for non-itemizers to want to give more, more often.

This straightforward improvement to the tax code will broaden the nation’s philanthropic base, provide increased incentive to give now and foster a culture of more regular charitable donations for the future. Further, the establishment of pre-tax FGAs as set forth in S. 3191 would incentivize charitable giving in a manner that is fiscally sound, compliance friendly, and effective.

“The Everyday Philanthropist Act would help people who give currently to give more and encourage those who don’t already give to start,” says Dan Rashke, Founder of The Greater Give. “It would revolutionize the way Americans give back and could have incredible impacts on those in our community who are in need.”

About The Greater Give
The Greater Give (TGG) is a nonprofit organization working to increase charitable giving by cultivating a movement of shared responsibility between employers and their employees. TGG helps employers easily implement workplace giving initiatives by educating employers on strategic philanthropy, advocating for changes in public policy, and connecting like-minded businesses.

*Companion legislation (HR 4585) was introduced in the U.S. House of Representatives by Congressmen Tom Suozzi (DNY) and Vern Buchanan (R-FL) on July 20, 2021.

The $1.7 trillion reconciliation package, a centerpiece of President Biden’s domestic agenda, passed largely along party lines (220-213) just before the Thanksgiving recess.

Several provisions were either left out or modified as Democrats sought to reduce the price tag of the initial $3.5 trillion plan and find consensus within their caucus. Those that were pared back include a proposal to provide 12 weeks of paid family leave.

This new measure would provide as many as four weeks of paid leave for the birth or adoption of a child, to care for a family member with a serious health condition, or for an employee’s own serious health condition that prevents them from working. Eligible workers would be entitled to the benefit within a one-year period, starting in 2024.

States with preexisting paid leave programs would receive grants to cover the equivalent costs of the benefits, and employers would receive grants to cover 90% of their paid leave benefits for as many as four weeks.

Below is a brief overview of other noteworthy policies….

• Tax Credits: Extends the expanded child tax credit for one year (through 2022) and limits advance payments to those with incomes below $150,000 for joint filers and $75,000 for single filers. It also would make the credit fully refundable after 2022.

• FMLA: Ends the employer tax credit for paid family and medical leave in 2024 (instead of 2026).

• Child Care: Provides $100 billion for the first three years of a new child care entitlement program, which would end after 2027. It would cap child care costs at a maximum of 7% of family income, using a sliding scale that would apply to those up to 250% of the state median income.

• Universal Preschool: Provides more than $18 billion for fiscal years 2022 through 2024 to provide free preschool to all three and four year olds.

While the timing for Senate consideration is still up in the air, changes are almost a certainty as several senators are opposed to various parts of the bill – including the paid leave portion. Regardless, any Senate amendment(s) will cause the package to be sent back to the House for a second vote.

Private Sector must comply with most aspects by December 5, 2021.

Last week, the Occupational Safety and Health Administration (OSHA) unveiled its Emergency Temporary Standard (ETS) to protect employees of large companies from COVID-19. This ETS, which is expected to apply to more than 80 million workers, will require employer action by December 5, 2021…however, the testing and vaccination requirements will not take effect until January 4, 2022.

Below is a brief summary of the key highlights/points:

Scope The guidance applies to employers with 100 or more employees* except for those who (1) do not report to a workplace where other individuals – such as coworkers or customers – are present (2) work from home, (3) work exclusively outdoors, (4) are covered under the federal contractor rule, or (5) are covered under the healthcare services rule.  

Vax-or-Test Timeline Employees must be fully vaccinated for COVID-19 by January 4, 2022, or be subject to weekly testing. This guidance will remain in effect until withdrawn or superseded by a permanent standard, which must be issued no later than six months after publication of the initial ETS.

Vaccination Requirements Employers must require each vaccinated employee to provide acceptable proof of vaccination status. Acceptable proof of vaccination generally includes: (1) a copy of the COVID-19 vaccination card, (2) a copy of immunization/medical records documenting the vaccination, or (3) employee attestation – but only if unable to produce other proof.  

Testing Each unvaccinated employee must be tested at least every seven days and provide documentation of the most recent test results to the employer.** A permissible test is one that has been approved by the Food and Drug Administration (FDA) and is administered in accordance with the authorized instructions. Over-the-counter self-tests are not permissible unless they are observed or proctored in accordance with the ETS.

The ETS does not require employers to pay for costs associated with COVID-19 testing.

Positive COVID-19 Test Regardless of vaccination status, an employee who tests positive for, or is diagnosed with, COVID-19 must promptly notify their employer. Said employee must be immediately removed from the workplace and may not return until he/she meets the return to work criteria. The ETS does not require employers to provide paid time off to any personnel removed from the workplace due to a positive COVID-19 test or diagnosis.

Paid Time Off Beginning December 5, 2021, large employers must provide paid time off for staff to receive the vaccine and recover from any side effects caused by the vaccine. Specifically, the ETS requires all covered entities to support vaccination by providing employees with a “reasonable” amount time off — including up to four hours at the regular rate of pay — to receive each vaccination dose. They must also provide “reasonable” time and paid sick leave to employees recovering from vaccine side effects.

Interaction with State Laws/Plans The ETS is intended to preempt any State or local requirements that ban or limit an employer from requiring vaccination or testing. In the twenty-two (22) states that maintain their own plans, the state OSHA will be responsible for either adopting the federal standard as written or modifying it to impose stricter requirements.

Penalties It appears that the civil penalty for violation of the ETS may be as high as $13,653 for each affected employee. Citations can carry monetary penalties up to $136,532 in the case of willful or repeat violations.

On November 6, 2021, the US Court of Appeals for the Fifth Circuit temporarily blocked OSHA’s vaccine mandate. The court wrote that the pending lawsuit raised “cause to believe that there are grave statutory and constitutional issues” surrounding the ETS. Thus, the guidance is stayed until further notice…temporarily halting its implementation and enforcement. Although the future of the ETS remains uncertain as the result of current legal challenges, employers should begin laying the groundwork for compliance while keeping a close eye on the ongoing litigation.  

*For a single corporate entity with multiple locations, all U.S. employees are counted for purposes of the 100-employee threshold. Part-time employees and those not covered by the ETS (i.e. remote workers) count toward the company total; independent contractors do not. Once at or above the threshold, an employer will remain covered even if it drops below 100 employees.

**An unvaccinated employee who typically works remotely – or has been away from the workplace for a week or longer – must be tested within seven days before returning to work.

The Everyday Philanthropist Act has been re-introduced for consideration during the 117th Congress (2021-22). Sponsored by House Ways & Means Committee members Tom Suozzi (D-NY) and Vern Buchanan (R-FL), this bi-partisan legislation (H.R. 4585) aims to revolutionize employee giving and incentivize every American to become an Everyday Philanthropist.

Historically, only a small percentage of Americans – those who itemize their tax returns – are eligible to take their charitable donations as tax deductions…a strategy that has overwhelmingly benefited the wealthiest in our country. The Everyday Philanthropist Act would afford a similar opportunity for ALL working Americans through the creation of a Flexible Giving Account, which provides businesses with an easy way to encourage employee giving. This bill is also essential for charitable organizations across the country who rely on giving to do their good work. 

Recently enacted provisions establishing a “partial/universal” above the line deduction extends and modifies the maximum amount that individuals are permitted to write-off, whether they itemize or not. While we applaud this forward movement in charitable reform legislation, our country needs a long term, fiscally sound and compliant friendly solution for all. 

The Everyday Philanthropist Act would revolutionize employee giving through empowering employees of all tax brackets to give to the charity of their choice, reducing the employer’s payroll taxes and cultivating a movement of shared responsibility between employers and employees. 

*The Coronavirus Aid, Relief & Economic Security (CARES) Act encouraged Americans to contribute to charitable organizations by permitting a $300 deduction of cash contributions for 2020 [Public Law 116-136]; The Consolidated Appropriations Act continued the $300 deduction through 2021 and clarified the allowance for married couples filing jointly [Public Law 116-260].

Yesterday, the IRS issued Notice 2021-31, which provides guidance needed to implement the temporary COBRA subsidy provisions included in the recently enacted $1.9 trillion COVID relief/stimulus package.

The American Rescue Plan contained a 100% federal subsidy to reduce employer sponsored health care premiums for workers eligible for COBRA – due to an involuntary termination of employment or reduction in hours – between April 1, 2021 and September 30, 2021.  The new law also adds a corresponding tax credit for the entities that maintain group health plans.

Notice 2021-31 furnishes substantial information regarding the calculation of the credit, the eligibility of individuals, the premium assistance period, and other information vital to employers, plan administrators, and health insurers.

Gov. Affairs is in the process of reviewing this new round of FAQs…TASC will provide a summary of the top compliance and implementation issues in the near future.

Notice 2021-31: https://www.irs.gov/pub/irs-drop/n-21-31.pdf

Just released – today’s compliance news addresses the taxation of dependent care benefits made available during the 2021 and 2022 tax years due to the application of either the carryover or the extension of a claims period made available under the Consolidated Appropriations Act (CAA)*.

The guidance seems to clarify that if these dependent care benefits would have been excluded from income if used during the taxable year ending in 2020 (or 2021 if applicable), these benefits will remain excludible from gross income and are not considered wages of the employee for 2021 and 2022. Additionally, the notice states that these amounts will not be taken into account for purposes of the application of the limits under Section 129 to the other dependent care benefits made available for the taxable years ending in 2021 and 2022**.

Governmental Affairs is reviewing these developments…clients should be on the lookout for additional communications from TASC in the near future.

Notice 2021-26: https://www.irs.gov/pub/irs-drop/n-21-26.pdf

*Public Law 116-260

**This is a change from how the Section 129 exclusion has been applied to grace period amounts prior to the CAA; previously, reimbursements of dependent care benefits in excess of the $5,000 statutory amount were taxable to recipients.

New tax credit prods businesses on employee vaccination

President Biden recently called on businesses to do more to boost the inoculation effort in the U.S. and encouraged employers to take advantage of a tax credit for providing paid time off to workers receiving their pandemic shots.

As a result, Treasury and the IRS published additional details of tax provisions available under the American Rescue Plan* to help small businesses…including providing paid leave for employees receiving COVID-19 vaccinations. Available to eligible employers – those with fewer than 500 employees – that pay sick and family leave for absences from April 1 through Sept. 30, 2021, the vaccination credit covers 100% of daily wages per employee (up to $511).

*The American Rescue Plan allows small and midsize employers to claim refundable tax credits that reimburse them for the cost of providing paid sick and family leave to their employees due to COVID-19. Self-employed individuals are eligible for similar tax credits.

Fact sheet: https://www.irs.gov/newsroom/employer-tax-credits-for-employee-paid-leave-due-to-covid-19