• San Francisco Health Care Security Ordinance Updates

    The San Francisco Health Care Security Ordinance (SF HCSO) requires covered employers to make a minimum health care expenditure on behalf of their covered employees. SF HCSO rules were first issued in January 2008. While it has been in place for many years, many employers are still out-of-compliance or unsure how the rules apply. Additionally, the reporting was waived for the past two years due to COVID Public Health Emergency. That reporting requirement is again required for the 2021 plan year.

    Below is a brief overview of the HCSO. For more details, visit the San Francisco Office of Labor Standards Enforcement (OLSE) page on HCSO, which includes training slides, new rules, an administrative guide and FAQ, as well as links to the required HCSO poster and waiver form. The OLSE page contains a link and instructions for the online Annual Reporting Form due April 30. The reporting form is available now.

    Covered Employers: Have 20+ employees (50+ for non-profits), with 1 or more working in the geographic boundary of San Francisco, and required to obtain a San Francisco business registration certificate. Small employers 0-19 (0-49 non-profit) are exempt.

    Tip: The headcount for determining your company size under HCSO – both for determining applicability and expenditure rate – includes ALL employees, regardless of status, classification, or contract status. That means even temp or contract employees that are 1099 or through an agency still counts!

    Covered Employees: Works an average of 8 or more hours per week in San Francisco and entitled to be paid minimum wage. There is a waiting period of 90 days.

    Tip: Look at the exemption criteria closely. The manager/supervisor exemption is coupled with the salary exemption amount, meaning the two are not separate. An employee needs to make more than the salary exemption (2021: $107,991 annually) AND be considered a manager/supervisor/confidential employee per HCSO.

    Calculating Expenditure Rate: Rates are based on employer size and are calculated per hour payable to covered employees. For 2021, a medium size employer is 20-99 employees (50-99 non-profit) with a rate of $2.12 per hour, while a large employer is 100+ employees with a rate of $3.18 per hour. Keep in mind the new expenditure for 2022 is $2.20 per hour for the medium sized employers outlined above and $3.30 per hour for large employers.

    Tip: Hours worked include both paid and entitled, like PTO. Maximum hours for the calculation is capped at 172 a month.

    Making Expenditures: For your full-time, benefit eligible employees, average costs for medical, dental, and vision can be used. For most employers, the minimum expenditure is easily reached. For 2021, a large employer would need to spend approximately $547 a month on an exempt or 40-hour non-exempt employee (that number increases to approximately $568 for 2022). Most medical, dental, and vision premiums, when combined, would exceed that amount. Just be sure to factor out employee contribution amounts. For non-benefit eligible employees, the expenditure would be made quarterly. The simplest method for making an expenditure is via the San Francisco City Option.

    Tip: Being benefit eligible does not immediately mean that HCSO requirements are met and expenditures do not need to be made. If a benefit-eligible employee waives the employer’s company sponsored health plan, the employer is still required to make a minimum expenditure on behalf of that employee. That means paying into the City Option, similar to non-benefit eligible employees. The exception is if the employee voluntarily signs the HCSO Waiver Form. You may NOT coerce an employee to sign the form and the form language dissuades one from signing it! Due diligence would mean sending the form to a waived employee and if the employee chooses not to sign, be sure to make the quarterly expenditure.

    Due Dates: Quarterly expenditures are due 30 days following the end of the quarter. First quarter 2022 will be due April 30. Annual Reporting to HCSO of covered employees and expenditures made for the 2021 plan year are also due April 30 and is completed online. The online reporting form is available now. 

    Risk:There are penalties for non-compliance – up to $100 per employee per quarter for failure to make expenditures and up to $500 per quarter if the annual reporting is not submitted. There are other penalties as well for retaliation, failure to provide records to OLSE, and failure to post the required notice. However, while there’s no guarantee, the OLSE generally does not fine an employer that has been out-of-compliance that now comes into compliance. The bigger risk is if an employee complains as that is generally when the OLSE would take action and penalize for non-compliance.


    More Information 

    SF HCSO Resources including training slides, rules, and administrative guide and FAQs. This site also contains instruction links.  


  • California Dental Summary of Benefit Coverage

    In 2018, CA passed SB 1008 which requires fully insured dental plans in California to provide a dental Summary of Benefits Coverage. This requirement mirrors the health plan Summary of Benefits Coverage introduced by the Affordable Care Act, only this law applies to dental plans.

    The intention behind the ACA provision was to make it easier for employees to compare their medical plan options (in an apples-to-apples format). Now, California has added an equivalent disclosure for dental plans.

    Fully Insured Dental Plans Only

    This applies to fully insured dental plans only, as self-funded plans are exempt from state legislative authority. Only plans written in California are subject to this disclosure law.

    Required Format

    The law prescribes that the Summary of Dental Benefits Coverage (SDBC) follow a very specific format. The law outlines the “uniform benefits and disclosure matrix” down to the requirement to use an Arial 12-point font. This matrix has been dubbed the dental SBC or SDBC.

    Who Must Create the SDBC?

    Insurance carriers are responsible for creating and providing the dental SBC to employers.

    Distribution Requirements

    Employers must distribute the dental SBCs to all eligible employees. The dental SBC must be distributed at the following times:

    1. Upon being newly eligible

    2. At open enrollment

    3. At Special Enrollment

    The method of distribution must be in one of three formats:

    1. Paper form free of charge to the individual’s mailing address

    2. Electronically by email

    3. Electronically by directing the participant to the insurer’s website for a copy of the dental SBC.

    In the case of either electronic distribution option, notice must be provided that a paper copy is available free of charge.

    Effective Date

    The effective date for this law is January 1, 2022, so dental carriers are now required to provide dental SBCs to employer groups.

    How Does ERISA Fit In?

    Generally, ERISA preempts state laws that “relate to” employee benefit plans. This typically relegates state legislators to governing (or mandating) insurers, not employers sponsoring employee benefit plans. In this case, legislators have done a bit of an end-run around by including specific “Group Policyholders Obligations” in the law. Most pundits would say that the inclusion of Group Policy Holder Obligations regulates something that “relates to” an employee benefit plan (in this case a dental plan) by specifically requiring employers to provide the dental SBC matrix disclosures to plan participants.

    While the insurer provisions are not controversial, the employer disclosure requirements will likely be challenged at some point. That said, in the meantime, employers would be wise to include the dental SBCs with their health plan SBC disclosure materials.

    What are Dental Carriers Doing?

    At this point, we are seeing dental carriers, well, scrambling. Despite the long runway on this law, as a rule, carriers are not prepared to distribute the customized dental SBC to employers. We are seeing carriers send out “generic” dental SBCs (along with directions to pair it with the plan certificate) despite the law’s very detailed customization instructions. It is our sense that carriers have been expecting the law to be challenged, and thus have been lulled into non-action. But with 2022 here, the carriers are now scrambling to get something out to comply with the law.

  • COVID National Emergency Extended

    President Biden again formally extended the COVID-19 National Emergency (which was previously set to expire on March 1, 2022). Each National Emergency declaration generally lasts for one year unless the President announces an earlier termination or an extension (for up to another year). President Trump first declared the National Emergency on March 1, 2020. On Feb. 24, 2021, President Biden extended the National Emergency. Most recently, it was unclear whether President Biden would extend it again because, although many stakeholders requested another extension, the Biden administration is also facing some political pressure to move the country onto an "off-ramp" from the COVID-19 pandemic. Nonetheless, a formal extension was made. However, it is possible that President Biden could take action to end the National Emergency in the coming months (assuming COVID-19 cases, hospitalizations, and deaths continue to decline).

    Employee Benefits Deadlines Will Be Further Tolled

    As a result, the “tolling” of health, welfare, and retirement plan deadlines will also remain in effect. This means plan sponsors and administrators should continue to apply the deadline extensions to affected individuals on a participant-by-participant basis for the foreseeable future. This further extension means that the deadlines summarized below must continue to be tolled for one year or for 60 days from the end of the National Emergency (if President Biden declares an earlier end to the National Emergency).

    The First Year of the National Emergency

    Shortly after the COVID-19 pandemic began, joint guidance from the Department of Labor and the Department of the Treasury suspended, or “tolled,” certain deadlines for benefit plans and participants for the period beginning on March 1, 2020 and ending 60 days after the announced end of the National Emergency. This extension period is referred to as the “Outbreak Period.” The following deadlines were extended by the length of the Outbreak Period.

    For Participants:
    • HIPAA Special Enrollment. The 30-day deadline (or 60-day deadline, in some instances) to request enrollment in a group health plan following the loss of other group health plan coverage, the acquisition of a new dependent through marriage, birth, adoption or placement for adoption or the eligibility for premium assistance through state premium assistance subsidy, Medicaid, or CHIP.
    • COBRA Notifications (by Employee to Employer). The 60-day deadline by which individuals must notify the plan of certain COBRA-qualifying events (such as a divorce or a child losing eligibility as a dependent under the plan), or a Social Security Administration determination of disability.
    • COBRA Elections. The 60-day deadline for electing COBRA coverage.
    • COBRA Premium Payments. The 45-day (initial) and 30-day (subsequent monthly) COBRA premium payment deadlines.
    • Benefit Claims and Appeals. The plan deadlines by which participants may file a claim for benefits (under the terms of the plan) and the deadline for appealing an adverse benefit determination. This includes extensions of claims filing deadlines for Health FSAs.
    • External Review. The 4-month deadline by which a claimant must request an external review of a final determination on appeal.

    For Employers/Plan Sponsors:
    • COBRA Notifications (by Employer to QB). The 14-day deadline to provide a COBRA election notice to qualified beneficiaries or the 44-day (14+30 days) deadline for employers who are plan administrators.

    The Second Year of the National Emergency

    Because the COVID-19 pandemic had not yet ended at the time the regulatory guidance was set to expire, the DOL issued additional guidance in February 2021, providing that the deadlines would continue to be tolled, or remain disregarded, through the earlier of:
    • One year from the date the individual was first entitled to the extension relief (i.e., a date on or after March 1, 2020).
    • 60 days after the end of the National Emergency (i.e., the end of the Outbreak Period).
    Importantly, the second year ushered in the position that the tolling period applies on a person-by-person basis. It can be challenging to track these deadlines when the tolling period applies, so plan administrators need to take care that they are calculating the deadlines correctly.

    The Third Year of the National Emergency

    While this latest extension of the National Emergency does not change the previous guidance, it does further extend the timeline of the tolling period; participants will continue to have more time to act on these deadlines than they normally would under the applicable plan terms. Note that the individualized tolling periods continue into the third year. Also, because the National Emergency’s end remains open at this time, exactly how long participants have under these deadlines remains a moving target until the National Emergency ends.

    Different from the Public Health Emergency

    Importantly, this National Emergency declaration is different from the Public Health Emergency declaration made by the Secretary of HHS, which is tied to the COVID-19 testing requirements in the Families First Coronavirus Response Act and the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

    The Public Health Emergency is set to expire on April 16, 2022. However, the Secretary may extend it for subsequent 90-day periods for as long as the public health emergency continues to exist or may terminate the declaration whenever it is determined that the public health emergency has ceased to exist.
  • 2022 California COVID-19 Paid Sick Leave Extension

    On Wednesday, February 9th, Governor Gavin Newsom signed Senate Bill 114, providing additional COVID-19 supplemental paid sick leave for covered employees unable to work or telework due to certain reasons related to COVID-19.

    Who is subject?

    Employers with 26 or more employees are subject to this new legislation. Small employers with 25 or fewer workers are exempt.

    When will it take effect?

    The law will take effect on February 19th, 2022, ten days after the bill was signed. It will be retroactive to January 1st, 2022, and will remain in effect through September 30th, 2022.

    Who is eligible?

    Covered employees include those working full-time, or those that are scheduled to work an average of 40 hours per week in the 2 weeks preceding the date the covered employee took COVID-19 supplemental paid sick leave.

    Employees who do not work 40 hours per week are entitled to COVID-19 supplemental paid sick leave equal to the total number of hours the employee is normally scheduled to work over one week. Employees who work variable hours are entitled to seven times the average number of hours worked per day over a six-month lookback period preceding the date the covered employee took COVID-19 supplemental paid sick leave.

    What is the duration of, and the qualifying reasons for, the additional leave?

    Covered employees are now entitled to two separate 40 hour allotments of supplemental paid sick leave.

    A covered employee may take up to 40 hours of COVID-19 paid sick leave if they are unable to work or telework due to one or more of the following reasons:
    • The covered employee is subject to a quarantine or isolation period related to COVID-19 as defined by federal, state or local orders
    • The covered employee is advised by a healthcare provider to self-quarantine or isolate due to COVID-19 related concerns
    • The covered employee is attending an appointment for themselves or a family member to receive a COVID-19 vaccine or vaccine booster (employers may limit the supplemental paid sick leave to 3 days (or 24 hours) unless the covered employee provides verification from a healthcare provider that the employee or family member is continuing to experience symptoms related to the vaccine or vaccine booster)
    • The covered employee is experiencing symptoms, or caring for a family member experiencing symptoms, related to a COVID-19 vaccine or vaccine booster
    • The covered employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis
    • The covered employee is caring for a child whose school or place of care is closed or otherwise unavailable due to COVID-19
    A covered employee may take up to an additional 40 hours of COVID-19 paid sick leave if they or a family member tests positive for COVID-19.

    Employers are authorized to require the covered employee to take another test on the fifth day after the first positive test and provide documentation of the results. Employers are also authorized to require the covered employee to provide documentation of a family member’s positive test result before paying the COVID-19 paid sick leave. If the covered employee refuses to provide documentation as requested, the employer is not obligated to provide the additional COVID-19 paid sick leave. Employers are required to make a test available at no cost to the covered employee.

    What is the rate of pay?

    A covered employee is to be compensated for each hour of COVID-19 paid sick leave at their regular rate of pay, not to exceed $511 per day, or $5,110 in aggregate. An employer cannot require a covered employee to use any other paid or unpaid leave, time off, or vacation time prior to or in lieu of the COVID-19 paid sick leave.

    The legislation does not provide any direct tax or financial relief to employers for providing the additional COVID-19 paid sick leave. As such, there is no mechanism in place for employers to recoup any pay amounts associated with the additional COVID-19 paid sick leave.
  • Employers' Medicare Part D 2022 Creditability Disclosure Due March 1

    Summary: This applies to all employers offering medical plan coverage with a plan renewal date of January 1. The online disclosure must be completed by March 1, 2022 (assuming a calendar year medical plan contract).


    Federal law requires that employers provide annual notification of the Medicare Part D Prescription Benefit "creditability" to employees prior to October 15th. However, that same law also requires plan sponsors to report creditability information directly to the Centers for Medicare and Medicaid Services (CMS) within 60 days of the first day of the contract year if coverage is offered to Part D eligible individuals. Many employers have a January 1 renewal plan year. So, for many employers, the deadline is in a couple of weeks! If your plan renews some time other than January 1, you have 60 days after the start of your plan year to complete this disclosure.

    Mandatory Online Creditable Coverage Disclosure 

    Virtually all employers are required to complete the online questionnaire at the CMS website, with the only exception being employers who have been approved for the Retiree Drug Subsidy (RDS). This disclosure requirement also applies to individual health insurance, government assistance programs, military coverage, and Medicare supplement plans. There is no alternative method to comply with this requirement! Please remember that you must provide this disclosure annually.

    The required Disclosure Notice is made through completion of the disclosure form on the CMS Creditable Coverage Disclosure web page. Click on the following link: CMS Disclosure Form.

    Employers must also update their questionnaire if there has been a change to the creditability status of their prescription drug plan, or if they terminate prescription drug benefits altogether.

    Detailed Instructions and Screenshots Available

    If you would like additional information on completing the online disclosure, a detailed instruction guide is available online. The instructions also include helpful screenshots so that you will know what data to have handy. More info here: CMS Notification Instruction Guide.

    Helpful Tip for Vita's Clients

    The Medicare Part D creditability status of your medical plans is outlined in the Welfare Summary Plan Description that we provide to all clients. Please refer to this document as you will need this information to complete the online disclosure. 

  • COVID Test Coverage: More Guidance for Health Plans

    The joint departments have issued yet another set of five (5) FAQs addressing coverage of COVID tests under health plans. These build on the last FAQ release.

    The full FAQ is fairly readable and available here. This article attempts to summarize the most critical guidance in as few words as possible.

    Health Plans and Self-Funded Plans

    Importantly, this guidance applies to health plans (insurers) and to self-funded plans. The guidance is not directly actionable for employers with fully insured plans, but it is important to be aware of the guidance for underlying health plans. Self-funded plans must address these issues directly.

    Q1: Direct to Consumer COVID Tests

    The safe harbor has been revised to allow significant flexibility to plans in how they provide access to over-the-counter (OTC) COVID-19 tests. Plans must ensure participants have adequate access with no upfront out-of-pocket expenditure. This generally means there is at least one direct-to-consumer shipping mechanism and at least one in-person mechanism.

    Q2: Supply Shortages

    Plans will not face enforcement action if they are temporarily unable to provide adequate access to OTC COVID-19 tests through their direct coverage program due to a supply shortage. In that case, plans may continue to limit reimbursement to $12 per test (or the full cost of the test, whichever is lower) for tests purchased outside of the direct coverage program.

    Q3: Suspected Fraud

    While medical management is prohibited, plans are permitted to address suspected fraud and abuse related to the reimbursement of OTC COVID-19 tests purchased by a participant from a private individual or via online auctions, resale marketplaces, or resellers. Specifically, plans may disallow reimbursement for tests that are purchased by a participant from a private individual via an in-person or online person-to-person sale, or from a seller that uses an online auction or resale marketplace. (Resale marketplaces refer to services like eBay, Facebook Marketplace, etc. In-person sales refers to purchasing from a friend or other contact that may have a supply of tests.)

    Q4: Self-Collected/Lab Processed Tests

    Plans are not required to provide coverage for tests that use a self-collected sample, but require processing by a laboratory or other health care provider to return results (such as home-collection PCR tests that can be purchased directly by consumers). However, when a test is ordered by an attending health care provider, such a test must be covered.

    Q5: Reimbursement Through FSA/HRAs

    While the cost of OTC tests purchased by an individual is a medical expense and thus generally reimbursable by a health FSA, HRA, or HSA, an individual cannot be reimbursed more than once for the same medical expense. Therefore, the cost (or the portion of the cost) of OTC COVID-19 tests paid or reimbursed by a plan cannot be reimbursed by a health FSA, HRA, or HSA. If an individual mistakenly receives reimbursement from a health FSA, HRA, or HSA, corrective measures should be initiated.

  • Health Insurers to Cover At-Home COVID-19 Testing

    On January 10, the Departments of Labor, Health and Human Services (HHS), and the Treasury issued Frequently Asked Questions (FAQs) that require group health plans/insurers to cover the costs of at-home, over-the-counter COVID-19 tests. Key requirements are as follows:
    • Tests must be approved by the U.S. Food and Drug Administration (FDA).
    • Tests must be purchased on or after January 15, 2022.
      • The requirement will continue through the Coronavirus public health emergency period, which is expected to extend to at least April 15, 2022.
    • Tests can be purchased online, at a pharmacy, or at a retail store.
    • Each individual may purchase up to eight COVID-19 tests per month (note the per-test limit, not per-kit limit; kits may contain multiple tests).
    • Plans and insurers may provide tests through existing pharmacy or direct delivery networks, as long as they take reasonable steps to ensure access.
      • If individuals obtain tests outside of the above channels, tests may be limited to reimbursement of $12 per test (or the cost of the test if under $12).
    • Tests for employment purposes are not required to be covered.
    • There is currently no limit on COVID-19 tests ordered or administered by a healthcare provider.

    Note this blog only covers the federal mandate, not any state-specific mandates.

    How will insurance carriers comply?

    Vita is working with all major insurance carriers to identify more details for fully insured plans. Vita clients are encouraged to reach out to their benefits account management teams if there are any questions about how specific insurance carriers are receiving claims or processing reimbursements. Below are links to major medical carriers’ coronavirus pages:
  • 401(k) Update: Q1 2022


    2021 Year-End Census Information Due Now!

    It’s that time again! Perhaps one of the most pressing compliance matters is the submission of census data to begin compliance testing. Sponsors of calendar-year 401(k) plans subject to the Average Deferral Percentage (“ADP”) or Average Contribution Percentage (“ACP”) Tests (i.e. all Non-Safe Harbor Plans) must submit their 2021 census data now to ensure timely results.

    Be sure to submit your annual census data and compliance questionnaires to your recordkeepers by their specific deadlines. Typically, this information is due no later than January 31st, though we have seen due dates as early as January 15th. This allows the recordkeepers sufficient time to process the year-end tests and deliver results to you before March 15th, which is the deadline for employers to process corrective refunds (for failed ADP tests, if applicable) without paying a 10% excise tax. Please contact Vita Planning Group if you have questions regarding your recordkeeper’s year-end requirements.

    For other important dates on the horizon, download our online Compliance Calendar.

    2022 Contribution Limits1

    As a reminder, the employee contribution limit for 2022 is increasing by $1,000 from last year.

    Elective Deferral Limit: $20,500

    Additional Catch Up Amount (age 50+): $ 6,500

    Plan Document Restatement2

    Approximately every 6 years, the IRS requires employer-sponsored retirement plans to update their plan documents through a process called “restating” the document. Most 401(k) and 403(b) plans use an IRS-pre-approved plan document created by their recordkeeper or third-party administrator and this cyclical process ensures that documents are updated to incorporate regulatory changes from any mandatory or voluntary amendments that may have been adopted since the last time the document was restated.

    This process is owned by your plan’s recordkeeper, or third-party administrator so be on the lookout for this task over the coming months. Generally, the restatement involves providing you with the updated plan document for review and adoption (i.e. signature).

    Many plans will have already completed the Plan Restatement Process; those that have not should expect to receive the restatement documents from their recordkeeper in the next few months. The deadline to restate plan documents is July 31, 2022. 

    401(k) News

    Retirement Plan Legislation3

    There are now four bills making their way through Congress regarding retirement plans: 

    1. SECURE Act 2.0 from the Ways and Means Committee (House)

    2. RISE Act from the Education and Labor Committee (House)

    3. Retirement Security and Savings Act (Senate)

    4. Improving Access to Retirement Savings Act (Senate)

    The first two House bills were passed out of their respective committees unanimously by voice vote. The last two Senate bills have not yet come out of committee.

    While the details of each of these bills are different, the major areas being addressed are outlined below. 

    • Required Minimum Distributions (“RMDs”):

      • Pushing out the starting age to 75 by 2032

      • Waiving the RMD requirement for those with less than $100,000 in retirement savings

      • Reducing the penalty for not taking an RMD from 50% to 25%

    • Catch-up Contributions:

      • Increasing the amount by $3,500 (for a total of $10,000) for those over age 60

      • Requiring that all catch-up contributions be made as Roth

      • Possibility of employers matching in Roth dollars

    • Student Loan Debt:

      • Allowing employers to make retirement plan contributions for employees whose student loan repayments prevent them from participating in a retirement savings plan

    • Incentives or requirements for Automatic Enrollment are considered.

    • Mandatory eligibility of Part-time Employees who work more than 500 hours for two years consecutively is also in review.

    Separately from these four bills is a provision in the Build Back Better bill, currently stalled in Congress, which eliminates the ability of retirement plan participants to convert either pre-tax or after-tax contributions to Roth, commonly known as “Backdoor Roth Conversions”.4

    We will monitor the progress of the various bills currently in Congress pertaining to retirement savings plans and report back on the final provisions of any legislation. 

    Market Update5

    Markets in Q4 2021 were able to shake off concerns about rising inflation and the end of easy fiscal and monetary policy to finish the year strongly higher. US equity markets finished the year on a high note with the S&P 500+ up 11.03% in Q4 resulting in a rise of 28.71% for all of 2021. Even the bond markets managed a small positive return for Q4 with the up 0.01%, though the index was down 1.54% for the year. Overseas equity markets were divided between developed markets which performed well and emerging markets which struggled. Overall, the was up 6.5% for 2021 but developed markets as measured by the MSCI EAFE Index were up 11.78% for the year, emerging markets, the MSCI EM Index, was down 2.22% in 2021. Surprisingly, the best performing market sector in 2021 was US real estate. Increased post-pandemic mobility, decreasing vacancy rates and rising asset prices delivered a 39.9% return in the FTSE NAREIT Index in 2021. 

    The American economy showed remarkable resilience to the outbreak of yet another COVID-19 variant recession at the end of 2021. While US GDP growth slowed in Q3 2021, recording 2.3% annualized growth, the expectation is that growth in Q4 will have accelerated to as much as 7%, annualized. If this is the case, then the economy will have reversed all of the loss to GDP due to the COVID pandemic since Q4 2019; the US economy will be right back on its 20-year growth line of 2.0% per year. Economist forecasts for the first half of 2022 are coming in at between 2.0% and 3.0%, with a return to trend line growth after that.

    A tight labor market and inflation are expected to be features of the economy in 2022. The US unemployment rate in November 2021 was 4.2% and wages rose by 5.9% year-over-year. Wage growth coupled with a high level of job openings would indicate a continued tight labor market well into 2022. Inflation was recorded at 6.9% year-over-year in the Consumer Price Index, but much of that can be attributed to transitory factors: the rise of energy prices (34% rise in oil prices in November) and supply-train disruptions due to transportation bottlenecks and offline manufacturing capacity. The core PCE deflator used by the FED excludes food and energy and is running at 4.0% at the end of 2021 with expectations that it will fall to 3.0% in 2022. 

    During the 2021/2022 COVID pandemic, governmental monetary and fiscal stimulus has been two to three times larger than that of the Global Financial Crisis of 2008/2009. Those policies were largely successful in preventing a sustained recession and propping up asset prices. However, 2022 should see a diminished level of government stimulus spending (e.g., the Build Back Better bill being stalled in Congress) and an end to quantitative easing. High equity valuations and bond market expectations of the Fed raising interest rates rise as early as the second half of 2022 could make it difficult to replicate the gains recorded 2022.



    1) IRS 401(k) Limits

    2) Third Six-Year Cycle Pre-Approved DC Plans

    3) Article: Proposed Retirement System Changes

    4) Article: Congress to End Backdoor Roth Conversions 

    5) Unless otherwise indicated, data and commentary for the Market Update is sourced from three JPMorgan Asset Management sources: 1) Guide to the Markets – U.S. Economic and Market Update, 1Q 2022, December 31, 2021, 2) the “4Q21 Guide to the Markets Webcast” on January 3, 2022, and 3) Eye on the Market Outlook 2022, Reflation: Endgame, January 1, 2022. 


    This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Past performance does not guarantee future results.

    +The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is a market value weighted index with each stock's weight in the index proportionate to its market value.

    ++ Indices are unmanaged and investors cannot invest directly in an index. Unless otherwise noted, performance of indices do not account for any fees, commissions or other expenses that would be incurred. Returns do not include reinvested dividends.

    The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.

    The MSCI All Country World Index ex USA Investable Market Index (IMI) captures large, mid and small cap representation across 22 of 23 Developed Markets (DM) countries (excluding the United States) and 23 Emerging Markets (EM) countries*. With 6,062 constituents, the index covers approximately 99% of the global equity opportunity set outside the US.

    The MSCI EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada.

    The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

    The FTSE NAREIT All Equity REITs Index is a free-float adjusted, market capitalization-weighted index of U.S. Equity REITs. Constituents of the Index include all tax-qualified REITs with more than 50 percent of total assets in qualifying real estate assets other than mortgages secured by real property.

    The Consumer Price Index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies.


  • IRS Proposes Changes to ACA Reporting

    The IRS has released an advanced copy of proposed regulations that, if finalized, will ease some of the ACA reporting requirements for employers. The IRS also used the publication as another opportunity to announce that the era of leniency for inaccurate or incomplete reporting has ended. There are three key changes proposed in the regulations:

    • Extension of 1095 Deadline
    • Alternative to Furnishing 1095 Statements
    • Elimination of Transitional Good Faith Relief 

    Deadline Extension for Furnishing 1095s to Individuals

    The proposed regulations would permanently extend the deadline for furnishing Form 1095-B and 1095-C to individuals. The deadline would change from January 31 (current) to 30 days after January 31 or March 2nd (except in a leap year). If the deadline falls on a weekend or legal holiday, the form is due on the next business day. This proposed extension generally aligns with the extensions that have been granted each year since the requirements took effect. This action would make the change permanent.

    Alternative to Automatically Furnishing Statements: 1095-B

    The proposed regulations offer an alternative to automatically furnishing statements in certain situations. In short, carriers who are required to furnish Forms 1095-B to insureds (to report fully-insured minimum essential coverage being provided) would be able to employ an alternate communication method rather than mailing forms to individuals. This includes:

    • Posting a “clear and conspicuous” notice on its website
    • Providing information about how to request a form
    • Furnishing a Form 1095-B within 30 days after an individual’s request is received.

    The notice must remain in the same location on the website until October 15 of the year following the calendar year to which the statement relates.

    The IRS is easing these reporting requirements primarily due to fact that the information has little utility, since Congress lowered the penalty for the “individual mandate” to $0, effective as of 2020. It is subject to change if the individual mandate is increased in the future.

    Alternative to Automatically Furnishing Statements: 1095-C

    Unlike the individual mandate penalty, the employer Shared Responsibility Payment penalties are still in play. Therefore, this relief does not apply to furnishing statements to an Applicable Large Employer’s (ALE) full-time employees or reporting information to the IRS. However, similar relief is available to ALEs with respect to furnishing Forms 1095-C to non-full-time employees and non-employees enrolled in the ALE’s self-insured health plan.

    Elimination of Good Faith Relief

    Since the requirements came into play, employers have enjoyed an era of transitional good faith relief where the IRS has been accommodating of employers filing incomplete or inaccurate information on Forms 1094 and 1095. In 2020, the IRS first announced that it would cease to provide the “transitional good faith relief” that it had previously offered. These new regulations reiterate that this relief from penalties for reporting incorrect or incomplete information will no longer be available for reporting for tax year 2021 and beyond. The IRS noted that an exception from penalties may still be available if the filer can show reasonable cause for the failures.

    What About State Reporting?

    To date, we are not aware that any states have followed suit in offering parallel relief for state reporting requirements. Stay tuned for more updates.

    Effective Date

    The changes in the proposal would apply for calendar years beginning after December 31, 2021, but insurers and ALEs may choose to apply the changes for calendar years beginning after December 31, 2020. Although these are proposed regulations, they may be relied upon by taxpayers.

  • IRS Announces Retirement Plan Limits for 2022

    The Internal Revenue Service has announced the 2022 cost-of-living adjustments (COLAs) to the various dollar limits for retirement plans. The Social Security Administration (SSA) has also announced the taxable wage base for 2022:



    Elective Deferral Limit (401(k) & 403(b) Plans)



    Catch Up Contributions (Age 50 and over)



    Annual Defined Contribution Limit



    Annual Compensation Limit



    Highly Compensated Employee Threshold



    Key Employee Compensation



    Social Security Wage Base





    • Elective Deferral Limit means the maximum contribution that an employee can make to all 401(k) and 403(b) plans during the calendar year (IRC section 402(g)(1)).
    • Catch-up Contributions refers to the additional contribution amount that individuals age 50 or over can make above the Elective Deferral and Annual Contribution limits, if permitted by the company’s retirement plan.
    • Annual Contribution Limit means the maximum annual contribution amount that can be made to a participant's account (IRC section 415). This limit is expressed as the lesser of the dollar limit or 100% of the participant's compensation, and is applied to the combination of employee contributions, employer contributions and forfeitures allocated to a participant's account.
    • Annual Compensation Limit means the maximum compensation amount that can be considered in calculating contribution allocations and non-discrimination tests. A plan cannot consider compensation in excess of this amount (IRC Section 401(a)(17)).
    • Highly Compensated Employee Threshold means the minimum compensation level established to determine highly compensated employees for purposes of non-discrimination testing (IRC Section 414(q)(1)(B)).
    • Social Security Wage Base is the maximum amount of earnings subject to Social Security payroll taxes.