• 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.
  • IRS Announces 2022 Pre-Tax Contribution Limits

    The Internal Revenue Service recently announced annual inflation adjustments for 2022. For taxable years beginning in 2022, IRS Rev. Proc. 2021-45 indicates the following maximums apply for Health Flexible Spending Arrangements, Adoption Assistance Programs, and Commuter Benefits:

    Health FSA

    The annual Health FSA limit will increase $100 from $2,750 in 2021 to $2,850 in 2022.

    The annual Dependent Care FSA limit will revert to $5,000 in 2022.

    FSA Balance Rollovers

    The increase of the Health FSA limit means an increase to the Health FSA rollover amount allowed for 2022. Up to $570 (20% of the regular election maximum) will be rolled from the 2022 plan year into the 2023 plan year.

    Dependent Care FSA balances from 2022 will not roll into 2023. Any balance that remains in the Dependent Care FSA after the 2022 claims submission deadline will be forfeited.

    Commuter Benefits Limits

    The monthly transit and parking limits will increase from $270 in 2021 to $280 in 2022.

    Adoption Assistance Limit

    The annual Adoption Assistance limit will increase from $14,400 in 2021 to $14,890 in 2022.

    If you are a Vita Flex FSA client who currently offers the IRS maximum and your plan renews January 1, 2022, your limits have been automatically increased for the 2022 plan year, unless you previously requested otherwise.

    If you are a Vita Flex Commuter Benefits client, the monthly pre-tax limit will be automatically increased to the IRS maximum for the January benefit month. 

  • COVID-19 Vaccine Mandate for Companies with 100+ Employees

    (1/14/2022 Update): On Thursday, January 13 the Supreme Court blocked the Biden administration's vaccine-or-test requirement for companies with over 100 employees. However, the mandate was allowed to proceed for healthcare facilities that receive payment from Medicare or Medicaid. This ruling was announced three days after the mandate was to take effect. 

    (11/8/2021 Update): On November 6, a federal appeals court in Louisiana blocked the below COVID-19 vaccine mandate in response to a suit filed by several states. We expect more to develop in the coming days.

    On November 4, Occupational Safety and Health Administration (OSHA) released details on the COVID vaccine mandate for companies with 100+ employees. Note: health care providers, government contractors, and Medicare/Medicaid providers have separate mandates not covered in this blog. 

    Which employers are currently subject?

    Employers with 100 or more employees must follow the newly released regulations. All employees should be counted to determine whether or not an employer is subject; this includes part-time, full-time, and remote workers. Companies affiliated through common ownership or controlled groups should consult with an attorney to determine if all groups must be counted together.

    Although state challenges are expected, the Labor Department’s top legal official, Seema Nanda, told reporters that OSHA rules preempt conflicting state laws or orders. In states that have their own OSHA-approved agencies for workplace issues, those agencies must enact a rule at least as effective as OSHA’s. 

    OSHA indicated a new rule may be released in the future to also cover smaller employers by asking for public comment.

    What is required?

    Companies must require workers to be fully vaccinated or conduct weekly COVID testing and wear a mask while in the workplace. Employers must retain documentation of employees’ vaccination statuses. To be fully vaccinated, an employee must receive two doses of Moderna or Pfizer-BioNTech, or one dose of Johnson & Johnson; booster shots are not currently required under the OSHA rule. 

    December 5 is the deadline for enforcing the mask mandate. Employees must be fully vaccinated or begin testing January 4. 

    Lastly, employers must provide paid time off for their workers to get vaccinated (up to four hours) and paid sick leave to recover from side effects of the vaccine. This leave requirement begins December 5. 

    What exceptions are allowed?

    Employees working from home and employees who work outdoors will not be required to be vaccinated or test weekly; only those in the workplace are covered under the order’s rules. 

    Employers are required to give exemptions to comply with the Americans with Disabilities Act (ADA) and Title VII of the Civil Rights Act (sincerely held religious beliefs). 

    What considerations are there for testing in lieu of vaccination?

    Unless workplace employees qualify for an exemption, employers could choose to mandate vaccines without a testing option.

    If the testing option is given to unvaccinated employees, employers are not required to pay for tests, provide tests, or provide paid time off for testing. The OSHA rule allows for both PCR and antigen tests to be used for weekly testing, provided they are approved for emergency use by the FDA. However, over-the-counter home tests are generally not considered sufficient unless they are proctored (the tests cannot be both self-administered and self-read). 

    Employers should note that so-called “surveillance” testing or testing for employment purposes is not required to be covered by health insurance. The federal mandate to cover COVID-19 testing only requires coverage for tests ordered by a healthcare provider. 

    What are the penalties?

    Employers who fail to comply could face penalties of up to $13,653 per serious violation.


  • 401(k) Update: Q4 2021

    Year-End Participant Notifications

    As we wrap up 2021, we would like to remind you of some important annual notices that may need to be delivered to Plan participants, depending on the provisions of your Plan. Below is an outline of these notices, along with the corresponding due dates, based on a calendar-year Plan.

    To be distributed to eligible participants by December 1, 2021:

    • Qualified Default Investment Alternative Notice (applicable to Plans that have a QDIA)
    • 2022 Safe Harbor Notice (applicable to Plans with a Safe Harbor feature)
    • Automatic Enrollment Notice (applicable to Plans using Automatic Enrollment)

    To be distributed to eligible participants by December 15, 2021*:

    • 2020 Summary Annual Report

    (*This is the extended due date for Plans that filed a Form 5558)

    Download our Compliance Calendar online to see what other important dates may be approaching.


    Plan Restatements

    Recordkeepers and administrators are currently in the process of restating all qualified retirement plans. Every six to seven years, the IRS requires retirement plans to be “restated” so that the Adoption Agreement of the plan is compliant with legislative changes that have been passed during the last few years. The current restatement process, called “Cycle 3” must be completed for all qualified retirement plans by July 31, 2022.

    This is generally a straightforward process. Your recordkeeper will have had their “volume submitter” document approved by the IRS. The provisions of your plan will then be transferred to this new volume submitter document and sent to you for signature.

    In the event your plan recordkeeper has not contacted you about restating your plan, please be aware that this process is happening for all plans and you should hear about it soon. Any questions or concerns, please contact us.


    ESG Investing Methodology

    One of the most difficult issues in the area of socially responsible investing, now generally known as ESG (Environmental, Social and Governance) Investing, has been the methodology around analyzing bond investments’ adherence to ESG principles. Vita uses the sustainability rating system of Morningstar, who have recently announced a new initiative beginning in November 2021 to expand their rating system to include government bonds, known as Sovereign Debt. This should enhance and expand the number of bond funds that receive a sustainability rating. Linked here is Morningstar’s FAQ: Incorporating Sovereign Debt.


    Market Update (1)

    Global markets were increasingly volatile in Q3 2021 and returns more difficult to come by. US markets were flat for the quarter while international equities were noticeably lower. Reports of supply chain difficulties and the prospects of rising inflation put a pallor over fixed income markets. The Chinese government’s policy tightening led to a crackdown on listed tech companies and the default of property giant Evergrande, giving pause to both international and US equity markets. Finally, markets had to again suffer through political wrangling in Washington DC over the infrastructure bill and debt ceiling. US equity markets were up in Q3 but well off the pace of the first half; the S&P 500+ added 0.6% in Q3 which left the index up 15.9% YTD. US bond markets finished the quarter virtually flat, with the BarCap US Aggregate Bond Index++ down 0.05%, pushing returns for the year down 1.55%. Overseas equity markets suffered the most as the MSCI All Country World ex US Index++ fell 2.99% in Q3, limiting the YTD gain to 5.90%.

    The American economy continues to rebound from the COVID-19 pandemic recession, but growth may have stalled somewhat in Q3 2021. The Delta variant of the virus as well as supply chain problems have hurt both production and consumption right when businesses and workers are having to do with less direct support from the government. This has led many economists to reduce their estimates for Q3 2021 GDP growth to around 5%. This in contrast to Q2 US GDP growth at 13.4% and Q1 growth revised upward to 10.9%. Expectations are for an uptick in GDP growth in Q4, with full year 2021 GDP growth at between 6.5% to 7%. As we enter Q4 2021, output is back to the pre-COVID, Q4 2019 levels and GDP is on track to return to its 20-year average of 2% per year by the end of 2022. The $1.9 trillion “American Rescue Plan” passed in March should help bolster economic activity through 2021 and into 2022.

    A tight labor market and inflation are growing concerns to US markets. Since losing 22.4 million jobs between February and April 2020, the US economy has recovered 17 million jobs, or 77% of those lost. The US unemployment rate in August was 5.2% and wages rose by 4.9% over pre-COVID levels. Wage growth coupled with a high level of job openings would indicate a continued tight labor market with unemployment falling more slowing and predicted not to reach pre-COVID levels until the end of 2023. Inflation has heated up as consumer demand has collided with disruptions in supply chains. The global semiconductor shortage, for example, has increased input prices in wide range of goods, most notably automobiles. Additionally, the cost of travel, entertainment and rents are starting to return to pre-pandemic levels. The FED’s measure of inflation, the PCE (“personal consumption expenditures”) Deflator, is up by more than 4% year-over-year (“YOY”), well above the FED’s target of 2%. The FED has said that current high rate of inflation is transitory and have projected the PCE Deflator to fall to 2.2% in 2022. While the FED’s commentary after its September 2021 meeting was slightly more hawkish in tone, the FED has consistently said it will be the combination of unemployment and inflation which will determine the end its current easy monetary policy and a rise in interest rates, previously not expected until sometime in 2023.

    Along with economic growth, corporate earnings have also rebounded and are expected to reach an all-time high in 2021. Important sectors of the economy, such as technology, communications and consumer products, were able to grow earning right through the pandemic due to continued consumer demand and increased productivity. From here, earnings growth, like market returns, could be much harder to come by with slower economic growth, higher wages, higher interest rates and possibly higher corporate taxes negatively affecting margins.

    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.


    (1) Unless otherwise indicated, data and commentary is sourced from two JPMorgan Asset Management sources: 1) Guide to the Markets – U.S. Economic and Market Update, 4Q 2021, September 30, 2021, and 2) the “4Q21 Guide to the Markets Webcast” on October 4, 2021.


    +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.

  • 2022 ACA Affordability Threshold Released

    In order to avoid a Shared Responsibility Payment under the ACA, employers must offer affordable, minimum value coverage to full-time employees. Coverage is considered “affordable” if the employee contribution is below a specified percentage of income for each employee.

    The IRS has announced the 2022 indexing adjustments for the affordability threshold. This was released in Rev. Proc. 2021-36.


    2022 Affordability Threshold

    The new affordability threshold for 2022 is 9.61%. This is a reduction from the 2021 affordability threshold, which was 9.83%.

    Employers who use the Federal Poverty Level safe harbor (as opposed to Rate of Pay or W2 safe harbors) will now be restricted to lowest cost employee only contributions of $103.14 per month in 2022. As a reminder, certain other stipends or surcharges must be included in the affordability determination.


    Of Note for Employers

    Employers typically cross reference these affordability threshold percentages in designing contributions such that Shared Responsibility Payments can be avoided. Of note, since the threshold was reduced for 2022, if wages were to remain level, maximum contributions may actually be reduced.


    Enhanced Premium Tax Credit (for Individuals)

    The enhanced premium tax credit applies to individuals with Exchange coverage. While this does not directly impact employers, the expansion of the credit is worth noting for employers who have employees that are not eligible for employer sponsored coverage.

    The ACA premium tax credit was expanded by the American Rescue Plan Act of 2021 (ARPA) for taxable years 2021 and 2022. Under standard rules, the tax credit is limited to taxpayers with household income between 100% and 400% of the federal poverty line.

    ARPA eliminated the upper income limit for eligibility and increased the amount of the premium tax credit. The revised calculations decreased the percentage of household income that individuals must contribute for Exchange coverage (in all income bands). The 2022 percentage ranges from zero to 8.5%. This reflects the percentage of household income that recipients of the tax credit must pay for Exchange coverage. This is a substantial reduction from prior year percentages (which were 2.06% to 9.78% for 2020 and 2.07% to 9.83% for 2021). Special enhancements to the credit are also included for individuals receiving unemployment compensation in 2021.

  • Health Plan Surcharges for Unvaccinated Employees

    More employers are contemplating a health plan premium surcharge for unvaccinated employees in lieu of incentives now that the FDA has approved a COVID-19 vaccine and the number of COVID-19 hospitalizations are on the rise. While this strategy has been more commonly associated with employees who smoke tobacco, employers are looking for new ways to keep the workplace safe and healthcare claim costs under control.


    What is a Surcharge?

    Most employers today have a set dollar amount or percentage of premiums that they pay for employee healthcare insurance. A common model is one in which an employer pays 80% – 90% percent of the premiums and requires the employee to pay the other 10% – 20%.

    A surcharge is an additional fee or premium that an employee is required to pay on top of their regular portion or a percentage for healthcare coverage through their employer. For example, employee only medical coverage costs employees $150 per month. If the employer imposes a $100 surcharge for being a smoker, an employee who smokes would have to pay $250 per month for employee only medical coverage.


    Cost of Hospitalizations

    According to a report dated August 20, 2021, from the Kaiser Family Foundation (KFF), 98% of people hospitalized with COVID-19 between May 2021 and July 2021 were unvaccinated. Per the KFF report, the average hospitalization cost for COVID-19 is approximately $20,000 and 113,000 of the 185,000 hospitalizations during this time may have been prevented with vaccination. This resulted in $2.3B in healthcare spending that may have been avoided.

    “Still, this ballpark figure is likely an understatement of the cost burden on the health system from treatment of COVID-19 among unvaccinated adults," researchers wrote, noting COVID-19 cases, hospitalizations and deaths have continued to increase in August and the analysis does not include the cost of outpatient treatment, which "is likely substantial.”

    While the KFF report obtains its average hospitalization costs through data from the Centers for Medicare and Medicaid Services (CMS) ($24,033) and FAIR Health ($17,094 for people over age 70 and $24,012 for people in their 50’s), many employers are seeing much higher average costs for COVID-19 related hospitalizations; Delta Air Lines reports a $40,000 average claims cost per person.


    Employer Considerations

    • Given the cost of care detailed above, it is no surprise that employers are looking for ways to defray their healthcare claims costs.  Employers who are considering implementing a health plan premium surcharge for unvaccinated employees need to consider many factors, such as:
    • What will the surcharge amount be?
    • Will the surcharge only apply to unvaccinated employees, or will a surcharge apply to unvaccinated dependents as well?
    • When will the surcharge be implemented and how does that align with a return to the physical worksite?
    • What time frame will you allow for those affected by the surcharge to get vaccinated?
    • What will you require as proof of vaccination?
    • Vaccination cards are considered medical information. If you require a copy of the vaccination card as proof of vaccination, are you prepared to comply with medical record security, privacy and retention requirements? Alternate options:
      • Require proof of vaccination, but do not keep a copy of the vaccination card
      • Require employees to sign a form attesting to their vaccination status
    • How will you handle the submission of false information or a fake vaccination card?
    • Will the surcharge eventually apply to booster shots or just initial vaccination?


    Wellness Program Considerations

    As with smoking surcharges, a surcharge for unvaccinated employees would be subject to the rules of the Affordable Care Act and HIPAA. These rules prohibit group health plans from charging similarly situated individuals different premiums or contributions, with the exception of certain wellness programs, according to the U.S. Department of Labor. Any surcharge would need to follow federal requirements for health-contingent wellness programs.

    Further, employers must offer a "reasonable alternative standard" to a health-contingent wellness program, and this requirement can differ depending on whether the program is considered an "activity-only" or "outcome-based" wellness program under federal law.


    Surcharge Amounts

    Employers who implement a vaccine surcharge should keep in mind wellness program incentive limits and ACA affordability rules. Vita clients can reach out to their benefits account management team for guidance and further discussion.


    Alternate Effects

    Given the potential reduction in healthcare claims cost and improved workplace safety, most employers may believe surcharges are the answer. However, surcharges may be unlikely to significantly increase the vaccination rate of an employer’s population. Additionally, thought must be given to the effect such a surcharge would have on company culture.

    Surcharges have no effect on the employee population who waived coverage. Typically, 10% - 15% of an employer’s population will waive off the health plan coverage. In addition, surcharges can disproportionately affect low-wage workers, which tend to be the largest unvaccinated population, according to U.S. Census data.

    In the end, for some employers, a health plan premium surcharge may be too fraught with implementation, compliance and disparity concerns, thereby making vaccine mandates a more popular option, especially with the recent FDA approval of the Pfizer vaccine.

  • The No Surprises Act Explained

    The No Surprises Act (NSA) was enacted in December 2020 as part of the Consolidated Appropriations Act of 2021. The rule bans the practice of surprise-billing for out-of-network medical care, including from air ambulance providers, hospitals, facilities, and individual providers.

    Surprise billing happens when patients unknowingly get care from providers that are outside of their health plan's network. The law outlines new requirements and restrictions for many billing situations; however, the major focus on the bill is on three major categories of care, those where patients are most vulnerable to surprise billing.

    • Emergency Care - At Out-of-Network Facilities: Surprise billing often occurs in an emergency care situation where patients have little or no choice in where they receive care. Examples of this would be emergency care at a non-participating hospital or air ambulance services furnished by a non-network provider.
    • Ancillary Care – By Out-of-Network Providers at In-Network Facilities: Surprise billing can also occur in non-emergency care situations when patients at an in-network hospital or other facility receives care from ancillary providers (such as anesthesiologists or radiologists) who are not in-network and whom patients do not specifically choose.
    • Air Ambulance: Air ambulance services are usually furnished by nonparticipating providers, and the service is called upon when patients have essentially no choice of provider.

    The problem of “balance billing” occurs when a provider charges a patient the remainder of what their insurance does not pay. This practice is currently prohibited by both Medicare and Medicaid. The No Surprises Act extends similar protections to insureds covered under employer-sponsored and individual health plans.

    New Guidance

    On July 1, 2021, the DOL, HHS, and the IRS released the first round of guidance (Interim Final Rule) prescribing regulatory requirements pursuant to surprise medical billing. Broadly, the guidance puts prescriptive rules into place to protect individuals from surprise medical bills, and details how providers will navigate these rules behind the scenes.

    In short, the new rules clarify that patients are only responsible for their in-network cost-sharing amounts in emergency situations and certain non-emergency situations where they do not have the ability to affirmatively choose an in-network provider.


    Following is a summary of the key provisions of the guidance:

    • In-Network Cost Sharing: Cost-sharing (deductible or coinsurance) for out-of-network services that fall within the surprise billing protections are limited to in-network levels. That means patient cost-sharing cannot be higher than if the services were provided by an in-network provider.
    • Counts Toward In-Network OOP: Applicable cost-sharing (deductible or coinsurance) must count toward in-network deductibles and out-of-pocket maximums.
    • All Emergency Care In-Network: Emergency services, regardless of where they are provided, must be treated as if it were provided on in-network basis.
    • No Pre-Authorization: The practice of requiring a prior authorization for emergency services is prohibited.
    • Ancillary Care at In-Network Rates: Out-of-network charges for ancillary care (such as an anesthesiologist or assistant surgeon) provided at an in-network facility is prohibited in all circumstances.
    • No Balance Billing: The practice of balance billing (when providers seek to collect more than the applicable cost sharing amount from the patient) is banned.
    • Notice Required When OON Provider is Selected: When a patient voluntarily seeks care at an out-of-network provider, the provider/facility must provide patients with a plain-language consumer notice. The notice must explain that patient consent is required before that provider can bill at out-of-network rate (and collect any balance billed amount).

    Effective Date and Applicability

    The new law becomes effective for plan years beginning on or after January 1, 2022. It applies to nearly all private health plans offered by employers (including grandfathered group health plans) as well as individual health insurance policies offered through the Marketplace or directly through insurance carriers.

    More Details . . .

    The following sections provide a deeper dive into the details of the guidance for those that prefer a more in-depth review.

    Emergency Services Provided by Out-of-Network Providers

    If a nonparticipating provider (for example, an anesthesiologist or assistant surgeon) provides services at a participating facility or at a nonparticipating emergency facility, the provider may not bill beyond an allowed cost-sharing amount (essentially, the in-network levels).

    In addition to specifying the payment constraint, the guidance also prescribed a specific process by which providers are paid. Within 30 days from when the provider submits a bill to a plan, the plan must determine an initial payment and directly pay the provider or issue a notice of denial. (The regulations clarify that this “initial payment” does not refer to a first installment, but rather the amount that the plan or insurer reasonably intends as payment in full.)

    If the provider disagrees with the plan’s payment, the parties may begin a 30-day open negotiation period. If the parties fail to reach an agreement, the plan or provider has four days to notify the other party and the HHS that they are initiating an Independent Dispute Resolution (IDR) process. The No Surprises Act prescribed the details of this process, including the IDR as the final solution.

    Can Surprise Billing Protections be Waived?

    There are differences in how the guidance treats whether a patient may waive their surprise billing protections. These distinctions are useful in understanding the specific (and narrow) circumstances under which additional cost sharing and balance billing can be applied.

    Out-of-Network Emergency Care
    Types of Care:

    • Emergency Room Care
    • Air Ambulance Services

    Involuntary Ancillary Care at Out-of-Network Facilities
    Types of Care:

    Circumstances where a patient does not have control in choice of provider:

    • Emergency medicine
    • Anesthesiology
    • Pathology
    • Radiology
    • Neonatology
    • Diagnostic services (including radiology and laboratory services)
    • Assistant surgeons
    • Hospitalists
    • Intensivists
    • Nonparticipating providers at a facility where there is no participating provider who can furnish the necessary item or service

    Right to Waive:

    No. Protections can never be waived. Notice and consent provisions cannot be used under any circumstances.

    Voluntary Ancillary Care at Out-of-Network Facilities/Providers
    Types of Care:

    Circumstances where a patient has a meaningful choice as to whether to select a nonparticipating provider:

    • Other services (not listed above)
    • Nonemergency care where the patient elects a specific specialist
    • Care provided where additional cost sharing and balance billing amounts are not a “surprise” because a patient knowingly and purposefully seeks care from the nonparticipating provider

    Right to Waive:

    Yes. Protections can be waived if patient agrees to receive nonemergency care from certain nonparticipating providers. Notice and consent provisions must be followed.

    Cost-Sharing Amounts

    Participants in group health plans will pay cost-sharing for items and services that fall within the No Surprises Act’s scope based on the “recognized amount,” which generally will be the lesser of the “qualifying payment amount” (QPA) (i.e., the plan’s median in-network rate for an item or service) and the amount billed by the provider.

    What is the Qualifying Payment Amount?

    The Qualifying Payment Amount (QPA) is an amount paid to a non-participating provider as determined by the plan or insurer. Generally, it is the median of all the plan or insurer’s contracted rates from January 31, 2019 for a given item or service in that geographic region, increased for inflation. The QPA affects patient cost sharing in many instances and is a key factor for arbitrators to consider if and when payment disputes are resolved through the IDR process.

    Accurate Provider Network Directories

    Health plans must update their provider directory at least every 90 days. They also must respond within one business day to requests from individuals about whether a provider or facility is in-network. Lastly, consumers who rely on incorrect information conveyed by plans or posted in directories are entitled to have services covered with in-network cost sharing applied.

    Continuity of Care

    The No Surprises Act also includes a provision which requires health plans to notify enrollees when a provider/facility leaves the plan network while it is providing ongoing care. In certain circumstances, health plans must provide transitional coverage for up to 90 days or until treatment ends (whichever is earlier) at in-network rates.

    The continuity of care requirement applies to treatment for serious or complex health conditions, institutional or inpatient care, nonelective surgery, pregnancy, and care for patients with terminal illness.

    Advanced Explanation of Benefits

    Beginning in 2022, patients can request advance information about how services will be covered before they are provided. For scheduled services, if a request is submitted, the health plan must provide written information including whether the provider/facility participates in-network and a good faith estimate of what the plan will pay and what patient cost liability may be. Generally, this information must be provided to the patient within three business days.

    Notice and Consent Exception

    Providers furnishing non-emergency services where the patient voluntarily elects to seek care out-of-network must provide notice and receive written consent from the patient in order to be exempt from the NSA’s balance-billing and cost-sharing restrictions. The nonparticipating provider generally has 72 hours before the service is delivered to obtain the patient’s consent. The process can be executed either in paper or electronic form, but notice must be provided to patients and patients must provide consent in advance of services in order for the provider to apply out-of-network cost sharing and/or balance bill for any services. To enable a plan or insurer to apply cost-sharing correctly, a provider relying on the notice and consent exception must timely notify the plan or insurer and provide the plan or insurer a signed copy of the binding notice and consent documents.

    Model Notice

    A model notice is provided for plans and insurers to post and include in all explanations of benefits to which the No Surprises Act applies. The regulations outline the process for providing the notice, which is intended to serve as good faith compliance with the NSA requirement that, beginning in 2022, a plan or insurer must disclose the prohibition on surprise billing and the entities to contact in the event of a violation.