William Byrnes' Tax, Wealth, and Risk Intelligence

William Byrnes (Texas A&M) tax & compliance articles

TaxFacts Intelligence August 6, 2021

Posted by William Byrnes on August 6, 2021

This week’s newsletter is dedicated to helping clients—both employers and employees—maximize their health-related benefits and tax credits (even when those benefits are only available for a limited time). Do you have questions about situation-specific COBRA eligibility, little-known HSA tricks, or the ever-evolving EEOC vaccine guidance for employers? Read on to see if we’ve got the answers in Tax Facts – or ask us to include in the future online/book updates.

By the way subscribers, Texas A&M graduate program for wealth and risk management, including tax risk management, is accepting applications for fall. Maximum enrollment for a course section is 30 so that each student receives meaningful feedback throughout the course from the full-time academic, professional part-time faculty, and each other. Learn more about it here: https://law.tamu.edu/distance-education

Prof. William H. Byrnes         Robert Bloink, J.D., LL.M.

EEOC – Vaccine Incentive Guidance for Employers

The EEOC posted an update about offering incentives to employees to take a COVID vaccine, especially relevant now that the Delta COVID-19 variation has brought hospitalization levels back to record pandemic levels. Under the new guidance, employers are permitted to offer incentives to employees who voluntarily provide confirmation that they have received the COVID-19 vaccine from a third party. Requesting these confirmations will not be treated as disability-related inquiries under the ADA or requests for genetic information under GINA. Employers should be aware that these incentives are treated differently than incentives offered for employer-provided vaccines. If the incentive is actually for the purpose of encouraging an employee to receive the vaccine from the employer or an agent, employers should continue to use caution against offering an incentive that can be construed as “coercive”. That’s because employees must provide certain health information before receiving the vaccine—and employees should not be pressured to disclose medical information to their employers. For more information on the available tax credit for employers who offer paid vaccine leave to employees, visit Tax Facts Online. Read More

Some legal-health experts have raised the issue of whether an employer can require an employee to undergo a treatment that has not yet received approval? The current COVID-19 vaccines are being administered under an Emergency Use Authorization. The FDA, which is empowered by law to authorize an emergency use designation for unapproved vaccinations and other medical treatments, states that:

An Emergency Use Authorization (EUA) is a mechanism to facilitate the availability and use of medical countermeasures, including vaccines, during public health emergencies, such as the current COVID-19 pandemic. Under an EUA, FDA may allow the use of unapproved medical products, or unapproved uses of approved medical products in an emergency to diagnose, treat, or prevent serious or life-threatening diseases or conditions when certain statutory criteria have been met, including that there are no adequate, approved, and available alternatives.

In response to the concerns raised by employers regarding the legal requirement to inform individuals of the “option to accept or refuse administration” of the unapproved product [see 21 U.S. Code § 360bbb–3(e)(1)(A)(ii)(III)- Authorization for medical products for use in emergencies], especially as regards the potential liability, the DOJ released its opinion that employers may require employees to submit to emergency-use vaccines. The DOJ opinion, “Whether Section 564 of the Food, Drug, and Cosmetic Act Prohibits Entities from Requiring the Use of a Vaccine Subject to an Emergency Use Authorization?” concludes that: “… This language in section 564 specifies only
that certain information be provided to potential vaccine recipients and does not prohibit entities from imposing vaccination requirements.” Both public and private employers, according to the DOJ opinion, may require the COVID-19 vaccination of employees. To roughly summarize the reasoning: The applicant or employee has an option to refuse to submit to vaccination, but the employer also has an option to either not offer or continue to offer employment. The DOJ’s legal analysis goes beyond this simplification with arguments why the option to refuse is not applicable. Certainly, these issues and arguments will see substantial litigation in the courts (the DOJ memo references the opening salvo). But the memo does its job in providing reasonable legal cover for employers, employers’ legal counsel, and employers’ insurers to implement vaccination requirements.

A separate issue is whether employers can require employees or applicants for employment to prove via a vaccination card or similar medical record that a COVID-19 vaccination has been administered and when administered? Check your Tax Facts app for the discussion.

Related Questions:

773. What happens when the employee has exhausted the paid time off under the Families First Coronavirus Response Act (FFCRA)? Does the employee have the right to return to work?

8895. What is a “de minimis” fringe benefit?

Am I Eligible for Federal COBRA Assistance? Case-Specific IRS Guidance

The IRS guidance on the availability and implementation of the ARPA 100 percent COBRA premium assistance provides some useful guidance on specific scenarios that employers and employees may now be facing. Generally, individuals remain assistance-eligible individuals (AEIs) during eligibility waiting periods if the period overlaps with the subsidy period. For example, the individual will be an AEI during periods outside the open enrollment period for a spouse’s employer-sponsored health coverage. Employers who change health plan options must place the AEI in the plan that’s most similar to their pre-termination plan, even if it’s more expensive (and the 100 percent subsidy will continue to apply). Importantly, employers who are no longer covered by federal COBRA requirements may still be required to advance the subsidy (for example, if the employer terminated employees so that the federal rules no longer apply). If the employer was subject to COBRA when the individual experienced the reduction in hours or involuntary termination, the employer must offer the subsidy. For more information on the COBRA premium subsidy, visit Tax Facts Online. Read More

Related Questions:

0121. COBRA Subsidies Back on the Table for 2021

371. When must an election to receive COBRA continuation coverage be made?

Maximizing Post-Pandemic HSA Benefits

HSAs and other tax-preferred health benefits have taken on a whole new meaning in the wake of the pandemic. It’s important that clients fully understand the rules so that they aren’t leaving valuable benefits on the table. In 2022, annual HSA contribution limits will rise to $3,650 for self-only coverage or $7,300 for family HDHP coverage. (HDHPs are health insurance plans that have a minimum annual deductible of $1,400 for self-only coverage ($2,800 for family coverage).). Taxpayers aged 55 and up can contribute an extra $1,000 per year. Taxpayers don’t have to fund an employer-sponsored HSA. Even if the client has been laid off or furloughed, clients with HDHP coverage can open an HSA at their bank and fund the account independently. Additionally, clients who have lost their jobs continue to have access to the funds in their old HSA, and can even transfer that HSA to a new provider. In other words, as long as the client remains covered by a HDHP, there is no “use it or lose it” rule. The funds simply roll over from year to year and continue to grow tax-free. For 2021, that same benefit has been extended to health FSAs. With an HSA, however, the rollover benefit is even more substantial because once the participant reaches age 65, the account can be accessed without penalty for any reason—much like a typical retirement account. The funds are simply taxed as ordinary income upon withdrawal, like a 401(k) or IRA. For more information on HSA advantages, visit Tax Facts Online. Read More

Related Questions:

388. What is a Health Savings Account (HSA) and how can an HSA be established?

391. Who is an eligible individual for purposes of a Health Savings Account (HSA)?

IRS Extends Relief for Employee Donations of Unused Sick, Vacation & PTO.  The IRS has extended the relief provided in Notice 2020-46 to allow employees to continue to forgo, or “donate”, sick, vacation, and personal leave because of the COVID-19 pandemic without adverse tax consequences through the end of the 2021 tax year.  After December 31, 2020, and before January 1, 2022, employers may make cash payments to Section 170(c) charitable organizations that provide relief to victims of the COVID-19 pandemic in exchange for sick, vacation, or personal leave which their employees gave up.  Those amounts will not be treated as compensation and the employees will not be treated as receiving the value of the leave as income.  While taxable income will not be increased, employees cannot claim a charitable deduction for the leave donated to their employer. Employers, however, may deduct these cash payments as Section 162 business expenses or Section 170 charitable contributions if the employer otherwise meets the respective requirements of either section.  For more information on the deduction for charitable contributions, visit Tax Facts Online. Read More

Related Questions:

8540. What are the income percentage ceilings that limit the income tax deduction for charitable contributions?

8541. How does the income percentage ceilings calculated if charitable contributions of money are made to both public charities and private foundations in the same tax year?

Look in your Tax Facts Online app for our continuing analysis of this bill, the tax reform in the reconciliation bill, and other weekly intelligence.

Wealth & Risk Management Degree for Industry Professionals – learn about the graduate degree here: https://law.tamu.edu/distance-education

Texas A&M, an annual budget of $6.3 billion (FY2020), is the largest U.S. public university, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space! The law school has the #1 bar passage in Texas, and #1 for employment in Texas (and top 10 in U.S.)

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