We know you’re concerned about the impacts of COVID-19 on your employees and benefits, but there are steps you can take to mitigate those impacts . . . and CBIZ is here to guide you every step of the way. To that end, we are providing you with this summary of the most critical issues that your business must be aware of.
To access our detailed Employer COVID-19 Compliance Handbook, click here to download.
Families First Coronavirus Response Act
On March 18, 2020, Congress passed and the President signed the Families First Coronavirus Response Act (H.R. 6201). Specific to employee benefits, it provides for mandated health coverage for coronavirus testing and related services, emergency paid sick leave, and emergency family and medical leave, as well as tax credits for employers impacted by the coronavirus.
Health Coverage for Testing & Related Services
Individual and group health plans, including insured, self-funded and grandfathered health plans, are required to provide first dollar coverage for FDA-approved testing for COVID-19, as well as related services received in emergency rooms, urgent care facilities, or during in-person or telehealth visits. This relief is being given for the sole purpose of encouraging and facilitating diagnosis and treatment of coronavirus. It will only apply until future guidance is provided.
With regard to coordination of coronavirus diagnosis and treatment and HSA-compatible high deductible health plan (HDHP) coverage, the IRS-issued guidance (IRS Notice 2020-15) together with a news release on March 11, 2020.
Emergency Paid Sick Leave
The law provides for an emergency paid sick leave benefit to individuals who are unable to work due to a coronavirus-related reason.
Covered employers: Applies to private employers with fewer than 500 employees and public employers of any size
Eligibility: Available to all employees for up to 80 hours of paid sick leave if they are:
- Currently diagnosed as having COVID-19;
- Quarantined, either self-quarantine or by their healthcare provider, employer or government official;
- Caring for a person who has been diagnosed with or quarantined due to the virus; or
- Caring for a child or other individual who is unable to care for themselves due to school, child care facility or other day care program closures.
Amount of Leave: The maximum amounts vary based on full- or part-time and the reason for the absence.
Emergency Family and Medical Leave Expansion Act
The law amends the federal Family and Medical Leave Act (FMLA) to provide for emergency family and medical leave due to coronavirus-related reasons.
Covered employers: Applies to employers employing fewer than 500 employees on at least 20 or more calendar weeks in the current or preceding calendar year, and government employers. Employees are counted in the same manner as they are counted for FMLA purposes.
Eligible employees: Anyone who has worked at least 30 calendar days
Amount of leave: Up to 12 weeks of job-protected leave is available to eligible individuals who are unable to work or telework due to a need for leave to care for a child under age 18. The first 10 days of the leave could be unpaid, though an individual could choose to use available paid time off. After 10 days, the leave would be paid at not less than two-thirds of the individual’s regular monthly rate of pay, not to exceed $200 per day. Emergency FMLA leave for a part-time employee would be pro-rated based on hours worked.
Job restoration: Like the FMLA, the bill provides for a guaranteed return to same or equivalent position. However, the law provides protection for certain small employers.
Certain payroll tax credits are available to employers who provide the emergency family leave and sick leave benefit, subject to varying limits depending on the type of leave provided and circumstances for the leave. Further details are expected to be released in future guidance. Employers should work closely with their payroll provider and tax advisor to determine their eligibility.
Review of Benefit Plan Issues
Coverage for Coronavirus Testing & Related Expenses
Prior to the enactment of the federal law, many insurers had already been mandated by state insurance departments or by legislature or were voluntarily covering costs associated with certain coronavirus testing and/or treatment costs. Check the terms of your health plan, as well as communications received from your insurer(s).
Plans subject to ERISA are obligated to communicate plan changes through a summary of material modification (SMM). Because coronavirus testing would be a material enhancement rather than a reduction of benefits, a special 60-day advanced notice would not be required. However, it is important to communicate a change in plan provision in a timely manner in accordance of when the change becomes applicable.
Continuation of Health Coverage
The federal COBRA continuation of health coverage law applies when two events happen: 1) a COBRA qualifying event and 2) a related loss of coverage. Current circumstances relating to coronavirus may result in reduction in hours. Whether that results in a loss of coverage depends upon the terms and conditions of the health plan. A reduction in hours that does not result in a loss of coverage will not give rise to COBRA.
For employers not subject to COBRA, there may be state continuation coverage available due to termination of employment or reduction in hours. These employers should refer to their insurance contract and/or plan document.
Cafeteria Plan Issues
An IRC Section 125 cafeteria plan requires elections to be made for 12 months. Elections can only be changed in the event of status changes. Relating to potential coronavirus-related reasons, certain events may be considered status changes permitting modifications to cafeteria plan elections but only to the extent that the plan document so provides. The details are too numerous to list here; please contact your benefits advisor.
For dependent care assistance plans (DCAP), a change in coverage of a benefit would include the availability of a new daycare provider or a significant change in the cost of a childcare provider. In the event that school or child care provider needs are changed, review your DCAP to determine whether it allows a status change.
An HSA that is component of an IRC Section 125 cafeteria plan is not subject to the 12-month election change rules discussed above. In fact, an individual must be able to change their HSA contribution at least once every 30 days.
Other Welfare Benefit Plan Matters
As employees are being potentially furloughed or laid off, it is important to understand the terms and conditions of other types of benefit plans, such as short- and long-term disability plans and life insurance plans. Many of these plans contain “actively at work” provisions. Be aware of any notice obligations that these types of plans or contracts contain.
Privacy & Confidentiality of Medical Information
Both federal and state privacy rules must be considered. For HIPAA privacy purposes, the HHS Office of Civil Rights provides guidance and other resources to remind HIPAA-covered entities and business associates of their obligations to protect the privacy of patient information. Generally, health information an employer gathers in its role as an employer is not protected by HIPAA privacy rules, but it is protected by other federal and state confidentiality laws.
It is possible that some retirement plan participants have already begun requesting hardship distributions from a plan; in which event the terms and conditions of hardship distribution procedures contained in the plan must be followed.
Some plans offer loans due to a change in financial condition; thus, some individuals may be requesting loans from the plan. Work closely with your retirement plan administrator and record keeper to ensure proper compliance with the plan’s loan provisions.
Stock market changes may cause participants to have questions about their investments. Work closely with your plan administrator and other plan advisers for assistance in helping participants work through these issues.
Leave Policies & Provisions
For employers subject to federal FMLA, it is important to note that while the coronavirus does not always constitute a serious health condition unless complications arise, it certainly could. Several years ago, the DOL’s Wage and Hour Division issued a set of FAQs addressing pandemic flu as it relates to the FMLA. Under the FMLA, there are several criteria that define a serious health condition as an illness, injury, impairment, or physical or mental condition. Reach out to your benefits advisor for those details.
To be eligible for FMLA benefits, the individual must have worked at least 12 months for the employer, attained at least 1,250 hours of service during the 12 months immediately preceding the leave, and worked at a worksite subject to the law. Such eligible employee would be entitled to up to 12 weeks of FMLA leave for the employee’s own or their family member’s care or treatment of a serious health condition.
An employer faced with the possibility of an employee who could have been infected with coronavirus or who may need to care for family member, should assess the situation, and if it is appears to be a serious health condition, provide the Notice of Eligibility and Rights & Responsibilities to the employee.
As mentioned above, employers should also be aware that certain state and local laws provide for leave of absence in the event of an employee or their family member’s serious health condition. Further, employers should be familiar with their internal leave policies or other governing obligations such as collective bargaining agreements or employment contracts, to ensure they know how to properly handle leave requests.
Employment Law Protections
Employers have a general obligation to ensure a safe workplace. The Occupational Safety and Health Administration (OSHA) governs general workplace standards. This agency established a dedicated webpage, along with new guidance to assist employers in making sure their workplace environments are safe places to work specific to COVID-19. Employers should also follow the recommended guidelines issued by the Centers for Disease Control and Prevention (CDC).
Consider how, if at all, individuals required to be quarantine could be compensated. If you have employees testing positive for the coronavirus, consult the CDC, as well as your local health departments for any reporting obligations. Consider the need to notify individuals who may have come in contact with an infected individual, but make certain to maintain the confidentiality and identity of the individual.
If a financial or other conditions cause a need to have a change in workforce, consider the difference between imposing a furlough and a lay-off. The DOL’s Wage and Hour Division provides some FAQs relating to payment of wages during coronavirus emergency, as well as a fact sheet discussing wages paid in the event of a furlough or reduction of pay.
In the event of a plant closing or mass layoff situation, there are additional employer obligations, specifically, a 60-day advanced notification requirement of the closure.
In all instances, be aware that all discrimination rules apply. The Equal Employment Opportunity Commission (EEOC) issued a news release directing employers to their previously issued guidance relating to pandemic flu situations. It is very important to ensure that in any workplace planning, laws such as discrimination laws, including but not limited to national origin and disability, continue to apply.
Benefit and employment matters are changing quickly relating to the coronavirus. As in all matters, each employer must consult with all of its professionals, including but not limited to its benefits advisor, legal counsel and tax advisor, to ensure that actions taken are appropriate for its situation.
This is a summary. For the complete article and state-by-state breakdown, CBIZ clients should contact their benefits advisor.
This is current as of March 25, 2020 but may have changed by the time you are reading this.
The information contained herein is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations. The information contained herein is provided as general guidance and may be affected by changes in law or regulation. The information contained herein is not intended to replace or substitute for accounting or other professional advice. Attorneys or tax advisors must be consulted for assistance in specific situations. This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect