BAN Blog

Agencies Extend Deadline to Pay COBRA Premiums, Extend Certain Other ERISA and Internal Revenue Code Deadlines Due to COVID-19

The impacts of the COVID-19 National Emergency, as declared by President Trump on March 13, 2020, have been vast.  As a result, many employers and employees are struggling to meet their various filing, notice, election, or other deadlines.  In order to ease this burden on employers, plans, and participants, on April 28, 2020, the Department of Labor (DOL), the Internal Revenue Service (IRS), and the Department of Health and Human Services (HHS) issued much-needed guidance and relief.  Notably, the guidance requires employers and plans to suspend the deadline for qualified beneficiaries to elect COBRA or pay COBRA premiums from March 1, 2020, until 60 days after the National Emergency ends (or such other date as specified by the Agencies).

DOL Relief for Group Health Plans and Disability and Other Welfare Plans

EBSA Disaster Relief Notice 2020-01, eases the burden for group health plans, disability plans, and pension plans to provide notices and disclosures required under ERISA and Internal Revenue Code of 1986 (the “Code”) by clarifying, among other things, that:

• Neither the plan nor the employer will violate ERISA for failing to timely furnish a notice, disclosure, or document that must be furnished between March 1, 2020, and 60 days after the announced end of the COVID-19 National Emergency, if they act in good faith and make the disclosure as soon as administratively practicable under the circumstances.
• Plans and employers may communicate electronically with plan participants and beneficiaries who they reasonably believe have effective access to electronic means of communication, including email, text messages, and continuous access websites.
• Filing relief for Form 5500 applies per IRS Notice 2020-23, which was issued earlier this month.  IRS Notice 2020-23 provides that employers with plan years ending September 30, 2019, October 31, 2019, or November 30, 2019, have until July 15, 2020, to file Form 5500.  The deadline for calendar year plans has not been extended, though plans may file a Form 5558 by July 31, 2020, to have the deadline automatically extended an additional 2.5 months, to September 15, 2020.

EBSA Notice 2020-01 also includes general ERISA fiduciary compliance guidance, asking plans to “act reasonably, prudently, and in the interest of the covered workers and their families who rely on their health, retirement, and other employee benefit plans for their physical and economic well-being.”  The DOL requests that plans make reasonable accommodations to prevent the loss of benefits or undue delay in paying benefits.

Finally, the Notice clarifies that relief may be further extended in specific regions of the country if there are different outbreak period end dates for different parts of the country.

Relief for Participants and Beneficiaries

In order to ease the burden on participants and beneficiaries, the DOL, in coordination with the IRS issued a Final Rule extending certain timeframes and deadlines for participants to consider coverage elections and benefits decisions under ERISA and the Code. 

Specifically, Final Rule provides plan participants, beneficiaries, qualified beneficiaries, and claimants with relief from meeting the below referenced periods and dates during the period of March 1, 2020, until 60 days after the announced end of the COVID-19 National Emergency (or such other date announced by the Agencies in a future notice):

• The 30-day period (or 60-day period, if applicable) to request a special enrollment;
• The 60-day election period for COBRA continuation coverage;
• The date/deadline for making COBRA premium payments;
• The deadline for individuals to notify the plan of a qualifying event or determination of disability;
• The deadline within which employees can file a benefits claim, or a claimant can appeal an adverse benefit determination, under a group health plan’s or disability plan’s claims procedures;
• The deadline for claimants to file a request for an external review after receipt of an adverse benefit determination or final internal adverse benefit determination; and
• The deadline for a claimant to file information to perfect a request for external review upon finding that the request was not complete.

Consistent with the above, the Final Rule provides group health plans with relief from issuing COBRA election notices for any qualifying event that occurred between March 1, 2020, and 60 days after the announced end of the COVID-19 National Emergency (or such other date announced by the Agencies in a future notice).

Neither the Final Rule nor EBSA Notice 2020-01, provide guidance regarding the applicable PCORI fee amount for plan years ending after October 1, 2019, extend the PCORI fee deadline (currently July 31, 2020), or modify permitted cafeteria plan election changes.

Employers are encouraged to familiarize themselves with the relief in the Final Rule and EBSA Notice 2020-01, work with their insurance broker, COBRA administrator, or other vendors to ensure compliance with this relief and continue to work with their employees during this difficult time.

________________________________________________

About the Authors.  This alert was prepared by Marathas Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act.  Contact Stacy Barrow or Nicole Quinn-Gato at sbarrow@marbarlaw.com or nquinngato@marbarlaw.com.

On March 27, the President signed into law the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The CARES Act comes as a continued response to the Coronavirus 2019 (COVID-19) pandemic that is significantly impacting the United States. The Act is a $2.2 trillion economic package that is meant to stabilize individuals and employers, while the nation continues to experience shelter-in-place advisories/orders and hospitals report a surge of severely ill COVID-19 patients. The Act’s Paycheck Protection Program is retroactive to February 15, 2020, which is important for businesses that have been experiencing financial hardships starting in February.   Overview of CARES Act The CARES Act amends several laws, as well as appropriates funds to assist individuals, families, and businesses that are experiencing financial difficulties due to COVID-19. There are loans available to small businesses for paycheck protection and loan forgiveness, and other assistance for individuals and businesses as it relates to unemployment insurance and tax relief. The Act supports the health care system by providing financial assistance for medical supplies and coverage. It also provides economic stabilization and assistance for severely distressed sectors (such as airlines), as well as additional COVID-19 relief funds, expanded telehealth and COVID-19 testing provisions, and emergency appropriations for COVID-19 health response and agency operations.   HSA and Telehealth Expansion The CARES Act includes a new safe harbor under which high deductible health plans (HDHPs) can cover telehealth and other remote care before participants meet their deductibles (i.e., without cost-sharing). This temporary safe harbor applies for plan years beginning on or before December 31, 2021, unless extended. As a result of this safe harbor, no-cost telehealth may be provided for any reason–not just COVID-19 related issues–without disrupting HSA eligibility.   Prescription Drug Reimbursement under FSA/HRA/HSAs The CARES Act allows health flexible spending accounts (FSAs), Health Reimbursement Arrangements (HRAs), and Health Savings Accounts (HSAs) to pay for or reimburse over-the-counter medication and menstrual products without a prescription. This is a permanent repeal of the ACA’s prohibition on reimbursements under such plans for over-the-counter medication obtained without a prescription. This change is effective January 1, 2020.  The IRS may issue further guidance regarding the timing of any necessary plan amendments.   COVID-19 Testing Under the CARES Act, COVID-19 testing and related services must be offered at no cost-sharing, until the end of the public health emergency, as declared by Health and Human Services. This also means the health plans cannot require prior authorization or medical management for COVID-19 testing and services (such as an urgent care visit associated with COVID-19). This coverage requirement for COVID-19 testing applies to all health plans, including self-funded and grandfathered plans, and expires at the end of the public health emergency.   Any future COVID-19 vaccine must be provided cost-free, similar to other preventive care vaccines, by any non-grandfathered group health plan, pursuant to the ACA’s preventive care rules.  In addition, the CARES Act requires group health plans and health insurers to cover any “A” or “B” recommended qualifying coronavirus preventive service or CDC-recommended immunization, within 15 business days after the date on which a recommendation is made.  This is a much shorter timeframe than typically allowed for new recommended preventive care services to be added to a group health plan.   The CARES Act also clarifies how plans must pay for COVID-19 testing when performed by an out-of-network provider. Providers who offer COVID-19 testing must post a cash price on their website. Plans may pay out-of-network providers based on their posted cash rate for COVID-19 testing. Providers who do not post the cost for COVID-19 testing face a potential penalty of up to $300 per day. This provision is effective retroactively to March 18, 2020.   Assistance for Businesses – Payroll Protection Program The Act implements small business loans for employers that have fewer than 500 employees. An employer classified as hospitality and dining under the North American Industry Classification System (NAICS) with multiple locations may obtain loans on a location-specific basis, so particular locations may qualify for a loan. The loans are 100% federally-backed and can be utilized to pay for specific, operational costs. The interest rates for these loans cannot exceed 4%, and no subsidy recoupment or a prepayment penalty is permitted. Any small business administration disaster loan admitted after January 31, 2020, can be refinanced into the new loan program. This loan is capped at $10 million and requires a good-faith certification that: the loans are needed to continue operations during the emergency; funds will be used to retain workers and maintain payroll; pay for a mortgage, lease, and utility payments; that there is no other application pending for the same purpose; and that from February 15, 2020, to December 31, 2020, the applicant has not received duplicate amounts. The facts and circumstances should be closely reviewed when applying for and utilizing a small business loan. The Department of Treasury and Small Business Administration are likely to release additional guidance for these applications.   There is also assistance made for larger companies, which provides $500 billion in loans, loan guarantees, and investments for air carriers, cargo air carriers, businesses critical maintaining national security, and facilities that are established by the Federal Reserve to support lending. Loan forgiveness is not allowed for these loans. Again, employers should consult with counsel when availing themselves of these loans, and the Department of Treasury will likely release additional guidance.   Assistance for Individuals The Act also addresses assistance for individuals and their families who qualify for unemployment benefits. In states that adopt it, an additional federal unemployment benefit of $600 per week is added to what is provided under state law, through July 31, 2020 (unless extended). Individuals unemployed or underemployed due to COVID-19 reasons may also be eligible for an additional 13 weeks of extended unemployment benefits, once state unemployment benefits end.   Additional funding is also available for states that waive the waiting period for unemployment benefits, and states are authorized to enter into agreements with the federal government to initiate short-term compensation agreements to help subsidize payments to employees that have hours reduced due to COVID-19.   Individuals will also be eligible to receive a recovery rebate up to $1,200 ($2,400 for joint filers), including an additional $500 per child. This will phase out for taxpayers making $75,000 or more ($150,000 for joint filers, and $112,500 for heads of household), with the rebate completely phasing out for those earning in excess of $99,000 ($198,000 for joint filers). The rebates will be made available even if a taxpayer had no income, as long as a return is filed. Furthermore, 2018 tax filings will be utilized if filers have not yet filed 2019 taxes. Similarly, there is a waiver of taxes for premature distributions of certain accounts, such as retirement and IRAs. Individuals wishing to exercise this waiver will need to confirm it is due to a COVID-19 financial hardship and are urged to consult with a personal tax advisor.   Student Loan Relief Under the CARES Act, employers may use an educational assistance program to reimburse employees for qualifying student loans up to $5,250 on a tax-free basis (state or local taxes may still apply). This provision applies to loan payments, including principal and interest, made between March 28, 2020, and December 31, 2020, unless extended. Educational assistance programs are subject to Section 127 of the Internal Revenue Code and must be offered pursuant to a written plan document, be communicated to employees, and comply with certain nondiscrimination requirements.   Amendments to Families First Coronavirus Response Act (FFCRA) and Health Benefits The CARES Act made several clarifications to the FFCRA. For purposes of the expanded FMLA provision, employees will be considered rehired if they were laid off by their employer on or after March 1, 2020, had worked for the employer at least 30 days in the last 60 days prior to layoff, and are rehired. This means that employees that are rehired after March 1 may be eligible for expanded FMLA immediately without having to re-satisfy the 30-day employment requirement under expanded FMLA.  The CARES Act also clarifies that employers can receive an advance tax credit from the Treasury instead of waiting to be reimbursed.   The CARES Act also expands upon the types of COVID-19 testing that are required to be covered, which include in-vitro testing from any developer that has requested or intends to request emergency authorization from the FDA, or diagnostic tests authorized by a state.   Miscellaneous The Act also provides additional funding for other federal departments to help continue to support industries during this time, as well as increase manufacturing and approval efforts for vaccines and other supplies. Likewise, some adjustments (generally technical corrections) were made to the 2017 Tax Cuts and Jobs Act.   What Employers Should Expect Next We expect additional guidance at the federal level with regard to applying for and receiving a business loan. Further information from the IRS regarding individual payments is likely to be released in the coming weeks. Employers may also refer to state unemployment websites for questions regarding unemployment, as many states have been updating consistently in response to the pandemic. In addition, employers need to be cognizant of local and state emergency regulations that may affect how employers in certain industries, such as food services, operate during a public health emergency. For more information on COVID-19, see: https://www.cdc.gov/coronavirus/2019-ncov/index.html https://www.who.int/emergencies/diseases/novel-coronavirus-2019   _______________________________
This alert is a service to our clients and friends.  It is designed only to give general information on the developments actually covered.  It is not intended to be a comprehensive summary of recent developments in the law, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion.   Benefit Advisors Network and its members are not attorneys and are not responsible for any legal advice.  To fully understand how this or any legal or compliance information affects your unique situation, you should check with a qualified attorney.
© Copyright 2020 Benefit Advisors Network. All rights reserved.

On March 18, Congress passed, and President Trump signed into law, the Families First Coronavirus Response Act (FFCRA). The FFCRA is a bipartisan effort to help employers and individuals alike in managing pay, benefits, and business considerations during the COVID-19 pandemic. The focus of this alert is the impact of FFCRA on employer-sponsored benefits and paid leave. The paid leave provisions of the Act apply to employers with less than 500 employees.  They are effective within 15 days from the date of enactment and expire at the end of 2020 unless extended. 

Mandated Free Testing

FFCRA mandates free COVID-19 testing from all group health plans, including fully insured and self-funded plans, as well as grandfathered plans. All group health plans must waive cost-sharing, prior authorization requirements, and other medical management as it relates to COVID-19 testing. This includes provider office visits, urgent care, emergency room, and other healthcare visits that are for the purpose of evaluating or administering testing.

Emergency FMLA

The FFCRA provides for up to 12 weeks of job-protected leave under the Family and Medical Leave Act (“FMLA”) for a “qualifying need related to a public health emergency.” These provisions generally apply to private-sector employers with under 500 employees and all government employers.  (There are exceptions for employers with less than 50 employees if the required leave would jeopardize the viability of their business.)  This new law expands the leave for employees who have been employed at least 30 days, overriding, for these purposes, FMLA’s general requirement that employees must be employed for at least 12 months to be covered. For these purposes, a “qualifying need” exists if an employee is unable to work or telework because he/she/they need to care for a child who is under 18 years if their school or place of care has been closed, or the child care provider is unavailable, due to a public health emergency, such as COVID-19.

This Emergency FMLA rule also requires employers to pay employees after 10 days.  Employees on leave are to be paid at two-thirds of their regular rate of pay, based on normally scheduled hours, up to $200 per day and to a maximum of $10,000.

Emergency Paid Sick Leave

FFCRA requires employers with less than 500 employees to provide paid sick leave to any employee who is unable to work or telework because the employee: 

1. Is subject to a federal, state, or local quarantine or isolation order related to COVID-19;
2. Has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
3. Has COVID-19 symptoms and is seeking medical diagnosis;
4. Is caring for an individual who is subject to a quarantine or isolation order;
5. Is caring for a child if the school or daycare center has been closed, or the child care provider is unavailable, due to COVID-19 precautions; or
6. Is experiencing any other substantially similar condition specified by the regulatory agencies.

Overall, employees are entitled to at least 80 hours of paid sick leave (prorated for part-time employees). An employee is immediately eligible on date of hire. An employer cannot require an employee who is eligible for paid sick leave to find a replacement or be involved in finding a replacement for their scheduled work shift. Paid leave is limited to $511 per day ($5,110 total) for an employee’s own illness or quarantine (paid at the employee’s regular rate), and $200 per day ($2,000 total) for leave to care for others (paid at two-thirds of the employee’s regular rate). Failure to pay the required sick leave is treated as a failure to pay minimum wages in violation of the Fair Labor Standards Act.

Tax Credits

FFCRA offers some relief to employers who are now required to provide paid leave. The credit is available for up to $200 per day for Emergency FMLA and up to $511 per day for Emergency Paid Sick Leave payments. The credit is calculated on an individual employee basis for a total of 10 days paid leave. Employers should maintain records on employees who qualify for leave, which includes the reason for the leave, and the days taken in order to substantiate qualifications for the credit.

There is also another tax credit for employers who continue to provide health coverage to employees who take Emergency FMLA or Emergency Paid Sick Leave. Employers may receive a credit for the amount paid toward maintaining the health plan, for the amounts excluded from an employee’s gross income as it related to federal income tax. This is in addition to wages paid for qualifying leave, but it cannot exceed the credit available for Emergency FMLA and Emergency Paid Sick Leave. This credit is to be requested on quarterly tax returns. It will be included in an employer’s gross income.

What Employers Should Expect Next

We expect additional guidance at the state and federal levels that may impact employee benefit plans and potentially more state leave requirements. It is also important for employers to stay up-to-date on their state and municipal notices, as some are providing for insurance requirements. In addition, employers need to be cognizant of local and state emergency regulations that may affect how employers in certain industries, such as food services, operate during a public health emergency.

For more information on COVID-19, see:

• https://www.cdc.gov/coronavirus/2019-ncov/index.html
• https://www.who.int/emergencies/diseases/novel-coronavirus-2019

States and the federal government have issued (or re-issued) guidance for employers in response to the recent novel coronavirus disease 2019 (COVID-19) pandemic. As of March 14, 2020, the Centers for Disease Control and Prevention (CDC) has reported more than 2,000 cases from 49 states and Washington, DC.  Agency guidance includes the following:

• Internal Revenue Service (IRS): High Deductible Health Plans and Expenses Related to COVID-19
• Centers for Medicare and Medicaid Services (CMS): FAQs on Essential Health Benefit Coverage and the Coronavirus
• Equal Employment Opportunity Commission (EEOC): Pandemic Preparedness in the Workplace and the Americans With Disabilities Act (ADA)
• U.S. Department of Labor (DOL): COVID-19 or Other Public Health Emergencies and the Family and Medical Leave Act Questions and Answers

We expect additional guidance in the coming weeks. There will likely be COVID-19 related legislation as well. On March 14, the House of Representatives passed the Families First Coronavirus Response Act (with adjustments on March 16) which includes emergency paid sick leave and job-protected paid family and medical leave. The Act will head to the Senate the week of March 16, where it’s expected to pass. The Act applies to employers with less than 500 employees, primarily because there are tax credits to assist employers in paying employees.  In the meantime, below are highlights of state action and other guidance for employers related to COVID-19.

State Mandates and Related Guidance

Some states have begun directing insurance companies to eliminate cost-sharing for COVID-19 testing. These insurance mandates apply directly to fully insured group health plans; self-insured ERISA plans would not be subject to any state insurance mandates, although third party administrators may be making certain changes automatically unless the employer opts-out. Likewise, some health insurance carriers in non-mandated states have indicated that they will voluntarily waive charges for COVID-19 testing for participants in fully insured group health plans or individual market plans.

IRS / HSA-Qualified HDHPs

The IRS has provided that, until further guidance is issued, a high deductible health plan (HDHP) will not fail to be HSA-qualified merely because the health plan provides health benefits associated with testing for and treatment of COVID-19 without regard to whether the minimum deductible has been satisfied. This extends to all medical care services received and items purchased associated with testing for and treatment of COVID-19 that are provided by a health plan.

Part of the government’s response to COVID-19 is removing barriers to testing for and treatment of COVID-19. Therefore, the IRS has extended this relief due to the nature of this public health emergency, and to avoid delays or financial disincentives that might otherwise impede testing for and treatment of COVID-19 for participants in HDHPs.

All other HSA eligibility requirements are maintained at this time. Employers sponsoring HDHPs or other health plans should consult with their broker to determine how their insurance carrier or third-party administrator will handle benefits for testing and treatment of COVID-19, including the potential application of any deductible or cost-sharing.

Note that the IRS did not go so far as to change HDHP rules to except telehealth generally for non-COVID-19 related illnesses. In other words, employers who waive all telehealth copays during the pandemic may jeopardize HSA eligibility.  That said, we have seen some insurance carriers and telehealth vendors willing to waive copays for all telehealth visits for a limited duration (e.g., 2-3 months).  Those employers with HSA-qualified plans who wish to broaden their telehealth program to include all visits should consider doing so only for a limited duration and understand that the IRS does not seem to be fully on board with that approach yet.  In addition, an employer extending no-cost telehealth for all visits should consider whether to extend the same treatment for virtual behavioral health visits. 

Note that many physicians, providers, and health care systems are extending (or have already extended) telehealth visits to their patients. These are coded the same or similar to an office visit and require a copay or deductible amounts to be met. A virtual visit with a member’s own primary care physician may not have the same HDHP restrictions as a telehealth visit with an external vendor.

CMS / Essential Health Benefits (EHBs)

• The EHB package required to be offered as part of all non-grandfathered plans for sale in the individual or small group market includes coverage for the diagnosis and treatment of COVID-19
  • Exact coverage details and cost-sharing amounts for individual services may vary by plan, and some plans may require prior authorization
  • Many health plans have publicly announced that COVID-19 diagnostic tests are covered benefits and will be waiving any cost-sharing that would otherwise apply to the test
  • Many states are encouraging carriers to cover a variety of COVID-19 related services, including testing and treatment, without cost-sharing
  • Some states are requiring health plans to cover the diagnostic testing of COVID-19 without cost-sharing and waive any prior authorization requirements for such testing
• Quarantine outside of a hospital setting, such as a home, is not a medical benefit, nor is it required as EHB; however, other medical benefits that occur in the home that are required by and under the supervision of a medical provider, such as home health care or telemedicine, may be covered (pursuant to prior authorization and/or cost-sharing or other limitations)
• While a COVID-19 vaccine does not currently exist, current law and regulations require specific vaccines to be covered as EHB without cost-sharing, when recommended by the federal government
  • Plans are not required to cover a recommended vaccine until the beginning of the plan year that is 12 months after the recommendation is issued; however, plans may voluntarily choose to cover a vaccine for COVID-19, with or without cost-sharing, prior to that date

EEOC / ADA

Now that COVID-19 is a pandemic as reported by the World Health Organization and the CDC, employers may take certain actions without violating the ADA, which applies to employers with 15 or more employees.

• Employers may send employees home if they display flu-like symptoms (e.g., fever, cough, shortness of breath) during a pandemic
• Employers may ask employees who report feeling ill at work or who call in sick if they are experiencing flu-like symptoms
  • Employers must maintain all information about employee illness as a confidential medical record in compliance with the ADA
• When the CDC recommends that people who visit specified locations remain at home for several days until it is clear they do not have symptoms, an employer may ask whether employees are returning from these locations, even if the travel was personal
• Making disability-related inquiries or requiring medical examinations of employees without symptoms is prohibited by the ADA; however, when a pandemic becomes more severe or serious according to the assessment of local, state or federal public health officials, ADA-covered employers may have sufficient objective information from public health advisories to reasonably conclude that employees will face a direct threat if they contract the virus
  • In these circumstances, employers may make disability-related inquiries or require medical examinations of asymptomatic employees to identify those at higher risk of complications
• Employers may require employees to adopt infection-control practices, such as regular hand washing, coughing and sneezing etiquette, and proper tissue usage and disposal at the workplace
• Employers may require employees to wear personal protective equipment (e.g., face masks, gloves, or gowns) designed to reduce the transmission of infection.
  • If an employee with a disability needs a reasonable accommodation under the ADA (e.g., non-latex gloves, or gowns designed for individuals who use wheelchairs), the employer should provide these, absent undue hardship
• When employees return after a pandemic, employers may require a doctor’s note certifying fitness to return to work; however, as a practical matter, health care professionals may be too busy during and immediately after a pandemic outbreak to provide fitness-for-duty documentation

Department of Labor / FMLA

The DOL released an FAQ to assist employers who are subject to the Family and Medical Leave Act (generally, an employer with at least 50 employees within 75 miles).  Employees are eligible to take FMLA leave if they have worked for their employer for at least 12 months and have at least 1,250 hours of service over the previous 12 months (and work at an FMLA-covered location).  As a reminder, under the FMLA, covered employers must provide employees job-protected, unpaid leave for specified family and medical reasons.  Employees on FMLA leave are entitled to the continuation of group health insurance coverage under the same terms as existed before they took FMLA leave.

• Employees are entitled to leave to care for themselves or a sick family member; however, leave taken by an employee for the purpose of avoiding exposure to COVID-19 would not be protected under the FMLA (under current law)
• Employers may require employees to use paid sick and paid vacation/personal leave during periods of unpaid FMLA
• Federal law generally does not require employers to provide paid leave to employees who are absent from work due to COVID-19
  • State or local laws should be considered as well
  • Some federal contractors may be required to provide paid leave
• Employers may change their paid sick leave policy (in accordance with state law) if employees are out and they cannot afford to pay them all, as long as it is done in a manner that does not discriminate between employees because of race, sex, age (40 and over), color, religion, national origin, disability, or veteran status

What Employers Should Expect Next

In addition to the federal guidance noted above, employers who are reducing hours or laying off employees should review the terms of their plans to determine how benefits are affected.  Group health plan coverage may terminate due to the reduction in hours; if so, COBRA must be offered.  Employers may generally subsidize COBRA premiums, and employees may wish to avail themselves of premium tax credits, should they opt for Marketplace coverage.  Subsidizing COBRA coverage has the added benefit of ensuring that employees who are in a stability period as full-time continue to be offered “affordable” coverage for purposes of the ACA’s employer shared responsibility provision.

Ancillary plans (e.g., life insurance, long-term disability) may terminate once employees are no longer actively at work, or the policy may contain an extension of coverage for a certain period of time (typically one or two months). Employers who would like to extend coverage to laid-off employees should consult with their broker or consultant and ensure the carrier agrees with their approach. 

We expect additional guidance at the state and federal levels that may impact employee benefit plans as well as employee leave requirements.  It is also important for employers to stay up to date on their state notices, as some are providing for required paid leave, as well as other insurance requirements. In addition, employers need to be cognizant of local and state emergency regulations that may affect how employers in certain industries, such as food services, operate during a public health emergency.

For more information on COVID-19, see:

• https://www.cdc.gov/coronavirus/2019-ncov/index.html
• https://www.who.int/emergencies/diseases/novel-coronavirus-2019