April 9, 2020

Updating Health Plans for Coronavirus Changes

Employers may be considering changes to their group health plans in response to the ongoing COVID-19 pandemic. In some cases, health insurance issuers for fully insured plans may be initiating some of these changes to help individuals impacted by the pandemic. These changes may include: Waiving certain eligibility requirements for employees who have been furloughed or laid off or had their hours reduced; and Offering a special mid-year enrollment window for employees who did not elect coverage during the last open enrollment period. In addition, due to COVID-19 relief legislation, employers with health flexible spending accounts (FSAs) and health reimbursement arrangements (HRAs) can amend these plans to allow for tax-free reimbursement of over-the-counter (OTC) drugs and menstrual care products. COVID-19 legislation also allows employers with high deductible health plans (HDHPs) to amend their plans to allow coverage of COVID-19 treatment and telehealth and other remote care services, without a deductible.  Employers that make changes to their planโ€™s eligibility and enrollment rules should obtain prior written approval from their issuer (or stop-loss carrier for self-insured benefits). Also, employers that make health plan changes may need to update their plan documents and must communicate the changes to employees through a summary of material modifications (SMM). In addition, employers that offer special mid-year enrollment opportunities must consider the tax rules for premium payments. Waiving Eligibility Requirements Some health insurance issuers and group health plans are waiving certain eligibility requirements (for example, active employment or hours of service) to provide coverage to employees who would otherwise lose eligibility because they have been furloughed or laid off or had their hours reduced. Employers that want to make these eligibility changes should take the following steps: To avoid any unintended liability, employers with fully insured health plans should obtain their issuerโ€™s written approval before making any changes in plan eligibility requirements. For self-insured health plans, employers should obtain this prior approval from their stop-loss carriers. Review the planโ€™s documents to determine whether the planโ€™s eligibility rules need to be updated to include these revised eligibility requirements; and Communicate the changes to employees. To do this, employers can provide an SMM. See below for more information on the deadlines for providing an SMM.    In addition, as a compliance reminder, employers that are subject to the Affordable Care Actโ€™s (ACA) employer mandate rules (or employer shared responsibility rules) and using the look-back measurement method to determine full-time employee status for plan eligibility should continue to follow the same general rules that applied before the COVID-19 outbreak. Under these rules, all paid leave must be taken into account and special rules apply for certain types of unpaid leave, including FMLA leave, and for rehired employees. Federal agencies have not issued any special guidance about the ACAโ€™s employer mandate rules in light of the COVID-19 outbreak. Offering a Special Mid-year Enrollment Window Due to the COVID-19 health crisis, some health insurance issuers and group health plans are offering a special mid-year enrollment window to allow employees who did not elect coverage during their regular enrollment period to sign up for coverage. To avoid any unintended liability, employers that want to offer this additional enrollment opportunity should get written approval from their health insurance issuers (or stop-loss carriers for self-insured plans) before making this change. In addition, employers must consider the tax rules for premium payments under Internal Revenue Code (Code) Section 125 and should take certain steps to implement the special enrollment window. Section 125 Rules for Pretax Premiums If an employer allows employees to pay their health insurance premiums on a pre-tax basis, it must comply with the irrevocability rules of Code Section 125. Under these rules, employees must make their pre-tax elections before the first day of the plan year (or period of coverage), and those elections must be irrevocable until the beginning of the plan year. This means that, as a general rule, an employee who does not elect health plan coverage during open enrollment cannot later elect this coverage during the plan year and pay for it on a pre-tax basis. The IRS has identified some limited circumstances when employees can change their pre-tax elections during the plan year (called mid-year election change events). The IRS, however, has not issued any guidance that would allow employees to change their pre-tax elections due to the COVID-19 pandemic. Whether an employeeโ€™s COVID-19-related election change would satisfy any of the IRSโ€™ current rules for mid-year election change events is unclear and may depend on the specific facts involved.  For example, the IRS currently allows mid-year election changes when any of these events occurs: A change in employment status (such as an unpaid leave of absence or a change in worksite) if the change affects eligibility for coverage under the health plan; A significant change in health plan coverage; and A HIPAA special enrollment event (for example, marriage or birth of a child).  Many employees are experiencing employment changes due to the COVID-19 outbreak, but not all these changes impact  eligibility for coverage. Also, it is not clear whether the health plan changes made by the Families First Coronavirus Response Act (FFCRA) (for example, mandatory coverage of COVID-19 testing without cost-sharing) would be a significant change for a health plan. Further, a special mid-year enrollment window for the COVID-19 pandemic is not covered under HIPAAโ€™s special enrollment rules. Due to this uncertainty, employers should work with their tax and legal advisors to determine whether employees who enroll during the special enrollment window may pay their premiums on a pre-tax basis. Employers may allow employees to enroll in coverage during the special enrollment window and pay for coverage on an after-tax basis until the next plan year, but this tax treatment should be communicated to affected employees in advance because it may be unexpected. Action Steps Employers that want to implement this special enrollment opportunity should: Determine whether newly enrolled employeesโ€™ premiums will be paid on a pre-tax or after-tax basis. Employers that allow employees to pay their premiums

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Unemployement Benefits For Coronavirus Under the CARES Act

The Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted on March 27, 2020, provides federal funding to expand the availability of unemployment insurance (UI) benefits during the coronavirus (COVID-19) public health emergency. Under this law, virtually all types of workers, even those who otherwise would not qualify for UI benefits, may receive payments for up to 39 weeks of unemployment under certain circumstances. The CARES Act also provides funding for states to waive any waiting week requirements for UI benefits during the COVID-19 pandemic and to provide an additional $600 per week to all individuals receiving UI benefits for weeks of unemployment ending before July 31, 2020. The first week for which these benefits are available generally depends on when a particular state enters an agreement with the U.S. Department of Labor (DOL) to administer them. According to the DOL, all states have executed agreements as of March 29, 2020. This Compliance Bulletin provides a summary of the CARES Actโ€™s expanded UI benefit provisions and includes information from related guidance issued by the DOL on April 2, 2020, and on April 4, 2020. Additional guidance is expected in the near future. Employers should become familiar with the expanded benefits available under the CARES Act and advise any workers who may qualify for them to apply through the UI agency of the state in which the workers were employed. Employers should also monitor DOL and applicable state websites for guidance on  how the benefits will be administered.  d. Pandemic Unemployment Assistance (PUA) Benefits for Unemployment due to COVID-19 The CARES Act allows individuals who are unemployed because of the COVID-19 pandemic to receive temporary UI benefits called Pandemic Unemployment Assistance (PUA). Eligible individuals include workers who would not otherwise qualify for UI benefits under their applicable state (or federal) law for any reason, such as because they: Are self-employed; Are seeking part-time work; or Do not have sufficient work history.  An individual may receive PUA benefits for up to 39 weeks if he or she is otherwise able to work and available for work (as defined under state law), but is unemployed, partially unemployed, or unable or unavailable to work because of at least one of a variety of specified reasons related to COVID-19. The table below provides an outline of these specified reasons. The DOL may establish additional qualifying reasons. An individual may receive PUA benefits if he or she is not working because: Diagnosis -The individual has symptoms of COVID-19 and is seeking a medical diagnosis; -The individual or a member of his or her household has been diagnosed with COVID-19;-The individual is caring for a family member or a member of his or her household who has been diagnosed with COVID-19; ย  Child Care A child or other person in the individualโ€™s household for which the individual has primary caregiving responsibility is unable to attend school or another facility that is closed as a direct result of the COVID-19 public health emergency, and that school or facility care is required for the individual to work; Quarantine The individual is unable to reach the place of employment because of a quarantine imposed as a direct result of the COVID-19 public health emergency;   The individual is unable to reach the place of employment because he or she has been advised by a health care provider to self-quarantine due to concerns related to COVIDโ€“19; New job loss The individual was scheduled to commence employment but does not have a job or is unable to reach the job as a direct result of COVID-19; Death The individual has become the breadwinner or major support for a household because the head of the household has died as a direct result of COVID-19; Has to quit The individual has to quit his or her job as a direct result of COVIDโ€“19; or Closed workplace The individualโ€™s place of employment is closed as a direct result of the COVID-19 public health emergency. However, an individual is not eligible for PUA benefits if he or she is: Able to telework; or Receiving paid leave benefits of any kind. Individuals who are eligible for PUA benefits may receive them for weeks of unemployment that started on or before Jan. 27, 2020, and end on or before Dec. 31, 2020. The CARES Act directs the DOL to establish a process for states to provide these benefits retroactively. The weekly amount of an individualโ€™s PUA benefit depends on how the individualโ€™s UI benefit is calculated under the applicable state UI law. For weeks of unemployment ending on or before July 31, 2020, the weekly amount determined under state law is increased by the extra $600-per-week benefit discussed after the section below.   Pandemic Emergency Unemployment Compensation (PEUC): A 13-Week Extension The CARES Act provides federal funding for states to administer Pandemic Emergency Unemployment Compensation (PUEC) benefits. These benefits are available for up to 13 weeks of unemployment to individuals who: Have exhausted all rights to regular UI benefits under the applicable state (or federal) UI law for a benefit year ending on or after July 1, 2019;   Have no rights to regular UI benefits under any state or federal law;   Are not receiving benefits under the unemployment compensation law of Canada; and Are able to work, available to work and actively seeking work. Because most state UI laws provide regular UI benefits for a maximum of 26 weeks in a benefit year, the PEUC provision means that many individuals may receive UI benefits for a total of up to 39 weeks (the 26-week state maximum plus 13 weeks of PEUC benefits). Accordingly, in any of the five states where the state UI maximum is 20 weeks (Idaho, Michigan, Missouri, North Carolina and South Carolina), an individual may qualify for a total of up to 33 weeks of benefits. (Three other states also have lower maximums. These include Florida (12 weeks) Georgia (14 weeks) and Kansas (16 weeks)).   As noted above, an individual must be

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