On March 19th, President Trump signed into law The Families First Coronavirus Response Act. This is a significant piece of legislation designed to address the economic impact of the COVID-19 pandemic. The bill provides new employee leave benefits, including paid sick time options and mandated insurance coverage for the COVID-testing.
Mandated Coverage for COVID-19 Testing:
Group health plans and insurers offering individual or group insurance must cover testing for the COVID-19 diagnostic test without cost sharing, preauthorization, or other medical management requirements. This applies to FDA approved diagnostic products to detect the virus. It must also include coverage for related services furnished during an urgent care, emergency room, in-person or virtual provider visit that results in an order for or the administration of the COVID-19 diagnostic test in or out-of-network. This mandate extends to self-funded health plans.
DG Action Plan – We have been in constant contact with all our stop loss partners to ensure that any change in coverage to waive cost shares will be considered under the group health plan as any other eligible medical expense. However, the self-funded health plan will need to be amended to extend this coverage. We are also working with our ERISA Attorney to draft exact amendment language to ensure your plan is complying with this mandate. Our action plan is to send out amendments for your signature early next week. Given the timing and critical nature of this process, we will not be printing amendments, we ask that each plan sponsor distribute the amendment accordingly. At that time, we will also include a communication piece that explains the coverage enhancement to your members. If your plan currently covers diagnostic testing and associated costs with no cost share, you will not receive the amendment. This amendment will also apply to HSA compatible HDHP’s. Per IRS Notice 2020-15, waiving cost sharing for COVID-19 diagnostic testing will not disqualify contributions to an HSA. Coverage for treatment of the COVID-19 virus is a covered expense under the health plan subject to your plan’s cost sharing requirements and plan design. These amendments will be effective March 1, 2020.
The legislation includes an expansion to the current FMLA rules to require employers with fewer than 500 employees to provide paid leave to certain employees through December 31, 2020. This new required leave category under FMLA extends to employees who have been employed for a minimum of 30 days and are unable to work or telework due to a need for leave to care for a son or daughter under age 18 because a school or place of care has been closed, or childcare is unavailable, due to an emergency with respect to COVID-19 that is declared by a federal, state, or local authority. This includes biological, adopted, foster children, stepchild, legal ward, or the child of a person standing in loco parentis. The first 10 days of this leave may be unpaid and then paid leave is required after 10 days, calculated based on an amount not less than two-thirds of an employee’s regular rate of pay and the number of hours the employee would otherwise be normally scheduled to work, not to exceed $200 per day and $10,000 in aggregate. Continuation of coverage provisions and job protections would apply to this new FMLA leave category, similar to current FMLA leave categories. Additionally, employees cannot be compelled to use available PTO before receiving this benefit. This expansion applies to employers with under 50 lives as well even though they currently are not subject to FMLA. Employers with less than 25 employees are exempt from the job protections aspect of FMLA. The Department of Labor will be authorized to issue regulations to (i) exclude certain healthcare providers and emergency responders from paid leave benefits, and (ii) exempt small businesses with fewer than 50 employees from the paid leave requirements “when the imposition of such requirements would jeopardize the viability of the business as a going concern.”
DG Action Plan – A plan amendment is not needed for this FMLA expansion because the legislation is amending an already existing program that includes continuation of coverage provisions under FMLA. However, if you are a small (under 50 employer) and do not have FMLA language in your current plan document, please contact us for further guidance.
Emergency Paid Sick Time:
Emergency Paid Sick Time requirements only apply to sick time needs related to the coronavirus. Private employers with 500 or less employees and any public employer regardless of size must provide 80 hours of paid sick time to full time employee who are unable to work or telework for the following virus-related reasons:
- Subject to a quarantine or isolation order – compensated at their regular rate, up to a maximum of $511 per day ($5,110 total);
- Advised by a health provider to self-quarantine – compensated at their regular rate, up to a maximum of $511 per day ($5,110 total);
- Experiencing symptoms and seeking diagnosis- compensated at their regular rate, up to a maximum of $511 per day ($5,110 total);
- Employees caring for an individual described in the above categories – compensated up to two-thirds of their regular rate, up to a maximum of $200 per day ($2,000 total); or
- Employees caring for a son or daughter whose school is closed or child care is unavailable – compensated up to two-thirds of their regular rate, up to a maximum of $200 per day ($2,000 total) – this will provide sick time pay for the first 10 days not covered under the FMLA expansion for this category discussed above.
This amount is immediately available and not subject to length of service requirements. Part-time employees are entitled to sick time based on their average hour worked over a 2-week period. Additionally, employees cannot be compelled to use available PTO before receiving this benefit. The Department of Labor will be authorized to issue regulations to (i) exclude certain healthcare providers and emergency responders from paid leave benefits, and (ii) exempt small businesses with fewer than 50 employees from the paid leave requirements “when the imposition of such requirements would jeopardize the viability of the business as a going concern.”
DG Action Plan – There is no continuation of coverage provision attached to the Emergency Paid Sick Time subsection. Should a plan sponsor want to include continuation of coverage under this mandatory paid sick leave, the plan will need to be amended with stop loss carrier approval (to ensure claims incurred while on this leave are treated as any other eligible medical expense). Without a plan amendment, this leave would be considered a reduction of hours under the plan and subject to COBRA.
The legislation provides payroll tax credits for employers that make required sick or family leave medical payments as described above. More information can be found on the IRS coronavirus website here or contact your accountant or tax advisor for more information on the credit and how to apply.
FMLA Expansion and Emergency Paid Sick Time take effect April 2, 2020 and will sunset on December 31, 2020.
Furloughs and Layoffs:
DG Action Plan – If your plan does not include continuation for temporary layoffs, furloughs, or reduction in hours, then these will be treated as a termination of employment or reduction of hours under your group health plan and COBRA would be triggered. If you were inclined to continue coverage for a period of time during furlough or temporary layoff, or reduction in hours, you could amend your plan which would require the approval of your reinsurance carrier if you want these individuals covered under stop-loss and/or aggregate. When considering continuation of coverage in these situations, a plan must define a beginning and end date of the continuation. To avoid having to re-amend, we would recommend an initial term of no less than a 60-day continuation. Additionally, do not forget to consider other lines of coverage, such as dental, vision, disability and life insurance programs. For self-funded dental, vision and WDI with Diversified, we would recommend extending coverage to match the extension on your medical plan.
If you have any questions, please feel free to contact DG’s Compliance Team:
Dave Follansbee – firstname.lastname@example.org; 860-295-6531
Laura Williams – email@example.com; 860-612-8644