The Families First Coronavirus Response Act (FFCRA) signed into law on March 18th included two temporary expanded paid leave options that are mandatory for employers with fewer than 500 employees. Additionally, there are tax credits available for employers that have paid employees with one of these two emergency leave provisions (outlined below). The chart below summarizes these two new leave provisions.
Emergency Paid Leave under FFCRA:
Diversified Group’s Response: During the week of March 25th, Diversified Group sent amendments to all our plan sponsors amending plans through December 31, 2020 to allow for continuation of coverage in the event of an employee utilizing the emergency FMLA and Paid Sick Leave. Stop loss carriers will only consider claims incurred during an emergency sick leave/FMLA leave to be covered under stop loss if an amendment has been signed.
Available Tax Credits for Employers for Emergency Paid Sick Leave Under FFCRA
Tax credits are available to employers for any Emergency Paid FMLA and Sick Time Leave paid from April 1, 2020 to December 31, 2020. Qualified health plan expenses to determine tax credits include the total portion paid by the employer and by the employee (when contributions are made on a pre-tax basis); post tax employee contributions are not considered when calculating healthcare expenses. These expenses are pro-rated over the paid leave time period for which wages were paid. When multiple plans are offered, qualified health plan expenses should be determined for each plan in which the employee participates. Sponsors of self-funded health plans may use the CY 2019 COBRA premium minus the 2% administrative fee when determining qualified healthcare expenses.
Diversified Group’s Response: If applying for the FFCRA tax credit for paid leave, plan sponsors should immediately contact their payroll provider to obtain reporting on their CY 2019 COBRA rates for medical, dental, and vision coverage by tier minus the 2 percent admin fee. If your payroll vendor is unable to provide such data then, upon request, Diversified Group will provide a report of COBRA rates by plan and enrollment for each plan in total for Calendar year 2019. Employers can use that total figure to calculate the per day average cost of each plan per employee. For further information on the FFCRA paid leave tax credits and a description of how to calculate the per day qualified healthcare expense (FAQ 31-36), please click here.
For the full DOL FAQ on The Families First Coronavirus Response Act, click here.
Please note, the tax credits described above are not the same as the Small Business Administration’s Paycheck Protection Program Loan under the Care’s Act. Once guidance is released on the Care’s Act, Diversified Group will outline the details of determining qualified healthcare expenses for the purpose of PPP loans.