Benefit Plan FAQs on COVID-19 Part 3

Mandates for Employer Group Health Plan Testing Coverage and Paid Leaves of Absence Included in Congress’s “Phase 2” Coronavirus Legislation

On Wednesday, March 18, 2020, the U.S. Senate approved and President Trump signed into law, the Families First Coronavirus Response Act (Act). Among other important relief initiatives to assist Americans in fighting the coronavirus (COVID-19) pandemic, the Act may have immediate impact on certain employer-provided health and welfare benefits, including health plans, time off programs and short-term disability plans.

Health Plan COVID-19 Testing Coverage

The Act requires that all employer group health plans, whether self-funded or insured (and including grandfathered health plans under the Affordable Care Act), cover the full cost with no cost-sharing (e.g., deductibles, copayments, and coinsurance), prior authorization or medical management requirements for:

  • FDA-approved diagnostic products for the detection and diagnosis of COVID-19
  • Costs of office visits (including in-person and telehealth visits), urgent care center visits and emergency room visits that relate to furnishing or administration of a diagnostic test, or evaluation to determine the need for a diagnostic test.

Health plans that are excepted benefits (e.g., limited-scope dental or vision plans) and retiree-only plans are not subject to these requirements.

Impact on Employer Health Plans:  These provisions are effective immediately and for the duration of the public health emergency.  Employers should check with their health plan’s third-party administrators and insurers to ensure compliance.  To the extent these requirements change a health plan’s coverage terms, the new coverage terms should be communicated to employees through a summary of material modifications (SMM) to the health plan’s summary plan description (SPD).

The Act does not require a health plan to expand coverage for treatment of COVID-19. However, employers with high deductible health plans with a health savings account (HSA) may still want to consider extending health plan coverage for COVID-19 treatment before the health plan deductible is met without causing the employee to become ineligible for the HSA, as permitted under recent IRS guidance, which is discussed in our March 17 post Benefit Plan FAQs on COVID-19.

Paid Leave Provisions

The Act also includes two new types of paid leave that generally apply to private employers with fewer than 500 employees, to be effective within 15 days of enactment.

    • Emergency Paid Sick Leave – Covered employers are required to offer up to 10 days of paid sick leave for employees under the following circumstances:
      • The employee is subject to a federal, state or local quarantine or isolation order related to COVID-19.
      • The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
      • The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
      • The employee is caring for an individual who is subject to a local quarantine or isolation order related to COVID-19, or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
      • The employee is caring for his or her son or daughter if the child’s school or place of care has been closed, or the child’s care provider is unavailable, due to COVID-19 precautions.
      • The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.

      Payment is at the greater of the employee’s regular rate of pay, the federal minimum wage, or the applicable state or locality minimum wage (except paid leave to care for another individual or the employee’s son or daughter, and paid leave under the “substantially similar condition” category, as described above, is at two thirds of that amount). Required pay is capped at $511 per day or $5,110 in the aggregate per employee (or $200 per day or $2,000 in the aggregate for payments at two thirds, as described above). Under this provision, the duration of the leave is up to 80 hours for full-time employees, and up to the average number of hours worked over a 2-week period for part-time employees. An employer may not require that an employee use other employer-provided time off before using paid leave under this provision.

      An employer may elect to exclude employees who are health care providers or emergency responders. Employers must post a notice describing the availability of emergency paid sick leave. A model notice is forthcoming from the Department of Labor.

  • Family and Medical Leave Act (FMLA) Expansion – The Act expands FMLA provisions to require a covered employer to provide up to 12 weeks of job-protected leave for employees who have been employed at least 30 days and have a qualifying need due to a public health emergency. The leave is available if an employee is unable to work or telework in order to care for a child under age 18 if the child’s school or place of child care has been closed, or if the child care provider is unavailable, due to a public health emergency with respect to COVID-19. The first 10 days of leave are unpaid, although an employee may use other accrued vacation, or paid personal, medical or sick time off available during these 10 days. After 10 days, employees are entitled to pay in an amount not less than two thirds of their regular pay based on the number of hours the employee would normally work. Pay required under this provision is capped at no more than $200 per day, or $10,000 in the aggregate, per employee.

An employer may elect to exclude employees who are health care providers or emergency responders. The Secretary of Labor has certain authority to exempt small businesses with fewer than 50 employees when the imposition of these requirements would jeopardize the small business’s viability.

The Act provides employers with payroll tax credits for the amount of paid leave provided under these provisions, subject to the caps described above. The two new types of paid leave expire at the end of 2020.

Impact on Employer Leave Policies and Disability Benefits:  Employers may have other state-mandated or discretionary sick leave, paid time off, personal leave or short-term disability policies. Employers should review those policies now to determine how those policies coordinate with the Act’s new paid leave provisions, and whether any clarifications to those policies are needed in light of the Act’s new paid leave provisions.

Employers also should review how the terms of its other benefit plans will apply during these two new types of paid leave. While health and other welfare benefits often continue during paid leave, plan terms vary to some extent. Employers should review existing benefit plan terms, including any insurance policies, for continuation terms applicable to other paid leaves, and any employee premium payment procedures.