As the COVID-19 pandemic continues, our clients are dealing with rapidly evolving compliance issues with respect to health and welfare benefit plans and the implementation of existing and new regulatory requirements. Below is a chart providing links to guidance issued by various government agencies with respect to health and welfare plan issues related to COVID-19. This chart is current as of May 12, 2020. There are a number of questions and issues outstanding, and we expect further guidance. Please contact your Faegre Drinker attorney with questions and/or updates regarding this guidance.
On April 28, 2020, the U.S. Department of Labor (DOL) and the Internal Revenue Service issued a new final rule and additional guidance that together extend numerous deadlines under ERISA and the Internal Revenue Code (Code) that apply to group health plans, retirement plans, and participants in those plans (Extension Guidance). The extensions, which are being enacted in response to the COVID-19 pandemic and pursuant to the authority granted to the DOL by the CARES Act, promise to have a significant impact on employers’ administration of various benefit plan requirements, such as administration of benefit plan claims and appeals, COBRA continuation coverage and mid-year special enrollment in group health plan coverage.
The Department of Labor (DOL), the Department of Health and Human Services (HHS), and the Department of the Treasury (collectively, “the Departments”) issued Frequently Asked Questions for health plans implementing coverage changes under the Families First Coronavirus Response Act (Families First Act) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Faegre Drinker and Multnomah Group held a roundtable discussion designed to provide practical advice on navigating employee benefits during the COVID-19 pandemic. Employers are dealing with remote work, layoffs, reduced hours, as well as determining how these changes will impact the operations of their employee benefit plans. Furthermore, with the passage of recent legislation such as the Families First Coronavirus Response Act and potential passage of the Coronavirus Aid, Relief and Economic Security Act, employers are faced with more challenges and changes.
As people across the country react to the quickly changing COVID-19 pandemic, Congress passed another piece of legislation providing guidance and relief on a variety of issues — the Coronavirus Aid Relief and Economic Security (CARES) Act, signed into law on March 27, 2020. This article includes brief summaries of what employers should know about key benefits-related components of the CARES Act. Plan sponsors should review their plans to assess the impact of these changes and take appropriate steps to implement the changes (some of which are required).
With most of the nation on lockdown due to the COVID-19 pandemic, many employers are in the unfortunate position of having to lay off workers or significantly reduce their hours. If these workers also lose employer-sponsored health coverage, they will experience a “qualifying event” under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), triggering the requirement to send COBRA election notices describing the employee’s (and spouse’s) right to elect to temporarily stay on their employer’s health plan. In these difficult times, employers should review their notices to ensure they are compliant with COBRA and provide adequate information to employees. Compliance is especially important because COBRA notices have become the subject of a growing trend of class action lawsuits filed by ex-employees alleging that their former employers did not provide sufficient notice of their COBRA rights.
Generally, COBRA requires notices to be drafted in a manner that the average plan participant can understand, and must provide specifics about continuation coverage, such as the contact information for the administrator, how to elect coverage, and how much coverage costs. The DOL has issued model notice letters to help employers meet these requirements.
HIPAA in the Time of Coronavirus
Group health plans and other entities covered by the Health Insurance Portability and Accountability Act of 1996 (HIPPA) should consider the bulletin released by the Department of Health and Human Services (Bulletin) as a reminder that their HIPAA obligations continue to apply even during a public health emergency, such as the Novel Coronavirus Disease (COVID-19) outbreak.
The Bulletin reiterates the circumstances under which HIPAA currently permits an individual’s protected health information (PHI) to be used and disclosed in an emergency situation and those circumstances applicable to group health plans are generally discussed below. Plan sponsors may want to review their group health plan’s use and disclosure procedures to confirm these permitted exceptions are correctly included.
As of the date of this post, there has been no legislation or IRS guidance allowing plan sponsors to permit cafeteria plan participants to make COVID-19 related mid-year election changes, other than those which also meet the current requirements of the employer’s cafeteria plan and applicable law. However, employers may find themselves faced with an increase in employee requests to change their cafeteria plan elections in response to employees’ rapidly changing circumstances in light of COVID-19.
The table below highlights a few of the mid-year election change requests anticipated as employees and employers respond to the social distancing and economic impact of COVID-19. Plan sponsors should confirm that their plan is not more restrictive than the general mid-year election changes permitted by law which are described here, and as with any mid-year election change request, a change is permitted only when it is consistent with the event and the terms of the plan.
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.
COVID-19 and Leave-Sharing Plans
In these difficult times, some employees may want to donate some of their accrued paid-time off, vacation, or leave to help other employees take leave to recover from COVID-19 or to care for family members with COVID-19. This can be accomplished through a “Leave-Sharing Plan” set up by their employer.
Under normal tax rules, the leave donation would have to be treated as an assignment of income that is taxable to the employee donating the leave. However, the IRS allows such a donation to be made on a tax-free basis if it is done pursuant to a Leave-Sharing Plan that meets IRS requirements for a “Medical Leave-Sharing Plan” or a “Major Disaster Leave-Sharing Plan.” Note that in both types of plans, the employee who receives the donated leave will be taxed on the pay for the donated leave.