Employee Benefits Question of the Week: COVID-19 and Disclosure

QUESTION: Can an employer disclose to their employees a positive COVID-19 diagnosis within the employee population?

ANSWER:    Generally, an employer may disclose a positive diagnosis of COVID-19 to employees, but must do so in a way that does not identify the infected employee. A combination of federal privacy laws prevent an employer from disclosing the identity of an infected employee without authorization.

Health Insurance Portability and Accountability Act (HIPAA)

Although the Department of Health and Human Services recently announced a limited HIPAA waiver of certain penalties for noncompliance with the certain provisions of the HIPAA Privacy Rule, that waiver only applies to hospitals within areas covered by public health emergencies that have implemented their disaster protocols. Employers may be subject to HIPAA if they are the sponsor or administrator of self-insured health and wellness plans. If the employer acquired information relating to the infected employee’s diagnosis in its role as administrator of the health plan, then HIPAA prohibits the employer from disclosing the employee’s positive COVID-19 diagnosis to other employees.

Americans with Disabilities Act (ADA)

According to the EEOC’s recently updated Pandemic Preparedness in the Workplace and the Americans with Disabilities Act, during a pandemic, information about an employee’s positive COVID-19 diagnosis (even though not disability-related) should be treated as confidential medical records in compliance with the ADA. Additionally, if an employee is experiencing influenza-like symptoms, such as fever or chills and a cough or sore throat, but does not test positive for COVID-19, any information about the employee’s illness must also be maintained as a confidential medical record in compliance with the ADA.

Family and Medical Leave Act (FMLA)

The expanded FMLA leave protections for COVID-19 provided by the Families First Coronavirus Response Act (HR 6201) will prompt many employers to ask if an employee is taking FMLA leave for reasons related to COVID-19. If an employee takes FMLA leave because of their, or their family member’s, positive COVID-19 diagnosis, the FMLA prevents employers from disclosing the diagnosis of the employee, or their family member.

If an employer has authorization from an infected employee, they may disclose the infected employee’s identity to other employees. The infected employee’s authorization must be truly voluntary. An employer may ask the employee for authorization, but if the employee declines, the employer cannot disclose the employee’s identity.

Even if an infected employee does not give the employer authorization to disclose their identity, the employer may still make a general disclosure to inform other employees that an employee tested positive for COVID-19. The disclosure cannot (i) specifically identify the infected employee by name or (ii) provide any information that would allow other employees to identify the infected individual. Employers should also make reasonable efforts to limit the information they disclose to the minimum information necessary to accomplish the purpose of the disclosure.

 

Source: https://www.employeebenefitslawreport.com/2020/03/employer-disclosures-of-covid-19-diagnoses/

Employee Benefit News Update- Families First Coronavirus Response Act

Late yesterday afternoon the Senate passed the Families First Coronavirus Response Act. It includes several provisions to protect American workers and assist employers in providing emergency paid sick leave, as well as paid family leave in the case of school closures, for working families impacted by COVID-19.

The FFCRA requires employers with up to 500 employees to provide paid sick leave and paid family leave while providing a refundable payroll tax credit to employers to cover 100% of the cost of wages. There is also a refundable income tax credit made available for self-employed individuals. Employers with less than 50 employees must apply for a hardship exemption in order to qualify.

Employers must offer two weeks (10 days) of paid sick leave for COVID-19-related reasons (existing leave offered can count toward the 10 days). If the sick leave is for an employee who is sick or seeking a diagnosis, the benefit must replace all of the employee’s wages up to a maximum benefit of $511 per day. If an employee is caring for another individual who is sick, the benefit must replace at least two-thirds of the employee’s wages up to a maximum benefit of $200 per day. The paid sick leave credit offsets 100% of employer costs for providing mandated paid sick leave. The credit also offsets, uncapped, the employer contribution for health insurance premiums for the employee for the period of leave.

Employers must offer 12 weeks of paid family leave for employees who have been employed for at least 30 days with a minor child in the event of the closure of the child’s school or place of care. The first 10 days are unpaid, but the employee can overlap this with the 10 days of paid sick leave. This benefit must replace at least two-thirds of the employee’s wages up to a maximum of $200 per day. The paid family leave credit offsets 100% of employer costs for providing mandated paid family leave. The credit also offsets, uncapped, the employer contribution for health insurance premiums for the employee for the period of leave.

Under FFCRA, self-employed individuals are provided similar credits as refundable income tax credits in an amount of what self-employed workers would have received if they had been an employee receiving paid leave benefits pursuant to the mandates. For a given day that a self-employed worker could not work, they can claim a “rough justice” tax credit in the amount of their average daily self-employment income for the year.

Employee Benefits Question of the Week: Who qualifies and when for COBRA?

QUESTION: COBRA allows individuals to temporarily continue their employer-sponsored health care coverage when certain qualifying events occur that would otherwise end the coverage. So who qualifies for COBRA and when?

ANSWER:    Only qualified beneficiaries are entitled to elect COBRA. A qualified beneficiary is an employee covered by an employer-sponsored group health plan on the day before a “qualifying event” takes place that would trigger COBRA rights, as well as that employee’s spouse, former spouse and dependent children if they were covered by the plan. Dependent children include adopted children.

Domestic partners are not considered spouses for purposes of federal law, including COBRA. Group health plan sponsors that offer domestic partnership coverage may offer COBRA-like rights to domestic partners, but they are not required to do so.

Qualifying events include the following:

  • a covered employee’s termination of employment or reduction of the hours of employment
  • the covered employee becoming entitled to Medicare
  • divorce or legal separation from the covered employee
  • the death of the covered employee
  • a dependent child ceasing to be a dependent under the generally applicable requirements of the plan

For more information on COBRA visit the the CMS page FAQ on COBRA.  You can also find an employer and employee guide on the DOL site.

 

Sources:

https://www.cms.gov/CCIIO/Programs-and-Initiatives/Other-Insurance-Protections/cobra_qna

https://blog.ifebp.org/index.php/who-qualifies-for-cobra

https://www.dol.gov/sites/dolgov/files/legacy-files/ebsa/about-ebsa/our-activities/resource-center/publications/an-employees-guide-to-health-benefits-under-cobra.pdf

 

Employee Benefits Question of the Week: Newborns’ and Mothers’ Health Protection Act

QUESTION: Does a plan have to cover a newborn baby under the Newborns’ and Mothers’ Health Protection Act (NMHPA) if the newborn is not added to the policy?

ANSWER:    The plan need not cover anyone who is not enrolled.  The NMHPA does not require group health plans to provide coverage for maternity or newborn benefits.  HIPAA affords newborns at least a 30 day window to be enrolled in the plan, starting at birth; coverage will be retroactively effective as of the birth.

Generally, the mother’s inpatient stay and delivery itself are covered under the mother’s benefits, but beyond that, any treatment for the newborn would be under the newborn’s own coverage (if enrolled).

Source: The Phia Group

Employee Benefits Question of the Week: COBRA and FSAs

QUESTION: How does COBRA apply to health flexible spending accounts (FSAs)?

ANSWER:    Generally, a health FSA is considered an ERISA-covered health plan, and, unless an exception applies, an employer subject to COBRA provisions must offer COBRA continuation coverage to qualified beneficiaries who experience a loss in coverage due to a qualifying event for up to 18 months, including new elections during open enrollment.

A limited COBRA option must be offered if the FSA plan is considered an excepted benefit. To determine whether an FSA is an excepted benefit, the following conditions must be met:

  1. The annual FSA election amount does not exceed two times the amount contributed by the employee. If the employer does not contribute to the FSA, this requirement is met.
  2. A health insurance plan was available to the FSA participant due to his or her employment, and this coverage was not limited to excepted benefits such as limited-scope dental and vision coverage.
  3. The maximum COBRA premium is equal to or exceeds the maximum FSA benefit.

For an excepted-benefit FSA, COBRA is only offered for the remainder of the plan year and not for a full 18 months (i.e., it is limited). COBRA coverage does not need to be offered to qualified beneficiaries who have “overspent” their accounts at the time of the qualifying event.

If the health FSA plan is not an excepted benefit, the employer will need to offer COBRA regardless of whether the account is over- or underspent and the COBRA duration is offered for the full 18 months.

Employees who elect COBRA continuation coverage may only make after-tax contributions to the FSA account once they are no longer receiving a paycheck. In addition, employers may require a qualified beneficiary to pay an additional 2% administrative fee. As an example, an employee who makes an annual FSA election of $2,400 and terminates employment on June 30 will have contributed $1,200 ($200/month) at the time of termination. For each month of continued coverage, the beneficiary should send $204 (102% of the applicable premium/contribution) to the employer.

If an employee does not elect COBRA upon termination, he or she cannot access the FSA funds once terminated (except for claims incurred prior to termination date), and any balances are forfeited.  For more information and details, search Zywave for “COBRA Rules: Health FSAs and HRAs”.

 

Source: SHRM (https://www.shrm.org/resourcesandtools/tools-and-samples/hr-qa/pages/howdoescobraapplytohealthflexiblespendingarrangements.aspx) and Zywave

Employee Benefits Question of the Week: Health Coverage and FMLA Leave

QUESTION: Do employers have to maintain an employee’s health benefits on FMLA leave? If the employee doesn’t pay his or her premium, can the employer cancel the employee’s health benefits?

ANSWER:    An employer is required to maintain group health coverage for an employee on FMLA leave on the same terms as if the employee had continued to work.  An employer may require employees taking FMLA leave to pay their share of health plan premiums, although they cannot be required to pay more than what they would have paid if they had remained actively employed. An employer is not required to maintain an employee’s health insurance coverage for extended leaves of absence, but it is required to follow its written policies and to apply them consistently.

An employee may choose not to retain group health plan coverage while on FMLA leave or may stop paying premiums for his or her coverage. Unless an employer has an established policy with a longer grace period, the employer is not required to maintain health coverage for an employee on FMLA leave if the employee’s premium payment is more than 30 days late. Employers must notify employees on FMLA leave before health care coverage is dropped for lack of premium payments.

Generally, an employer must provide written notice to the employee at least 15 days before coverage is to cease. The notice must explain that the payment has not been received and that coverage will be dropped on a date that is at least 15 days after the date of the letter, unless payment is received by that date.

Alternatively, when an employee stops making premium payments while on FMLA leave, the employer may decide to maintain the employee’s coverage by paying both its share and the employee’s share of the premium. After the FMLA leave ends, the employer may recover from the employee the portion of the employee’s share of the premium that it paid, even if the employee does not return to work following leave.

Upon the employee’s return from FMLA leave, the employer must unconditionally restore the employee to the same coverage and benefits that he or she would have had if he or she had not taken leave and stopped paying premiums. The employee cannot be required to re-qualify or meet any other conditions prior to being reinstated to the group health plan.

Aside from certain small employers, as well as the federal government and church organizations, employers must allow employees to elect the COBRA continuation coverage if health insurance coverage is terminated due to a leave of absence from work. Generally, for losses of health insurance due to leaves of absence, former employees will be entitled to 18 months of continued COBRA coverage.

 

 

Sources: Broker Briefcase “FMLA – Maintaining Health Benefits”

https://www.hq-law.com/blog/employee-benefits/health-insurance-during-medical-leave-from-work/

Employee Benefits Question of the Week: 1095-C Form

QUESTION: I thought the individual mandate no longer applies, what is the purpose of 1095-C form? Will employees covered under an employer’s group health plan still receive the 1095-C?

ANSWER:    The IRS 1095-C form shows whether an employer offered an employee affordable health care coverage of minimum value during the past year. It also reports whether the employee and their family members actually had health coverage through the employer for each month of the past year.

The employer or health insurance company sends one copy of the 1095-C to the Internal Revenue Service (IRS) and one copy to the employees.  It is the responsibility of the plan sponsor to provide the 1095-C, so if your client is self-insured they are the responsible party, if they are fully insured, it is the responsibility of the health insurance company to provide the form.

The 1095-C should be received by March 2nd, 2020.  While not needed for federal tax purposes given the absence of a penalty for not having health insurance, some states require residents to have health insurance.  New Jersey, Massachusetts and Washington, D.C. required individuals to have health coverage in 2019. California, Vermont and Rhode Island will join them in 2020.

Source: https://www.irs.gov/affordable-care-act/individuals-and-families/affordable-care-act-what-to-expect-when-filing-your-tax-return

Employee Benefits Question of the Week: COBRA Extensions

QUESTION: Can COBRA be extended?

ANSWER:    Before answering the question, it’s best to explore how long qualified beneficiaries are entitled to COBRA.  Depending on the qualifying event (QE), the maximum coverage period can be anywhere between 18 and 36 months.

18 Months

Where a loss of coverage is a result of an employee’s termination of employment (other than by reason of gross misconduct) or reduction in hours, qualified beneficiaries are entitled to continue coverage for a maximum of 18 months.

36 Months

Where a loss of coverage is a result of any of the following, qualified beneficiaries are entitled to continue coverage for a maximum of 36 months:

  • Death of a covered employee;
  • Divorce or legal separation of a covered employee from the covered employee’s spouse;
  • A covered employee becoming entitled to Medicare benefits; and
  • A dependent child ceasing to be a dependent child under the terms of the health plan.

29 Months

Where a loss of coverage is a result of an employee’s termination of employment (other than by reason of gross misconduct) or a reduction in hours and a qualified beneficiary is determined by the Social Security Administration to be disabled before, at or within 60 days of the date of the qualifying event, all qualified beneficiaries within that family are entitled to COBRA for a maximum period of 29 months. To benefit from this extension, any qualified beneficiary within the family must notify the plan administrator as required by the reasonable procedures established by the plan administrator.

Medicare

If the employee was enrolled in Medicare prior to his or her termination or reduction in hours (for example, retirement), the employee is entitled to 18 months of COBRA continuation coverage. Where the spouse or dependent is covered under the plan on the day before the employee’s termination or reduction in hours, the spouse and dependent are entitled to COBRA continuation coverage for the longer of:

  • 18 months from the date of the employee’s termination or reduction in hours; or
  • 36 months from the date the employee became enrolled in Medicare.

As outlined, the length of the maximum coverage period depends on the type of qualifying event that has occurred.  There are situations where the maximum coverage period can be extended or terminated early.

There are several ways that the standard maximum coverage period can be extended. The following chart provides a summary of the available methods.

Disability Extension Rule Extends 18-month period to 29 months for all related QBs
Multiple Qualifying Event Rule Extends 18-month coverage period to 36 months for spouse and children when a second qualifying event (such as divorce from or death of the covered employee or loss of dependent status) occurs during the initial 18-month coverage period
Medicare Entitlement Rule Extends 18-month period for spouses and children when the covered employee becomes entitled to Medicare within 18 months before the qualifying event

COBRA coverage usually terminates at the end of the maximum coverage period. It is important to keep track of each QB’s period of coverage to be able to tell when coverage should be terminated. In addition, coverage can be terminated early for the following reasons:

  • The QB fails to make timely premium payments;
  • The employer ceases to make any group health plan available to any employee;
  • The QB becomes covered under another group health plan;
  • A disabled QB is determined not to be disabled; or
  • For cause.

If coverage is to be terminated before the end of the maximum coverage period, notice to the QB is required.

 

Source:   Zywave’s “Top 10 COBRA Mistakes” and “COBRA Common Questions – Administration”  https://www.dol.gov/sites/dolgov/files/legacy-files/ebsa/about-ebsa/our-activities/resource-center/publications/an-employees-guide-to-health-benefits-under-cobra.pdf

 

Compliance: Annual Limitations on Cost Sharing

The ACA requires non-grandfathered plans to comply with an overall annual limit—or an out-of-pocket maximum—on essential health benefits.

For 2020, the out-of-pocket maximum is $8,150 for self-only coverage and $16,300 for family coverage.

Individual Mandate’s Affordability Exemption

Under the ACA, individuals who lack access to affordable minimum essential coverage (MEC) are exempt from the individual mandate penalty. Coverage is considered affordable for an employee if the required contribution for the lowest-cost, self-only coverage does not exceed 8.24% of his/her household income for MEC in 2020.

Tikia Logo_Clear Background_RS-01

 

 

Compliance: PCORI

The Patient-Centered Outcomes Research Institute (PCORI) fee was established as a part of the ACA to fund medical research. Insurers and employers with self-insured plans are subject to the fee. The last PCORI fee payment was expected to occur on July 31, 2019 (or July 31, 2020 for non-calendar year plans). The PCORI fee is now extended for another 10 years, which means employers with self-insured plans must continue paying the PCORI fee.

The Further Consolidated Appropriations Act, 2020, signed into law on December 20, has reauthorized those fees for the next ten years, meaning that insurers and employers will have to continue to pay this fee until 2029 or 2030, depending on their plan year. The amount due per life covered under a policy will continue to be adjusted annually.

For more information on how to calculate this fee, see the IRS website.  An update to the attached workbook will be provided once the adjusted amounts are announced.

 

Source: https://www.connerstrong.com/blog/insights-detail/cadillac-and-other-aca-taxes-repealed-pcori-extended/