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.
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:
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.
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.
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.
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.