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COVID-19 U.S.: Collected Employee Benefits Blog Posts

We have published a number of COVID-19/coronavirus related blog posts for our U.S. clients and friends over the past couple of weeks.  In an effort to consolidate the flurry of guidance and keep you up-to-date in these fast-changing circumstances, we are posting the links to all of our COVID-19 related blog posts here.  We will update the list below as additional blog posts are added.

  • IRS relief for high deductible health plans covering testing and treatment: click here
  • ERISA fiduciary responsibilities in an uncertain market: click here
  • HIPAA compliance during the COVID-19 pandemic: click here
  • Aggregated links to federal government guidance: click here
  • Compensation considerations fr public and private U.S. companies: click here
  • Emergency paid sick leave and family leave under the Families First Coronavirus Response Act (FFCRA): click here and here
  • Proposed legislative relief for participant access to retirement plan funds under the Coronavirus, Aid, Relief and Economic Security Act (CARES Act): click here
  • FFCRA paid sick and family leave tax credits for small employers: click here
  • FFCRA COVID-19 diagnostic testing mandate for most group health plans: click here
  • Providing employee assistance through interest-free loans: click here
  • Summary of the CARES Act retirement plan access and employer-sponsored health plan provisions: click here
  • Key Issues for employers

COVID-19 Update – Employee Assistance Through Interest-Free Loans

March 23, 2020

Categories

As we explore ways to manage through these difficult economic times, employers who are looking for ways to assist employees who have seen their compensation reduced or former employees whose jobs have been temporarily eliminated due to the impact of the coronavirus quarantine may want to consider making interest-free loans available to those employees as a way to assist them economically during this difficult period.

Click here to read the Alert from our tax colleagues in full.

Families First Coronavirus Response Act Part 2 of 2: Impact on Employer Health Plans

The Families First Coronavirus Response Act (“FFCRA”) enacted March 18 provides a combination of benefits to help U.S. employees during the COVID-19 pandemic:

  • Mandated benefits under employer health plans,
  • Paid sick leave benefits (up to 80 hours) – click here for our discussion of the paid sick leave benefits,
  • FMLA benefits (up to 12 weeks with a combination of paid and unpaid leave) – click here for our discussion of the FMLA benefits,
  • Tax benefits to ease the cost to certain small employers of providing health care coverage under the newly expanded sick leave and FMLA benefits noted above click here for a discussion of the FMLA benefits – click here for our discussion of the small employer tax credits.

The following is a summary of the mandated benefits COVID-19 testing requirements applicable to employer health plans.

COVID-19 Diagnostic Testing Coverage Requirements

Most group health plans[1] and group insurance coverage are required to cover COVID-19 testing related items and services without imposing any cost sharing (including deductibles, copayments, and coinsurance) or prior authorization or medical management requirements. The following is a summary of the key points of the FFCRA requirement:

  1. Coverage of Diagnostic Items and Services without Cost-Sharing. The specific items and services to which the coverage mandate applies include:
    1. “In vitro diagnostic products”[2] used for the detection of SARS–CoV–2 or diagnosis of the virus that causes COVID–19

Families First Coronavirus Response Act Part 1 of 2: Small Employer Tax Credits

The Families First Coronavirus Response Act (“FFCRA“) generally requires U.S. employers with fewer than 500 employees (“Small Employers”) to provide paid sick leave and additional FMLA benefits to their employees.[1] You can read our summary of the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act here and here, respectively.

In order to offset some of the costs these provisions impose on Small Employers, the FFCRA also provides a quarterly payroll tax credit equal to 100% of the qualified sick and leave wages paid to employees under the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act.

The amount of leave wages taken into account is limited with respect to each individual employee for purposes of the credit.

  • For sick leave wages paid due to an employee’s illness or quarantine, the amount of wages taken into account for purposes of the credit is capped at $511 per day and $5,110 in the aggregate for each employee; and
  • For sick leave wages paid due to an employee’s need to care for others or care for the employee’s child(ren) due to school closures[2], the amount of wages taken into account for purposes of the credit is capped is $200 per day and $2,000 in the aggregate for each employee. Sick leave wages under the FFCRA are available for a maximum of 2 weeks (10 days).

CARES Act Would Expand U.S. Retirement Plan Access to Participants Impacted by the Coronavirus Pandemic

The proposed Coronavirus, Aid, Relief and Economic Security Act (“CARES ACT”) would, if enacted, provide legislative relief to participants impacted by the Coronavirus pandemic.  This relief is expected to be agreed upon and enacted – although likely with some modifications.  We will update this post and provide additional detail at that time.

As currently drafted, the CARES ACT would provide the following relief with respect to hardship distributions and loans.

Hardship Distributions

The 10% early distribution tax would be waived for the following virus related hardships:

  • Participant is diagnosed with COVID-19;
  • Participant’s spouse or dependent is diagnosed with COVID-19;
  • Participant experiences adverse financial consequences as a result of being quarantined, furloughed, laid off, experiencing a reduction of work hours, inability to work due to lack of child care caused by COVID-19, the closing or reduction of hours by a business owned or operated by such participant due to COVID-19; or
  • Other circumstances as determined by the Treasury Secretary.

The CARES Act would provide additional tax relief in the form of a three-year period for (i) payment of tax on the distribution and (ii) tax-free repayment of the distribution to the plan.

Plan Loans

The maximum loan that could be taken would be increased to the lesser of $100,000 or 100% of a participant’s vested account balance.  This limit would be double the current limit of the lesser of $50,000 or 50% of a participant’s vested account balance.  In addition, qualifying participants with outstanding loan

Families First Coronavirus Response Act: Emergency Family and Medical Leave Provisions (Part 2 of 2)

The following blog post was authored by our colleagues, Lily Kurland and Christy Phanthavong, and published on the BCLP At Work blog, where there have been ongoing labor and employment updates in response to the COVID-19 pandemic.

On March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act (the “FFCRA or Act”).  The FFCRA provides for two types of leave for employees:  Paid Sick Leave (up to 80 hours) and Emergency Family and Medical Leave (up to 12 weeks of combined paid and unpaid leave).  This post is part 2 of 2 summarizing the requirements of the FFCRA and focuses on Emergency Family and Medical Leave.

  • Scope: Unlike the paid sick leave provisions of the FFCRA, the emergency family and medical leave provisions are not standalone law.  Rather, these provisions amend the Family and Medical Leave Act (“FMLA”), thus providing for “Emergency FMLA” leave.  However, the amendments (such as the changed definition of Covered Employer and Eligible Employee) apply only to Emergency FMLA provisions and do not amend the pre-existing provisions of the FMLA.
  • Effective Dates: The Act will become effective no later than April 2, 2020 and expire on December 31, 2020.
  • Covered Employer: Anyone who has fewer than 500 employees[1] and otherwise satisfies the elements of the definition of “Employer” under the FMLA.[2]
    • EXCEPTIONS:
      • DOL may issue guidance excluding employers with fewer than 50 employees

Families First Coronavirus Response Act: Paid Sick Leave Provisions (Part 1 of 2)

The following blog post was authored by our colleagues, Lily Kurland and Christy Phanthavong, and published on the BCLP At Work blog, where there have been ongoing labor and employment updates in response to the COVID-19 pandemic.

On March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act (the “FFCRA or Act”).  The FFCRA provides for two types of leave for employees:  Paid Sick Leave (up to 80 hours) and Emergency Family and Medical Leave (up to 12 weeks with a combination of paid and unpaid leave).  This post is part 1 of 2 summarizing the requirements of the FFCRA and focuses on Paid Sick Leave. 

  • Effective Dates: The Act will become effective no later than April 2, 2020 and expire on December 31, 2020.
  • Department of Labor (“DOL”) Obligations: Must issue a “Model Notice” for employers to post within 7 days of enactment and guidance within 15 days of enactment.
  • Covered Employer – Anyone engaged in commerce with fewer than 500 employees,[1] as defined under the Fair Labor Standards Act (“FLSA”).
    • EXCEPTION – The DOL may issue guidance excluding employers with fewer than 50 employees from the paid leave requirements of the Act if the paid sick leave would “jeopardize the viability of the business as a going concern.”
  • Eligible Employees – All employees (as defined under the FLSA), regardless of length of employment, and regardless of

COVID-19 and Compensation: Considerations for Public and Private U.S. Companies

The COVID-19 pandemic has created significant disruption in the financial performance of businesses across the globe, creating real challenges for compensation programs maintained by both public and private U.S. companies. While the health and safety of company employees does and should remain the primary concern, boards of directors and compensation committees may also want to consider how the economic impact of COVID-19 may affect their short- and long-term incentive compensation programs and the potential effects of related performance declines on employee morale and commitment.

1. Establishing and Adjusting Performance Goals for Incentive Compensation Programs.

The destabilizing forces of the COVID-19 pandemic have significantly impacted business operations around the globe. As a result, company performance may lag for reasons unrelated to employee performance. In that context, boards of directors and compensation committees should evaluate the performance goals that have been (or are scheduled to be) established for their current cash and equity incentive compensation programs and determine whether it would be in the company’s interest to adjust those performance goals . For public and private companies that have not yet established performance goals for 2020 performance periods, to the extent permitted under applicable plan documents it may be best to hold off on establishing performance goals until the impact of COVID-19 on business operations is more fully understood. Fortunately for U.S. public companies, the repeal of Section 162(m)’s performance-based compensation exception in 2017 created significant flexibility as to when during a performance period performance

Guidance on Employee Benefits and the Coronavirus (COVID-19)

As the Coronavirus has continued to spread, there has been guidance from various entities on a myriad of topics pertaining to employee benefits. Summaries and links to such guidance can be found below. This information will be updated regularly as more guidance becomes available.

The Health Insurance Portability and Accountability Act (HIPAA): The Office for Civil Rights, a division of the U.S. Department of Health and Human Services, published a bulletin outlining privacy of protected health information and when covered entities may disclose such information without a patient’s authorization. Covered entities may be able to disclose needed protected health information without individual authorization to public health authorities, to persons at risk of contracting or spreading a disease, or to prevent a serious and imminent threat, among other limited circumstances. Covered entities must make reasonable efforts to limit the information disclosed to that which is the minimum necessary to accomplish the purpose. In a prior post, we provided a review of the bulletin and ongoing HIPAA obligations for covered entities.

The Family and Medical Leave Act (FMLA): The U.S. Department of Labor released a Q&A addressing various questions about employee rights and employer responsibilities under the FMLA. Eligible employees are typically entitled to take up to 12 weeks of unpaid, job-protected leave in a designated 12-month period due to their own illness or that of a family member. Covered employers must continue to abide by federal FMLA laws as well

HIPAA Continues to Apply During Coronavirus Pandemic

As the Coronavirus Disease 2019 (COVID-19) pandemic grows, employers and others may be wondering how the public health emergency created by the outbreak affects information protected under the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

The short answer: All HIPAA protections continue to apply. Accordingly, employer-sponsored health plans, which are “covered entities” subject to HIPAA, must continue to adhere to HIPAA’s privacy and security rules and may not use or disclosure protected health information (PHI) in a manner not already provided for under HIPAA in the absence of an applicable exception issued by the U.S. Department of Health and Human Services. As a reminder, PHI that an employee obtains when carrying out an administrative function for the plan generally cannot be shared with the employer.  For example, if in the process of performing auditing activities for the employer-sponsored health plan, an employee learns that the plan has provided coverage for the COVID-19 treatment for an employee’s child, that information is PHI and the employee is prohibited from sharing that information with the employer.

The U.S. Department of Health and Human Services Office for Civil Rights recently issued a Bulletin to remind covered entities of their continuing compliance requirements and the circumstances under which PHI may be disclosed without an individual’s authorization, including:

  • Treatment, when necessary to treat the patient or a different patient by one or more health care providers.
  • Public health activities, including disclosure to a public health authority such as the
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