Health & Welfare Plans Newsletter

May 1, 2020

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View Coronavirus (COVID-19) News and Resources

[Official Guidance]

EBSA Issues New COBRA Model Notices for Employee Benefit Plans

"[EBSA] today issued Frequently Asked Questions ... and revised COBRA model notices [Model general notice and Model election notice].... 'The information we're providing today will help Medicare-eligible Americans make key decisions regarding their healthcare coverage,' said U.S. Secretary of Labor Eugene Scalia. 'As many individuals face economic hardship related to coronavirus, the Department will continue to inform workers and help them avoid incurring unnecessary health costs.' Scalia added[.]"

Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

[Guidance Overview]

DOL and IRS Announce Emergency COVID-19 COBRA Rules

"The 60-day [COBRA] election 'clock' is paused beginning March 1, 2020 or later until the lifting of the National Emergency. Similarly, the 45-day first payment 'clock' is also paused during the Outbreak Period, as is the 30-day grace period for making COBRA payments.... Similarly, the 30 day HIPAA Special Enrollment Period (SEP) for qualified changes of status that impacts group health plan enrollment changes is also 'paused' for until after the end of the Outbreak Period."

Kushner & Company

[Guidance Overview]

Agencies Extend Benefit Plan Compliance Deadlines Due to COVID-19

"Although the Departments assumed a national emergency end date of April 30, 2020, ... the actual national emergency end date (and, as a result, the end date of the follow-on outbreak period) are not yet known and may not occur until several weeks or months in the future.... [P]lan administrators will ultimately need to monitor and build in the outbreak period (once it is known) in calculating the timeliness of certain benefit actions. This will be especially important with regard to COBRA[.]"

Thomson Reuters Practical Law

[Guidance Overview]

CARES Act Expands Scope of Educational Assistance Plans to Include Employer Repayments of Student Loans

"The CARES Act expanded the scope of Educational Assistance Programs under Section 127 of the code to include student loan repayments. Under prior law, that provision only allowed for an exclusion from an employee's income for educational assistance that was provided by an employer prospectively.... [An] employer may now repay up to $5,250 of an employee's student loans, and those repayments would not be subject to income or payroll tax for 2020."

Hinshaw & Culbertson LLP

[Guidance Overview]

Layoffs/Furloughs and Excise Taxes Under the ACA

"To avoid ACA penalties, employers may wish to consider subsidizing or instituting a premium holiday for employees on layoff or furlough to ensure that affordable coverage continues to be offered. Alternatively, if an employee is terminated, no penalties will result from a month in which an employee is not employed. An unsubsidized offer of COBRA coverage will generally not be considered affordable under the ACA."

Dickinson Wright

[Guidance Overview]

Interaction Between Emergency Paid Sick Leave and California Paid Family Leave/State Disability Insurance

"Employees who are eligible for Emergency Paid Sick Leave (EPSL) under the [FFCRA] may also file a claim for Paid Family Leave (PFL) or State Disability Insurance (SDI), two benefits established under California law.... [It] is likely that an employee who receives EPSL from an employer, while also receiving PFL from the EDD, will see their PFL benefits reduced, unless the employer and employee have agreed to coordinate/integrate the two benefits ... If an employer has adopted a policy of coordinating SDI/PFL benefits, the extent to which EPSL will supplement PFL or SDI will be determined by the terms of the policy."

Liebert Cassidy Whitmore

[Guidance Overview]

Editor's Pick COBRA Deadlines and the Emergency COVID-19 Regulation

"The new regulation does not include an updated COBRA election notice template with the new deadline extension information. So what language should a well-meaning plan sponsor rely on? ... [Assume an] individual elects continuation coverage immediately.... [T]he person could choose to defer all premium costs until the end of the national emergency. Yet the employer plan is still bound to pay all of the resulting claims on time?"

MZQ Consulting, LLC

[Guidance Overview]

Employee Benefits in the Time of COVID-19: Reimbursement of Over-the-Counter Medications

"An employer is not required to allow participants to be reimbursed for over-the-counter medications from its health FSA or HRA.... [D]ue to the popularity of this category of reimbursable expenses prior to the ACA exclusion, particularly in health FSAs, ... many employers will permit the reimbursement of over-the-counter medications. An HSA does not need to be amended, as employees are required to self-police their reimbursable medical expenses. However, an employer could provide notice of this change to employees so they are aware of the additional items that can be reimbursed on a pre-tax basis from an HSA."

Dickinson Wright

Impact of COVID-19 on HIPAA Compliance and Employer Considerations

"[E]mployers should treat COVID-19 disclosures confidentially and consider OCR's guidance in preparing their workplace policies related to the pandemic.... Revisit your organization's remote access policy, which was likely not intended to address most employees working from home.... Educate employees about the increased cybersecurity risk of working remotely and consider conducting controlled exercises to assess your organization's risk. Train those employees with access to PHI and include instructions on permitted uses and disclosures of PHI with a focus on the 'minimum necessary' standard."

Buck

Benefits and Marketplace Trends Through the Lens of COVID-19

"A primary development in the near future will be cost increases.... Many insurers are already covering telehealth under their plans, and it's a safe bet that others will do the same.... Employers will need to evaluate their unique circumstances and consider whether they need to shift some of their cost-sharing burden with a new plan design.... Some organizations are already successfully holding virtual open enrollments."

CBIZ

Editor's Pick Deferral of Health Care Means COVID-19 Could Reduce Employer Costs in 2020

"COVID-19 could reduce employer health care costs by as much as 4% in 2020, as medical care for noninfected patients has declined during the pandemic, according to a new Willis Towers Watson analysis of large, self-funded employers. The analysis updates a similar study conducted last month that projected employer costs could rise by as much as 7% due to COVID-19-related costs."

Willis Towers Watson

Paid Medical Leave: What We Know and What We Need to Know to Improve Health and Economic Well-Being

"Research suggests that paid medical leave could affect economic outcomes by reducing income volatility, helping workers to return to employment after taking leave, reducing productivity loses due to presenteeism, and supporting greater labor supply and long-term labor force participation. There are several different mechanisms through which paid medical leave may have an effect on health outcomes. These include improved health management, earlier treatment, greater healthcare utilization, improved income stability, and reduced financial stress."

Urban Institute

[Opinion]

Consumer Protection Realignment: Shifting Consumer Billing from Providers to Health Plans

"To ameliorate one of the systemic problems arising from this dynamic -- the problem of consumers receiving multiple confusing invoices for the same procedure from insurers and providers -- we propose a realignment of the billing and collection of deductibles, coinsurance, and copayments from health care providers to health insurance plans. Specifically, we propose the consideration of federal legislation requiring all providers, whether in or out of network, to bill through the insurer."

John A. Sackett and Allen Dobson, in Health Affairs

Benefits in General

[Guidance Overview]

Editor's Pick DOL Disaster Relief Notice Extends Deadlines, Enables COBRA Gamesmanship

"The DOL ... will not take enforcement action against retirement plan sponsors that are temporarily unable to promptly remit contributions to the plan solely as a result of COVID-19.... [T]he requirement to disregard COBRA deadlines during the Outbreak Period may enable affected individuals to manipulate the COBRA election process.... Although this gives individuals who lose health coverage during the pandemic significant latitude, it also creates a very real risk of adverse selection for group health plans."

Spencer Fane

[Guidance Overview]

DOL/Treasury COVID-19 Relief Includes Long Extension of Participant Deadlines and Rule of Reasonableness for Plan Administration

"The guidance does not get into details on logistics for implementation. Plan sponsors and fiduciaries will need to grapple with issues such as: [1] When and how to communicate the extensions to affected participants and beneficiaries.... What format, and how much detail is appropriate, given that the extension period is fluid and will be short-lived? What should be done for people who are already in election periods and were previously informed of a deadline that has now been extended? [2] Whether and how past actions can be undone.... [If] an individual's COBRA coverage was previously canceled for not paying premiums, can it be reinstated? What happens if an eligible COBRA beneficiary already obtained coverage somewhere else?"

Proskauer

Press Releases

401(k) Champion® Award Announces Winners
Jackson, Grant Investment Advisers, Inc.

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BenefitsLink Health & Welfare Plans Newsletter, ISSN no. 1536-9595. Copyright 2020 BenefitsLink.com, Inc. All materials contained in this newsletter are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of BenefitsLink.com, Inc., or in the case of third party materials, the owner of those materials. You may not alter or remove any trademark, copyright or other notices from copies of the content.

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