By: HUB’s EB Compliance Team
The widespread reporting about the Coronavirus/COVID-19 virus has led to several questions from employers. Employers dealing with this crisis may want to consider the following benefits issues (a broader suite of issues is addressed in HUB’s Coronavirus Resource Center).
Health Coverage Considerations
One question is whether COVID-19 testing is covered by the employer’s health plan. Some states (such as California [also here], New York, Oregon, and Washington) have issued guidance requiring some or all insured plans in their states to cover COVID-19 testing at no cost to members. By contrast, Massachusetts and Georgia have issued bulletins encouraging carriers to take these steps, but not requiring them. This will likely evolve as time goes on, so employers with insured plans should contact their HUB broker to confirm if they have coverage for the test under their plans and whether cost sharing applies.
Fortunately, the IRS has stated that, until further notice, a plan that otherwise high deductible health plan (HDHP) will still be an HDHP even if it covers COVID-19 testing and treatment on a first dollar basis. This will allow employees covered by an HDHP to continue to contribute to a health savings account (HSA) even if they receive COVID-19 testing or treatment (and even if they are already exhibiting symptoms). This is a significant (and welcome) departure from the regular HSA rules. Typically, an HDHP cannot cover treatments for diseases that are already manifested on a first dollar basis. Employers offering HDHPs should confirm with their insurance carriers and/or third-party administrators on how this will be implemented. (Note: This paragraph is updated from the original article to reflect IRS guidance released on March 11, 2020.)
Additionally, self-funded plans are not required to comply with the above state directives. However, employers with self-funded plans should work with their third-party administrators and stop loss providers to determine if and how they want to cover COVID-19 testing under their plans.
In a nutshell, if the employer learns of the employee’s medical information, condition, diagnosis etc. through the health plan, then that information is likely protected under
HIPAA. In that case, the employer (or employees of the employer) who know absolutely cannot share the medical diagnosis or other medical information unless it is facing a true medical emergency where the employee’s diagnosis becomes imperative for health and safety reasons or the employee has given a written HIPAA-compliant authorization to share the information. In certain circumstances, the employer may also disclose information to public health authorities without authorization, although those circumstances are limited.
While there may be a temptation to want to let other employees know or try to help the affected employee, colleagues (such as those in HR or benefits) who learn of this information from the health plan need to keep it to themselves.
Note that other confidentiality provisions may apply from other laws (such as the Americans with Disabilities Act, Family and Medical Leave Act, or Workers’ Compensation Laws). Those requirements are addressed in HUB’s Coronavirus Resource Center.
Some employers are experiencing production slow downs because of supply chain issues in other countries. As a result, they may furlough or put employees on leave until the supply chain disruption goes away.
Employers should consult their plan documents on how to handle COBRA in this situation (and, if applicable, consider the employer mandate issues mentioned below). In some instances, the furlough/leave may cause the employee to lose eligibility for the health plan, so COBRA should be offered. Employers considering paying for COBRA may want to consider the issues we raised in our prior article on that topic.
ACA Employer Mandate
Additionally, if an employer is putting employees on leave (whether because they have contracted the virus or as a preemptive measure), it could have Affordable Care Act (“ACA”) employer mandate implications for employers subject to the mandate. First, if the leave is paid, then the employee’s hours should be counted for purposes of determining if they are full-time.
Second, if an employee goes on an unpaid leave and returns, then the rules for determining if an employee is still full-time or part-time on return are generally the same as if they terminated and were rehired. We discussed those rules here. Additionally, for purposes of counting an employee’s hours, employees on FMLA leave (among others not relevant to COVID-19) must either have their period of leave disregarded or be credited with their average hours of service for the period of the leave.
Third, and perhaps most importantly, if an employee is in a stability period when they go on leave, their coverage will likely have to continue during the period of the leave (other laws, such as FMLA, may also require the coverage to continue). As long as the employee continues to remain employed, coverage will need to be continued, subject to the employee paying the applicable premiums.
Finally, employers using the W-2 safe harbor to determine affordability should consider the impact of an unpaid leave on affordability for that employee. When an employee experiences a reduction in compensation due to an unpaid leave of absence, Box 1 of the W-2 will invariably be reduced. Therefore, the employer’s plan my no longer be affordable. A plan that is not affordable may trigger a “B” penalty if an employee goes out to the marketplace, gets a plan, and gets a subsidy. More details on the employer mandate are described in our other articles on that topic.
HUB will continue to monitor developments in this area and provide updates as appropriate. Companies should also keep an eye on our Coronavirus Resource Center for additional information on issues that may impact their business.
NOTICE OF DISCLAIMER
The information herein is intended to be educational only and is based on information that is generally available. HUB International makes no representation or warranty as to its accuracy and is not obligated to update the information should it change in the future. The information is not intended to be legal or tax advice. Consult your attorney and/or professional advisor as to your organization’s specific circumstances and legal, tax or other requirements.