COVID-19 and Employee Benefits Plans

The ongoing COVID-19 pandemic has created new and unique challenges for employers, their workers, and their businesses. ThinkHR has been on the front lines, supporting employers with HR and Benefits advice and compliance guidance through our online resources and on-demand advisors.

Group health plans and other employee benefit plans are one area of concern during these times. Here are some of the most-frequently asked questions we receive about COVID-19 and benefit plans:

Do all medical plans cover COVID-19 testing?

Yes, the Families First Coronavirus Response Act (FFCRA) requires that all medical plans provide 100% coverage of COVID-19 testing. There are no deductibles, copays, or coinsurance. This federal mandate took effect March 18, 2020 and applies to insurance plans and employer self-funded plans, including grandfathered plans. It does not apply to retiree-only plans.

All testing-related services and services, such as consultative visits to doctors (including telehealth), emergency rooms and urgent care centers that lead to an order for testing, and the administration of tests, are covered. Preauthorization is not required and coverage is not limited to in-network providers.

Is treatment of COVID-19 also covered at 100%?

It depends. The FFCRA mandate for 100% coverages applies only to services and supplies related to testing. Once diagnosed, however, coverage for any treatment of COVID-19 will depend on each medical plan’s terms and conditions, including any provisions for deductibles, copays, coinsurance, and use of network providers.

Additionally, insured plans are subject to state laws that may be broader than the new federal mandate. A number of states now require that medical insurers cover COVID-19 treatment at 100% (in addition to testing). Many carriers also have agreed to provide 100% coverage even if not required by law. For details, contact your carrier or check the America’s Health Insurance Plans (AHIP) website for the latest updates.

Is a high deductible health plan (HDHP) that waives the deductible for COVID-19 testing still compatible with a Health Savings Account (HSA)? What about coverage for treatment?

HDHP must cover COVID-19 testing at 100% per the FFCRA mandate. HDHPs also may be amended to cover treatment of COVID-19 as a first-dollar benefit without deductibles. On March 11, 2020, the IRS announced that pre-deductible coverage of testing and treatment does not cause the plan to lose its status as an HSA-compatible HDHP and does not interfere with the covered person’s eligibility to make HSA contributions.

Many employees are working from home now instead of coming to the office. Can they continue using their Dependent Care FSAs for child care expenses?

Yes, employees can continue using their Dependent Care FSAs provided that the child care is required for the employee to be able to work. For instance, employees working full time may need the same child care whether working from home or the office. If, however, the employee or spouse can care for the child while the employee works, the expenses are not reimbursable.

Can employees change their Dependent Care FSA election due to the COVID-19 issues?

The IRS rules for Dependent Care FSAs set forth a list of permissible election changes. (Ref: 26 CFR § 1.125-4.) Assuming the employer includes all IRS-permissible change events in its plan document, employees may start, stop, increase or decrease their Dependent Care FSA contribution on account of specific events. Examples of events that are likely to come up due to COVID-19 issues include:

• The dependent care center or provider is no longer available;
• The employee needs child care because the schools are closed; or
• The employee’s or spouse’s employment status or work hours are changed.

Can employees change their commuter benefits since they are now working from home?

Section 132(f) plan, often called pretax commuter benefits, allow employees to change their election, or start or stop contributing, for any reason. Generally, changes made by the middle of the month take effect the first of the next month but employees will want to confirm their plan’s procedures with the administrator. Note that there is no use-or-lose provision for commuter benefits, so the any unused balance now will be available for the employee’s use when they get back to commuting to work.

Many employees have been put on reduced hours or furloughed. Can the employer continue covering them on the group health plan?

Many employers and workers are concerned about maintaining group health coverage when work hours are cut due to the current COVID-19 outbreak. Each employer’s case is different, so we suggest the following steps:

1. Review the group policy or plan document. If the plan limits eligibility to employees who are regularly scheduled to work 30 hours or more per week and states that coverage ends when the employee ceases to be eligible (unless protected by the FMLA or similar law), then reduced hours or furloughs will cause the employee to lose coverage. Plans must be administered according to their terms, so the employer cannot continue reporting that employee (and dependents) as active on its eligibility file to the carrier.

2. If the employer wants to continue eligibility for reduced-hours employees or furloughed employees, contact the carrier regarding options to amend the policy. Many carriers are agreeing to changes, and a number of states are requiring carriers to give employers the option of maintaining active coverage for furloughed or reduced-hours employees.

3. If the plan is self-funded, the employer may amend its plan as long as the plan does not discriminate in favor of highly-compensated employees. If the employer has stop-loss insurance, that policy also may need to be amended to ensure its terms are consistent with the underlying self-funded plan.

4. Is the employer an applicable large employer (ALE) that uses the look-back measurement method to determine eligibility for group health (medical) coverage? If so, employees who are deemed full-time employees for a stability period will not lose eligibility during that stability period even if they are furloughed or their work hours are cut (if they remain employed).

5. If the employee’s coverage ends, note that loss of coverage due to reduced work hours or furlough is a COBRA qualifying event. The federal COBRA rules apply plans sponsored by employers with 20 or more workers (except certain church plans). Insured plans also may be subject to state insurance continuation laws (often called mini-COBRA).

Working with their brokers and carriers, employers may find flexible options to meet their employees’ needs during these challenging times.

For More Information

Do you have HR questions about COVID-19? ThinkHR has answers. We are making tons of resources for employers, including templates, FAQs, white papers, and checklists, publicly available through our website. Check it out at https://www.thinkhr.com/covid19/.

Kathy Berger

Kathy Berger is ThinkHR’s principal benefits consultant. She is a Certified Employee Benefits Specialist (CEBS) with over 25 years of experience working with brokers and employers. Kathy uses her extensive knowledge of ERISA, HIPAA, the ACA, and other benefits laws and regulations to assist our clients with practical information in clear language.