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An Important Message to Our Clients

This is an unprecedented time for all of us.  We’re actively monitoring the Coronavirus situation as it changes daily, and we continue to evaluate how to best serve our clients.  Our top priority during this time of uncertainty is balancing the well-being of our employees while providing our clients with continual access to essential employee benefit insurance services.  To keep this balance, we have made some temporary adjustments and permanent enhancements to our business services.

We are temporarily discontinuing in-person Employee Benefits Renewal Meetings

  1. In observance of the health of our clients and employees, we will be conducting Employee Benefits Renewal Meetings through the use of email, telephone conference and / or videoconferencing technologies.
  2.  DMIS Renewal Proposals will be delivered to each client no less than 60 calendar days in advance of the renewal effective date.  Renewal Binders will be sent via US Mail or UPS delivery.  

We are temporarily discontinuing in-person Benefits Open Enrollment Meetings

  1. In service of the health of our clients and their employees, we will be conducting Benefits Open Enrollment Meetings through the use of Zoom technologies.  We will prepare OE presentations and provide a downloadable link for employees to access the material during Zoom meeting .
  2. Employee enrollment or re-enrollment in their benefit plans will continue through Employee Enterprise, our cloud-based online enrollment technology.   Our Employee Enterprise System uses high level encryption technology to keep your employee information private & secure.

ThinkHR

 As a client of DMIS, we want to make sure you have the resources you need to work with your employees during this critical time.  For the most up-to-date news as it relates to HR and Coronavirus (COVID-19) Resources, please login to your ThinkHR account at  https://www.thinkhr.com/hrhotline/login.php.  If you need assistance with your login credentials, please call or email us.  We are available.

1.     Access your ThinkHR Account  

Live Advisors(877) 225-1101 – HR questions answered by a ThinkHR expert to help guide you in the area of terminations, furloughs and lay-offs.   

Comply – click on “Comply” at the top of the home page and then click the red circle “COVID-19” .  From there you will find current resources and materials including:  

a. COVID-19 FAQ

b. COVID-19 HR Best Practices and Guidance Webinar

c. Families First Coronavirus Response Act

d. Sample Emergency Family and Medical Leave Policy (FFCRA FMLA Expansion)

e. Sample Emergency Paid Sick Leave Policy (FFCRA Paid Sick Leave)

f. Sample Communication to Employees

g. Sample Essential Business Letter (COVID-19)

h. Furlough Letter (COVID-19)

i. Sample Telecommuting Agreement

j. Work from Home Agreement

k. Telecommuting Checklist

l. Sample Work from Home Policy

m. Acknowledgment of Receipt for Company-Issued Property

n. State Resources

o. ThinkHR Blog: When Business Threats are Contagious

In closing, I wanted to take this opportunity to update you on our company’s response plan. We’re closely monitoring updates from many resources including the World Health Organization (WHO), Centers for Disease Control and Prevention (CDC) and the California Department of Public Health (CDPH) and making sure we are complying to protect the health of our DMIS family and our community.  We are following the CDC’s recommendations by maintaining a very clean, safe and healthy environment for our employees. Please know that we remain dedicated to providing the best possible service in the days, weeks and months ahead.  We realize this is not business as usual for any of us and do appreciate your patience and understanding as we implement our new plan. 

Please reach us at (949) 366-9405 or email me directly at dsmith@douglasmccarty.com at anytime.         

Thank you and stay safe,

 Douglas T. Smith
President

 

Coronavirus (COVID-19) – Benefit Eligibility During Sick Leave, Furloughs, and Terminations

Many employers face a significant number of employee leaves of absence and employment terminations related to COVID-19. This article provides some clarity about how to handle benefit eligibility. Over the next several weeks, additional guidance and clarification from federal and state government agencies is expected, perhaps providing some exceptions and requirements regarding benefit eligibility. However, there are some general guidelines that we can follow in the meantime.

Sick Leave

It is necessary to consider whether FMLA-protected leave applies for employees who request leave due to their own COVID-19-related illness or to care for a sick family affected by COVID-19.

All public entities are subject to FMLA, regardless of size. Private employers are typically subject to FMLA only if the employer has 50 or more employees. Employees who request leave for qualifying reasons are eligible for FMLA-protected leave if they:

  • Work for a covered employer;
  • Have worked for the employer for at least 12 months as of the date the FMLA leave is to start;
  • Have at least 1,250 hours of service for the employer during the previous 12-month period; and
  • Work at a location where the employer employs at least 50 employees within 75 miles of that worksite.

See DOL’s Guide for Employers for more detailed information discussing employers subject to FMLA and FMLA requirements.

If the employee qualifies for FMLA-protected leave, the employer should continue to offer group health plan benefits with the same employer and employee contributions for at least 12 weeks.

For employees who do not qualify for FMLA-protected leave, benefit eligibility may be lost upon leave (or at the end of the month in which leave is taken) unless the employer has a leave policy that allows for an extension of benefit eligibility. Coverage should be terminated and COBRA offered if the employee is no longer considered eligible and there isn’t a leave policy extending benefit eligibility.

Furlough

Employers may be forced by government order, public health considerations, or economic circumstances to furlough employees for a period due to COVID-19. Typically, furloughed employees remain employed, but have reduced hours or are placed on a temporary leave of absence. It’s necessary to consider plan eligibility rules and any applicable leave policies to administer benefits properly if employment is not terminated, but there is a reduction in hours/leave of absence:

  • Look-back measurement method: If an employer is using the look-back measurement method, employees may remain eligible for benefits, at least for the duration of the current stability period. The general rule is that those who averaged full-time hours in the previous measurement period are considered eligible for the corresponding stability period, even during a reduction in hours, unless employment is terminated.
  • Monthly measurement method: If an employer is using the monthly measurement method, employees are unlikely to meet plan eligibility requirements during a period of reduced hours.
  • Leave of absence policy: An employer may have a leave of absence policy for specified circumstances that extend benefit eligibility for a period. An employer might also adopt such a policy specifically related to COVID-19. If choosing to adopt such a policy, the safest approach would be to make it available to all similarly situated individuals. In addition, any such policy should be carefully coordinated with the carrier or stop-loss vendor to ensure claims coverage during the leave of absence. Without their blessing, the carrier could refuse to provide coverage and leave the employer liable for medical expenses incurred.

    While on furlough, if employees no longer meet the plan eligibility rules and there isn’t a leave policy in place that extends benefit eligibility, coverage should be terminated and applicable COBRA or state continuation coverage should be offered.

  • Termination/Lay-Off
    Employers may have to make the tough decision to lay-off employees due to circumstances created by the COVID-19. A lay-off is considered a termination of employment, although potentially short-term under these circumstances. If employment is terminated, the former employees will typically no longer be eligible for benefits. Those covered when the lay-off occurs should have coverage terminated and be offered COBRA or state continuation as applicable.

    As mentioned above for furloughs, there may be some flexibility to extend benefit eligibility beyond employment for a short period under these circumstances. However, any efforts to extend benefit eligibility to former employees should be coordinated with the carrier or stop-loss vendor to ensure claims coverage. The recommendation would be to offer such extended benefit eligibility to all similarly situated individuals to avoid potential discrimination issues.

  • Premium Contributions
    The employer could choose to adjust employer contributions or subsidize the premiums for a period. Whether active coverage continues to be available, or federal/state continuation coverage is offered following a termination of active coverage. It’s recommended that employers adjust premium contributions in the same fashion for all similarly situated individuals and carefully communicate any employee responsibilities and applicable timeframes

    While every effort has been taken in compiling this information to ensure that its contents are totally accurate, neither the publisher nor the author can accept liability for any inaccuracies or changed circumstances of any information herein or for the consequences of any reliance placed upon it. This publication is distributed on the understanding that the publisher is not engaged in rendering legal, accounting or other professional advice or services. Readers should always seek professional advice before entering into any commitments.

President Signs Families First Coronavirus Response Act Into Law

President Trump signed H.R. 6201, the Families First Coronavirus Response Act (FFCRA), into law last night, which assists working families impacted by COVID-19. The law includes several provisions to protect American workers while helping employers provide emergency paid sick leave and paid family leave in the case of school closures. The leave provisions will go into effect on April 2, 2020.

As described in a summary from NAHU, the FFCRA requires employers with up to 500 employees to provide paid sick leave and paid family leave while providing a refundable payroll tax credit to employers to cover 100% of the cost of wages. There is also a refundable income tax credit made available for self-employed individuals. Employers with fewer than 50 employees must apply for a hardship exemption in order to qualify.

Employers must offer two weeks (10 days) of paid sick leave for COVID-19-related reasons (existing leave offered can count toward the 10 days). If the sick leave is for an employee who is sick or seeking a diagnosis, the benefit must replace all of the employee’s wages up to a maximum benefit of $511 per day. If an employee is caring for another individual who is sick, the benefit must replace at least two-thirds of the employee’s wages up to a maximum benefit of $200 per day. The paid sick leave credit offsets 100% of employer costs for providing mandated paid sick leave. The credit also offsets, uncapped, the employer contribution for health insurance premiums for the employee for the period of leave.

Employees can also take sick leave if they are caring for an individual who is subject to a federal, state, or local quarantine or isolation order or advised by a health care provider to self-quarantine due to COVID-19 concerns. Of note, caring for another who is subject to an isolation order or advised to self-quarantine is no longer limited to just family members.

The Act significantly amends and expands FMLA temporarily. Employers must offer 12 weeks of paid family leave for employees who have been employed for at least 30 days with a minor child in the event of the closure of the child’s school or place of care. The first 10 days are unpaid, but the employee can overlap this with the 10 days of paid sick leave. This benefit must replace at least two-thirds of the employee’s wages up to a maximum of $200 per day. The paid family leave credit offsets 100% of employer costs for providing mandated paid family leave. The credit also offsets, uncapped, the employer contribution for health insurance premiums for the employee for the period of leave.

Under FFCRA, self-employed individuals are provided similar credits as refundable income tax credits in an amount of what self-employed workers would have received if they had been an employee receiving paid leave benefits pursuant to the mandates. For a given day that a self-employed worker could not work, they can claim a “rough justice” tax credit in the amount of their average daily self-employment income for the year.

COVID – 19 Benefits Questions

Employers have many questions about the impact of the Coronavirus (COVID-19) on employer-sponsored benefit plans. In this article, we will address important questions. We will also review the recent IRS notice regarding HSA eligibility when high deductible health plans (HDHPs) cover COVID-19 related testing and treatment.

Health Insurance Portability and Accountability Act (HIPAA)

The privacy of individually identifiable health information that is created or received by a health plan is protected under HIPAA ̶ Protected Health Information (PHI). Although employers may be motivated to help prevent the spread of COVID-19 in their workforce, staff members with access to an employer’s group health plan’s medical records are required to use and disclose only the minimum necessary PHI for purposes of payment, treatment, and health-care operations. There are limited exceptions to this rule for situations involving public health and the safety of the workforce. In most cases, staff members should refrain from accessing or disclosing an employee’s COVID-19 related PHI for employment purposes, or for other reasons not specifically allowed by HIPAA regulations, unless a valid authorization is received from the patient.

Other Important Employee Benefit Issues

Other benefits related issues may be affected depending on the type of benefits and size of the employer:

  • Employers who provide paid leave to employees who miss work due to an illness need to remember to count that time as hours of service when determining full-time status for purposes of the Section 4980H employer shared responsibility rules (the Employer Mandate).
  • Employers who use the lookback measurement method to determine full-time status may need to continue coverage for employees put on paid or unpaid leave for the remainder of the applicable stability period.
  • Some employers who suffer economically from the effect of the virus may not be able to continue paying their group health insurance premiums. If a plan is terminated due to non-payment, employees who lose group coverage will not be eligible for COBRA continuation coverage. In this situation every effort should be made to help these employees understand their options to purchase individual health insurance coverage. Employees can be directed to Healthcare.gov or their local state-run health insurance exchange.
  • Applicable large employers (ALEs) who are not able to continue to offer group coverage may also put themselves at risk for penalties under the employer mandate. While it is possible that the IRS may extend some relief in the future to employers in this situation, to date nothing official has been announced.

Impact of Virus Testing and Treatment on HSA Eligibility

In response to the spread of COVID-19, several states have mandated coverage for testing and treatment of the virus to be provided with no cost-sharing requirements to individuals. These state insurance mandates apply to fully insured group health plans issued within the state. Normally, an HDHP providing this coverage could cause employees to be ineligible to make Health Savings Account (HSA) contributions. In general, in order to maintain qualified status to permit participants to continue contributing to HSAs on a tax-favored basis, HDHPs must not provide first-dollar coverage for any expenses unless the expense is considered preventive.

The IRS has responded in IRS Notice 2020-15 allowing HDHPs to provide this type of coverage without making an employee ineligible for HSA contributions. Specifically, the notice states that “Until further guidance is issued, a health plan that otherwise satisfies the requirements to be a [HDHP]…will not fail to be an HDHP…merely because the health plan provides health benefits associated with testing for and treatment of COVID-19 without a deductible, or with a deductible below the minimum deductible for an HDHP. Therefore, an individual covered by the HDHP will not be disqualified from being an eligible individual…who may make tax-favored contributions to [an HSA].”

This relief applies to both fully insured HDHPs required to cover COVID-19 due to state mandates, and to employer-sponsored plans (fully insured and self-insured) that voluntarily choose to provide this coverage.

Summary

The impact of COVID-19 is likely to get worse before it gets better. Employee access to health insurance during a difficult time like this is more important than ever. Most employers are likely to take extraordinary steps to help employees with health care and health insurance. However, in doing so, employers must pay close attention to existing laws and regulations, plan eligibility rules, and coverage details.

While every effort has been taken in compiling this information to ensure that its contents are totally accurate, neither the publisher nor the author can accept liability for any inaccuracies or changed circumstances of any information herein or for the consequences of any reliance placed upon it. This publication is distributed on the understanding that the publisher is not engaged in rendering legal, accounting or other professional advice or services. Readers should always seek professional advice before entering into any commitments.

HDHPs Will Not Lose HSA Qualified Status for Covering COVID-19 Expenses

The IRS has released guidance regarding HSA eligibility when high deductible health plans (HDHPs) cover COVID-19 related testing and treatment. Until further notice, these plans will not cause an employee to be ineligible to make HSA contributions.

Background

In response to the spread of COVID-19, several states have mandated coverage for testing and treatment of the virus to be provided with no cost-sharing requirements to individuals. These state insurance mandates apply to fully insured group health plans issued within the state. Normally, an HDHP providing this coverage could cause employees to be ineligible to make Health Savings Account (HSA) contributions. In general, in order to maintain qualified status to permit participants to continue contributing to HSAs on a tax-favored basis, HDHPs must not provide first-dollar coverage for any expenses unless the expense is considered preventive.

IRS Notice 2020-15

The IRS has responded in IRS Notice 2020-15 allowing HDHPs to provide this type of coverage without making an employee ineligible for HSA contributions. Specifically, the notice states that “Until further guidance is issued, a health plan that otherwise satisfies the requirements to be a [HDHP]…will not fail to be an HDHP…merely because the health plan provides health benefits associated with testing for and treatment of COVID-19 without a deductible, or with a deductible below the minimum deductible for an HDHP. Therefore, an individual covered by the HDHP will not be disqualified from being an eligible individual…who may make tax-favored contributions to [an HSA].”

This relief applies to both fully insured HDHPs required to cover COVID-19 due to state mandates and to employer-sponsored plans (fully insured and self-insured) that voluntarily choose to provide this coverage.

While every effort has been taken in compiling this information to ensure that its contents are totally accurate, neither the publisher nor the author can accept liability for any inaccuracies or changed circumstances of any information herein or for the consequences of any reliance placed upon it. This publication is distributed on the understanding that the publisher is not engaged in rendering legal, accounting or other professional advice or services. Readers should always seek professional advice before entering into any commitments.