Federal Updates
Extension of Certain Timeframes for Employee Benefit Plans, Participants and Beneficiaries
On May 4, 2020, the DOL and the Department of the Treasury (the Departments) issued guidance providing an extension of various compliance deadlines in its “Extension of Certain Timeframes for Employee Benefit Plans, Participants, and Beneficiaries Affected by the COVID-19 Outbreak” final rule. Recognizing the potential difficulties for group health plans attempting to comply with certain notice obligations due to the COVID-19 public health crisis, and in effort to minimize the possibility of individuals losing benefits due to a failure to timely meet requirements, the Departments have extended certain timeframes for group health plans, disability and other welfare plans, and pension plans.
The relief provides that all group health plans, disability and other employee welfare benefit plans, and employee pension plans subject to ERISA or the Code must disregard the period from March 1, 2020, until 60 days after the end of the National Emergency (known as the “Outbreak Period”) for certain deadlines, including:
- The 30-day (or 60-day, if applicable) deadline to request a special enrollment under HIPAA
- The 60-day COBRA election period
- The 30-day (or 60-day, if applicable) deadline to notify the plan of a COBRA qualifying event (and the 60-day deadline for individuals to notify the plan of a determination of a disability)
- The 14-day deadline for plan administrators to furnish COBRA election notices
- The 45-day deadline for participants to make a first COBRA premium payment and 30-day deadline for subsequent COBRA premium payments
- Deadlines for individuals to file claims for benefits, for initial disposition of claims, and for providing claimants a reasonable opportunity to appeal adverse benefit determinations under ERISA plans and non-grandfathered group health plans
- Deadlines for providing a state or federal external review process following exhaustion of the plan’s internal appeals procedures for non-grandfathered group health plans
Notably, with this relief applying to deadlines for individuals to file claims for benefits, this may impact health FSA administration. For example: let’s say that under H Company’s health FSA, participants must submit claims incurred in the 2019 plan year by March 31, 2020 (also called the run-out period). Further, for purposes of this example, let’s say that the national emergency is proclaimed to be over on May 31, 2020. The health FSA participants would have until October 28, 2020, to submit claims (90 days following the end of the outbreak period). Note that this relief does not extend a date in which a claim can be incurred for health FSAs. Rather, it extends the time in which a claim can be submitted for reimbursement. This relief will impact health FSAs or even HRAs with a run-out period ending during the outbreak period, as described in the example. Importantly, this extension does not apply to Dependent Care FSAs.
In addition, there is relief for group health plans in furnishing participant notices. More specifically, plans (and responsible plan fiduciaries) will not be treated as having violated ERISA if they act in good faith and furnish any notices, disclosures or documents that would otherwise have to be furnished during the outbreak period (including those requested in writing by a participant or beneficiary) “as soon as administratively practicable under the circumstances.” Here, it’s important to note that acting in good faith includes sending documents electronically as long as the employer believes employees have effective access to electronic means of communications.
Employers should be aware of these developments and confirm with any vendors and administrators, as applicable, that the specified timelines are being administered in accordance with the DOL’s guidance. For more guidance on application, see the examples provided in the DOL’s final rule.
DOL News Release »
Extension of Certain Timeframes for Employee Benefit Plans, Participants, and Beneficiaries Affected by the COVID-19 Outbreak Final Rule »
COVID-19 FAQs for Participants and Beneficiaries »
DOL Announces Relief for Certain ERISA Deadlines
On April 29, 2020, the DOL’s EBSA issued Disaster Relief Notice 2020-01, which provides certain relief for group health plans, retirement plans, sponsors, fiduciaries, participants and service providers subject to ERISA. Due to the COVID-19 national emergency, parties will have additional time to comply with certain ERISA deadlines occurring on or after March 1, 2020, through the period ending 60 days after the termination of the national emergency. In the case that different regions of the country will have different end dates related to the national emergency, the DOL will issue future related guidance.
In addition to the relief provided separately for deadlines related to COBRA, HIPAA Special Enrollment Rights, claims processing and Form 5500, the new notice provides relief related to:
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Blackout Notices
Generally, a plan administrator is required to provide 30 days’ advance notice to participants and beneficiaries whose rights under the plan will be temporarily suspended, limited or restricted by a blackout period of more than three consecutive business days. Relief is available if the administrator is unable to provide the notice because of circumstances related to COVID-19. Plans should use good faith effort to comply. Good faith for this purpose includes use of electronic disclosure with plan participants and beneficiaries who the plan fiduciary reasonably believes have effective access to electronic means of communication, including email, text messages and continuous access websites. -
Verification Procedures for Plan Loans and Distributions
If an employee pension benefit plan fails to follow procedural requirements for plan loans or distributions imposed by the terms of the plan, relief is available if the failure is related solely to COVID-19, the administrator makes a good-faith diligent effort to comply, and the administrator makes a reasonable attempt to correct any procedural deficiencies (such as assembling any missing documentation). -
Participant Contributions and Loan Repayments
Generally, any participant contribution or repayment of a loan to an employee pension benefit plan constitutes plan assets. As such, an employer generally must forward the amounts to the plan on the earliest date on which they can be segregated from general assets, which can be no later than the 15th business day of the month following the month in which the amount was withheld or paid. The DOL will not take enforcement action with respect to a temporary delay in forwarding contributions or repayments if the failure is solely attributable to COVID-19. Employers and service providers must act reasonably, prudently and in the interest of employees to comply as soon as administratively practicable under the circumstances. -
M-1 Filings
Similar to Form 5500s, filings due between April 1 and before July 15, 2020, are now due July 15, 2020. This would affect any M-1 filing for which the plan administrator sought an extension of time to file from the normal March 1 deadline.
The guidance is effective immediately upon publication. In general, the DOL expects plans to act reasonably, prudently and in the interest of plan participants and beneficiaries. Plan fiduciaries should make reasonable accommodations to prevent the loss of benefits or undue delay in benefits payments in such cases and should attempt to minimize the possibility of individuals losing benefits because of a failure to comply with preestablished timeframes.
DOL Updates FFCRA Questions & Answers
On May 7, 2020, the DOL updated questions and answers regarding the novel coronavirus (COVID-19) paid leave under the Families First Coronavirus Response Act (FFCRA). Specifically, the agency added five new questions and answers (#89-93).
As background, the FFCRA includes provisions mandating that employers with fewer than 500 employees provide paid leave to employees who are unable to work or telework due to certain COVID-19-related reasons. The DOL guidance serves to address commonly asked questions with respect to the paid sick leave and expanded family and medical leave requirements.
The newest additions address topics including domestic and temporary work arrangements, leave for childcare reasons and documentation requirements. Question 89 describes the facts and circumstances analysis for determining whether a domestic service worker is an employee (and thus entitled to paid leave) or a contractor. Question 90 explains that a business may be responsible for providing paid leave to a temporary worker hired through a staffing agency, if the business is deemed to be a joint employer of that worker.
Questions 91 through 93 focus upon qualifying reasons for paid leave and the related supporting information. Questions 91 and 92 address, respectively, the employer’s ability to request leave documentation for an employee’s claimed childcare needs or experience of COVID-19 symptoms. Finally, Question 93 explains which circumstances would permit childcare leave to be taken after the school season has ended.
Employers may find this additional guidance helpful in administering the FFCRA leave requirements.
DOL Issues New COBRA Model Notices
On May 1, 2020, the DOL issued a series of questions and answers regarding COBRA, as well as a new set of model notices. As background, regulations governing COBRA require plan administrators to provide persons who enroll in the plan with an initial notice of their right to elect COBRA when they initially sign up for plan coverage. Plan administrators must also provide those persons who lost coverage after the occurrence of certain events with an election notice that explains their rights to coverage through COBRA and provides them with an opportunity to make that election. The agency updated these model notices.
The revisions to the model notices and the question and answer document focus on the interaction between COBRA and Medicare. They make clear that there are circumstances under which a person who is eligible for both Medicare and COBRA, and who chooses coverage through COBRA, may face penalties when they later enroll in Medicare. They also make clear that when a person is enrolled in both Medicare and COBRA coverage, Medicare is the primary payer and COBRA is the secondary payer.
Although certain deadlines in COBRA administration have been extended in response to the COVID-19 outbreak, the revisions to the COBRA materials do not mention them.
Plan administrators may use the model notices to comply with COBRA notice requirements, and they should familiarize themselves with the information provided in the revisions regarding the interaction between COBRA and Medicare.
DOL Publishes Participant-Facing COVID-19 FAQs
On April 28, 2020, the DOL’s EBSA published COVID-19 FAQs for Participants and Beneficiaries, including information relating to both health and retirement plans. The FAQs are primarily addressed to participants and beneficiaries (individuals), but have helpful information for employers and plan sponsors.
On the health side, the FAQs include information and reminders on options for employees who may lose their coverage because the employer terminates its business, the plan or the employee’s employment. FAQ 3 outlines these options, including special enrollment in another group health plan (such as a spouse’s employer’s plan), COBRA, Medicaid, CHIP and special enrollment through the exchange (including loss of coverage due to a family member’s death or when an employer stops its COBRA contributions). The FAQs remind employees of the importance of maintaining and submitting documentation for special enrollment periods, and that the employee may have additional flexibility on the timing of notification during the COVID-19 outbreak period.
There are several FAQs relating to business closures. In situations where an employer or the vendor receiving COBRA or other premium payments is closed, or if the employer did not pay the insurance premium for group coverage, the FAQs direct employees to reach out to their employer, a benefit advisor with EBSA or the state insurance commissioner.
Several FAQs remind employees and retirees that employers are under no federal or state obligation to provide benefits and plans, and that employers can terminate benefits and plans at any time. The FAQs do say that such termination depends on the terms of the plan, that notice should be provided in advance (although some notice requirements have been relaxed), and that some benefits may be protected by contractual promise (pursuant to a collective bargaining or other employment agreement). The FAQs remind employees, though, that they have options once benefit eligibility is lost, including the ability to enroll in COBRA and special enrollment rights in another group health plan, a state health insurance exchange or state programs (Medicaid or CHIP). These FAQs point back to plan documents, SPDs, retiree benefit plans/promises and other employment agreements to determine exact benefit promises and obligations.
On the retirement side, FAQs 13 through 15 remind participants to contact their plan administrator regarding filing retirement plan claims, receiving payments and changing investment decisions, and that employees may have to anticipate delays as companies may be slower in processing claims, payments and investment changes. FAQs 16 and 17 relate to preretirement distributions, stating that employees may be able to take early distributions in certain situations (including adverse impact from COVID-19), but that they should remember that the distribution may be taxable and may impact the employee’s ability to qualify for unemployment compensation. FAQs 18 and 19 relate to timing and payment of distributions (which may be delayed), including a reminder that a retirement plan is not required to give an individual a lump-sum distribution. Other FAQs address the concerns relating to retirement plan distributions for a spouse of a deceased employee and to the consequences of a retirement plan termination (which depend heavily on whether the plan was a defined benefit plan or a defined contribution (e.g., 401(k)) plan.
Although directed at individuals, the FAQs contain helpful reminders for employers as plan sponsors. The FAQs also include references to the recently published rules relating to plan notice deadline extensions, which allow for relaxed deadlines for (among other notices) the COBRA and HIPAA SER notices. Employers should review the FAQs and implement processes and procedures to keep employees informed of plan/benefit and administrative changes during the COVID-19 pandemic.
IRS Announces New COVID-19-Related Guidance for Section 125 Cafeteria Plans and Related High Deductible Health Plans, and ICHRAs
On May 12, 2020, the IRS issued Notices 2020-29 and 2020-33, which provides guidance for Section 125 plans for calendar year 2020 and related HDHPs, as well as ICHRAs. Together, the two notices relax the rules relating to election changes for health plans offered under a section 125 plan, including health and dependent care FSAs.
Notice 2020-29 provides guidance for HDHPs and increased flexibility for mid-year elections made in calendar year 2020, as well as grace periods for applying unused amounts in health FSAs to medical care expenses incurred through December 31, 2020, and unused amounts in dependent care assistance programs to dependent care expenses incurred through December 31, 2020. Specifically:
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Mid-Year Elections
For mid-year elections made during calendar year 2020, a § 125 cafeteria plan may permit employees who are eligible to make salary reduction contributions under the plan to:-
With respect to employer-sponsored health coverage:
- Make a new election on a prospective basis, if the employee initially declined to elect employer-sponsored health coverage
- Revoke an existing election and make a new election to enroll in different health coverage sponsored by the same employer on a prospective basis
- Revoke an existing election on a prospective basis, provided that the employee attests in writing that the employee is enrolled, or immediately will enroll, in other health coverage not sponsored by the employer
- Revoke an election, make a new election, or decrease or increase an existing election applicable to a health FSA on a prospective basis
- Revoke an election, make a new election, or decrease or increase an existing election regarding a dependent care assistance program on a prospective basis
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With respect to employer-sponsored health coverage:
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Health FSAs and DCAPs
For unused amounts remaining in a health FSA or a dependent care assistance program under the § 125 cafeteria plan as of the end of a grace period or plan year ending in 2020, a § 125 cafeteria plan may permit employees to apply those unused amounts to pay or reimburse medical care expenses or dependent care expenses, respectively, incurred through December 31, 2020. -
HDHPs
The relief provided in Notice 2020-15, 2020-14 IRB 559 regarding HDHPs and expenses related to COVID-19, and in section 3701 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (P.L. 116-136, 134 Stat. 281 (March 27, 2020)) regarding an exemption for telehealth services, may be applied retroactively to January 1, 2020.
This guidance may be applied on or after January 1, 2020, and on or before December 31, 2020, provided that any elections made in accordance with it apply only on a prospective basis.
Notice 2020-33 modifies the permissive carryover rule for health FSAs and clarifies how health plans reimburse premiums by ICHRAs, specifically:
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Health FSAs
Notices 2013-71 and 2013-47 IRB 532 are modified to increase the carryover limit (currently $500) of unused amounts remaining as of the end of a plan year in a health FSA under a § 125 cafeteria plan that may be carried over to pay or reimburse a participant for medical care expenses incurred during the following plan year. The increase in the amount that can be carried over from one plan year to the next reflects indexing for inflation, and this indexing parallels the indexing applicable to the limit on salary reduction contributions under § 125(i) of the Internal Revenue Code. The FSA rollover amount for the 2020 plan year is increased from $500 to $550. -
ICHRAs
The notice clarifies that only payments or reimbursement made by a health plan, including a premium reimbursement plan in a § 125 cafeteria plan or an ICHRA, for medical care expenses incurred by an employee during the plan year may be excluded from income and wages under §§ 105 and 106. Medical care expenses are treated as incurred when the covered individual is provided the medical care that gives rise to the expense, and not when the amount is billed or paid. This notice provides that a plan is permitted to treat an expense for a premium for health insurance coverage as incurred on 1) the first day of each month of coverage on a pro rata basis, 2) the first day of the period of coverage, or 3) the date the premium is paid. Thus, for example, an ICHRA with a calendar year plan year may immediately reimburse a substantiated premium for health insurance coverage that begins on January 1 of that plan year, even if the covered individual paid the premium for the coverage prior to the first day of the plan year.
The IRS intends to revise Prop. Treas. Reg. §§ 1.125-1(o) and 1.125-5(c) to reflect the guidance in this Notice 2020-33. Until then, the IRS states that taxpayers may rely upon the guidance provided in the notice.
Retirement Update
IRS Provides Guidance on Retirement Plan Provisions of CARES Act
On May 4, 2020, the IRS released a set of questions and answers discussing the retirement plan provisions of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). As background, the CARES Act was enacted on March 27, 2020, and included a number of provisions affecting retirement plan and IRA rules. We discussed those provisions in an article in the April 2nd, 2020, edition of Compliance Corner.
The questions and answers simply confirm the availability of expanded hardship distribution and loan options available to individuals that are effected by the COVID-19 crisis. Notably, the IRS indicates that they anticipate releasing guidance on the CARES Act retirement provisions. But until that guidance is issued, they acknowledge that it will be similar to the guidance that was applied to victims of Hurricane Katrina (via IRS Notice 2005-92 ).
The questions and answers go on to address the tax treatment of COVID-19-related hardship distributions, confirming that individuals will be able to pay the taxes on any such distribution ratably over a three-year period. Individuals can also choose to repay their COVID-19-related distribution within three years of receiving the distribution. If this is done, the distribution will be treated as if it were a trustee-to-trustee transfer and the individual will not owe federal income tax on the distribution. Depending on when the distribution is repaid, this could require the individual to amend previous tax returns (if for example the individual repays the distribution in 2022, but previously paid taxes for the 2020 and 2021 year). Further, the guidance points out that retirement plans are encouraged but not required to accept repayment of distributions.
The IRS also reiterates the provisions affecting plan loans. Specifically, certain loan repayments can be delayed for up to one year. Additionally, the CARES Act increased the maximum loan amount.
The questions and answers also address a number of administration and reporting issues. Namely, plan sponsors are not required to adopt the hardship distribution and loan rules found in the CARES Act. If they do, plan administrators may rely on an individual’s certification that they are eligible to receive the COVID-19-related distribution or loan. Individuals that take a COVID-19-related distribution will report this on their federal income tax return, and plan administrators will also provide Forms 1099-R (as they do with any other hardship distribution).
Employers that will amend their plans to allow for these COVID-19-related changes will want to familiarize themselves with this guidance. We will continue to monitor this issue and share additional guidance as the IRS provides it.
Coronavirus-Related Relief for Retirement Plans and IRAs Questions and Answers »
IRS Allows Temporary Electronic Submission of Letter Ruling and Determination Letter Requests
On April 30, 2020, the IRS released Revenue Procedure 2020-29. The notice allows for the electronic submission of requests for letter rulings, closing agreements, determination letters and information letters. As background, taxpayers can request advice from the IRS on a number of issues. Additionally, the IRS provides determination letters that indicate whether a company’s employee benefits plan meets the requirements to be a qualified plan.
This revenue procedure allows for taxpayers to make these requests electronically by facsimile or compressed and encrypted email. It also allows for electronic signatures as long as the prescribed procedures are followed.
The revenue procedure is effective as of April 30, 2020, and continues until it is modified or superseded. Plan sponsors that are seeking letter rulings or determination letters should consider whether they would like to file the requests electronically.
Announcements
COVID-19-Related Benefits Compliance Resources Available
The Benefits Compliance team has provided a number of resources that are available for assistance during the COVID-19 crisis. Information presented through our resources is subject to change pending additional guidance from the DOL, IRS or other state or federal regulatory agencies.
FAQs on Benefits and Compliance and COVID-19 »
Families First Coronavirus Response Act (FFCRA) Flowchart »
COVID-19 State Quick Reference Chart »
Compliance Considerations on Insurance Carrier Refunds in the COVID-19 Environment »
FAQ
How should an employer handle health FSA eligibility when employees are furloughed?
The answer depends upon whether the employees lost eligibility for the health FSA when they were furloughed, and how long the furlough lasts.
If they did lose eligibility, COBRA should be offered for any employee with an underspent balance. If they want coverage for the furlough period, they would have to elect and pay for COBRA. If they return to work in less than 30 days since the date they were furloughed, the employees would be reinstated to their previous elections, including the health FSA. If it’s more than 30 days, then they would be treated like new hires, with an opportunity to enroll in the health FSA if they choose.
If the employer does not wish for their employees to lose eligibility while on furlough, the limited guidance available (including the federal government’s own cafeteria plan) suggests three possible approaches:
- First, the employer could suspend the FSA, with no employee contributions and no FSA coverage during the furlough. Upon return, there would be no employee salary contribution collection in arrears. The employee is not responsible for salary contributions during the furlough, but the employee cannot be reimbursed for FSA claims incurred during the furlough period. The employee’s total annual FSA benefit either remains the same (with the employer picking up the difference) or reduced by the missed furlough amount.
- Second, the employer could suspend employee FSA contributions but continue FSA coverage through the furlough. Upon return to work, the employees would pay back the contributions they skipped while on furlough paying a new recalculated contribution amount over the remaining pay periods. Employees can incur health FSA expenses during the furlough, and the employee’s FSA benefit amount remains the same. The employer risks not collecting in arrears if the employee does not return to work.
- Third, the employer could pay for the employees’ contributions and continue coverage during the furlough. However, this third option comes with some additional issues. The employer should be careful to make contributions that do not cause the FSA to lose its excepted benefit status (i.e., employer contributions should not exceed $500 or an amount that matches the employee’s contribution).
Although the idea is that employees would resume paying their portion of the contribution upon their return to work (and their contribution amount remains the same as before they went on furlough), the risk here is that employees do not return and the contributions that the employer has made on their behalf were wasted.
Finally, another thing to keep in mind is that, according to guidance from the IRS released on May 12, 2020, it is possible for employers to amend their plans and allow employees to make mid-year changes to their FSA elections. See our article in this edition of Compliance Corner about this new guidance from the IRS for additional information.
State Updates
California
May 12, 2020
Los Angeles County Supplemental Paid Leave
On April 28, 2020, the Los Angeles County Board of Supervisors enacted an interim urgency ordinance related to supplemental paid leave. Employers with 500 or more employees nationally must provide two weeks of paid sick leave to certain employees for reasons related to COVID-19. Employees are eligible if they perform work within the unincorporated area of Los Angeles County and have a qualifying reason. Emergency responders and health care providers may be excluded from eligibility.
There is no service requirement. An employee merely needs to be employed on the effective date of the law. To be eligible, an employee must not be able to work (including telework) due to one of the following reasons:
- A public health official or health care provider requires or recommends the employee isolate or self-quarantine to prevent the spread of COVID-19
- The employee is subject to a federal, state or local quarantine or isolation order related to COVID-19 (e.g., is at least 65 years old or has a health condition such as heart disease, asthma, lung disease, diabetes, kidney disease or weakened immune system)
- The employee needs to care for a family member who is subject to a federal, state or local quarantine or isolation order related to COV1D-19 or has been advised by a health care provider to self-quarantine for reasons related to COVID-19
- The employee takes time off work because the employee needs to provide care for a family member whose senior care provider, school or childcare provider ceases operations in response to a public health or other public official's recommendation.
The employer cannot require employees to use any accrued paid time off prior to the supplemental paid leave. Eligible full-time employees may receive up to 80 hours of paid sick leave up to a daily max of $511. Part-time employees may receive paid sick leave based on the average number of hours and pay rate for a two-week period during the eligibility period.
Importantly, an employer may not require a doctor’s note or other documentation from the employee. Additionally, if the employer has already provided paid sick leave to an employee for one of these reasons on or after March 31, 2020, the employer may reduce this amount from the maximum hours the employee would otherwise receive under this law.
The law is effective April 28, 2020, but applies to leaves taken on or after March 31, 2020.
San Jose Paid Sick Leave Related to COVID-19: Additional Guidance
On April 16, 2020, the San Jose Department of Public Works, Office of Equality Assurance provided guidance related to the COVD-19 paid sick leave ordinance. Under the new law, employers are exempt if they provide employees with some combination of paid personal leave at least equivalent to the paid sick time required by the ordinance.
The new guidance clarifies that an employer is only exempt if it provides the equivalent amount of paid leave time to an employee on the effective date of the ordinance: April 7, 2020. In other words, that amount of time must be available to an otherwise eligible employee on April 7, 2020. For example, let’s say that the employer provides employees with three weeks of PTO, which may be used as sick time. Prior to April 7, 2020, an employee had already used two weeks of the PTO for 2020. The employer must provide the employee with additional time to comply with the two week paid sick leave requirement if the employee has a COVID-19-related reason for leave.
Colorado
May 12, 2020
COVID-19 Insurance Updates
On April 30, 2020, the Division of Insurance issued Bulletin No. B-4.108, which covers all carriers offering individual, small group and large group health benefit plans, and managed care plans, including health-savings-account (HSA)-qualified health benefit plans, and grandfathered health benefit plans that are subject to the insurance laws of Colorado. TPAs for self-insured plans are also encouraged to read and follow the requirements in the bulletin.
The bulletin clarifies the testing, diagnosis and screening for COVID-19 and insurers’ obligations under Emergency Regulation 20-E-01 (as discussed in the March 31, 2020, edition of Compliance Corner). It requires carriers to use both in-network and out-of-network labs in order to make sure that there is enough testing for COVID-19 to meet the demand, with no cost sharing. In addition, carriers shall cover cost sharing where licensed health care providers are administering COVID-19 tests and are prohibited from requiring providers to collect cost shares. This testing shall be covered when the testing is conducted in an in-network provider office setting, an in-network urgent care center setting, an emergency room setting, and nontraditional care settings where licensed health care providers are administering the testing.
The bulletin reminds carriers that the emergency regulation requires them to cover without cost sharing any test approved for use in detecting or diagnosing of COVID-19 in accordance with the CARES Act and subsequent federal guidance, including serological testing and any other tests a provider determines appropriate when determining the need for COVID-19 diagnostic testing, such as influenza or pneumonia testing.
The regulation is primarily directed at carriers. However, employers should also be aware of these developments.
Georgia
May 12, 2020
Prior Coronavirus Directives Winding Down
On April 28, 2020, the Insurance and Safety Fire Commissioner issued Bulletin 20-EX-7 regarding the winding down of prior coronavirus (COVID-19) directives. The bulletin was issued to consumers and insurers in the state.
Following a declaration of a COVID-19 public emergency in the state, policies were enacted to prevent cancellation of insurance coverage, including for reasons of nonpayment, and to extend certain filing deadlines. As a result of the state’s improving conditions with respect to the containment of the spread of COVID-19, expiration dates have been set with respect to these policies and extensions.
For example, the prior instructions to health insurers under Directive 20-EX-5 to refrain from canceling policies due to nonpayment will now expire on May 31, 2020. However, the commissioner encourages insurers to be accommodating to consumers facing financial difficulties. The suspension of nonfederal insurer filing deadlines and waiver of late fees will also expire on May 31, 2020. Additionally, the commissioner’s request to insurers and hospitals to suspend certain utilization and review requirements under Directive 20-EX-7 will expire on May 25, 2020.
Employers may wish to stay apprised of these developments, as the state reevaluates the COVID-19 situation and prior related orders.
Hawaii
May 12, 2020
Reiteration of COVID-19-Related Insurance Guidance
On April 27, 2020, Insurance Commissioner Hayashida issued Memorandum 2020-4A. This memo incorporates and reemphasizes all previous guidance the Insurance Division has provided concerning the COVID-19 crisis. Specifically, among other things, the Insurance Division continues to encourage insurers to waive fees and penalties relating to an insured’s temporary inability to submit premium payments, extend grace periods, grant additional time to policyholders to pay premiums, and encourage policyholders to use electronic payment technology to avoid in-person payments.
This guidance applies to insurers, but employers should familiarize themselves with it should they need to seek leniency from an insurer.
Idaho
May 12, 2020
Extension of Transitional Health Insurance Plans
On April 22, 2020, Insurance Director Cameron released Bulletin 20-07, extending the ability of health insurance carriers in the individual and small group market to continue transitional health insurance plans through December 31, 2021.
As background, on January 31, 2020, CMS provided guidance for a transition policy extension that allows insurers the option to renew non-grandfathered non-ACA-compliant plans, as long as the state allows for such an extension. Such transition policies are not required to be in compliance with certain ACA mandates including community rating, coverage of essential health benefits, prohibition on pre-existing condition exclusions and the annual out-of-pocket maximum limit. This bulletin applies this most recent federal extension to Idaho and allows the issuer to renew these non-ACA-compliant plans.
Small employers that are interested in renewing their non-ACA-compliant plan should work with their advisors and insurers.
Indiana
May 12, 2020
Mastectomy Mandate Changes
Effective July 1, 2020, health plans that cover mastectomies are required to provide coverage for custom fabricated breast prostheses, along with one additional breast prosthesis per breast affect by the mastectomy. As background, Indiana’s current benefit mandates require plans that provide coverage for a mastectomy to also provide coverage for prosthetic devices, reconstructive surgery of the affected breast and reconstructive surgery of the other breast as appropriate. On March 18, 2020, S.B. 239 was signed by Governor Holcomb and became Public Law 67, which now requires this new health benefit mandate effective July 1, 2020.
Employers who sponsor fully insured group health plans issued in Indiana should be aware of this new health benefits mandate and confirm that their insurers are in compliance effective July 1, 2020.
Extension of the Moratorium on Policy Cancellation and Nonrenewals
On May 7, 2020, Indiana DOI (IDOI) issued Bulletin 254, extending the current moratorium on policy cancellations and nonrenewals until May 31, 2020. The IDOI confirms that this moratorium is not a waiver; rather, it is an extension of the period in which to pay the premium.
As background, Bulletin 252 implemented a 60-day moratorium (applicable March 19, 2020, through May 18, 2020) on policy cancellations for nonpayment of premiums applicable to all lines of business (as mentioned in the March 31, 2020, Compliance Corner article “COVID-19 and Health Insurance Coverage”). Subsequently, Executive Order 20-25 was issued on May 1, 2020, renewing the public health emergency declaration for the COVID-19 outbreak and requesting the current moratorium on policy cancellations and nonrenewals continue until May 31, 2020.
Employers should be aware of these developments.
Minnesota
May 12, 2020
FAQ Regarding Local Earned Sick and Safe Time
Issued in April 2020, Saint Paul’s Labor Standards Enforcement and Education Division created an FAQ resource regarding earned sick and safe time. The FAQ resource addresses COVID-19 and the city's earned sick and safe time ordinance. Highlights include:
- Explanation that the Saint Paul Earned Sick and Safe Time (ESST) ordinance requires employers to provide earned sick and safe time to employees who work in Saint Paul. Sick time refers to paid time off for medical reasons (e.g., physical illness, mental injury, medical appointments seeking diagnosis), while safe time refers to paid time off for an absence related to domestic abuse, sexual assault or stalking.
- Employees may use both sick time and safe time for their own reasons or for reasons of a family member.
- ESST can be used if an employee’s place of work or child’s school/daycare is closed due to reasons related to COVID-19. However, only if such closure is due to an official order.
The above highlights are not exhaustive. Employers with employees in St. Paul should be aware of this resource and review the Frequently Asked Questions for additional guidance.
Earned Sick and Safe Time – COVID-19 Frequently Asked Questions and Answers »
Missouri
May 12, 2020
Extension of Grace Periods
On May, 7, 2020, the Department of Commerce and Insurance issued Insurance Bulletin 20-10, extending the application of Bulletin 20-05 until June 15, 2020.
As background, Bulletin 20-05 strongly encourages health carriers to extend a grace period of at least 60 days from coverage in effect on March 13, 2020, if premiums are unpaid (as mentioned in the March 31, 2020, Compliance Corner article “COVID-19 and Health Insurance Coverage: Executive Orders and Insurance Bulletins”), and is effective until May 15, 2020. Bulletin 20-10 extends the effective date until June 15, 2020, in light of the continued public health emergency. As such, all insurers are strongly encouraged to extend grace periods until June 15, 2020.
Employers should be aware of these developments.
New Hampshire
May 12, 2020
Additional Guidance on Health Coverage and COVID-19
On April 24, 2020, Gov. Sununu issued Emergency Order #34, providing additional guidance on temporary requirements regarding health coverage related to COVID-19. Highlights include:
- Requiring carriers and pharmacy benefit managers (PBMs) to remove signature requirements for in-person prescriptions receipts or in-home prescription deliveries (except where federal signature requirements exists).
- Prohibiting carriers and PBMs from performing certain audits.
- Requiring carriers to allow employers to continue group health plan coverage eligibility regardless of any “hours worked” provisions.
While the above impacts carriers and PBMs, employers should be aware of these updates.
New Mexico
May 12, 2020
COVID-19 Insurance Updates
On April 30, 2020, the Office of the Superintendent of Insurance issued Bulletin No. 2020-009, which applies to all major medical insurers subject to regulation by the state. The bulletin reminds those carriers that they must hold insureds harmless for expenses related to the testing, diagnosis and treatment of COVID-19. The bulletin also reminds carriers that they can only charge insureds for emergency medical services provided by out-of-network providers at in-network rates, and must pay these providers at rates consistent with New Mexico’s surprise billing laws.
The regulation is primarily directed at carriers. However, employers should also be aware of these developments.
North Carolina
May 12, 2020
Premium Deferral Policy Extended
On April 21, 2020, the Insurance Commissioner issued Bulletin Number 20-B-07 to extend an automatic stay of premium deferrals and other insurance requirements due to the coronavirus disaster declaration. The bulletin was issued to all insurance companies and other entities licensed under the state’s insurance laws.
On March 27, 2020, the commissioner had issued Bulletin Number 20-B-06, which activated an automatic stay of premium and debt deferrals for the state’s residents in accordance with North Carolina General Statutes 58-2-46. The March 27 order expired on April 26, 2020. However, under the extended order, the automatic stay will now expire 30 days from the April 27, 2020, effective date.
As a result, insurance companies are required to continue to provide relief to insureds adversely affected by the pandemic with respect to premium payments, submission of claims and other obligations. Similarly, entities subject to the state’s external review laws shall still allow impacted consumers additional time for their requests or any additional information required to be received and reviewed.
The memo is directed at insurers, but employers may also want to be aware of this extension.
Oklahoma
May 12, 2020
COVID-19 Insurance Updates
On April 29, 2020, Insurance Commissioner Mulready amended LH Bulletin No. 2020-02, to include a requirement that health carriers licensed in the state follow federal guidelines with respect to payment of antibody tests related to COVID-19. The bulletin was also amended to require health carriers and other entities regulated by the state to accept as valid and binding any claim or claim related document bearing an e-signature or an e-notary as otherwise authorized pursuant to Oklahoma law. Finally, health carriers must continue to pay claims without regard to premium payment status during the (60) day grace period for nonpayment of premiums granted under the original bulletin. Claims may not be pended for payment during that period nor shall carriers recoup claims payment amounts from future provider reimbursements. Carriers shall follow all state, federal and administrative guidance related to cancellations.
The original bulletin was discussed in the March 31, 2020, edition of Compliance Corner. The regulation is primarily directed at carriers. However, employers should also be aware of these developments.
Puerto Rico
May 12, 2020
COVID-19 Treatment Mandates
On April 16, 2020, Gov. Vazquez-Garced signed into law HB No. 2442, which provides for government support and relief relating to the COVID-19 outbreak, including the provision that all medical care, study, analysis, diagnosis and treatment of COVID-19, including hospitalization, will be free of cost for all citizens whether or not they have health insurance. It also provides that no health insurance organization, insurer, PBM or third party administrators may require any deductible, referral or pre-authorization copay for the diagnosis and treatment of COVID-19, including hospitalization.
Employers with health plans issued in Puerto Rico should be aware of this development
Texas
May 12, 2020
Cost and Utilization Data Reporting Requirement Postponed
On April 30, 2020, the Department of Insurance issued Bulletin B-0024-20. The bulletin informs insurers licensed by the department to issue health benefit plans that a statutory requirement to report cost and utilization data they collect about those plans for 2019 to the department will be delayed a year. Those insurers can report both the 2019 and 2020 data to the department in 2021.
Employers with health plans licensed in Texas should be aware of this development.
Virginia
May 12, 2020
Coverage for Hearing Aids
On April 10, 2020, Gov. Northam signed SB 423 into law. The new law requires group health insurance policies to provide coverage for hearing aids and related services for children 18 years of age or younger when recommended by an otolaryngologist. The coverage must include one hearing aid per hearing-impaired ear, up to a cost of $1,500, every 24 months. The mandate applies to policies issued or renewed on and after January 1, 2021.
Discriminatory Coverage Related to Transplants Prohibited
Effective for policies issued on or after January 1, 2021, HB 1273 prohibits a group health plan from denying or limiting overage related to organ, eye or tissue transplant services solely because of the insured’s physical, intellectual, developmental or other disability. Services include referral to a transplant center or specialist; inclusion on an organ, eye or tissue transplantation waiting list; evaluation, surgery and related health care services; counseling; and post-transplantation treatment and services. The law only applies to policies that include coverage for services related to such transplants.
This material was created by PPI Benefit Solutions to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The service of an appropriate professional should be sought regarding your individual situation. PPI does not offer tax or legal advice. "PPI®" is a service mark of Professional Pensions, Inc., a subsidiary of NFP Corp. (NFP). All rights reserved.
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Industry news topics covered in the Compliance Corner are chosen based on general interest to most employers and may include articles about services not available through PPI.
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