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Agencies Extend Deadline to Pay COBRA Premiums and Certain Other ERISA and Internal Revenue Codes Due to COVID-19

Posted on April 30th, 2020

The impacts of the COVID-19 National Emergency, as declared by President Trump on March 13, 2020, have been vast.  As a result, many employers and employees are struggling to meet their various filing, notice, election, or other deadlines.  In order to ease this burden on employers, plans and participants, on April 28, 2020, the Department of Labor (DOL), the Internal Revenue Service (IRS), and Department of Health and Human Services (HHS) issued much needed guidance and relief. Notably, the guidance requires employers and plans to suspend the deadline for qualified beneficiaries to elect COBRA or pay COBRA premiums from March 1, 2020 until 60 days after the National Emergency ends (or such other date as specified by the Agencies)

DOL Relief for Group Health Plans and Disability and Other Welfare Plans

EBSA Disaster Relief Notice 2020-01, eases the burden for group health plans, disability plans, and pension plans to provide notices and disclosures required under ERISA and Internal Revenue Code of 1986 (the “Code”) by clarifying, among other things, that:

  • Neither the plan nor the employer will violate ERISA for failing to timely furnish a notice, disclosure, or document that must be furnished between March 1, 2020, and 60 days after the announced end of the COVID-19 National Emergency, if they act in good faith and make the disclosure as soon as administratively practicable under the circumstances.
  • Plans and employers may communicate electronically with plan participants and beneficiaries who they reasonably believe have effective access to electronic means of communication, including email, text messages, and continuous access websites.
  • Filing relief for Form 5500 applies per IRS Notice 2020-23, which was issued earlier this month.  IRS Notice 2020-23 provides that employers with plan years ending September 30, 2019, October 31, 2019, or November 30, 2019 have until July 15, 2020 to file Form 5500.  The deadline for calendar year plans has not been extended, though plans may file a Form 5558 by July 31, 2020 to have the deadline automatically extended an additional 2.5 months, to September 15, 2020.

EBSA Notice 2020-01 also includes general ERISA fiduciary compliance guidance, asking plans to “act reasonably, prudently, and in the interest of the covered workers and their families who rely on their health, retirement, and other employee benefit plans for their physical and economic well-being.”  The DOL requests that plans make reasonable accommodations to prevent the loss of benefits or undue delay in paying benefits.

Finally, the Notice clarifies that relief may be further extended in specific regions of the country if there are different outbreak period end dates for different parts of the country.

Relief for Participants and Beneficiaries

In order to ease the burden on participants and beneficiaries, the DOL, in coordination with the IRS issued a Final Rule extending certain timeframes and deadlines for participants to consider coverage elections and benefits decisions under ERISA and the Code. 

Specifically, Final Rule provides plan participants, beneficiaries, qualified beneficiaries, and claimants with relief from meeting the below referenced periods and dates during the period of March 1, 2020 until 60 days after the announced end of the COVID-19 National Emergency (or such other date announced by the Agencies in a future notice):

  • The 30-day period (or 60-day period, if applicable) to request a special enrollment;
  • The 60-day election period for COBRA continuation coverage;
  • The date/deadline for making COBRA premium payments;
  • The deadline for individuals to notify the plan of a qualifying event or determination of disability;
  • The deadline within which employees can file a benefit claim, or a claimant can appeal an adverse benefit determination, under a group health plan’s or disability plan’s claims procedures;
  • The deadline for claimants to file a request for an external review after receipt of an adverse benefit determination or final internal adverse benefit determination; and
  • The deadline for a claimant to file information to perfect a request for external review upon finding that the request was not complete.

Consistent with the above, the Final Rule provides group health plans with relief from issuing COBRA election notices for any qualifying event that occurred between March 1, 2020, and 60 days after the announced end of the COVID-19 National Emergency (or such other date announced by the Agencies in a future notice).

Neither the Final Rule nor EBSA Notice 2020-01, provide guidance regarding the applicable PCORI fee amount for plan years ending after October 1, 2019, extend the PCORI fee deadline (currently July 31, 2020), or modify permitted cafeteria plan election changes.

Employers are encouraged to familiarize themselves with the relief in the Final Rule and EBSA Notice 2020-01, work with their insurance broker, COBRA administrator or other vendors to ensure compliance with this relief, and continue to work with their employees during this difficult time.

The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers or our clients.  This is not legal advice.  No client-lawyer relationship between you and our lawyers is or may be created by your use of this information.  Rather, the content is intended as a general overview of the subject matter covered.  This agency and Marathas Barrow Weatherhead Lent LLP are not obligated to provide updates on the information presented herein.  Those reading this alert are encouraged to seek direct counsel on legal questions.

© 2020 Marathas Barrow Weatherhead Lent LLP.  All Rights Reserved.

Weekly Wrap-up: Wellbeing Resources

Posted on April 27th, 2020

COVID-19 has brought many new challenges to the way we communicate with our coworkers, friends and family.  Never has listening been more important than it is right now.  As we focus on listening fully, listening with focus and listening with the true intent to understand and not just hear, the common threads we are hearing from employees are paving the way for the next developments in your wellbeing programs.  Please continue to keep in touch on the needs and concerns of your teams and we will do our best to work with you on solutions. 

Have a safe and healthy week!

Career Wellbeing

  • How to Stay Focused and Productive When Working From Home – We’ve all seen the basic tips at this point but there are a few new simple tips in here that are worth considering in order to do your best work at home.
  • Coursera – Another great resource which includes a variety of free courses to further develop yourself.

Social & Family Wellbeing

Social

Family

Financial Wellbeing

Physical Wellbeing

  • The Best At-Home Workouts on Instagram – Top influencers in a variety of disciplines are putting out fresh content each week.  Try something new and free this week.
  • A Functional Medicine Approach to COVID-19 – Dr. Mark Hyman, Head of Strategy and Innovation at the Cleveland Clinic Center for Functional Medicine gives functional medicine tips on nutrition and supplements during COVID-19. 

Emotional Wellbeing

  • Headspace for NY’ers (and everyone else) – In partnership with Governor Cuomo (NY), Headspace has released a variety of free meditations.  The good news is, they are still free even if you aren’t a NY’er!
  • 4-7-8 Breathing – Watch this quick video to learn this simple stress antidote.
  • If you or someone you care about feels overwhelmed with emotions like sadness, depression or anxiety, or like you want to harm yourself or others call 911.  You can also contact the Substance Abuse and Mental Health Service Administration’s (SAMHSA) Disaster Distress Helpline at 800-985-5990, the National Suicide Prevention Lifeline at 800-273-8255 or text MHFA to 741741 to talk to a Crisis Text Line counselor.

Community Wellbeing

  • Provide Funds to American Families that Need It Most – GiveDirectly’s Covid-19 cash program. GiveDirectly has partnered with Propel, a company that works on benefit delivery to recipients of the Supplemental Nutrition Assistance Program (SNAP, a.k.a. food stamps), to identify SNAP recipients and direct money to them.  Each household gets $1,000 as a one-time payment. As of this writing, GiveDirectly reports having helped 3,200 families, and given a total of $3.5 million. Google announced a $2 million gift (half from the company itself, half from CEO Sundar Pichai) to GiveDirectly’s efforts.

EMPLOYER FOCUSED RESOURCES

  • The Changing Demands on People Leaders Through COVID-19 – This webinar brings together a panel of top HR Execs to discuss leading through uncertainty.  WEBINAR hosted by CLEO and execs from Affirm, Cleo, Udemy, and Tile on Wednesday, April 29th at 4 PM ET.  RSVP HERE
  • The Future of Wellness in the Workplace – This Webinar features Karen Moseley, President of HERO (Health Enhancement Research Organization) and Chuck Gillespie, CEO of the National Wellness Institute.  Thursday, April 30th at 12 PM ET.  RSVP HERE.

 

About the Author

Andrea Davis, Director of Wellbeing
Andrea joined Alera Group Northeast (formerly CBP) in July 2013, bringing over 15 years of experience in management consulting and strategic solutions. As the Director of Wellbeing, she is responsible for assisting with the development, implementation and evaluation of comprehensive wellness strategies for existing and prospective Alera Group clients. She provides assistance and support to Alera Group clients by developing personalized programs that fit clients’ unique health management needs, wellness program implementation, committee development, promotion and marketing of their programs to encourage participation. In addition, Andrea conducts program analysis and generates reports related to program participation, health assessment and client utilization. 

COVID-19 and Cafeteria Plan Considerations

Posted on April 27th, 2020

This legal alert was updated May 13, 2020.

A cafeteria plan, or Section 125 plan, sometimes referred to as a POP plan, allows employees to pay for certain expenses on a pretax basis. Employees choose between a taxable benefit (cash, typically distributed via payroll) and two or more pre-tax qualified benefits. Just like standing in line at a cafeteria and selecting a salad, a plate of meatloaf, and a carton of milk, employees can “stand in line” and select health insurance, vision insurance, and dental insurance – and more! The IRS limits the benefits that can be offered through a cafeteria plan.

  • Coverage under an accident or health plan (traditional health insurance, self-insured reimbursement plans, dental, vision, etc.)
  • Health care expense reimbursement plans (FSAs)
  • Dependent care assistance benefits
  • Paid time off
  • Adoption assistance benefits
  • Health savings accounts (HSAs)
  • Group term life
  • 401(k) contributions

 

Employees can make elections and select which of the offered benefits they would like to enroll in. Employees can choose to cover other individuals, including spouses and dependents, if the employer’s plan allows. These elections are prospective, with an exception for birth, adoption and placement for adoption as well as new hires, when the employer’s plan does not impose a waiting period for new employees. The IRS considers pretax elections to generally be irrevocable unless a permitted event occurs or there is an exception. These events sometimes overlap and fall into three general categories, HIPAA special enrollment events, change in status events, and other triggering events.

A plan sponsor is not required to recognize any midyear changes to pretax elections. However, for practical purposes, because HIPAA requires group health plans to provide a special enrollment opportunity to an employee upon the occurrence of specific events (e.g. marriage, birth, adoption, etc.)¹ most plan sponsors at a minimum will design their plan to recognize HIPAA special enrollment events, permitting changes to pretax elections midyear. All of the events however are optional, and a plan sponsor must ensure their plan documents affirmatively indicate which of the events are recognized.

QUALIFYING EVENTS

Gain dependent(s) due to marriage

Employee or dependent becomes entitled to Medicare or Medicaid

Employee/dependent status change results in gaining eligibility under the plan (e.g., new job; part-time to full-time)

Plan makes SIGNIFICANT cost change

Plan makes automatics small cost change(s)

Lose spouse (e.g., divorce, legal separation, death of spouse)

Employee or dependent becomes entitled to premium assistance subsidy for Medicaid or CHIP

Employee/dependent employment change results in losing eligibility under employer plan (e.g., full to part-time; unpaid leave)

Plan makes SIGNIFICANT curtailment in coverage

Other employer's plan increases/decreases/ceases coverage

Gain/lose child (e.g., birth adoption or placement for adoption/death)

Employee or dependent loses entitlement for Medicare, Medicaid, or CHIP

Employee hours of reduced to average less than 30 hours a week

Plan eliminates/adds new benefit or coverage option

Other employer's plan offers open enrollment

Dependent loses/gains eligibility (e.g., child reaches age limit/becomes student after age 26)

Change in residence triggers gain/loss eligibility (e.g., move in/out of a plan services area

Employee becomes eligible to enroll in a QHP in the Marketplace

Order requiring plan to add child(ren) to health plan coverage

Order requiring another employer's plan to add child(ren) to health plan coverage

 

The following situations are not cafeteria plan qualifying events:

  • Change in employee’s finances
  • Change in employee’s medical condition (worsens/heals)
  • Provider leaves network, unless it results in a significant reduction of coverage (e.g., the only gastroenterologist in the network leaves)
  • Legal separation, unless it causes the spouse to lose eligibility under the terms of the plan. (Many plans eligibility isn’t lost until divorce is final.)
  • Commencement of domestic partner relationship
  • Dependent or spouse leaves/returns from prison/jail, unless it causes the individual to lose HMO eligibility due to change in residence

On May 12, 2020, the IRS issued Notice 2020-29 which, among other things, allow employees to amend their cafeteria plans to permit employees to make mid-year changes for the following purposes:

  • For employer-sponsored health coverage:
    • Make a new, prospective election if the employee had previously declined coverage;
    • Revoke an existing election and make a new, prospective election to enroll in different health coverage sponsored by the employer; or
    • Prospectively revoke coverage if the employee attests in writing that they are enrolled in, or immediately enroll in, other health coverage not sponsored by the employer. The Notice provides a sample attestation employers can use and may rely on the written attestation unless the employer has actual knowledge the employee is not, or will not be, enrolled in other comprehensive health coverage.
  • For FSA coverage:
    • Prospectively revoke an election, make a new election, or decrease or increase an election to a health FSA (including a limited purpose health FSA) or DCAP.

Notice 2020-29 provides that employers may amend their plans to allow each eligible employee to make prospective election changes or an initial election regardless of whether the election change satisfies one of the permitted election changes under applicable Treasury regulations. The Notice is very clear that this is not a free-for-all. The employer has the discretion to impose parameters for these election changes, including the extent to which the election changes are permitted and applied, and they can limit the period during which election changes may be made.

The relief may be applied retroactively to January 1, 2020; however, as set forth above, all election changes must be prospective. The retroactive application of the relief is to cover any employer who may have allowed an election change that may not have been consistent with Section 125 (but would be consistent with one of the permitted election changes discussed above).

Finally, employers must ensure the election changes do not result in failure to comply with the nondiscrimination rules. The Notice provides strategies an employer may use to ensure there is no adverse selection of health coverage, such as limiting elections to circumstances in which an employee’s coverage will be increased or improved as a result of the election change (ex. switching from self-only to family coverage).

For more COVID-19 legal alerts, please visit our resource center at aleragroup.com/coronavirus/#legalalerts.

If you have any questions related to this alert, please reach out to your Alera Group advisor or email us at info@aleragroup.com to be connected with your local firm.

 

¹Special Enrollment rights are not required for “HIPAA-excepted benefits” which generally include stand-alone dental, vision and most health care FSAs.

 

The information contained herein should be understood to be general insurance brokerage information only and does not constitute advice for any particular situation or fact pattern and cannot be relied upon as such. Statements concerning financial, regulatory or legal matters are based on general observations as an insurance broker and may not be relied upon as financial, regulatory or legal advice. This document is owned by Alera Group, Inc., and its contents may not be reproduced, in whole or in part, without the written permission of Alera Group, Inc. Reviewed as of 05/13/2020.

NYS Notice: Small Group Blanket Comprehensive Health Insurance Policies

Posted on April 21st, 2020

Notice for Individual, Small Group and Student Blanket Comprehensive Health Insurance Policies

Dear Policyholder,

A recent Executive Order issued by Governor Cuomo, together with recent amendments to the insurance and banking regulations (the “regulations”) issued by the New York State Department of Financial Services (“Department”), extend grace periods and give you other rights under certain health insurance policies if you are a policyholder of an individual, small group or student blanket comprehensive health insurance policy and can demonstrate financial hardship as a result of the novel coronavirus (“COVID‑19”) pandemic. A “small group” means a group of one hundred or fewer employees or members exclusive of spouses and dependents.  These grace periods and rights are currently in effect but are temporary, though they may be extended further.  Please check the Department’s website at https://www.dfs.ny.gov/consumers/coronavirus for updates.

Insurance Payments – Grace Period

If you can demonstrate financial hardship as a result of the COVID-19 pandemic, your insurer must extend to the applicable grace period for the payment of premiums to the later of the expiration of the applicable contractual grace period and 11:59 p.m. on June 1, 2020, for any individual, small group or student blanket comprehensive health insurance policyholder.  Your insurer is responsible for the payment of claims during such period and may not retroactively terminate your policy for non-payment of premium.  In addition, if you do not make a timely premium payment and can demonstrate financial hardship as a result of the COVID-19 pandemic, your insurer may not impose any late fees relating to the premium payment, report you to a credit reporting agency or a debt collection agency regarding such premium payment and provide information to you regarding alternative policies available from such insurer and provide contact information for the NY State of Health.

How to Demonstrate Financial Hardship

If you are unable to make a timely premium payment due to financial hardship as a result of the COVID-19 pandemic, you may submit to your insurer a statement that you swear or affirm in writing under penalty of perjury that you are experiencing financial hardship as a result of the COVID-19 pandemic, which the insurer or premium finance agency, as applicable, shall accept as satisfactory proof.  Such statement is not required to be notarized.

Questions

If you have any questions regarding your rights under the Executive Order or regulations, please contact your insurer, broker, or premium finance agency.

Weekly Wrap-up: Wellbeing Resources

Posted on April 20th, 2020

As we all adapt to new rhythms of working from home and social distancing, it's important that we stay on top of our wellbeing. Each week we're putting together a fresh list of wellbeing resources that target reach of the six categories of holistic wellbeing: career, social, financial, emotional physical and community. We hope you enjoy this week's list!

Career Wellbeing

  • Career Focused Webinars – this can be a great way to learn more about a specific topic in a short amount of time.  Career Contessa is free during COVID-19 and eLearning Industry offers both free and paid webinars. 
  • Free Online Courses by MIT, Harvard, and More – edX offers a wide variety of courses from business to engineering to humanities by many top universities.  You can audit most of these courses for free. 

Social & Family Wellbeing

Social

  • Calling all Bruce Springsteen Fans – Fans of Bruce and other performers such as Tony Bennett, Jon Bon Jovi, Charlie Puth and more might want to catch the JERSEY 4 JERSEY Benefit Show.
  • 52 Questions to Bring You Closer Together – With extra time to connect with our loved ones, leverage these questions to start meaningful conversations. 

Family

  • Free Tutoring – Students from Harvard, MIT, UC Berkeley Give Free Tutoring to K-12 Students. 
  • How to Discipline During the Pandemic – Some leading psychotherapists weigh in how to discipline in a time where kids need “much more compassion than ever before.”

Financial Wellbeing

  • The Pete the Planner Show – Personal Finance Expert and author Pete the Planner (aka Peter Dunn) welcomes one person on per episode on a quest to make them a millionaire.  In each episode, the entertaining host brings lots of laughs and practical money advice for real people. 

Physical Wellbeing

  • Getting A Good Night’s Sleep During a Pandemic’ WEBINAR hosted by WELCOA and Dr. Michael Breus (aka The Sleep Doctor) on Tuesday, April 21st at 3PM ET. RSVP HERE.
  • TEDTalks Health – From new medical breakthroughs to smart daily health habits, doctors and researchers share their discoveries about medicine and well-being onstage at the TED conference. This is a great podcast to subscribe to. 

Emotional Wellbeing

  • Yale’s Massively Popular ‘Happiness’ Course (choose the free version) – This course has been something of a phenomenon and you can access it for free right now.  Over 1.5 million people have signed up in the wake of COVID-19. 
  • ‘How to be Kind and Gentle with Yourself’ WEBINAR hosted by Modern Health on Thursday, 4/23 at 2pm ET.  This webinar will explore ways to offer yourself more compassion during this difficult time.  RSVP here.
  • If you or someone you care about feels overwhelmed with emotions like sadness, depression or anxiety, or like you want to harm yourself or others call 911.  You can also contact the Substance Abuse and Mental Health Services Administration’s (SAMHSA) Disaster Distress Helpline at 800-985-5990, the National Suicide Prevention Lifeline at 800-273-8255 or text MHFA to 741741 to talk to a Crisis Text Line counselor.

Community Wellbeing

  • Meals on Wheels COVID-19 Response Fund – With seniors being at greatest risk amid COVID-19, Meals on Wheels services are more important than ever.  This organization delivers meals and conducts safety checks for our seniors.  Donate to the national organization or your local program.   
  • The Kindness Podcast – This podcast explores how kindness can be used to solve problems and help others.  Each feel-good episode is 30 minutes. 

EMPLOYER FOCUSED RESOURCES

  • Sustaining Company Culture Through COVID-19 – Culture is so important for our employees and also for our clients or customers.  Gallup talks about how to sustain culture through this unique time.  The webinar was hosted 4/17 but if you register you will get the link for the recording. 

 

About the Author

Andrea Davis, Director of Wellbeing
Andrea joined CBP, an Alera Group company, in July 2013, bringing over 15 years of experience in management consulting and strategic solutions. As the Director of Wellbeing, she is responsible for assisting with the development, implementation and evaluation of comprehensive wellness strategies for existing and prospective CBP clients. She provides assistance and support to CBP clients by developing personalized programs that fit clients’ unique health management needs, wellness program implementation, committee development, promotion and marketing of their programs to encourage participation. In addition, Andrea conducts program analysis and generates reports related to program participation, health assessment and client utilization. She interfaces with CBP’s Chief Medical Officer, Dr. Terrence Fitzgerald, to leverage clinical and analytic data in support of CBP’s health management solutions.

Implementing Workplace Controls During COVID-19

Posted on April 13th, 2020

This article was adapted from the COVID-19 in the Construction Industry webinar on April 9, 2020.

To watch the full webinar, click here.

During the COVID-19 outbreak, when it may not be possible to eliminate the hazard, the most effective protection measures are engineering controls, administrative controls, safe work practices, and personal protective equipment (PPE).

Engineering Controls

►          Installing high-efficiency air filters.

►          Increasing ventilation rates in the work environment.

►          Installing physical barriers, such as clear plastic sneeze guards.

►          Installing a drive-through window for customer service.

Administrative Controls

►          Encouraging sick workers to stay at home

►          Minimizing contact among workers, clients, and customers by replacing face-to-face meetings with virtual communications and implementing telework if feasible.

►          Establishing alternating days or extra shifts that reduce the total number of employees in a facility at a given time, allowing them to maintain distance from one another while maintaining a full onsite work week.

►          Discontinuing nonessential travel to locations with ongoing COVID-19 outbreaks. Regularly check CDC travel warning levels at: www.cdc.gov/coronavirus/2019-ncov/travelers.

►          Developing emergency communications plans, including a forum for answering workers’ concerns and internet-based communications.

►          Training workers who need to use protecting clothing and equipment how to put it on, use/wear it, and take it off correctly, including in the context of their current and potential duties. Training material should be easy to understand and available in the appropriate language and literacy level for all workers.

Safe Work Practices

►          Providing resources and a work environment that promotes personal hygiene. For example, provide tissues, no-touch trash cans, hand soap, alcohol-based hand rubs containing at least 60 percent alcohol, disinfectants, and disposable towels for workers to clean their work surfaces.

►          Requiring regular hand washing or using of alcohol-based hand rubs. Workers should always wash hands when they are visibly soiled and after removing any PPE.

►          Post handwashing signs in restrooms.

Personal Protective Equipment (PPE)

Examples of PPE include: gloves, goggles, face shields, face masks, and respiratory protection, when appropriate. All types of PPE must be:

►          Selected based upon the hazard to the worker.

►          Properly fitted and periodically refitted, as applicable (e.g., respirators).

►          Consistently and properly worn when required.

►          Regularly inspected, maintained, and replaced, as necessary.

►          Properly removed, cleaned, and stored or disposed of, as applicable, to avoid contamination of self, others, or the environment.

 

To watch the full webinar, click here. For more information on COVID-19, check out our live dashboard at aleragroup.com/coronavirus

If you have any questions about the content and resources provided in the webinar above, please contact jsimmers@hmk-ins.com.

 

About the Author:

Jade Simmers
Director of Risk Management

HMK Insurance, an Alera Group Company

Jade Simmers joined HMK Insurance in January of 2018 to begin the HMK Risk Management Department. Jade has 25 years of experience in Health & Safety/Risk Management and has worked in both the fields of construction and general industry.  Jade has been working in the insurance industry for the last eight years and has worked for both insurance carriers and brokers.  In his current role, he works with HMK commercial clients to assess, address, and mitigate safety-related and OSHA-regulated hazards. To HMK clients, Jade has provided regulatory programs & training, job-site & facility hazard inspections, safety committee facilitation, accident investigation, and on-call consulting.  Jade actively participates in the Eastern Pennsylvania Chapter of ABC and the Lehigh Valley Safety Committee, where he is frequently a guest speaker.  Jade is an OSHA Outreach trainer for both the Construction & General Industry and holds an Advanced Safety Certificate with the National Safety Council.

Tax Credits Under FFCRA: Qualified Leave Wages & Health Plan Expenses

Posted on April 13th, 2020

This content was last reviewed on April 14, 2020.

Employers who are uncertain about how to calculate their qualified health plan expenses and qualified leave wages should consult with their legal counsel or financial adviser.

The Families First Coronavirus Response Act (“FFCRA”) created two new refundable tax credits intended to reimburse employers for costs associated with their financial obligations to provide leave benefits created by the Act plus the cost of continuing health insurance for employees on FFCRA leave.

Employers with fewer than 500 employees (“eligible employers”) are entitled to receive a credit in the full amount of the qualified sick leave wages and qualified family leave wages, plus allocable qualified health plan expenses and the employer’s share of Medicare tax, paid for leave during the period beginning April 1, 2020, and ending December 31, 2020.

Determining what is meant by “costs associated” and to understand what is included in the tax credits, the DOL’s guidance references the Internal Revenue Code.

  • Qualified health plan expenses are amounts paid or incurred by an Eligible Employer to provide and maintain a group health plan (as defined in section 5000(b)(1) of the Internal Revenue Code) that are allocable to the employee’s qualified leave wages.
  • Qualified leave wages are wages as defined in section 3121(a) of the Internal Revenue Code for social security and Medicare tax purposes.

In general, the term “group health plan” as defined in Section 5000(b)(1) includes all plans that are subject to continuation coverage under COBRA, such as medical, dental, vision, health FSA and HRA.

  • (1) Group health plan the term ‘‘group health plan’’ means a plan (including a self-insured plan) of, or contributed to by, an employer (including a self-employed person) or employee organization to provide health care (directly or otherwise) to the employees, former employees, the employer, others associated or formerly associated with the employer in a business relationship, or their families

However, the provisions related to determining which contributions by an employer to these health plans are allowed to be included for purposes of claiming payroll tax credits and the extent these amounts are excluded from the gross income of employees under Section 106(a) of the Code is not black and white.

  • 26 CFR 1.106-1: Contributions by employer to accident and health plans indicates:
    (a) The gross income of an employee does not include the contributions that the employer makes to an accident or health plan for compensation (through insurance or otherwise) to the employee for personal injuries or sickness incurred by the employee, the employee's spouse, the employee's dependents (as defined in section 152 determined without regard to section 152(b)(1), (b)(2), or (d)(1)(B)), or any child (as defined in section 152(f)(1)) of the employee who as of the end of the taxable year has not attained age 27. The employer may contribute to an accident or health plan either by paying the premium (or a portion of the premium) on a policy of accident or health insurance covering one or more of his employees, or by contributing to a separate trust or fund (including a fund referred to in section 105(e)) which provides accident or health benefits directly or through insurance to one or more of his employees. However, if such insurance policy, trust, or fund provides other benefits in addition to accident or health benefits, section 106 applies only to the portion of the employer's contribution which is allocable to accident or health benefits. See paragraph (d) of § 1.104-1 and §§ 1.105-1 through 1.105-5, inclusive, for regulations relating to exclusion from an employee's gross income of amounts received through accident or health insurance and through accident or health plans. For the treatment of the payment of premiums for accident or health insurance from a qualified trust under section 401(a), see §§ 1.72-15 and 1.402(a)-1(e).

These are complicated issues and determining the deductible costs is not easy. Therefore, we recommend employers who are uncertain should reach out to their legal counsel or qualified accountant for guidance.

For more legal alerts and resources, please visit our live COVID-19 dashboard

 

The information contained herein should be understood to be general insurance brokerage information only and does not constitute advice for any particular situation or fact pattern and cannot be relied upon as such. Statements concerning financial, regulatory or legal matters are based on general observations as an insurance broker and may not be relied upon as financial, regulatory or legal advice. This document is owned by Alera Group, Inc., and its contents may not be reproduced, in whole or in part, without the written permission of Alera Group, Inc.

Who Is Eligible for Emergency Paid Sick Leave Act (EPSLA) Coverage & Emergency Family and Medical Leave Expansion Act (EFMLEA) Coverage?

Posted on April 13th, 2020

Download this scenario chart HERE.

To be eligible for benefits, three criteria must be met: 

  1. Employer must have work for the employee;

  2. Employer and employee must agree on a work schedule;

  3. Employee must have a qualifying reason (see FFCRA FAQs for details)

Joey works in a coffee shop. The shop is closed for business. It doesn’t matter if it is due to a lack of business or to a shutdown order closing all restaurants. Since there is no work for Joey, he may be eligible for unemployment insurance, but he is not eligible for EPSLA or EFMLEA.

Alicia is an attorney working for a law firm. The office is closed, but everyone is teleworking from home. Alicia and her employer agree she can work whenever she wants, except that they want her to work from 9 to 5 on Tues. and Thurs., so she is available for clients. All her other work can be in the evenings, weekends or whenever she wants. Since Alicia did not have an income loss, she does not need either EPSLA or EFMLEA benefits.

Mary works as a grocery store cashier, an essential business. The store is open from 8 AM to 10 PM daily and Mary is offered 40 hours per week in work. Her normal rate of pay is $15.00 per hour. Mary has an autoimmune disease and a compromised immune system. Her doctor tells her that she is at high risk and that she must self-quarantine. Since work is available, but due to the self-quarantine order, Mary is eligible for benefits under the EPSLA. Here benefits are calculated as follows: $15/hour X 40 hours X 100% benefit = $561 maximum weekly benefit *Since Mary does not have a child, she is not eligible for EFMLEA benefits.

George is Alicia’s husband. He works making medical equipment in a factory. His employer is open, and his work hours are from 9 to 5, Monday to Friday. Since Alicia must work during the day on Tues. and Thurs., George applies for leave on those days so he can take care of their 7-year-old daughter Cindy, whose school is closed due to COVID-19. George applies for and is approved for two days of leave since he must care for their daughter. George makes $20 per hour, is approved for 16 hours of leave per week and receives 2/3 of his wage as EPSLA and then EFMLEA benefits. $20/hour X 16 hours X 2/3 benefit = $266.80 weekly benefit.

For more related updates, check out our COVID-19 dashboard for our latest updates and legal alerts. 

 

This document was created by Alera Group, Inc. Updated as of 4/6/2020. This is not legal advice. No client-lawyer relationship between you and our lawyers is or may be created by your use of this information. Rather, the content is intended as a general overview of the subject matter covered. To be eligible for benefits, three criteria must be met: 1. Employer must have work for the employee; 2. Employer and employee must agree on a work schedule; 3. Employee must have a qualifying reason (see FFCRA FAQs for details)

COVID-19, Remote Working and Cyber Attacks

Posted on April 10th, 2020

Amid the economic crisis brought on by the COVID-19 pandemic, many small businesses are devoting most of their attention to finances — and with good reason. The disruption caused by the pandemic threatens their very existence.

So the questions insurance agents are hearing most often these days from small-business owners are:

  1. "Am I covered for business interruption caused by the coronavirus?" (It depends on the language in the policy.)
  2. "Am I eligible for PPP funding?" (See the conditions for the Payroll Protection Program on the coronavirus.gov website.)

But in the rush to secure funding to keep their operation running and their employees on the payroll, some businesses are paying too little attention to another potentially fatal risk: cyber attack. 

With unprecedented numbers of people working remotely due to the pandemic and more business than ever being transacted online, cyber criminals are recognizing vulnerabilities and exploiting them.

As Alera Group notes in the recently released document Warning: Cyber Liability — Increase Risk with COVID-19:

"Experts are projecting a 30-40 percent increase in cyber attacks during the novel coronavirus pandemic. This is primarily due to hackers exploiting the vulnerabilities associated with this crisis, especially those arising from employees working from home. In situations such as these, companies need to reexamine their network security infrastructure and Cyber Liability Insurance program." 

To view the full, single-page document, click on the image at right.

Productivity vs. Security

While seeking information on financial assistance and insurance coverage, business owners have another priority that may compromise their cyber security: keeping their remote workforce as productive as possible.

"What's happening on the cyber security side is that people's guards are down," Asaf Lifshitz, CEO of Massachusetts and Israel-based Sayata Labs, tells the publication Insurance Business America. “Cyber security almost always comes at some degree of conflict with productivity, and all of a sudden [as a result of the coronavirus] there’s this massive shortage of productivity. Companies need to be able to transact business, now that their employees are working from home and they’re already taking a hit.

“In times like these, IT managers have to make compromises. Ideally, we’d like our employees to log in via a VPN, or to conform to whatever standards we put in place before. Now, it’s much harder to enforce. If we insist on doing it, productivity will take a bigger hit, and so those constraints are relaxed a little bit — and that’s what I mean when I say guards are down from a pure cyber security perspective."

Zoom bombs, Slack attacks and other trending threats

The Conversation website explores the risks of using popular online collaboration tools such as Zoom and Slack in its piece Working from home risks online security and privacy— how to stay protected. The piece includes these risk management tips:

  • Be careful what you post publicly. Check that there is no potentially sensitive information in it. Once it’s published online, it’s there, forever.

  • Check recent security and privacy reports about online collaboration tools before using them, and if in doubt, consult your employer. These tools can have access to details about your devices, your data and your video and audio conversations. The Electronic Frontier Foundation is a good source.

  • Protect your devices. Install anti-virus software, update systems and apps, implement multi-factor authentication (so that multiple pieces of evidence are needed for someone to use your login, such as username and password and a text message), and be on the lookout for phishing scams.

  • Zoom Bombing and other forms of hijacking meetings can be prevented. Share meeting links with only invited partiesConfigure Zoom to only allow the host to share screen, as appropriate. And disable file transfers to stop trolls sharing viruses to all attendees.

The importance of cyber insurance

While good risk management is always advisable, it's also true that cyber breaches are inevitable. As I've written before, "Because no business is immune to cybercrime, it stands to reason that every business should protect itself with cyber insurance. Competitive pricing among the broad array of carriers offering coverage further contributes to the value of a cyber policy."

For more information on cyber insurance, see the Alera Group flier. And if you'd like to know more about how cyber insurance can protect your business, contact us at info@aleragroup.com to be connected with an expert. 

 

About the Author:

Andrew Armstrong
Partner/Account Executive
Sylvia Group, an Alera Group Company

The fourth generation in his family to provide clients with custom-designed solutions to risk-mitigation challenges, Andrew Armstrong carries on the Sylvia Group tradition of service to his clients and community. A Certified Commercial Lines Professional (CCLP), he makes sure that no detail related to a business' insurance needs goes overlooked. Through an open discussion of their needs and budget, he works with clients to design coverage programs in a collaborative process that leaves them feeling better for the experience.

Is Your Business Eligible for Federal COVID-19 Assistance?

Posted on April 9th, 2020

The passing of the CARES Act and $350 billion Paycheck Protection Program (PPP) created extensive financial assistance to help businesses continue operating and enable employees to retain their jobs. It also created endless questions about eligibility for loans and grants, and about compliance with employee benefits regulations.

One of the CARES ACT-related questions we've received is, "Am I eligible for assistance as a sole proprietor?"

The U.S. Small Business Administration (SBA) addresses this on its website:

"The SBA’s Economic Injury Disaster Loan provides vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing as a result of the COVID-19 pandemic. 

"This program is for any small business with less than 500 employees (including sole proprietorships, independent contractors and self-employed persons), private non-profit organization or 501(c)(19) veterans organizations affected by COVID-19."

Answers from specialized advisers

Recognizing that not all questions are as easy to answer as the one about the eligibility of sole proprietors, Alera Group has established a webinar series to address employers' concerns regarding COVID-19.

The webinars feature specialized advisers who provide updates and explanations on legislation and compliance issues, and they include the opportunity to submit viewer questions. Upcoming are:

For further details and registration, click on the corresponding link above.

Comprehensive, orderly collection of resources

Within a day or two of each webinar, Alera Group will post a recording of the session in its Coronavirus Resource Center. Comprehensive and easy to navigate, the attractively designed page also includes links to Property & Casualty Insurance information, legal alerts, employer resources, FAQs, wealth management resources and infographics such as this Decision Tree for Emergency  Paid Sick Leave (EPSLA).

If you have any questions about our COVID-19 resources and updates, please reach out by emailing info@aleragroup.com

 

About the Author

Maureen Armstrong
Managing Partner at Sylvia Group, an Alera Group Company

In a career spanning three decades, Maureen Sylvia Armstrong has been an established business and civic leader in Southeastern Massachusetts. It’s a reflection of Maureen’s vision, dedication and inexhaustible drive that Sylvia Group’s reputation for expertise and superior customer service in insurance, employee benefits and financial planning is matched only by its widely recognized commitment to the community of SouthCoast and beyond.

 

The information contained herein should be understood to be general insurance brokerage information only and does not constitute advice for any particular situation or fact pattern and cannot be relied upon as such.  Statements concerning financial, regulatory or legal matters are based on general observations as an insurance broker and may not be relied upon as financial, regulatory or legal advice.  This document is owned by Alera Group, Inc., and its contents may not be reproduced, in whole or in part, without the written permission of Alera Group, Inc.

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