In light of COVID-19, many schools and businesses are being forced to make changes including closings, layoffs, and remote workforces. Just last night, President Trump signed the Families First Coronavirus Response Act (FFCRA), which includes provisions to help employees and their employers, by among other things, providing emergency paid sick leave and temporarily expanding the Family and Medical Leave Act (FMLA) to allow paid family leave for working families affected by school closures. All of this can leave employers and their employees uncertain about the future and have them asking about benefit elections changes and how to handle benefits during employee leave or business shutdowns.
Emergency Paid Sick Leave
The FFCRA signed into law on March 18, 2020, is the first attempt by the federal government to provide relief to workers and their families facing the economic fall-out of the novel coronavirus. The FFCRA creates a new Emergency Paid Sick Leave Act (EPSLA) which, effective April 2nd through the end of 2020, requires employers with less than 500 employers to provide paid sick leave to individuals who cannot work (including remote work) due to isolation/quarantine orders, having symptoms of COVID-19, caring for another person in one of those categories, or caring for a minor child due to school or daycare closures. The amount of pay must equal the employee’s regular rate of pay for hours of work missed for their own health or quarantine need (but not exceeding $511 per day or $5,110 total), and at least 2/3 of their regular pay (but not exceeding $200 per day or $2,000 total) if leave is needed to care for another sick or quarantined individual or a child missing school or daycare.
Additionally, the FFCRA provides longer paid leave and extends FMLA protection through December 31, 2020 if an employee needs to care for a child under age 18 if their school or daycare is closed for reasons related to the current public health emergency. To be eligible, employees must have worked for at least 30 days for an employer that employs less than 500 employees. After 10 days of unpaid leave (during which employees can use any available sick, PTO, or EPSLA time), most employers are required to pay at least 2/3 of an employee’s regular rate of pay, not to exceed $200 per day or $10,000 total.
Maintaining Employee Benefits for Employees
With the laws around leaves of absence changing frequently, it is important to understand an employer’s obligation to maintain benefits during leave. In general, if an employee is on a paid leave of absence, they will retain benefits eligibility as long as they are receiving any regular pay from their employer. This would include pay under the EPSLA or an employer’s normal paid leave policy. On the other hand, if an employee is on an unpaid leave, their benefits eligibility will depend on the type of leave and the employer’s leave policy. If a participant is on FMLA leave, including through the FFCRA expansion, group health benefits must be maintained as if the employee was actively at work. If a participant is on a leave that is not protected by FMLA, they will typically lose benefits eligibility unless the employer has a leave of absence policy that extends eligibility during the leave. Employers should work with their insurance carriers if they wish to make any policy exceptions to maintain benefits during these extraordinary circumstances.
Employers contemplating layoffs face different challenges at this time. When an employee is terminated or otherwise loses eligibility for their health benefits, Employers should offer COBRA (if it applies to them) continuation due to the qualifying event. Employers who are able may choose to offer a subsidy to help pay for COBRA coverage; this option can be especially attractive if the employer anticipates bringing the employee back once business returns to full operations. If employers are contemplating rehires, it may want to review its plan to understand if they will need to impose a new benefits waiting period upon rehiring, and get in touch with carriers and other service providers if a change to their rehire provision is desired.
Modifying Benefits Elections
Please note that at this time, the rules about changing benefit elections on a voluntary basis have not changed. This means that unless they experience a permitted election change event, including a leave of absence, participants typically will not be able to adjust benefit elections under a cafeteria plan, such as their medical or prescription drug, dental or vision coverage, or Health Care FSA elections. Keep in mind, however, that Dependent Care FSA elections are more flexible. Under existing permitted election change rules, any change of daycare providers or the cost of daycare for eligible dependents may allow a participant to change add, drop, or adjust the amount of their Dependent Care FSA election.
This means that participants can add or increase their Dependent Care FSA elections in order to pay for daycare for school-age children who are no longer able to attend school. Additionally, participants can revoke or decrease their elections if they stop working, or if they can no longer keep their children in their existing daycare due to facility closures. When regular activities resume, participants will likely experience new change in provider or change in cost events that would allow them to modify their Dependent Care FSA elections again. Permitted election changes generally must be requested within 30 days of the event and must be made on a prospective basis.
Additional FFCRA Resources
Below are some specific resources that may assist with specific questions regarding Families First Coronavirus Response Act.
Keeping up with Changes
In the coming days, weeks, and months, we know that federal, state, and local governments will be considering additional measures to support individuals and businesses impacted by this national health crisis. Below are some helpful links to help you stay abreast of legislative and regulatory changes enacted at the federal level.