Families First Coronavirus Response Act: Five Issues for Benefit Plan Sponsors to Consider
On March 18, 2020, the Senate passed the Families First Coronavirus Response Act, which is anticipated to be quickly signed into law by the president. This legislation expands employee sick leave benefits, expands access to medical services, and provides monetary assistance to impacted Americans. This summary addresses five issues that should be considered by employers that sponsor employee benefit plans.
- Expansion of Coverage Required Under Group Health Plans
Most group health plans will be required to provide full coverage of the following items and services at no cost to plan participants and without application of any medical management requirements, such as prior authorization or utilization review:
Certain COVID-19 testing
Specifically, in vitro diagnostic products for the detection of SARS-CoV-2 or the diagnosis of the virus that causes COVID-19 that are approved, cleared or authorized under sections 510(k), 513, 515 and 564 of the Federal Food, Drug and Cosmetic Act, and the administration of such in vitro diagnostic products.
Certain items and services furnished to a plan participant during a health care visit that results in an order for covered COVID-19 testing
A health care visit could take the form of an in‑person office visit, a telehealth visit, an urgent care center visit, or an emergency room visit.
Coverage is required only to the extent that items or services furnished during the visit relate to:
The furnishing or administration of the covered testing; or
The evaluation of the individual to determine whether covered testing is needed.
This new coverage requirement will be effective immediately, but only with respect to covered items and services that are provided both on or after the date of enactment and before the end of the public health emergency period declared by the secretary of the Department of Health and Human Services (HHS).
Both grandfathered and non-grandfathered plans (and not just those sponsored by employers with fewer than 500 employees) are subject to this requirement. However, retiree-only plans and HIPAA excepted benefits are not required to comply.
- Impact on High Deductible Health Plans
As we discussed in a previous client update, the IRS recently released guidance that gives high deductible health plans (HDHPs) greater flexibility to provide pre-deductible coverage of medical care services and items related to “testing for and treatment of COVID-19.” Although the IRS has not provided guidance specifically about the bill and has not elaborated on the meaning of the phrase “testing for and treatment of” in its recent guidance, it is reasonable to assume that employers can provide coverage of all of the items and services required under the bill without disqualifying an HDHP for health savings account (HSA) eligibility purposes.
- Expansion of Telehealth Coverage
The bill specifically includes coverage for certain telehealth visits; the Centers for Disease Control and Prevention have stressed the importance of relying on telemedicine to help curtail the spread of the virus and HHS has taken steps to make it easier for providers to use remote communication technology. As a result, employers may be considering waiving cost-sharing requirements for telehealth visits generally or expanding telehealth services to employees who are not enrolled in the employer’s medical plan.
Waiving cost-sharing requirements for telehealth visits, except as required under the bill, could disqualify an HDHP for HSA eligibility purposes. In such a case, the plan would cover non-preventive medical care even before plan participants satisfy their deductible. The IRS has not yet issued guidance relating to whether waiving telehealth copays during the emergency period (or otherwise) will impact an HDHP’s qualified status.
Expanding telehealth to individuals not covered under the medical plan could create risks under the Affordable Care Act. The telehealth benefit very likely does not cover all of the items and services that the Affordable Care Act requires a group health plan to cover. As a result, and pending any guidance from the IRS, the telehealth benefit likely could not be extended unless it was structured as a HIPAA excepted benefit or integrated with another group health plan.
- Benefit Continuation During Expanded Leave
The bill requires employers with fewer than 500 employees to provide Family and Medical Leave Act (FMLA) leave and paid sick leave in certain circumstances related to COVID-19 (additional details are summarized in this previous client update). The bill does not address whether or how benefits must be continued during such leaves, so current FMLA requirements will apply to the FMLA leave, and the employer’s benefit plan rules will apply to the paid sick leave.
- Tax Credits for Smaller Employers
For those employers that are required to provide expanded FMLA and paid sick leave under the bill, the bill creates refundable payroll tax credits. The amount of the tax credit is increased by certain amounts that the employer pays to maintain a group health plan. Details on the amount that may be added to the tax credit are to be addressed in future guidance from the Treasury Department.
Once signed into law as is, employers need to:
- Coordinate with their third-party administrators (TPAs) or insurers to ensure that the expanded coverage requirements of this bill are being administered correctly.
- Update plan documents and/or summary plan descriptions to reflect the changes required by this law.
- Consider whether their plans accurately and adequately describe how to benefit coverage is impacted by a leave of absence.
- Watch for future guidance regarding the new tax credit and potential future guidance on coverage of telehealth services.
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Please be advised that, based on current IRS rules and standards, the advice contained herein is not intended or written by the practitioner to be used and cannot be used by the taxpayer for the purpose of avoiding penalties.
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