Yes; however, there may be restrictions to those changes. Employers should consider the following steps before adjusting employee contributions:
The following plan design changes can be considered when an employer is looking to control costs:
Qualifying events are events that cause an individual a status change to his or her group health coverage. The type of qualifying event determines who the qualified beneficiaries are for that event and the period of time that a plan must offer continuation coverage. COBRA establishes only the minimum requirements for continuation coverage. The following are qualifying events for covered employees:
If an employee needs a significant sum of money and doesn't expect to have the means to repay it, they could consider a hardship withdrawal from their 401(k). A hardship withdrawal allows funds to be withdrawn from an account to meet an “immediate and heavy financial need,” such as covering medical expenses or avoiding foreclosure on a home.
Employers don't have to offer hardship withdrawal options, so it is recommended to check your retirement plan before exploring such option.
If furloughs are not currently addressed in plan language, it may be possible to modify existing plan terms to allow for the continuation of benefits while an employee is on furlough. Employers will need to work with their insurance carrier or TPA and stop-loss carriers on any modification of plan terms.
It is important to note that furloughed employees may not have the funds to pay for continued coverage. In that scenario, unless the employer is willing to assume the costs, continuing coverage may not be a practical cost control measure. If the employer expects the employee to repay premiums upon their return to work, the employer should have employees sign an agreement that allows for the repayment of past premiums upon the employee’s reinstatement to a full-time position. If employees lose access to employer sponsored coverage, they can enroll in Exchange coverage, if they request enrollment within 60-days of the loss. It’s important to note that failure to pay premiums does not invoke a special election period. Those who lose coverage due a failure to pay their premiums will have to wait until the next open enrollment to obtain individual coverage, I.e. November 1.
There are a few things to cover here. First, there is a difference between employer paid and contributory benefits. If the employer pays the full premium, i.e. non-contributory benefits, the employer may change the offer of coverage prospectively if they provide proper notification of this benefit reduction. Since voluntary benefits are 100% employee paid, the employee is the only one who can make the change and only under certain circumstances.
If the employee’s contributions to their benefit plans are taken out on a pretax basis, they have a cafeteria plan. At the beginning of each calendar year, employees make an irrevocable election to contribute premiums on a pretax basis. The IRS provides only certain options, known as “change in status” options that may allow a mid-year change to those elections. These change in status reasons are optional. Each employer may adopt some or all these reasons. To do so, they must include them in their cafeteria plan document. So, to the extent that the change the employee seeks to make is an allowable change in status, and the employer’s plan document includes that as a valid reason for change, the employee may make a change to their contributions.
Some voluntary benefits will be impacted on whether or not an employee is actively at work. Some examples include:
Life and Disability Plans: Some life and disability insurance carriers may require that employees be actively-at-work for coverage to be honored. Employers need to identify carrier plan language to ensure benefit continuation will not be disrupted in the event of a furlough/temporary closure or when employees’ hours are reduced below eligibility criteria. If an employer is changing life and disability carriers during this pandemic, confirm that they will not delay insuring employees who are not actively-at-work as a result of a closure or who have experienced a reduction in hours of employment.
Commuter Benefits: Notify employees to cease contributions into a commuter benefit program, if they are expected to work for home for a month or more. Employees can also reduce the monthly elections to reflect a decrease in the number of days they anticipate to commute into the office. If employees are terminated, note that unused amounts in their commuter benefit plans will be forfeit.
Yes; however, there may be restrictions to those changes and not all carriers allow employers to make changes midyear. Additionally, a significant cost in change may trigger a new open enrollment if the employer’s plan allows mid-year changes due to a change in costs. If your carrier permits midyear changes, consider the following:
If employees are terminated/laid off, even if potentially for a limited amount of time they are no longer eligible for benefits as active employees. At this point, employers will need to offer COBRA or state continuation coverage, whichever is applicable. Employees have the option of continuing coverage or applying for individual coverage in the Exchange or the private market. A loss of coverage, at any time and not just due to the COVID-19 issue, creates a special enrollment period in the individual market. Individuals may enroll within 60 days of the loss of coverage.
If employees are furloughed, they may potentially be eligible to continue coverage. Due to a reduction in hours, furloughed employees are eligible to make mid-year election changes that are consistent with the reduction in hours. Employers should note that COBRA continuation coverage (or state continuation coverage, if any) must be offered for all group health plans when there is a loss of coverage because of a furlough or reduction in hours. Individual state continuation rules vary. It is important to check the circumstances and rules for each applicable state.
Typically, there are three options.
Employers should implement a policy or follow their existing policy for collecting employees’ share of healthcare premiums. Employers can choose to implement any one of the following policies and must apply the policy uniformly to all employees:
As long as an employee remains covered by an HSA-compatible high deductible health plan during the leave or furlough, the employee is able to contribute to his or her HSA account. However, for periods of unpaid leave, there would be no pay from which salary reductions may be taken. In that scenario, the employee may suspend HSA contributions and resume contributions when they return to an active state of employment. As another alternative, the employee can make after-tax contributions to their HSA account directly and deduct those contributions when the employee files his tax return for the calendar year. It is important to note that contributions are only allowed for the months that an individual is enrolled in an HSA-compatible high deductible health plan (HDHP).
If furloughed employees lose their eligibility for flexible spending accounts (FSAs) at the beginning of the furlough, then in some cases health FSA participants will need to be offered COBRA continuation coverage. Employees with available account balances that exceed the COBRA premium for the remainder of the plan year would be able to elect COBRA coverage in order to utilize those dollars for expenses incurred after the date they lost eligibility for health FSA coverage.
Unemployment eligibility is determined by specific states under individualized statutory and regulatory frameworks. On March 12, the Department of Labor (DOL) issued new guidance encouraging states to amend their unemployment laws to provide greater flexibility for unemployment arising from coronavirus. Federal law does not require employees to resign employment in order to receive benefits due to the impact of COVID-19.
Federal law allows states to pay benefits where:
It is encouraged for employees to apply for unemployment benefits in the occasion of a furlough or layoff due to COVID-19.
Typically, employees may be required to use their PTO as long as it’s consistent with:
The PTO policy should be implemented on a consistent basis, and the employer should consider the potential employee relations implications of requiring use of PTO. In contrast, note that employers may not be able to require use of paid sick leave; some paid sick leave laws allow the employee to use it at the employee’s option. Be sure to review your state’s requirements for administration of these rules.
A furlough is a temporary, leave of absence, which is generally shorter in duration in full-day or week increments. During the furlough, the employees are not paid, but they are still technically employed. When the business reopens to full strength, furloughed employees will become active again.
A layoff is a permanent separation of employment, with the possibility that former employees may be rehired should the business reopen.
A furlough could be seen as favorable to retain talent and reduce the cost of separation (e.g., payout of vacation balance payout) or future hiring and training. However, the laws on furloughs and final pay vary from state to state, and employers should ensure compliance with their states of operation.
FMLA is an unpaid leave of absence for qualified employees for the following reasons:
FMLA benefits to employees unable to work, or telework, due to school or daycare closings. This leave is twelve weeks; the first 10 days is unpaid, but then the remainder of the leave is paid at 2/3 of regular rate of pay up to a maximum of $200 per day and a $10,000 in aggregate.
The emergency paid sick leave becomes effective April 1, 2020 if the employee needs to exercise leave for one of the qualified reasons under the FFCRA. They are:
For the purposes of employees who may be exempted from paid sick leave or expanded family and medical leave by their employer under the FFCRA, a health care provider is anyone employed at any doctor’s office, hospital, health care center, clinic, post-secondary educational institution offering health care instruction, medical school, local health department or agency, nursing facility, retirement facility, nursing home, home health care provider, any facility that performs laboratory or medical testing, pharmacy, or any similar institution, employer, or entity. This includes any permanent or temporary institution, facility, location, or site where medical services are provided that are similar to such institutions.
This definition includes any individual employed by an entity that contracts with any of the above institutions, employers, or entities institutions to provide services or to maintain the operation of the facility. This also includes anyone employed by any entity that provides medical services, produces medical products, or is otherwise involved in the making of COVID-19 related medical equipment, tests, drugs, vaccines, diagnostic vehicles, or treatments.
The answer is dependent upon many components, including applicable laws such as the federal Fair Labor Standards Act (FLSA), state wage and hour laws, company policy, and employee status (exempt versus nonexempt).A nonexempt employee, for example, is only required to be paid for the time they perform work. The employee may use his/her earned sick time, unused vacation time, personal time, or paid time off, to ensure continued earnings during the time the person is off work.
An employer’s duty should be to protect the workforce, while at the same time ensuring they aren’t creating panic. Due to medical privacy considerations, an infected employee should not be identified and confidential medical information about the employee should not be shared with others. However, the employer can inform the workforce that there has been a reported case of COVID-19. Once announced, it is important the employer identify the steps that are being taken to address the issue in the workplace, along with reiterating its infection control practices, including handwashing and sanitizing workplace areas.
Healthcare providers are required to notify federal, state and local health authorities of the diagnosis, and those authorities may provide additional guidance and requirements, including further notification, on-site medical questioning, or examinations.
Under the Americans with Disabilities Act (ADA), a temperature screening is likely to be considered a “medical examination,” which generally is prohibited. However, it may be permitted under limited exceptions. It must be job-related and consistent with business necessity, or the employer has a reasonable belief that the employee poses a direct threat to the health or safety of themselves or others. These exceptions may be more or less applicable depending on the employer’s industry and the employee’s job position. The Equal Employment Opportunity Commission (EEOC) has issued guidance permitting employers to take employee temperatures during this pandemic to determine if they have a fever. However, it is important to note that not everyone with the coronavirus may have a fever.
Requiring a doctor’s note certifying fitness to return to work is permissible if consistent with the employer’s standard practices, but employers should be aware that such documentation may be delayed due to the high volume of patients being assessed by healthcare providers during this period. Taking temperature or requiring a doctor’s note should be done consistently across the employee population or groups.
3/17 update: What used to be considered a medical examination and was not allowed under ADA has now been given the green light by the EEOC. On March 17, 2020, the U.S. Equal Employment Opportunity Commission (EEOC) issued an update to its guidance that now expressly acknowledges that employers may implement temperature screening measures in response to the current COVID-19 pandemic. The EEOC noted that “because the CDC [Centers for Disease Control and Prevention] and state/local health authorities have acknowledged community spread of COVID-19 and issued attendant precautions, employers may measure employees’ body temperature.” The CDC has also issued a precaution to remind employers that not everyone with COVID-19 has a fever and not everyone with a fever has COVID-19. Employees sent home due to COVID-19 concerns may be eligible for expanded unemployment insurance if paid leave or other relief is unavailable.
If your business decides to conduct this practice in the workplace, follow these precautions, consistent with social distancing policies:
Employers can ask an employee how he or she is feeling in general, but should avoid inquiring about specific illnesses, as that could rise to the level of a disability-related inquiry under the ADA.
If an employee is showing symptoms, it is recommended that employers require a set period away from the workplace and receive medical clearance before permitting the employee to return to the workplace. These determinations should be made on a case-by-case basis following guidance established by public health officials.
If there is an outbreak in your area, consider allowing or encouraging employees to work remotely, to the greatest extent possible, even if not sick. In this situation, it would not be considered a "leave of absence."
OSHA considers contraction of COVID-19 as a reportable event when work related. Employers are responsible for recording cases of COVID-19 if all of the following are met:
Additionally, there is no specific OSHA standard covering COVID-19; however, some OSHA requirements may apply to preventing occupational exposure to COVID19. Among the most relevant are:
OSHA’s Bloodborne Pathogens standard applies to occupational exposure to human blood and other potentially infectious materials that typically do not include respiratory secretions that may transmit COVID-19. However, the provisions of the standard offer a framework that may help control some sources of the virus, including exposures to body fluids (e.g., respiratory secretions) not covered by the standard.
Employers may ban any business-related travel to high-impact areas, as identified by the CDC. Employers with business involving travel to those areas should consider reasonable alternatives for their workforce, such as videoconferencing. As additional U.S. locations report incidences of COVID-19, employers should recognize that assessments of elevated travel risks must remain fluid.
Although employers cannot mandate an employee’s personal travel, they should consider advising employees about the risks associated with such travel, inform them of the consequences of undertaking such travel, and may require periods of quarantine before being allowed to return to the workplace, applying any such practice on a non-discriminatory basis.