LISI Coronavirus (COVID-19) Resources

In an effort to ensure employees have access to care, carriers have opened limited time special enrollment opportunities (SEO) for small and large employers. The SEO is designed to allow employees, who previously declined coverage during renewal or original enrollment, to enroll on the group plan off-anniversary. Some take it a step further by allowing employees currently enrolled to change their plan - like downgrading to a more affordable option!

Health insurers are responding to the Coronavirus threat by offering members no-cost screening and diagnostic testing. In addition, some are now waiving member cost-share for all COVID-19 treatment.

Ancillary Carriers

Health insurers are responding to the Coronavirus threat by offering members no-cost telemedicine benefits.

Insurance Commissioner Ricardo Lara issued a Notice requesting that all insurance companies provide their policyholders with at least a 60-day grace period to pay insurance premiums. An additional Notice was issued May 15th to extend the 60-day grace period through July 14, 2020. The Commissioner's request was to ensure policies are not cancelled for nonpayment of premium due to the Coronavirus (COVID-19) public health emergency. It was recommended carriers comply but it was not a requirement. The chart below shows the current standard grace periods as well as any options the carriers have made available.

Group are required to submit payment by the due date shown on their bill. If a group misses their due date, they have up until the standard grace period to make a payment before coverage is cancelled. The standard grace period begins the day after the missed due date. Carriers are reviewing their policies to determine if/how they can assist their employer groups with making payments during this difficult time.

Some carriers are offering payment deferral programs to those in need, while others may be refunding a portion of premiums. For groups that receive a refund, broker compensation may be affected.

Carriers are easing guidelines so employers can keep their employees covered, even if the employees no longer meet eligibility due to reduced hours. For carriers who have made this option available, review the chart to find out how long these employees may be covered. Unless otherwise indicated, these rules apply to small and large group fully-insured plans.

Keep in mind that employees who are permanently terminated are no longer eligible and should be offered COBRA/Cal-COBRA as usual.

Employers may want to adjust their own billing statement to pay only for employees still covered, taking into account any recent terminations. This is referred to as paying true premium. Avoid cancellation by understanding each carriers position on true premium.

Some carriers will not be re-certifying groups during this difficult time. Carrier systems may still auto generate letters to employer groups so it's important to know what you can expect.

With the unique circumstances facing employer today, some may be looking to change their contract. This could mean changes like adjusting eligibility to include part-time employees as eligible or shortening the waiting periods so new hires can join the plan sooner. Most carriers require these changes be made only at the anniversary date. Read below to see which carriers may be loosening their guidelines.

Related: To see what carriers have opened a special enrollment opportunity allowing employers to make a plan downgrade, view the Member Access to Care tab above.

Many employees who have been laid off will be re-hired once the pandemic is over. Read below to learn how each carrier handles this and whether your employer group will be able to waive the group waiting period for these individuals.

For the many employees that have been terminated and offered COBRA/Cal-COBRA, understand what will happen when they are re-hired and brought back onto the group plan. Some carriers will allow the members deductible credit to roll over, while others will reset the member at re-enrollment under the group plan.

For new business submissions, some employees may not have access to printers/scanners/smart phones or may not have internet at home. This poses a concern for carriers that require employees sign applications. Read below to identify which carriers are more flexible on this requirement, and those that require a signature due to legal requirements.

Some employers may be unable to make their full monthly premium payment. Learn which carriers will pay you commission based only on premium paid (even if partial) versus those that require full payment in order to release commission.

Some dental offices are charging a new fee to cover protective equipment, such as gloves and masks. There is no legislation that requires coverage for these materials and therefore they may be excluded under the plan. This list will be updated as confirmation becomes available from each dental carrier.  

ThinkHR hosted a webinar on March 31, 2020, to address employer questions around current guidelines from the CDC, illness & quarantine questions, the Families First Coronavirus Response Act, and reducing hours or closing:

• View the Slides
• Watch the Recording
• Read the Employer FAQ (updated April 8)

ThinkHR hosted a webinar on March 19, 2020, to address employer questions around employment, work from home policies, and to explain the Families First Coronavirus Response Act:

• View the Slides
• Watch the Recording

Covered Employers
Employers with fewer than 500 employees are covered.

Covered Employees
Any employee who has been employed for at least 30 calendar days, though employers may be able to exclude employees who are health care providers or emergency responders. See the ThinkHR COVID-19 FAQ for details on how the FFCRA defines health care providers and emergency responders.

Covered Leave Purpose
To care for a child under 18 of an employee if the child’s school or place of care has been closed, or the childcare provider is unavailable, due to a public health emergency, defined as an emergency with respect to the coronavirus declared by a federal, state, or local authority.

Duration
Up to 12 weeks of job-protected leave.

Compensation

• No pay for first 10 days of leave (other paid time off, and emergency sick leave under the FFCRA, may be applied).
• After 10 days, employers must pay two thirds of the employee’s regular rate of pay for the number of hours they would normally be scheduled to work, capped at $200/day and $10,000 total.

Reinstatement to Position after Leave
The same reinstatement provisions apply as under traditional FMLA. However, restoration to position does not apply to employers with fewer than 25 employees if certain conditions are met:

• The job no longer exists because of changes affecting employment caused by an economic downturn or other operating conditions that affect employment caused by a public health emergency;
• The employer makes reasonable efforts to return the employee to an equivalent position; and
• The employer makes efforts to contact a displaced employee if anything comes up within a year of when they would have returned to work.

Covered Employers
Employers with fewer than 500 employees.

Covered Employees
All employees (no matter how long they have been employed), though employers may be able to exclude employees who are health care providers or emergency responders. See the ThinkHR COVID-19 FAQ for details on how the FFCRA defines health care providers and emergency responders.

Covered Leave Purposes

1. When quarantined or isolated subject to federal, state, or local quarantine/isolation order;
2. When advised by a health care provider to self-quarantine (due to concerns related to COVID-19);
3. When experiencing symptoms of COVID-19 and seeking a medical diagnosis;
4. When caring for an individual doing #1 or #2 (2/3 pay);
5. When caring for a child whose school or place of care is closed due to COVID-19 (2/3 pay); or
6. When the employee is experiencing any other substantially similar condition (2/3 pay).

Duration of Leave

• Full time employees are entitled to 80 hours of paid sick leave.
• Part time employees are entitled to sick leave equal to the number of hours worked on average over a typical two-week period.

Rate of Pay

• Sick leave must be paid at the employee’s regular rate of pay for leave used for the employee’s own illness, quarantine, or care.
• Sick leave must be paid at two-thirds of the employee’s regular rate if taken to care for a family member or to care for a child whose school has closed, or if the employee’s childcare provider is unavailable due to the coronavirus.
• Pay is capped at $511/day and $5,110 total for reasons 1, 2, and 3 described above.
• Pay is capped at $200/day and $2,000 total for reasons 4, 5, and 6 described above.

Small Business Exemption
Employers with fewer than 50 employees may be eligible for an exemption from the childcare leave provisions if at least one of the three statements below are true:

• Providing leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause it to cease operating at a minimal capacity;
• The absence of the employee or employees requesting leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities; or
• There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, and these labor or services are needed for the small business to operate at a minimal capacity.

The IRS has released Guidance on the FFCRA Tax Credit. Employers should regularly check back for additional instructions.

LISI Compliance Alert: IRS Releases Guidance on FFCRA Tax Credit

Background
The FFCRA requires certain employers (generally private employers with fewer than 500 employees, and all public employers) to provide Paid Sick Leave and Expanded FMLA leave for certain events related to the COVID-19 pandemic. Private employers can recoup their costs of providing this leave through an advanced payroll tax credit. The credit is designed to reimburse private employers who are subject to the law for the extra cost of compensation and benefits provided to employees entitled to take leave due to one of the reasons defined in the FFCRA.

The IRS provided detailed guidance on the process employers need to follow in order to take advantage of the tax credit. The process permits affected employers to withhold an amount equal to qualified wages and health expenses from payroll taxes that are to be deposited with the federal government. The employer’s qualified costs can be withheld from the employer’s portion of payroll taxes, payroll taxes deducted from the employees’ pay, and federal income tax withheld from employees’ pay. The amounts withheld will then be reported on the employer’s quarterly payroll tax filing. If there are insufficient payroll tax funds available to offset the employer’s qualified wage and health expenses related to providing FFCRA protected leave, the employer can file a Form 7200 to claim an advance credit.

Determining the Amount of Qualified Health Plan Expenses
Employer tax credits to cover the cost of employees taking FFCRA qualified leave include what are referred to as “qualified health plan expenses.” Qualified health plan expenses include plans defined as group health plans in Code section 5000(b)(1). This is a broad definition that includes employer-sponsored medical plans, HRAs, dental plans, vision plans, Rx plans, health FSAs, and others, but does not include employer contributions to a QSEHRA, Archer MSA or HSA.

The amount of qualified health plan expenses generally includes both the portion of the cost paid by the employer and the portion of the cost paid by the employee with pre-tax salary reduction contributions. If an employee participates in more than one eligible plan, the qualified expenses of each plan in which the employee participates are aggregated for that employee.

Documentation
The IRS also provided guidance on documentation employers must obtain from employees who take FFCRA leave. This documentation does not need to be submitted to the IRS but must be maintained to justify tax credits claimed by the employer in the event of an audit. See more in the LISI Compliance Alert

Our partner ThinkHR has provided a great resource with questions they've received during recent webinars. Below are highlights taken from the ThinkHR COVID-19 FAQ.

Do we need to provide the required sick leave under the FFCRA in addition to the sick leave we already offer?
Yes. The Department of Labor makes it clear in an FAQ regarding the FFCRA that leaves under the FFCRA are intended to be in addition to any pre-existing leave entitlements that an employee may have.

Do we still have to provide EPSL or EFMLA if we lay off or furlough employees?
No. Employers who are closed — either due to lack of business or a state or local order — do not have to provide these leaves. Employees who are furloughed (temporarily not working but still on the payroll) are also not entitled to these benefits. In either of these cases, employees would be eligible for unemployment insurance instead. However, employers should ensure that they are not making furlough or layoff decisions based on an employee’s request or potential need for leave, as this would likely be considered interference or retaliation (and grounds for a lawsuit).

How are we supposed to pay for the sick leave and FMLA leave mandated by the Families First Coronavirus Response Act?
To take immediate advantage of the paid leave credits, businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes. If those amounts are not sufficient to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form that will be released soon.

For many, business slowdowns related to the spread of COVID-19 have made it hard to imagine how employers could bear any additional expenses. We encourage anyone with these concerns to read the linked announcement carefully.

The full announcement can be found here: Treasury, IRS, and Labor Announcement on FFCRA Implementation. Including the information in the link, this is all we currently know about the payroll tax credit under the FFCRA and how to access or administer it.

If I am a nonprofit or a public employer, do tax credits and reimbursement apply to me?
Most public employers (e.g., cities, municipalities, public school districts) will not be eligible for the tax credits or reimbursements provided in the act. Private nonprofit entities, however, are eligible

What are our EPSL and EFMLA obligations to different employee situations, such as remote employees?
All employees are entitled to emergency paid sick leave (EPSL) and emergency expansion of the FMLA (EFMLA) benefits unless a specific exemption applies to your business or the individual.

Is the FFCRA retroactive or applicable before its effective date?
No. The Families First Coronavirus Response Act (FFCRA) goes into effect on April 1, 2020 and is not applicable before that time.

How do EFMLA and EPSL relate to each other, especially in regard to caring for children?
The emergency FMLA (EFMLA) and emergency paid sick leave (EPSL) both cover caring for children whose school or place of care is closed due to COVID-19 precautions, though EFMLA has the broader restriction that the child be under 18 years old. The leaves can run concurrently with the first 10 days of EFMLA being unpaid, which will, in many cases, coincide with the 80 hours of pay (at 2/3 the regular rate) under EPSL for full-time employees.

Required FFCRA Poster
The Department of Labor (DOL) has released a mandatory employee rights poster for the FFCRA. It should be posted or distributed to employees electronically (via email or online portal) by April 1. Read more on the requirements.

Enforcement of FFCRA
The DOL will not bring enforcement actions against employers for violations of the FFCRA prior to April 17, 2020, provided that the employer has made reasonable, good faith efforts to comply with the Act. Read more about the brief non-enforcement period.

Documentation Required to Substantiate Leave Payments
(From the IRS) An Eligible Employer will substantiate eligibility for the sick leave or family leave credits if the employer receives a written request for such leave from the employee in which the employee provides:

1. The employee’s name;
2. The date or dates for which leave is requested;
3. A statement of the COVID-19 related reason the employee is requesting leave and written support for such reason; and
4. A statement that the employee is unable to work, including by means of telework, for such reason.

In the case of a leave request based on a quarantine order or self-quarantine advice, the statement from the employee should include the name of the governmental entity ordering quarantine or the name of the health care professional advising self-quarantine, and, if the person subject to quarantine or advised to self-quarantine is not the employee, that person’s name and relation to the employee.

In the case of a leave request based on a school closing or child care provider unavailability, the statement from the employee should include the name and age of the child (or children) to be cared for, the name of the school that has closed or place of care that is unavailable, and a representation that no other person will be providing care for the child during the period for which the employee is receiving family medical leave and, with respect to the employee’s inability to work or telework because of a need to provide care for a child older than fourteen during daylight hours, a statement that special circumstances exist requiring the employee to provide care.

Guidance from the DOL on Administering FFCRA Leaves
We strongly suggest that employers read through the entire Questions and Answers document, so they have an understanding of how the leaves work. The following are some highlights from the updated guidance:

• These leaves are not available to employees with reduced hours, furloughed employees, or employees whose workplaces are closed. See questions 23-28.
• These leaves are not available to employees whose workplaces are closed due to a federal, state, or local shelter-in-place or stay-at-home orders, or due to business slowdowns. See question 23.
• These leaves (and payroll tax credit) are not retroactive. Employees are not entitled to pay under these leaves if they were absent or out of work (for any reasons) prior to April 1. See question 13.
• Both emergency paid sick leave (EPSL) and emergency Family and Medical Leave (EFMLA) can be taken on an intermittent basis in certain situations. See Questions 20-22 for explanations about when intermittent leave is allowed.
• Employees may not be required to use other forms of paid leave prior to or concurrently with EPSL or EFMLA. See questions 32 and 33.
• Employers should keep documentation to show that employees who received leave were actually in need of leave. The documentation requirements are outlined in IRS guidance as discussed above. See Questions 15 and 16.

LISI Compliance Alert
CARES ACT: Small Business Loans
Small Business Administration (SBA) Relief for Small Business

Providing Alternatives to Closure and Layoffs
The CARES Act gives employers the following options and benefits, which may allow them stay open and keep more people employed:

• Small businesses may be eligible for emergency grants of up to $10,000 to cover immediate operating costs.
• The Small Business Administration (SBA) may provide loans of up to $10 million per business; any portion of that spent to pay employees, keep workers on payroll, or pay for rent, mortgages, or existing debt could be forgiven, provided workers remain employed through the end of June.
• Small businesses with existing SBA loans may have up to six months of payments waived.
• Businesses that have experienced a decline in gross receipts of 50% as compared to the same quarter of 2019 or that have been fully or partially shutdown by order may be eligible to receive a refundable tax credit for 50% of qualified employee wages up to $10,000 per employee. This is unrelated to the dollar-for-dollar payroll tax credit that can be taken for FFCRA leaves.
• Businesses may defer payment of employer payroll taxes imposed between the enactment of this law and December 31, 2020 with half of the deferred taxes due by December 31, 2021 and the rest due by December 31, 2022. This is unrelated to the dollar-for-dollar payroll tax credit that can be taken for FFCRA leaves.

We are unable to advise on these topics as they are outside the scope of our expertise. We encourage you to follow the IRS Coronavirus Tax Relief page and the SBA Coronavirus Loan Resources page, as well as consult with your tax professional or financial advisor. Detailed guidance on how to access these financial resources should be coming soon from those sources.

Impact on Unemployment Insurance
The act increases the length of time someone can be on unemployment benefits to a maximum of 39 weeks. In many states, this will be an increase of 13 weeks of benefits. The act also adds $600 to the weekly amount an individual would usually receive. Independent contractors may be eligible for benefits under this expansion. While these unemployment benefits are generous, employers should still consider their options and incentives under the CARES Act mentioned above before making decisions about reduced hours, furloughs, or layoffs.

Employees who experience reduced hours, furloughs, or layoffs should be encouraged to file for unemployment insurance as soon as possible. We recommend that both employers and employees visit their state’s unemployment insurance department website and track local and state news, as departments across the country are updating their rules to facilitate displaced workers during this time.

The Paycheck Protection Program (“PPP”) authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis. All loan terms will be the same for everyone. The loan amounts will be forgiven as long as:

• The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8 week period after the loan is made; and
• Employee and compensation levels are maintained.

Payroll costs are capped at $100,000 on an annualized basis for each employee. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs. Loan payments will be deferred for 6 months.

Visit the Paycheck Protection Program (“PPP”) page for more details.

Eligible Employers
Small businesses with 500 or fewer employees—including nonprofits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors— are eligible. Businesses with more than 500 employees are eligible in certain industries.

When to Apply
Starting April 3, 2020, small businesses and sole proprietorships can apply. Starting April 10, 2020, independent contractors and self-employed individuals can apply. We encourage you to apply as quickly as you can because there is a funding cap.

How to Apply
You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating. All loans will have the same terms regardless of lender or borrower. A list of participating lenders as well as additional information and full terms can be found at www.sba.gov.

The SBA will work directly with state Governors to provide targeted, low-interest loans to small businesses and non-profits that have been severely impacted by the Coronavirus (COVID-19). The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing. Find more information on the SBA’s Economic Injury Disaster Loans at SBA.gov/Disaster.

Benefits.gov offers an online questionnaire to assist employers in determining eligibility. Employers can apply online through the SBA website.

• SBA Small Business Guidance & Loan Resources
• SBA EIDL Program Fact Sheet and Q&A
• SBA EIDL Presentation

Details shown below are from the Benefits.gov website.

Program Description
The Small Business Administration's (SBA) disaster loans are the primary form of Federal assistance for the repair and rebuilding of non-farm, private sector disaster losses. The disaster loan program is the only form of SBA assistance not limited to small businesses.

The Economic Injury Disaster Loan Program (EIDL) can provide up to $2 million of financial assistance (actual loan amounts are based on amount of economic injury) to small businesses or private, non-profit organizations that suffer substantial economic injury as a result of the declared disaster, regardless of whether the applicant sustained physical damage.

An EIDL can help you meet necessary financial obligations that your business or private, non-profit organization could have met had the disaster not occurred. It provides relief from economic injury caused directly by the disaster and permits you to maintain a reasonable working capital position during the period affected by the disaster. EIDLs do not replace lost sales or revenue.

Program Requirements
To be eligible for EIDL assistance, small businesses or private non-profit organizations must have sustained economic injury and be located in a disaster declared county or contiguous county.

Check if you may be eligible for this benefit

Loan Terms
The SBA can provide up to $2 million in disaster assistance to a business. The $2 million loan cap includes both physical disaster loans and EIDLs. There are no upfront fees or early payment penalties charged by SBA. The repayment term will be determined by your ability to repay the loan.

Application Process
Apply online for disaster loan assistance at your own convenience through SBA's secure Disaster Loan Assistance website. For application information, please call 1-800-659-2955 or email DisasterCustomerService@sba.gov.

Contact Information
For more information about this program, please visit the Economic Injury Disaster Loan page.

Small Business Technical Assistance

• California’s network of small business support centers help businesses figure out which loans are best for them, develop resiliency strategies, and find other resources. Learn more.
• The Office of the Small Business Advocate has also provided answers to a list of frequently asked questions to help support California’s small businesses. Learn more.
• If you need to talk to a specialist in GO-Biz’s Office of the Small Business Advocate directly, please contact the team.

U.S. Small Business Administration Economic Injury Disaster Loan Program

• SBA loans are available to the entire state of California.
• For more Information about SBA disaster assistance programs, and to apply directly online, go to the SBA Website.
• To contact SBA’s Customer Service Center:
  • Email SBA: disastercustomerservice@sba.gov
  • Call: 1-800-659-2955/1-800-877-8339 (TTY)

CA Infrastructure and Economic Development Bank (IBank) Finance Programs (1-750 employees)

• Disaster Relief Loan Guarantee Program: This disaster program provides loan guarantees of up to $1 million for small business borrowers in declared disaster areas.
• Jump Start Loan Program: This program offers loans from $500 to $10,000 to low-wealth entrepreneurs in declared disaster and emergency areas.
• To contact IBank:
  • Email IBank: IBank@IBank.ca.gov
  • Call: 1-916-341-6600

California Capital Access Program (CalCAP) (1-500 employees)

• CalCAP is a loan loss reserve program which may provide up to 100% coverage on losses as a result of certain loan defaults. Individual borrowers are limited to a maximum of $2.5 million enrolled over a 3-year period.
• To contact the California State Treasurer’s Office:
  • Email CalCAP: calcap@treasurer.gov
  • Call: Call: 1-916-653-2995