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The Feds Are Coming, Is Your Business Ready? Part 2: FFCRA

June 14 - Posted at 9:00 AM Tagged: , , , , , ,

This is the second in our four-part series designed to let you know what changes have taken place that may affect your business. AAG is a benefit brokerage that specializes in working alongside an employer’s Human Resource/Management Team to assist with keeping companies in compliance with the ever-changing state and federal regulations. 

The Family First Coronavirus Response Act (FFCRA) was amended earlier this year under the American Rescue Plan Act (“ARPA”). The amended act encompasses the same covered categories as the Federal law required last year with some expansions, options, and more room for abuse. 

If you are a private employer with less than 500 employees, you have the option to voluntarily extend FFCRA paid leave from April 1, 2021 through September 30, 2021 and receive a tax credit. However, you must proceed with caution because the rules have changed and if not followed you may not be eligible for the tax credit.

In addition to the previous six reasons for emergency paid sick leave (EPSL) under the FFCRA, if an employer chooses to offer, you must allow for the following three reasons:

  • An employee seeking or awaiting results of a COVID-19 test or diagnosis;
  • An employee obtaining a COVID-19 vaccine;
  • An employee recovering from an injury, disability, illness, or condition related to the COVID-19 vaccine.

The change also includes 10 new days of available leave effective April 1, 2021. If an employee took 80 hours of EPSL leave prior to April 1st, they will be eligible for a new bank of paid leave after April 1, 2021. 

The emergency family medical leave (EFML) under the FFCRA also has some key changes to be aware of:

  • Includes “all” of the EPSL reasons for leave, including the 3 additional reasons
  • Expanded to include the first 10 days of leave and increases the maximum paid leave over 12 weeks from $10,000 to $12,000

Employers will not have the option of whether to apply the new reasons for leave or the fresh 10-day bank. Should you decide to offer EPSL to employees, it must be offered completely and available to all employees. Strict compliance is required in order to be eligible for the tax credit.

As the world continues to open and more employees return to work, changes to these paid leave revisions will no doubt continue. With AAG on your side, you can focus on your employees while we stay on top of required changes and keep you informed! If you have any questions or would like additional information please reach out, we are here to help!

Part 2 of Myra’s Minutes- FFCRA

- Posted at 8:15 AM
Business owners and HR professionals alike say that it’s nearly impossible to keep up with all the changes, but as the Employer Advocate, we’re here to help. AAG has compiled a series of informative videos and articles to help your business navigate the upcoming changes.

This episode covers Family First Coronavirus Response Act (FFCRA) as amended under ARPA.

Check out Part 2 of our 4 part series of Myra’s Minutes 
here!

PCORI Fee Increases to $2.66 for 2020 Calendar Year Plans

June 09 - Posted at 10:00 AM Tagged: , , ,

The IRS has released IRS Notice 2020-84 providing the adjusted $2.66 Patient-Centered Outcomes Research Institute (PCORI) fee per covered individual for health plan years ending on or after October 1, 2020 and before October 1, 2021, which includes 2020 calendar plan years.  The fee has increased $0.12 per covered individual from last year (from $2.54).

As detailed in last year’s alert, Congress surprisingly extended the PCORI fee for another decade (until 2029). Despite the originally scheduled sunsetting of the fee in the 2019 filing (for calendar plan years), PCORI filings are now here to stay as a summer staple for the foreseeable future.

The annual PCORI fee must be reported and paid to the IRS by August 2, 2021 via the second quarter Form 720

What is the PCORI Fee Used For?

The fee is imposed on health insurance issuers and self-insured health plan sponsors in order to fund the Patient-Centered Outcomes Research Institute (PCORI).  The mission of the institute is to improve healthcare delivery and outcomes by producing and promoting high-integrity evidence-based information that comes from research guided by patients, caregivers and the broader health community.

The institute currently maintains a robust portfolio of patient-centered outcomes research that addresses a variety of high priority conditions and topics.

PCORI research projects are also targeting certain populations of interest such as: racial and ethnic minorities, low socioeconomic status, women, older adults and individuals with multiple chronic conditions.  The PCORI website lists current and completed research projects as well as outcomes.

Who Needs to Pay the PCORI Fee?

Fully Insured Medical Plans:  Health Insurers (aka insurance carriers) are responsible for paying the fee on fully insured health policies.  This fee is built into the insurance premium, so there is no action required by employers.

Self-Insured Medical Plans (Including HRAs): The plan sponsor (aka the employer) is responsible for paying the PCORI fee for self-insured health plans.   Self-insured plans include so-called “level funded” plans. The employer must file the Form 720 and pay the fee.

To Which Plans Does the PCORI Fee Apply?

The PCORI fee generally applies only to major medical plans and health reimbursement arrangements (HRAs).  (See below for an exception that applies to many HRAs.)

The PCORI fee does not apply to dental and vision coverage that are excepted benefits (whether through a stand-alone insurance policy or meeting the “not integral” test for self-insured coverage).   Virtually all dental and vision plans are excepted benefits. 

The PCORI fee also does not apply to health FSAs (which must be an excepted benefit to comply with the ACA) or HSAs (which are not a group health plan).

For a quick reference guide, the IRS has published a table which summarizes the applicability of the fee to common types of health and welfare benefits.

Does the PCORI Fee Apply to HRAs?

Yes, an HRA is a self-insured health plan.  However, the PCORI rules provide an exception to the fee requirement for an HRA where it is offered along with a self-insured major medical plan that has the same plan year as the HRA.  This avoids the need to pay the PCORI fee for both the HRA and the self-insured major medical plan (i.e., each person covered by both plans is counted only once for purposes of determining the PCORI fee).

There is no exception from the PCORI fee for an HRA offered along with fully insured major medical coverage.  While the insurance carrier is responsible for paying the PCORI fee for the fully insured medical plan, the employer is responsible for paying the PCORI fee on the HRA.   The IRS is essentially double-dipping in this scenario by imposing the PCORI fee on the same lives covered by both the major medical and the HRA.  In recognition of this, the HRA PCORI fee paid by the employer is determined by counting only one life per employee participating in the plan (and not dependents).

Summary: The PCORI fee is required for an HRA unless it is paired with a self-insured major medical plan that has the same plan year as the HRA.  Where the PCORI fee is required, the employer is responsible for filing the Form 720 and paying the PCORI fee for an HRA solely for the covered employees (not dependents).

How is the PCORI Fee Calculated?

Plan Sponsors of self-insured health plans (other than an HRA) calculate the fee based on the average number of total lives covered by the plan (both employees and dependents).

Plan Sponsors can use one of three alternative methods which are summarized by the IRS in its PCORI fee homepage and PCORI fee FAQs:

  • Actual count method
  • Snapshot method
  • Form 5500 method

Upon reinstatement of the fee in 2020, the IRS allowed plan sponsors an alternative method of calculating the average number of covered lives.  Plan sponsors were able to use any reasonable method to calculate the average number of covered lives.  This guidance was not extended to the 2021 filing, and employers must use one of the above three methods.

How Much Do I Need to Pay on the July 2021 Form 720?

  • Plan Years Ending January 2020 – September 2020: $2.54 per covered life (including spouses/dependents)
  • Plan Years Ending October 2020– December 2020: $2.66 per covered life (including spouses/dependents)

For calendar plan years, the applicable rate for the 2020 plan year will be $2.66 per covered life.

Employers filing for a self-insured medical plan should keep in mind that the plan year is the ERISA plan year reflected in the plan document, SPD, and Form 5500 (if applicable).  The PCORI fee also applies to short plan years, defined as any plan year less than 12 months.

The fee is due July 31st (August 2nd in 2021) of the year following the last day of the plan year, including short plan years.

Examples

  • Employer with a calendar plan year first changes to a self-insured medical plan (including level funded) effective January 1, 2021. Employer must file the first Form 720 to pay the PCORI fee in July 2022 based on the TBD PCORI rate for next year.
  • Employer with a July 1 plan year first changes to a self-insured medical plan (including level funded) effective July 1, 2020. Employer must file the first Form 720 to pay the PCORI fee of $2.66 per covered life in July 2022.
  • Employer with a self-insured medical plan has short plan year from July 1, 2020 through December 31, 2020 to transition to a calendar plan year as of 2021. Employer must file the Form 720 in July 2021 to pay the PCORI fee for both the full plan year ending June 2020 ($2.54 per covered life) and the short plan year ending December 2020 ($2.66 per covered life). The PCORI fee amount is prorated for the short plan year, as detailed in the IRS PCORI Fee FAQ.

The IRS has published a table of the applicable filing deadline and rate for each plan year ending date.

How do we file the PCORI fee?

The PCORI fee is filed on the second quarter IRS Form 720, which is due by August 2, 2021 (July 31st is a Saturday in 2021).  Consult the IRS Instructions for Form 720 for direction on completing the form (see pages 8-9).

 

 

The Feds Are Coming, Is Your Business Ready? Part 1: New DOL Outreach

June 08 - Posted at 8:31 AM Tagged: , , , , , , , , , ,

The Department of Labor (DOL) has launched a new concentrated outreach initiative. For business owners, that means the DOL has promised to actively reach out via radio announcements, social media platforms and neighborhood posters informing employees of their rights under the Fair Labor Standards Act (FLSA). 

You may now be thinking “What does that have to do with me? I pay my employees to work”.  While this may be mostly true, often we (or our managers) inadvertently allow or encourage our employees to work off the clock.  Before your internal defenses kick into high gear, let me provide a few examples of how this could occur: 

  • Have you or one of your managers ever interrupted an employee during lunch to ask a “quick” work related question?
  • Do you auto deduct time for lunch each day?
  • Do your managers understand that if they need to reach out to employees before or after hours, even if it is a quick text or phone call, they should ensure the employee accounts for that time on their timesheet?
  • Do non-exempt employees have access to their work email on their personal phone?
  • How do you confirm time worked for remote employees is accurate?
  • Do you have a policy for your employees to report unauthorized or unapproved overtime?

Over the past year, business owners and managers have dedicated their time, energy and focus to keeping the essential business doors open or attempting to reopen and get employees back in the office.  To allow employees to safely return to work, you have had to operate/reopen your business within CDC guidelines, transition your business to accommodate a remote workforce, follow OSHA’s recommendations, keep up with Federal Equal Employment Opportunity Laws related to the COVID-19 pandemic, as well as the interaction between the Americans with Disability Act (ADA), Title VII of the Civil Rights Act of 1964, and the Genetic Information Nondiscrimination Act (GINA).  It is no wonder some of our focus on day-to-day compliance may have slipped. 

My company’s mission is to be The Employer Advocate.  Under the new administration, changes are happening at lightning speed and, as your advocate, we are here to help you navigate through changes as they occur.  Administrators Advisory Group (AAG) is a benefits brokerage that works with small to mid-size businesses, specializing in human resources compliance.  We work alongside your human resource team to keep you up to date with the latest workplace rules and regulations.

The Department of Labor (DOL) campaign is the first in our four-part series designed to let you know what changes have taken place that may affect your business. In the following weeks, we will cover changes regarding the Family First Coronavirus Response Act (FFCRA) as amended under the CARES Act, changes occurring within OSHA, and a new federal taskforce created whose goal is to unionize your employees. 

While Wage & Hour rules have not changed, the informational outreach by the DOL has just begun.  The biggest change comes in the form of visibility and accessibility of the information, beginning with the revamp of their website.  The DOL has promised to proactively reach out to employees using radio public service announcements, national webinars, social media messages, and posters. 

Reminding employers and employees alike that employees must be paid for ALL hours worked is the center of this outreach!  Even if you don’t ask an employee to work overtime, even if it’s done remotely, and even if you aren’t aware (but should have been), the employee is entitled to be paid.

Wage & Hour rules can be one of the many landmines that employers have to navigate on a daily basis. With AAG on your side, we will help you ensure you are prepared in case the DOL shows up on your doorstep. Let us know if you have questions or would like to review some of your existing practices or policies.

 

Part 1 of Myra’s Minutes- DOL Outreach

June 07 - Posted at 8:15 AM
Business owners and HR professionals alike say that it’s nearly impossible to keep up with all the changes, but as the Employer Advocate, we’re here to help. AAG has compiled a series of informative videos and articles to help your business navigate the upcoming changes.

This episode covers the new DOL Outreach program “Essential Workers, Essential Protections” including potential Wage & Hour issues your business may run into.

Check out the quick video  portion of Part 1 in our 4 part series of Myra’s Minutes 
here!


What A Big Surprise Before My Eyes… Advanced EOBs Coming in 2022

June 03 - Posted at 3:12 PM Tagged: , , , ,

The No Surprises Act (part of the Consolidated Appropriations Act introduced earlier this year) is poised to eliminate some of the surprises that group health plan participants encounter from unexpected charges.  One way the new legislation intends to accomplish this is with Advanced Explanation of Benefits (EOBs).

Beginning in plan years that start on or after January 1, 2022, group health plans are required to provide, upon request, what the No Surprises Act refers to as an Advanced EOB.  This new form is required to provide information on the estimated costs of procedures and services, especially the additional costs of non-participating providers.  The request for an Advanced EOB may be made by the participant or their representative and must include the billing and diagnostic codes for the anticipated services.  The Advanced EOB must then be provided within one business day of request for scheduled procedures (three business days if the request is made at least 10 business days before the scheduled procedure). 

The Advanced EOB must include:

  • Whether or not the provider or facility is in-network, and if so, the contracted rate under the plan for the provider or service. If the provider/facility is not in-network, the Advanced EOB must include a description on how the participant can obtain information on in-network providers/facilities.
  • A good faith estimate of the cost of the services to be provided, based on the billing and diagnostic codes provided, that must include:
    • the total cost for the services;
    • the amount of participant cost-sharing;
    • the accrued amounts already met by the participant towards deductibles and out-of-pocket maximums (as of the date of the notice); and
    • the amount the plan is responsible for paying.
  • A disclaimer regarding the requirement to obtain any medical management techniques for services subject to medical management techniques (such as prior authorization);
  • A disclaimer that the information is only an estimate and subject to change and any other information or disclaimer the plan determines is appropriate.

Plan Sponsors will be relying on insurers and TPAs to meet this new responsibility.  But, in the meantime, what should Plan Sponsors be doing so that they’re not surprised come January 1st?

  • Amend Summary Plan Descriptions to include a description of the right to request an Advanced EOB and the steps needed to do so;
  • Ask insurers/TPAs what steps they are taking to get ready for Advanced EOB requirements; and
  • Review service provider agreements and revise as necessary to include responsibility for providing Advanced EOBs (and responsibility for any penalties and/or costs that may be associated with missing deadlines or providing egregiously incorrect information).

Intro to New 4 Part Series of Myra’s Minutes

- Posted at 8:45 AM Tagged: , , , , , , , ,
Business owners and HR professionals alike say that it’s nearly impossible to keep up with all the changes, but as the Employer Advocate, we’re here to help. AAG has compiled a series of informative videos and articles to help your business navigate the upcoming changes.

Check out the intro to our newest 4 part series of Myra’s Minutes 
here!

Unmasking the Challenges: 7 Options for Managing a Partially Vaccinated Workforce

June 02 - Posted at 9:00 AM Tagged: , , , , , , , , ,

Now that most states, the CDC, and OSHA have (or may soon) lift mask mandates for vaccinated workers, what is an employer to do about revealing an employee’s vaccination status? Under any relaxed masking guidance applicable to those who are fully vaccinated, customers, visitors, and co-workers are likely to draw their own conclusions about the vaccination status of everyone else in the workplace based upon whether or not they are wearing a mask. This addresses some of the legal and practical considerations for employers dealing with a partially vaccinated workforce and provides seven options for you to consider as you navigate this rapidly evolving area.       

The Push to Unmask

Anxious to get back to normal after more than a year of mask mandates and social distancing, employers and employees are ready to do away with COVID-19 restrictions. Employees in certain industries (such as health care workers and educators) will likely continue to be required to mask up and social distance for the foreseeable future. However, other employers are developing various approaches and policies to lift masking requirements for employees (and others) who are fully vaccinated following new CDC and OSHA guidance.   

  • For a summary of the CDC’s guidance on scrapping mask mandates for fully vaccinated workers and a seven-step blueprint for employers to overcome risks and hurdles, click here.
  • For a summary of the three options that employers have in light of OSHA’s subsequent unmasking announcement, click here.

Unmasking Employees Based On “Proof” of Vaccination

“Proof” of vaccination status is and will continue to be a significant consideration for employers when lifting mask mandates. Indeed, many employees are under the mistaken belief that an employer cannot ask vaccine status. However, per the guidance of the EEOC and other state agencies, you are permitted to request vaccination status. In California, local health authorities such as in Santa Clara County, have already mandated that businesses and government entities ascertain the vaccination status of all employees, independent contractors, and volunteers who are or will be working at a facility or worksite in the county.

Indeed, the inquiry may be required to determine which employees can and which employees cannot unmask. As an example, the Oregon Occupational Safety and Health Administration has already issued guidance that requires employers to “verify the vaccination status” of workers before permitting them to unmask. The CDC, OSHA, and many state authorities agree that only those employees who are fully vaccinated can follow relaxed COVID-19 protocols, while those who are not fully vaccinated must continue to observe safety protocols such as mask wearing and social distancing. During COVID-19 inspections, OSHA will likely require employers to show how they have documented or “verified” vaccination status where employees are permitted to work under the relaxed COVID-19 safety protocols.  

In determining an employee’s vaccine status, however, you must carefully limit any vaccine-related inquiry only to vaccination status and not inquire further, as such follow-up could improperly elicit information about an employee’s medical disability or other family medical information. Given that this is likely considered medical information, such information should be kept separate and confidential. Additionally, employers subject to the CCPA in states such as California need to understand that collecting vaccine-related information triggers the CCPA notice obligation.

Navigating State Limitations on Requiring Proof of Vaccination Status

Even though some federal, state, or local agencies may require or request that employers track employee vaccine status, there is a growing move in some states to protect vaccine status as confidential, private information. States are literally all over the map when it comes to vaccine disclosure or use of so called “vaccine passports.” Some states have adopted or are considering laws that promote vaccine passports. New York, for example, launched a COVID-19 vaccine passport initiative known as the Excelsior Pass that allows users to provide proof of vaccination where required. Other states, like Hawaii, have or are considering similar passport systems that promote vaccine disclosure to assist in safe reopening of business and public access. 

However, many other states have gone in the opposite direction to protect individual privacy rights. These states have acted to restrict vaccine passports, with government entities and businesses barred from requiring proof of vaccinations. For example, Florida Governor Ron DeSantis recently signed into law a statute that prohibits the use of vaccine passports by government entities or businesses, stating that “in Florida, your personal choice regarding vaccinations will be protected and no business or government entity will be able to deny you services based on your decision.” Other states such as Alabama, Arizona, Idaho, Indiana, Iowa, Georgia, South Carolina, South Dakota, Texas, and Wyoming have also restricted vaccine passports or requirements. 

Arkansas and Montana have taken a more aggressive approach to address individuals’ privacy concerns and limit disclosure of vaccination status. Governor Hutchinson signed into law a statute that prevents state and local government entities from requiring proof of vaccinations as a condition of employment or to access goods and services. The law provides some exceptions for state-owned medical facilities. Montana Governor Gianforte has signed into law a statute that provides even greater protections for the unvaccinated, generally prohibiting employers from requiring any of the current vaccinations.   

Given the fluidity in this area, you should remain mindful of the need to monitor these developments and check with counsel before implementing any vaccine-tracking policies.

Additional Landmines if Fully Vaccinated Employees Unmask

Aside from the spate of state and local government restrictions and mandates, employers face other potential legal landmines and practical problems when tracking and/or disclosing an employee’s vaccination status. As mentioned above, you should consider the legal privacy considerations in requesting and maintaining the vaccination status of employees.

As employers move to allow fully vaccinated workers to unmask employees, there will likely be legal, privacy, and employee morale issues related to any express or perceived disclosure of employee vaccination status. Indeed, even without an explicit disclosure, others will likely be able to decipher the vaccination status of employees. While employees are choosing to voluntarily disclose their vaccination status to their co-workers, you should not adopt such a casual attitude. You should consider the ramifications of disclosure of vaccine status without employee consent or as a result of a “company policy” or practice. Such practices could potentially give rise to exposure in areas of breach of confidentiality, privacy, discrimination, retaliation, and more.  

Company disclosure of vaccine status may also inadvertently expose employees with legitimate disability issues or religious objections related to the vaccine. Employee morale could be compromised if employees believe they are being pitted against each other due to their vaccine status, especially if the company is somehow involved in the disclosures. Additionally, a policy of company-wide disclosure might even boomerang, potentially discouraging employees who do not want to be ridiculed or harassed by co-workers who are opposed to the vaccination.    

What Should Employers Do? 7 Options to Address a Partially Vaccinated Workforce

How to relax restrictions for those who are fully vaccinated while maintaining confidentiality and a safe workplace for all? How to balance the possible exposure and potential federal and state safety agency fines if you don’t get it right? While there are rarely clear answers, and legal liabilities remain unclear, below are some options employers have been adopting to deal with the dilemma of the partially vaccinated workforce.

  1. Continue to Mask Up. As noted, most jurisdictions can ease up on the COVID-19 safety protocols for those who are fully vaccinated (with certain exceptions such as healthcare workers). Nonetheless, some employers are choosing to require the entire workforce to continue to follow COVID-19 protocols. The protocols for all workers will remain in place until further guidance is issued. For non-healthcare employers, this may likely be an unpopular choice. But this option avoids landmines and morale issues created by a workforce that is partially masked and partially unmasked.
  2. Vaccine Mandate. In certain locations, you may have the option of adopting a vaccine mandate where permitted by state laws. Under this option, you would eliminate unvaccinated employees from the workplace and the remaining vaccinated workforce could unmask without concern. This option comes with increased legal risks and other practical issues in implementing the mandate, including exploring reasonable accommodations for those with protected reasons to remain unvaccinated. The mandates also create morale and employee defection issues. And your organization could be considered an outlier depending on your location and industry, as a recent FP Flash Survey revealed that fewer than one in 20 employers (4%) were mandating or considering mandating the vaccine.
  3. A Pure Honor System – Permit Fully Vaccinated to Unmask Without “Proof.” Employers who are choosing this option would not mandate the vaccination or require documentation to prove COVID-19 vaccination status. You would notify your workforce that fully vaccinated employees can ease up on COVID-19 safety protocols while all those who are not fully vaccinated are instructed to maintain the protocols and continue to mask up. This option comes with risk that employees who are not fully vaccinated will not appropriately follow the honor system. Without verification, this honor system may run afoul federal or state safety requirements. This option may also lead to employee morale issues and third-party liability concerns of those fully vaccinated workers, clients, or customers who do not trust the honor system. In addition, this is not a workable option in jurisdictions that require tracking of COVID-19 vaccination status.
  4. Employee Audits. Under this option, you would advise your workforce that fully vaccinated employees can dispense with relaxed COVID-19 protocols – subject to random audits of those employees who have dispensed with the relaxed COVID-19 protocols. If an employee is subject to a random audit, the unmasked employee would be required to provide proof of COVID-19 vaccination status. Effective management auditing and policing would be a key variable. This will not be a workable option in jurisdictions that require tracking of COVID-19 vaccination status.
  5. Employee Self-Certification. Another option is to allow employees to provide a self-certification of their COVID-19 vaccination status. Employees that self-certify they are fully vaccinated would be permitted to dispense with relaxed COVID-19 safety protocols. Those who certify that they are not fully vaccinated or decline to complete the self-certification would be required to maintain COVID-19 safety protocols. A template self-certification form may be found here. It is important to be mindful that self-certification may not be an acceptable form of “proof” in certain jurisdictions that have specific heightened criteria specifying what meets the verification or proof of COVID-19 vaccination standard.
  6. Requiring Certain “Proof” of Vaccination Status. For some employers that want to choose to permit employees to unmask, the above options may not go far enough. You could instead choose to require that all employees provide certain documented “proof” that they are fully vaccinated to designated personnel. Based upon the response, the employer will permit those who have provided the required proof that they are fully vaccinated to dispense with relaxed COVID-19 safety protocols. All others would be required to continue to follow COVID-19 protocols. Under this option, you would monitor and police employee violations. Obtaining proof and policing may limit liability concerns but also places a greater administrative burden on the employer.
  7. Requiring Proof and Disclosing Vaccine Status. Under this final option, you would request “proof” of vaccine status (similar to that required under option number 6) but would provide a sticker, badge, or lanyard to fully vaccinated employee once they submit “proof” of full vaccination. Those who have the company-issued sticker, badge, lanyard, etc. indicating they are fully vaccinated would be allowed to dispense with relaxed COVID-19 protocols, while all others are required to follow safety protocols. Unlike option number 6, you would take an affirmative step to identify those who unmask as fully vaccinated. Though this option provides greater clarity in the verification process and compliance with the policy, it also comes with greater risk of breach of privacy and confidentiality concerns – as well as potential employee morale issues. You should proceed with caution and consider obtaining written authorization from employees to disclose their vaccination status. It is also important to remain cognizant that some states such as California impose specific legal requirements that must be followed when asking for an employee’s consent to disclose confidential medical information such as vaccine status.

Conclusion

Each of these options come with some level of risk. You should explore the various paths available to you with your legal counsel before adopting any of them, especially in light of rapidly changing state and local laws in this area. Also, note that every option in which some employees are masked and some are unmasked includes the risk of employee conflict or harassment issues. This risk should be evaluated and addressed up front through training, ongoing communications emphasizing the importance of mutual respect in the workplace, adoption of written policies and procedures, and effective management oversight. 

Employers Now Have 2 Clear Options to Provide Vaccine Incentives Thanks to New EEOC Guidance

June 01 - Posted at 4:21 PM Tagged: , , , , , , , ,

The EEOC kicked off the unofficial start of summer with a bang by clearing the way for employers to offer their employees incentives to get the COVID-19 vaccine in new guidance released on the eve of the Memorial Day weekend. The May 28 updates to the agency’s COVID-19 Technical Assistance guidance now provides employers with two clear options, drawing a key distinction based on who administers the shot:

  1. If your employees voluntarily provide documentation confirming they have been vaccinated and got the shot on their own from a pharmacy, public health department, or other health care provider in the community, you can offer them any incentive you’d like with no apparent limitations.
  2. If your organization (or an entity acting on your organization’s behalf) administers the vaccine, you can still offer incentives – but they cannot be so substantial in value as to be considered coercive.

Regardless of which path you travel, there are still hoops to jump through if you want to provide vaccine incentives – providing accommodations, ensuring confidentiality, etc. – but you now have a clear direction to take to encourage your workers towards vaccination. What do you need to know about this critical update?

Why Was This Guidance Necessary?

Before we take a deeper dive into discussing the options and other considerations, some employers may be wondering why this guidance was even necessary. Couldn’t you just offer some cash or PTO or some other reward to induce employee behavior without concern about the legal ramifications?

The main sticking point troubling employers for months concerned wellness program rules. Historically, the EEOC has indicated it didn’t want employers to force employees to make medical-related decisions through the use of incentives. Until this latest guidance, the EEOC believed that too significant of an incentive could coerce employees to participate, thus leading to legal violations if employees are “forced” to disclose protected medical information to gain the incentive. Through rules, guidance, and federal litigation, the EEOC has taken steps to ensure that any employment decisions in this regard were genuinely voluntary.

Earlier this year, the EEOC issued a proposed rule expressly permitting only de minimis incentives as passing muster under participatory wellness programs. The proposed rule contained language referring to a permissible incentive as a “water bottle” or something of equivalent value. However, the Biden administration withdrew the proposed rule under a regulatory freeze typically seen when new leadership takes charge at the White House. The proposed rule is still pending review and it is unclear when or what form it may re-emerge. Against the backdrop of this uncertainty, employers have been attempting to navigate the thorny path of vaccine incentives, concerned that offering robust incentives could bring about a higher legal risk. At the urging of business groups seeking clarity on the matter, the EEOC finally heeded the call and provided the certainty that employers have been craving.  

Option 1: Unlimited Incentives

Under the first option, you are seemingly permitted to provide unlimited incentives to your workforce so long as your employees voluntarily provide you with documentation or other confirmation they received the COVID-19 vaccine, and they received the vaccination on their own from a third-party provider that is not an “agent” of your organization. The EEOC describes such third parties as pharmacies, public health departments, or other health care providers in the community.

Option 2: Restricted Incentives

On the other hand, if employees are voluntarily vaccinated by you or your “agent,” you can offer only incentives that are “not so substantial as to be coercive.” Which leads to two questions: what is an “agent,” and how substantial is “substantial”?

Definition of “Agent” and How to Avoid This Designation

  • The EEOC guidance defines “agent” as being an individual or entity having the authority to act on behalf of, or at the direction of, the employer (which could include an onsite nurse, onsite medical staff, and perhaps beyond).  
  • The agency further notes that the purpose for this distinction is that it would prefer employers to stay as far away from employee medical examinations as possible, and administering vaccines requires necessary pre-shot screening questions that could reveal information it would rather you not obtain. “When an employer asks employees whether they obtained a COVID-19 vaccine from a third party in the community, such as a pharmacy, personal health care provider, or public clinic,” the EEOC says, “the employer is not asking a question that is likely to disclose the existence of a disability.” Of course, care should continue to be taken not to ask follow-up questions such as why the employee has not been vaccinated or whether the employee suffered side effects of the vaccine.
  • Thus, to avoid the incentive limitation that arises in such a situation, you would want to do everything you could to keep a wall up between you and the healthcare provider offering the vaccines – especially if you are setting up a vaccine clinic at your worksite to make it as easy as possible for your workers to get inoculated. Unnecessary entanglements could arise if you gather medical information about your employees, assist with screening questions, or include an onsite nurse or other medical staff members to aid the healthcare provider in administering the shots. In a perfect world, you would limit your involvement to setting up a sign-up link to organize the schedule and giving your vaccine provider access to the information generated by the link. The “sign up” link and employee-facing communications should be self-serving in this regard. You could even state in the sign-up link that “Your responses cannot be shared with anyone, including your employer, without your authorization. This form is not such an authorization.” You may also want to consider an arms-length written agreement with the vaccine provider confirming that it does not have the authority to act on your behalf or at your direction.

Definition of “Substantial” and How to Avoid Violations

  • But if your organization or your agent is administering the vaccine, and you are interested in offering incentives, you will need to carefully thread the needle between offering a strong enough incentive to encourage employees but one not so strong that it could be considered coercive. You will want to tip the scale to help employees to choose to get vaccinated without twisting their arms.
  • Unfortunately, the EEOC does not provide detail or a definition regarding what might be considered too substantial, leaving you to navigate this terrain based on your own comfort and risk tolerance level. And this is not a term of art that the EEOC has often – if ever – used in this context. It appears that the term “substantial” would permit you to offer incentives at some level higher than a de minimis amount – higher than the “water bottle or its equivalent” level typically associated with incentives – but there is no clear answer about where to draw the line.
  • A rule of thumb to keep in mind: the higher the value, the greater the risk your program will be seen as unnecessarily coercive and therefore in violation of the EEOC’s rules. There are a number of factors to consider when making this determination, including your geographic location, your industry, the median pay of your workforce, and other relevant factors.

Other Considerations

Whichever path you take, there are several other considerations to keep in mind when offering vaccine incentives based on voluntary inoculations.

Accommodations

Some employees may have legitimate medical or religious reasons not to get vaccinated, and failure to provide them with the same types of incentives could lead to claims under the Americans with Disabilities Act (ADA) or Title VII. You will need to consider offering alternative means by which an employee can earn an incentive if they cannot be vaccinated due to a disability or sincerely held religious belief. Alternative ways to earn the incentive might be watching a workplace COVID-19 safety video or reviewing CDC literature on mitigating the spread of COVID-19 in the workforce.

Confidentiality

Once you gather information from employees about whether they have been vaccinated or not, you must maintain confidentiality. You should maintain the records as you would any other medical-related documentation (in a separate file, accessible to only those who need to know, etc.) and comply with all other state-specific privacy rules (such as in California).

Family Members

While you can offer an incentive to employees to provide documentation or other confirmation from a third party not acting on your behalf that their family members have been vaccinated, the EEOC confirmed that you may not offer incentives to your employees in return for their family members getting vaccinated by your organization or your agent. This would be considered a violation of the Genetic Information Nondiscrimination Act (GINA) Title II health and genetic services provision. Asking pre-screening medical questions would lead to you receiving genetic information in the form of family medical history of the employee, and GINA regulations prohibit employers from providing incentives in exchange for genetic information. However, you can still offer an employee’s family member the opportunity to be vaccinated by your organization or your agent if you take certain steps to ensure GINA compliance. 

Possible Incentives to Consider

If you are now considering what kind of incentives to offer your workforce in light of this new guidance, you might find comfort knowing that employers’ two most common incentive options include cash/gifts (38%) and paid time off (30%). This is according to an FP Flash Survey conducted earlier this year, which found that more than one in five employers were providing vaccine incentives. That number is bound to rise given that close to half of all respondents (43%) said they were unsure about whether to offer some form of incentive, many commenting that the then-current legal uncertainty fueled their hesitancy.

 

IRS Answers to Your American Rescue Plan Act COBRA Subsidy Questions

May 21 - Posted at 8:24 AM Tagged: , , , , , , , , , , , ,

In much-anticipated guidance, the Internal Revenue Service has offered its insight on the implementation of the COBRA temporary premium subsidy provisions of the American Rescue Plan Act of 2021 (ARPA) in Notice 2021-31.

Spanning more than 40 pages, the IRS-answered frequently asked questions (FAQs) finally resolve many issues relating to temporary premium assistance for COBRA continuation coverage left unanswered in the Department of Labor’s publication of model notices, election forms, and FAQs.

The practical implications of the guidance for employers are many. Significantly, employers must take action prior to May 31, 2021, to ensure compliance with some of the requirements under ARPA and related agency guidance.

Notice 2021-31 Topics

Notice 2021-31 provides comprehensive guidance on the ARPA subsidy and tax credit implementation issues (although it acknowledges there are many issues that still need to be addressed). Some of the key topics addressed include:

  • Clarifying that COBRA premium assistance is available for COBRA continuation coverage under vision-only plans, dental-only plans, and health reimbursement arrangements;
  • Describing the circumstances in which retiree coverage can be considered COBRA coverage and qualify for the subsidy and when non-COBRA retiree coverage will constitute other coverage for purposes of disqualifying an individual from the subsidy;
  • Defining what constitutes an “involuntary termination”;
  • Confirming that employers may rely on employee attestations regarding eligibility for premium assistance and record retention requirements;
  • Addressing the impact of employer-provided COBRA premium subsidies on the availability of the tax credit;
  • Providing instructions on how the ARPA COBRA premium subsidy notice and election rights are coordinated with the previously issued COVID-19 relief extending deadlines for certain actions; and
  • Addressing eligibility for the tax credit for church plans, small employer plans, and professional employer organization or other third-party payer arrangements.

Immediate Next Steps

For employers, there are some immediate takeaways:

  1. Review Your Lists of Potential Applicable Eligible Individuals (AEIs) Before May 31, 2021.

As expected, the IRS expansively defines an “involuntary termination.” For purposes of the ARPA COBRA subsidy, involuntary terminations include employee-initiated terminations due to good reason as a result of employer action (or inaction) resulting in a material adverse change in the employment relationship.

The guidance provides helpful COVID-19-specific examples. Employees participating in severance window programs meeting specified regulatory requirements could qualify. Voluntary employee terminations due to an involuntary material reduction in hours also could qualify. Further, voluntary terminations due to daycare challenges or concerns over workplace safety may constitute an involuntary termination, but only in the narrow circumstances in which the employer’s actions or inactions materially affected the employment relationship in an adverse way, analogous to a constructive discharge.

Employer action to terminate the employment relationship due to a disability also will constitute an involuntary termination, but only if there is a reasonable expectation before the termination the employee will return to work after the end of the illness or disability. This requires a specific analysis of the surrounding facts and circumstances. The guidance notes that a disabled employee alternatively may be eligible for the subsidy based on a reduction in hours if the reduction in hours causes a loss of coverage.

A number of the circumstances that meet the involuntary termination definition in the guidance may not be coded in payroll or HRIS systems as involuntary terminations. As employers have an affirmative obligation to reach out to employees who could be AEIs, employers will need to look behind the codes to understand the circumstances of the terminations.

Further, to identify all potential AEIs, employers may need to sweep involuntary terminations or reductions in hours occurring prior to the October 1, 2019, date referenced in the Department of Labor’s FAQs. The IRS makes clear that COBRA-qualified beneficiaries who qualified for extensions of COBRA coverage due to disability (up to 29 months), a second qualifying event (up to 36 months), or an extension under state mini-COBRA potentially can qualify for the subsidy if their coverage could have covered some part of the ARPA COBRA subsidy period (April 1, 2021–September 30, 2021).

An involuntary termination is not the only event that can make an employee potentially eligible for the subsidy. Employees who lose coverage due to a reduction in hours (regardless of the reason for the reduction) can be eligible for premium assistance as well. This can include employees who have been furloughed, experienced a voluntary or involuntary reduction of hours, or took a temporary leave of absence to facilitate home schooling during the pandemic or care for a child.

  1. Re-Evaluate Employee Exit Strategies, Severance Plans to Assess Eligibility for the Tax Credit

The IRS explains that, if an employer subsidizes COBRA premiums for similarly situated covered employees and qualified beneficiaries who are not AEIs, the employer may not be able to claim the full ARPA tax credit. In this case, the amount of the credit the employer can receive is the premium that would have been charged to the AEI in the absence of the premium assistance and does not include any amount of subsidy the employer would otherwise have provided. For example, if a severance plan covering all regular full-time employees provides that the employer will pay 100 percent of the COBRA premium for three months following separation, this employer could not take a tax credit for the subsidy provided during this three-month period.

Notice 2021-31 does not elaborate on this issue beyond providing specific examples involving a company severance plan. Thus, ambiguity remains as to whether this guidance would prohibit an employer from claiming a tax credit where an employer has agreed to provide a COBRA subsidy in a negotiated separation or settlement agreement and not pursuant to an existing severance plan or policy. Further IRS guidance on this point may be forthcoming. In light of this guidance, employers should re-evaluate their COBRA premium subsidy strategies.

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