Page 1 of 1

President’s Path Out of the Pandemic Adds Hurdles for Employers

September 10 - Posted at 8:10 AM Tagged: , , , , , , , ,

On September 9, 2021, the White House issued Path Out of the Pandemic: President Biden’s COVID-19 Action Plan (the Plan). The Plan outlines a six-pronged approach, portions of which will impose new obligations on employers across the country.

Most notably for employers, the first prong of the Plan, “Vaccinating the Unvaccinated,” includes:

  • Direction to the Department of Labor’s Occupational Safety and Health Administration (OSHA) to issue an Emergency Temporary Standard (ETS) requiring all employers with 100 or more employees to ensure that all employees are fully vaccinated or able to produce a negative COVID-19 test result on at least a weekly basis;
  • A new Executive Order that requires certain government contractors to comply with guidance, to be published later this month by the Safer Federal Workforce Task Force (Task Force Guidance or Guidance), which presumably will require that employees who work on or in connection with certain government contracts be vaccinated, regardless of whether they work on a federal site;
  • A statement that the Centers for Medicare & Medicaid Services (CMS) will be taking action to require COVID-19 vaccination for workers in most health care settings that receive Medicare or Medicaid reimbursement as a condition of Medicare/Medicaid reimbursement (similar to what was previously announced by the President in August 2021 for nursing homes); and
  • Direction to OSHA to require covered employers to provide paid time off for employees to get vaccinated or recover from vaccination.

The Plan also calls on states to adopt vaccination requirements for all school employees as part of the effort to “keep schools safely open.”

The Plan indicates that the administration will increase the amount of COVID-19 testing by ramping up production of testing products, offering at-home rapid COVID-19 tests at cost through certain retailers, and expanding free testing at retail pharmacy sites, among other things.

While the Plan is far-reaching, there are still many unknowns. Employer obligations arising from OSHA’s ETS will be dictated by the timing and the specific ETS provisions and corresponding requirements. The only thing we know for certain about the forthcoming ETS is that employers will need to continue to adapt and be prepared to pivot if necessary.   It is also unclear how the new ETS will fit in with OSHA’s current COVID-19 Healthcare ETS, in 29 C.F.R. 1910 Subpart U, or impact OSHA’s current guidance for non-healthcare employers. Further, the 27 states with OSHA-approved State Plans, such as California, Washington, Oregon, and Virginia, will need to determine how to respond to the ETS, once it is issued, and if certain provisions require implementation alongside the state’s standards and regulations.

CMS also issued a press release urging Medicare and Medicaid-certified facilities to “make efforts now to get health care staff vaccinated.” However, the agency noted that it is still developing an Interim Final Rule with Comment Period that will be issued in October.

Employers who are impacted by the Plan, and who may be impacted by an ETS once issued, are advised to start thinking through how they will navigate many legal issues and operational challenges related to required vaccination and testing. These issues include policy requirements, workplace testing strategies, vaccination tracking and management, medical record collection and retention, and accommodations for religion, disability and pregnancy, as well as wage and hour implications, bargaining obligations for unionized workplaces, employee confidentiality and privacy issues. Further, employers should consider the logistical impact on federal contracts and how these obligations will interplay with other state or local mandates or restrictions on vaccinations.

Stay tuned as we dive into the Plan and corresponding guidance documents, as well as await further information from federal agencies responsible for complying with the Plan and its directives. 

On April 7, 2021, the U.S. Department of Labor (DOL) issued eagerly anticipated guidance on administering COBRA subsidies under the American Rescue Plan Act of 2021 (ARPA). The guidance includes Frequently Asked Questions (FAQs) and various Model Notices and election forms implementing the COBRA Premium Assistance provisions under ARPA, while also announcing the launch of a page dedicated to COBRA Premium Subsidy guidance on its website.

Since ARPA was enacted, employers have been preparing to comply, albeit with many open questions.  ARPA requires that full COBRA premiums be subsidized for “Assistance Eligible Individuals” for periods of coverage between April 1, 2021, through September 30, 2021.  While this guidance answers important questions on the administration of the subsidies, it does not address many other details on the minds of employers.  For example, this guidance does not cover important nuances such as what is an “involuntary termination” in order to qualify for subsidized coverage, how existing separation agreement commitments to subsidize COBRA should be viewed, or details on how the corresponding payroll tax credit will work.

The FAQs are largely directed to individuals and focus on how to obtain the subsidy and how subsidized coverage fits with other types of health coverage that may be available, including Marketplace, Medicaid, and individual plan coverage.   We hope that employer directed guidance will follow to fill in the gaps.

Employers will be happy to know that the FAQs confirm a few points that will impact administration.  First, eligibility for coverage under another group health plan, including that of a spouse’s employer, will disqualify the employee from the subsidy.  Employees must certify on election forms that they are not eligible for such coverage and will notify the employer if they subsequently become eligible for coverage (individual coverage, such as through the Marketplace or Medicaid, will not disqualify an otherwise eligible individual from subsidized COBRA).  Failure to do so will subject the individual to a tax penalty of $250, or if the failure is fraudulent, the greater of $250 or 110% of the premium subsidy.  The availability of other coverage (which the employer may not know about) does not impact the employer’s initial obligation to identify potential Assistance Eligible Individuals and provide the required notices and election forms.

Soon after enactment, there were also questions circling about whether ARPA applied to small employer plans not subject to COBRA, but rather state “mini-COBRA” laws.  The FAQs confirm that the subsidy also applies to any continuation coverage required under state mini-COBRA laws but also notes that ARPA does not change time periods for elections under State law.  Further guidance would be welcome on obligations related to small insured plans.  The FAQs also confirm that plans sponsored by State or local governments subject to similar continuation requirements under the Public Health Service Act are covered by the ARPA subsidies.

One area that has caused great confusion is how the right to retroactively elect COBRA coverage (to the date active coverage was lost) due to the DOL’s extended deadlines fits with this new election right.  While there is more to come on this, the DOL helpfully confirmed that these are two separate rights and thankfully, the FAQs note that the extended deadlines do not apply to the 60-day notice or election periods related to the ARPA subsidies.

The most significant part of the guidance (that we knew was coming but are still happy to see sooner rather than later) are the Model Notices and election materials.  The guidance package confirms that employers have until May 31, 2021, to provide the notices of the opportunity to elect subsidized coverage and individuals have 60 days following the date that notice is provided to elect subsidized coverage.  Individuals can begin subsidized coverage on the date of their election, or April 1, 2021, as long as the involuntary termination or reduction in hours supporting the election right occurred before April 1, 2021.  As previously noted, in no way do these timeframes extend the otherwise applicable 18-month COBRA period.

The Notices include an ARPA General Notice and COBRA Continuation Coverage Election Notice, to be provided to all individuals who will lose coverage due to any COBRA qualifying event between April 1 and September 30, 2021, and a separate Model COBRA Continuation Coverage Notice in Connection with Extended Election Periods, to be provided to anyone who may be eligible for the subsidy due to involuntary termination or reduction in hours occurring before April 1, 2021 (i.e., generally involuntary terminations or reductions in hours occurring on or after October 1, 2019).

Plans will also have to provide individuals with a Notice of Expiration of Period of Premium Assistance 15-45 days before the expiration of the subsidy — essentially explaining that subsidies will soon expire, the ability to continue unsubsidized COBRA for any period remaining under the original 18-month coverage period and describing the coverage opportunities available through other avenues such as the Marketplace or Medicaid.  Employers are highly encouraged to use the DOL’s model notices without customization except where required to insert plan or employer specific information.

With the release of the model notices, employers and COBRA administrators now largely have the tools to administer this new election right.  The FAQs remind us that the DOL will ensure ARPA benefits are received by eligible individuals and employers will face an excise tax for failing to comply, which can be as much as $100 per qualified beneficiary (no more than $200 per family) for each day the employer is in violation for the COBRA rules.  Accordingly, employers will want to begin or continue conversations with COBRA administrators to ensure notices are timely provided to the right group of individuals.  

Reminder: Healthcare Marketplace Open Enrollment ends March 31, 2014

March 06 - Posted at 2:01 PM Tagged: , , , , , , , , , , , , , ,

If you are interested in signing up for medical coverage through the Marketplace, please note that you only have until the end of the open enrollment period (March 31, 2014) to sign up for coverage effective either April 1, 2014 or May 1, 2014. The effective date of your coverage in the Marketplace depends on when your application is submitted and processed.

 

The only way you will be able to enroll in a Marketplace medical plan outside of the open enrollment period is if you qualify for a “special enrollment” due to a qualifying event. A qualifying event is a change in your life that would make you eligible to sign up for coverage outside of open enrollment such as a marriage, divorce, birth or adoption, moving to a new state, loss of employment or loss of coverage due to changes in employment, etc. With employer based medical coverage, you typically have 30 days from the date of the qualifying event to enroll or make changes to your coverage due to a qualifying event, but the Marketplace allows you 60 days from the qualifying event to make changes.

 

You can enroll on either Medicaid or the Children’s Health Insurance Program (CHIP) at any time during the year as there is no limited open enrollment periods for these programs. You only need to qualify for these programs to be eligible. You can either complete a Marketplace application to find out if you are eligible for either program or contact your state agencies for further information.

 

The tentative next open enrollment dates for the Marketplace are November 15, 2014 through January 15, 2015, however please note that these dates are subject to change. 

The Patient Protection and Affordable Care Act (the “ACA”) adds a new Section 4980H to the Internal Revenue Code of 1986 which requires employers to offer health coverage to their employees (aka the “Employer Mandate”). The following Q&As are designed to deal with commonly asked questions.  These Q&As are based on proposed regulations and final regulations, when issued, may change the requirements.

Question 2: Who Is Eligible for a Premium Tax Credit or Cost-Sharing Subsidy?

As noted in Part 1, failing to offer full-time employees minimum essential coverage, or coverage that meets the affordability or minimum value requirements, is not enough to trigger liability under the Employer Mandate. Two additional things must occur before any penalty will be assessed:

 

  1. one of the full-time employees must enroll in health coverage offered through an Exchange.

     

  2. one of the full-time employees must also receive an Exchange subsidy (a premium tax credit or cost-sharing subsidy).

 

 

Thus, an employer should consider which employees are potentially eligible for an Exchange subsidy when deciding how to comply with the Employer Mandate. It is important to note that the employee must qualify for the Exchange subsidy. An employee’s dependent receiving an Exchange subsidy (i.e. an adult child who is not a tax dependent of the employee) will not cause an Employer Mandate penalty.

Coverage Through an Exchange

In order to be eligible to receive an Exchange subsidy, an individual must enroll in health coverage offered through the Exchange. Under the ACA, an Exchange will be established in each state, either by the state or by the federal government (or a combination of the two). An Exchange is a governmental entity or nonprofit organization that serves as a marketplace for health insurance for individuals and small employers. Health insurance offered through the Exchanges must cover a minimum set of specified benefits and must be issued by an insurer that has complied with certain licensing and regulatory requirements.

Eligibility for an Exchange Subsidy

There are two Exchange subsidies available:

 

  • The premium tax credit- This is intended to help individuals purchase health coverage through the Exchange. The credit is available only to legal U.S. residents whose household income is 100% - 400% of the federal poverty line (“FPL”). Legal resident aliens also qualify for the credit if their household income is below 100% of the FPL since they are not eligible for Medicaid. Individuals who are eligible for Medicaid or Medicare, or certain other government-sponsored coverage (like CHIP or VA health care), are not eligible for premium tax credits.

    An employee is not eligible for a premium tax credit if the employee is either (i) enrolled in an employer-sponsored plan or (ii) eligible for an employer-sponsored plan that meets the affordability and minimum value requirements.

 

  • The cost-sharing subsidy- Cost-sharing subsidies, which reduce cost-sharing amounts such as co-pays and deductibles, are available to individuals who have a household income no greater than 250% of the FPL and enroll in “silver-level” coverage through the Exchange. An employee whose household income is 200% of the FPL may as a result be eligible for a premium tax credit to help defray the cost of monthly insurance premiums, and a cost-sharing subsidy to help reduce the amount of out-of-pocket cost (like co-pays and deductibles) to which the Exchange-enrolled employee otherwise would be subject to.



“Certification” of Eligibility for an Exchange Subsidy to Employer

The Employer Mandate penalty applies only when the employer has first received “certification” that one or more employees have received an Exchange subsidy. The IRS will provide this certification as part of its process for determining whether an employer is liable for the penalty. This penalty will occur in the calendar year following the year for which the employee received the Exchange subsidy (i.e. the employer would receive the penalty in 2015 for a employee Exchange subsidy beginning in 2014). Under IRS issued procedures, employers that receive notice of certification will be given an opportunity to contest the certification before any penalty is assessed.

In addition, Exchanges are required to notify employers that an employee has been determined eligible to receive an Exchange subsidy. The notification provided will identify the employee, indicate that the employee has been determined eligible to receive an Exchange subsidy, indicate that employer may be liable for an Employer Mandate penalty, and notify the employer of the right to appeal the determination. These notices will be useful in giving employers an opportunity to correct erroneous Exchange information and protect against erroneous penalty notices from the IRS. These notices will also be useful in budgeting for any penalties that may be owed.

Planning Consideration
The Employer Mandate penalty applies only to an employer failing to offer health coverage if one or more of its full-time employees enrolls in insurance coverage through an Exchange, and actually receives either a premium tax credit or a cost-sharing subsidy. Unless a full-time employee enrolls in an Exchange and obtains the tax credit or subsidy, the employer is off the hook. This can lead to some surprising exemptions from the penalty.

The Patient Protection and Affordable Care Act (the “ACA”) adds a new Section 4980H to the Internal Revenue Code of 1986 which requires employers to offer health coverage to their employees (aka the “Employer Mandate”). The following Q&As are designed to deal with commonly asked questions.  These Q&As are based on proposed regulations and final regulations, when issued, may change the requirements.

Question 1: What Is the Employer Mandate?

On January 1, 2014, the Employer Mandate will requiring large employers to offer health coverage to full-time employees and their children up to age 26 or risk paying a penalty. These employers will be forced to make a choice:

 

  • “play” by offering affordable health coverage that is  considered “minimum essential coverage”

 

                             OR

 

  • pay” by potentially owing a penalty to the Internal Revenue Service if they fail to offer such coverage.

 

This “play or pay” system has become known as the Employer Mandate. The January 1, 2014 effective date is deferred for employers with fiscal year plans that meet certain requirements.

 

Only “large employers” are required to comply with this mandate. Generally speaking, “large employers” are those that had an average of 50 or more full-time or full-time equivalent employees on business days during the preceding year. “Full-time employees” include all employees who work at least 30 hours on average each week. The number of “full-time equivalent employees” is determined by combining the hours worked by all non-full-time employees.

To “play” under the Employer Mandate, a large employer must offer health coverage that is:

  1. “minimum essential coverage”
  2. “affordable”, and
  3. satisfies a “minimum value” requirement to its full-time employees and certain of their dependents.

 

This includes coverage under an employer-sponsored group health plan, whether it be fully insured or self-insured, but does not include stand-alone dental or vision coverage, or flexible spending accounts (FSA).

 

Coverage is considered “affordable” if an employee’s required contribution for the lowest-cost self-only coverage option does not exceed 9.5%  of the employee’s household income. Coverage provides “minimum value” if the plan’s share of the actuarially projected cost of covered benefits is at least 60%.

If a large employer does not “play” for some or all of its full-time employees, the employer will have to pay a penalty, as shown in following two scenarios.

Scenario #1- An employer does not offer health coverage to “substantially all” of its full-time employees and any one of its full-time employees both enrolls in health coverage offered through a State Insurance Exchange, which is also being called a Marketplace (aka an “Exchange”), and receives a premium tax credit or a cost-sharing subsidy (aka “Exchange subsidy”).

 

In this scenario, the employer will owe a “no coverage penalty.” The no coverage penalty is $2,000 per year (adjusted for inflation) for each of the employer’s full-time employees (excluding the first 30). This is the penalty that an employer should be prepared to pay if it is contemplating not offering group health coverage to its employees.

Scenario #2- An employer does provide health coverage to its employees, but such coverage is deemed inadequate for Employer Mandate purposes, either because it is not “affordable,” does not provide at least “minimum value,” or the employer offers coverage to substantially all (but not all) of its full-time employees and one or more of its full-time employees both enrolls in Exchange coverage and receives an Exchange subsidy.

 

In this second scenario, the employer will owe an “inadequate coverage penalty.” The inadequate coverage penalty is $3,000 per person and is calculated, based not on the employer’s total number of full-time employees, but only on each full-time employee who receives an Exchange subsidy. The penalty is capped each month by the maximum potential “no coverage penalty” discussed above.


Because Exchange subsidies are available only to individuals with household incomes of at least 100% and up to 400% of the federal poverty line (in 2013, a maximum of $44,680 for an individual and $92,200 for a family of four), employers that pay relatively high wages may not be at risk for the penalty, even if they fail to provide coverage that satisfies the affordability and minimum value requirements.

 

Exchange subsidies are also not available to individuals who are eligible for Medicaid, so some employers may be partially immune to the penalty with respect to their low-wage employees, particularly in states that elect the Medicaid expansion. Medicaid eligibility is based on household income. It may be difficult for an employer to assume its low-paid employees will be eligible for Medicaid and not eligible for Exchange subsidies as an employee’s household may have more income than just the wages they collect from the employer. But for employers with low-wage workforces, examination of the extent to which the workforce is Medicaid eligible may be worth exploring.

Exchange subsidies will also not be available to any employee whose employer offers the employee affordable coverage that provides minimum value. Thus, by “playing” for employees who would otherwise be eligible for an Exchange subsidy, employers can ensure they are not subject to any penalty, even if they don’t “play” for all employees.

© 2024 Administrators Advisory Group, Inc. All Rights Reserved