As the number of Covid-19 U.S. cases grows and public health officials scramble to operationalize preparedness and response plans, employers can do their part by anticipating employee benefits issues that may arise. This includes understanding potential benefit change and compliance issues associated with their response.
This article, the first in a two-part series, focuses on health benefits. Part II will focus on additional employee benefits considerations.
Group Health Plan Coverage
If an employer’s group health plan conditions eligibility on an employee’s hours of service, it might cause unintended consequences if an employee is forced to take an extended leave of absence due to Covid-19, a preventive quarantine or a worksite closure.
For example, if group health plan eligibility is tied to “full-time status” under the Affordable Care Act, the inability to work, for any reason, could cause an employee to fail to satisfy the hours-based eligibility requirement for coverage, potentially resulting in a loss of coverage for up to 12 months.
While the ACA’s rules require an employee’s usual work hours to be credited for paid leave and Family and Medical Leave Act leave, they do not require the same for unpaid non-FMLA leave situations, such as a worksite closure or preventive quarantine.
Therefore, employers should review their group health plan’s eligibility requirements and determine whether revisions are necessary to ensure that employees on extended leaves of absence for reasons related to the Covid-19 outbreak will continue to maintain coverage.
Cost-Sharing and HDHP Issues
Employers may be inclined to provide free Covid-19-related health services to their employees, for example, testing, doctor’s visits and hospitalizations. In that vein, New York’s Department of Financial Services issued a directive on March 3, requiring New York health insurers to, among other things, waive cost-sharing associated with Covid-19 testing and immunization (if it becomes available).
A number of health insurance providers have also announced they will waive co-pays and cost-sharing associated with Covid-19 testing.
Initially, plan sponsors were concerned about how the waiver of any cost-sharing requirements would affect their high deductible health plans (HDHPs). In response, on March 11, the IRS released Notice 2020-15, “High Deductible Health Plans and Expenses Related to COVID-19.” In order to facilitate responses to Covid-19, the IRS has stated that until further guidance is issued, a health plan that otherwise satisfies the HDHP requirements would not fail to be an HDHP merely because the health plan provides benefits associated with testing for and treatment of the coronavirus without a deductible, or with a deductible below the minimum deductible for an HDHP.
Therefore, for the time being, health insurers can comply with any state law requirements relating to Covid-19 testing and self-insured group health plans can provide coronavirus related testing and services at no cost to employees without concerns of jeopardizing a plans’ HDHP status.
Prescription Drug Coverage
The NYDFS directive also requires New York health insurers to provide coverage for off-formulary prescription drugs if no formulary drug is available due to supply shortages. Providing coverage for off-formulary medications may help address additional workforce absences by ensuring that otherwise healthy individuals have access to the drugs they need.
Well-intentioned employers may even seek to decrease waiting periods between prescription drug refills or allow employees to receive a larger supply of medication. However, a majority of states have laws setting time limits for certain schedules of prescription drugs, making such plan design changes non-compliant.
Employers considering any prescription drug plan design changes are advised to work with their prescription benefit managers and legal counsel to ensure compliance.
Telehealth services can be useful for employees who need help determining whether it is safe for them to go to work or whether further care is needed. They can even provide mental health care for employees who are sick with Covid-19 or for those whose loved ones are affected.
The NYDFS directive affirmatively calls for New York health insurers to work with vendors to provide telehealth services, and employers may consider following suit.
Employers should be mindful, however, that telehealth programs are subject to the Health Insurance Portability and Accountability Act’s Security Rule, which requires that only authorized users have access to electronic personal health information and that it be protected by a secure communication system capable of monitoring communications containing ePHI to prevent accidental or malicious breaches.
In addition, telehealth services are subject to various state laws; for example, a telehealth provider must be licensed in the state in which the employee resides.
Employers with employees overseas should consider the extent to which those employees have coverage. Although many domestic policies only provide coverage for emergencies while abroad, treatment for Covid-19 would likely be considered an emergency.
However, if an employee is on a long-term overseas assignment and has not maintained domestic coverage, he or she might be left without insurance. In light of this global health crisis, employers who regularly send employees overseas for extended periods of time should consider obtaining a group global medical policy.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Julia Ann Love is a partner and lead’s Thompson Hine’s Employee Benefit and Executive Compensation practice. She has more than 25 years of experience providing proactive and practical advice to businesses on all aspects of employee benefits and executive compensation, including ERISA compliance, defined benefit and defined contribution retirement plans, health and welfare plans, executive employment agreements and non-qualified deferred compensation arrangements.
Kim Steefel is counsel in the firm’s Employee Benefits & Executive Compensation practice group. She focuses her practice on employee benefits, ERISA, executive compensation, qualified and non-qualified retirement plans, welfare and employment agreements, and related tax and securities law compliance and disclosure matters.
Erin Shick is an associate in the Employee Benefits & Executive Compensation group and provides advice and performs comprehensive plan audits to ensure compliance with ERISA and related statutes and regulations. She also assists with benefit plan design, with a focus on self-insured health plans.