COVID-19: Issues for Group Health Plan Sponsors
March 24, 2020
By: Jill E. Hall
Ten years ago this week, President Obama signed into law the Affordable Care Act. The healthcare landscape has changed drastically since then, and the current Coronavirus crisis raises even more novel issues for employer sponsors of group health plans. Among the most pressing issues for employers during this time are employee leaves of absence and reductions in work hours. There are several important considerations for employers addressing these situations including compliance with the Families First Coronavirus Response Act, state leave laws and employers’ internal policies. Importantly, employers should consider how leaves of absence or reductions in work hours might impact eligibility under their group health plans.
All group health plans, whether insured or self-funded, contain eligibility requirements. The Affordable Care Act requires that large employers (those with 50 or more full-time equivalent employees) offer coverage to employees working at least 30 hours per week. Most group health plans, regardless of size, also contain an “active at work” requirement meaning that, to be eligible to participate in the plan, the employee must be actively at work. What happens, then, when an employee is on a leave of absence from work or suffers a reduction in hours during the Coronavirus pandemic?
First, employer sponsors of group health plans should review the terms of their plans. Such plan terms will address eligibility requirements and may dictate for how long coverage may continue during a leave of absence. Plan terms may even be amended during this crisis depending on the type of plan at issue. Sponsors of self-funded group health plans have more latitude when it comes to changing plan terms, although they should consult with their stop loss carriers to ensure the stop loss coverage at issue will be unaffected by any change in plan terms. Employers sponsoring fully insured health plans are generally bound by contracts with insurance carriers and may have less freedom to change eligibility requirements under their plans. Employers should always contact insurance carriers to discuss any desired changes to eligibility requirements.
Second, consider federal and state laws. The Family and Medical Leave Act (FMLA) requires covered employers to maintain group health coverage while an employee takes FMLA leave. Such coverage is to be maintained under the same terms and conditions as if the employee remained actively at work. This means an employee on FMLA leave remains responsible for the same premium payment he or she was responsible for paying before the leave. Expanding on the FMLA’s protections, the Families First Coronavirus Response Act contains the Emergency Family and Medical Leave Expansion Act (EFMLEA) which requires covered employers to provide up to 12 weeks of protected leave to eligible employees for a qualifying reason. The requirement that group health coverage be maintained during FMLA leave also applies to EFMLEA leave. Covered employees include all employees who have worked for the employer for at least 30 days. Generally, the EFMLEA provides up to 12 weeks of leave for employees who are unable to work or telework because they are caring for a son or daughter under the age of 18 while the child’s school or daycare facility is closed due to the Coronavirus. The EFMLEA applies to all employers with fewer than 500 employees, although the Department of Labor can exempt small businesses with fewer than 50 employees. Consequently, many employers not previously subject to the FMLA must familiarize themselves with the FMLA’s requirement that group health coverage be maintained during a leave of absence covered by the EFMLEA.
Additionally, the Families First Coronavirus Response Act also contains the Emergency Paid Sick Leave Act which requires employers with fewer than 500 employees and all public employers to provide up to 80 hours of paid sick time to employees requiring leave for various reasons related to the Coronavirus. Employees on leave covered by this law will maintain eligibility under group health plans for the duration of the leave. Generally, paid leaves of absence will constitute hours worked for purposes of health plan eligibility.
Third, large employers subject to the Affordable Care Act also must consider whether an employee is entitled to continue coverage under a group health plan during a stability period. Large employers measuring the full-time status of employees may have a look-back measurement period used to determine whether an employee averaged 30 work hours per week and a corresponding stability period during which employees who averaged at least 30 hours per week during the look-back period are entitled to maintain coverage, regardless of the number of hours worked during the stability period. If an employee is in the middle of a stability period and suffers a reduction in hours as a result of decreased business operations during the Coronavirus crisis (or suffers a reduction in hours as a result of most other reasons), the employee generally is entitled to maintain coverage for the entirety of the stability period as long as the employee remains employed and pays his or her share of the applicable premium.
Finally, in the event employees experience a separation of employment, employers with 20 or more employees should remember to send COBRA notices and election forms to separated employees. Some states have “mini-COBRA” laws that may also require an employer or health insurance carrier to provide similar notices.
The Coronavirus presents enormous challenges for employers. Preparing a checklist of items to be addressed during this crisis will be helpful moving forward. Employers should add health plan coverage issues to that list.