Where We’re At With the COVID-19 Crisis
In addition to the CARES Act, the US government passed the Families First Coronavirus Response Act (FFCRA), which also incudes the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act. The FFCRA was enacted, among other things, to provide funding for free coronavirus testing, increase funding for food stamps, and it requires certain employers to provide employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19. For companies with 500 or fewer employees, the Emergency Family and Medical Leave Expansion Act and the Emergency Paid Sick Leave Act provides paid emergency family leave in limited circumstances, as well as paid sick leave for people affected by COVID-19. Those emergency expansion acts went into effect April 1, 2020 and will cover eligible leaves up until December 31, 2020.
The DOL release an in-depth FAQ on the laid leave acts that can be viewed HERE.
Payroll Protection Program
As part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act allocated $350 billion to help small businesses keep workers employed amid the pandemic and economic downturn. The program is intended to provide small businesses with forgivable loans to keep workers employed during the COVID crisis. Known as the Paycheck Protection Program, the initiative provides 100% federally guaranteed loans to small businesses. Businesses that are eligible for the program include:
- A small business with fewer than 500 employees
- A 501(c)(3) with fewer than 500 employees
- An individual who operates as a sole proprietor
- An individual who operates as an independent contractor
- An individual who is self-employed who regularly carries on any trade or business
As of this posting, however, the originally funds allocated for this program have already been exhausted. But fear not, on April 22nd the Senate approved an additional $310 billion in funding for the Paycheck Protection Program. If you think your company could benefit from the Paycheck Protection Program, you will need to complete the loan application and submit the application with the required documentation to an approved lender that is available to process your application by June 30, 2020. The application for the loan can be found HERE.
COBRA Continuation Coverage
As previously mentioned, we have already posted about how COBRA continuation coverage and the administration of COBRA has been affected during this COVID pandemic – with the short answer then being that there haven’t been any changes. That is still the case as of the posting of this article. That being said, with companies having to deal with employment decisions that they most likely weren’t planning on, there can be some confusion or uncertainty when it comes to COBRA qualifying events. For example, lay-offs and furloughs aren’t technically terminations, so are they COBRA qualifying events? The simple answer – similar to a reduction of hours qualifying event – is that if there is a loss of coverage, then it’s a COBRA qualifying event. If companies plan on keeping their furloughed employees on their health plans, however, it is advised that they first discuss the matter with their insurance carriers or stop loss providers as their plan’s eligibility requirements might not allow for coverage for employees who are not working. Companies can of course subsidize their COBRA participant’s COBRA premiums, either fully or partially, much like a severance agreement. With that though, it’s important to make sure any such agreements aren’t considered discriminatory under the Internal Revenue Code.
There are few changes on a federal level to extend grace periods of COBRA payments, which was released by the U.S. Department of Labor – EBSA Division and the IRS last week. See that announcement here and watch for upcoming posts as we’ll continue to keep updates coming your way.
Whether the government eventually makes temporary changes to the COBRA law or they leave it status quo, CobraHelp will continue to stay on top of any new developments coming from Washington and we will be sure to update our clients and partners accordingly.
Learn more about the new laws impacting national employee benefits administration here
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