With the March 2020 passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act and recent rules changes by the Internal Revenue Service and the Department of Labor, employers have the opportunity to make changes to their group health plans to help those whose financial and medical well-being are at risk by the COVID-19 pandemic.
“While many of the COVID-19 regulations regarding benefits are required, the Mid Year Special enrollment option for medical plans and Section 125 plans are voluntary,” said Kim Troup, Vice President of Benefits at XMI. “A lot of companies are trying to accommodate people’s changing financial situations, what with furloughs and diminishing work hours, that kind of thing.”
Below are some of the changes offered to employer-sponsored health plans, complete with the latest updates:
Time Extensions. On May 4, 2020, a rule by the IRS and the Employee Benefits Security Administration issued a rule declaring that, in recognition of “the numerous challenges participants and beneficiaries already face as a result of the National Emergency,” it would “take steps to minimize the possibility of individuals losing benefits because of a failure to comply with certain pre-established timeframes.”
One of these steps was extending the 30-day deadline to enroll in employer-sponsored healthcare—in cases of an employee experiencing a qualifying life event. From March 1, 2020, through 60 days after the end of the national emergency, employers must provide additional time for employees to make these elections.
“Typically, if you had a baby or your spouse lost their job or some other major life event, you had 30 days to either enroll or make any necessary changes,” Troup said. “Now, there is no hard-and-fast, 30-day window.” These relaxed deadline restrictions apply to COBRA elections and payments and employees making claim appeals to name a few.
A Mid-Year Enrollment Window. Some health insurers and employer plans are offering special mid-year enrollment coverage. This means that employees who did not enroll in their employer-sponsored health plan, flexible spending account (FSA), or dependent care assistance program now have the opportunity to enroll in the middle of the year. Employers can choose whether they want to offer this option or not.
The IRS announced in May that those who elect to have coverage during this mid-year window will be able to pay for it on a pre-tax basis.
“The good news for employees with flexible spending accounts is that they can either increase or, more likely, decrease the amount they pay into it,” she said. “With so many people postponing elective surgeries and procedures, a lot of people are likely to make those changes.”
Tax-Free Reimbursement of OTC Drugs and Feminine Products. As stipulated by the CARES Act, employers with FSAs can amend their plans to allow for tax-free reimbursement of certain over-the-counter drugs and feminine care products. This change, made effective for such purchases dating back to January 1, 2020, eliminates a provision of the tax code that allowed tax-free reimbursement for FSA for over-the-counter drugs with a prescription. Additionally, employees with health savings accounts (HSA) can likewise use their HSA funds for these same expenses.
“Reimbursement of feminine products isn’t getting as much coverage as the reimbursement of over-the-counter drugs,” said Troup, “but that’s a win for half the population.”
Expanding telehealth coverage under HDHPs. The CARES Act also relaxes rules affecting high-deductible health plans (HDHPs), by allowing first dollar coverage for COVID-19 testing and treatment, as well as telehealth coverage under HDHPs prior to satisfying the deductible. This expansion dates from January 1, 2020, through December 31, 2021.
Although the measure is temporary, relaxing the rules around telehealth visits is significant, as telehealth is an affordable way for employers to bolster their health plans. And in light of the pandemic, telehealth has taken on a greater role in both physical and mental health treatment.
“Many health insurance carriers are currently working to strengthen their telehealth platforms,” Troup said. “What’s interesting is that telehealth can be utilized not just for regular sick visits, but also mental health support. Even in the small business space, I’m seeing more clients looking for Employee Assistance Programs (EAPs) and other programs that provide telehealth counseling and mental health support to employees.”
Troup is quick to add that employers wishing to include some or all of these new items in their health plans should consult their third-party administrators to determine the implementation process. In some cases, such as the special mid-year open enrollment widow, employers are advised to get written approval from their health insurance issuer before moving forward. Employers will need to closely review their plan documents and make appropriate plan modifications to support any changes.
Need help incorporating telehealth into your employee benefit offering? As your full-service human resources outsourcing partner, XMI delivers spot-on solutions for your most pressing HR and benefits needs.