On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) into law. It provides support to individuals and businesses that are trying to cope with the coronavirus disease 2019 (“COVID-19”) pandemic. We will likely continue to see additional legislation enacted in response to the COVID-19.
The majority of the 800 pages of legislation are aimed at providing relief for individuals and businesses that have been negatively impacted by the pandemic. This Bulletin will focus is on the parts of the CARES Act that are directed towards employee benefit plans and employee leaves of absence.
Briefly, the legislation:
The following provides highlights of the final enacted legislation with respect to employee benefit plans and employee leaves of absence and is not an exhaustive summary.
The CARES Act builds on the insurance coverage provisions included in the FFCRA.
The FFCRA requires all employer-sponsored health plans to provide coverage for testing and other services related to COVID-19 without cost sharing, prior authorization, and other medical management requirements.
The tests and services include:
The CARES Act broadens coverage for COVID-19 tests and services under private plans beyond FDA-approved testing to also include coverage, without cost-sharing, for in vitro COVID-19 diagnostic products for which the developer has requested, or intends to request, emergency use authorization from the FDA, or that a state (which has told HHS it is reviewing such test) has authorized.
The CARES Act provides guidance that leaves open coverage for any “other test that the Secretary determines appropriate.”
The CARES Act requires that group health plans (or insurers) reimburse providers at the negotiated cost of testing, where applicable, and for out-of-network providers, the group health plan (or insurers) must reimburse the provider at the cash price of the diagnostic testing, as reflected on the website. Providers are required to publicize the price of testing on a publicly available website. Providers who fail to publicize the price of testing will be subject to a fine not to exceed $300 per day.
The CARES Act provides that if a preventive measure, defined as an “item, service, or immunization that is intended to prevent or mitigate COVID-19” (e.g., a COVID-19 vaccine) becomes available, group health plans must cover such preventive measure with no-cost sharing. The item or service must meet criteria under current U.S. Preventive Services Task Force (“USPSTF”) guidelines or have a recommendation from the CDC with respect to an individual for whom the services are intended.
The CARES Act provides much needed clarity with respect to Health Savings Accounts (“HSAs” and telemedicine. For plan years beginning on or before December 31, 2021, the CARES Act includes a safe harbor for high deductible health plans (“HDHPs”) that permits pre-deductible coverage for telehealth and remote care services. As a result, HDHPs can allow all services provided through telemedicine or other remote care services to be covered prior to meeting the health plan deductible without jeopardizing an individual’s HSA eligibility.
The CARES Act also repeals a rule enacted under the Affordable Care Act that prohibited over-the-counter medicines and drugs, other than insulin, from being qualified medical expenses without a prescription. For expenses incurred after December 31, 2019, participants may utilize HSAs, health flexible savings accounts (“FSAs,”) or health reimbursement arrangements (“HRAs”) to cover over-the-counter medicines and drugs (e.g., ibuprofen, cold medicines), without a prescription.
The CARES Act further provides that HSAs, health FSA, and HRAs, may be used to purchase certain menstrual care products (e.g., pads and tampons) on a tax-favored basis. These products will be treated as qualified medical expenses under the new legislation. This change applies to expenses incurred after December 31, 2019.
The CARES Act provides a few clarifications and makes some relatively small changes to the paid sick leave and extended family leave provisions under FFCRA. The CARES Act:
The CARES Act includes provisions that are meant to improve the ability of employers to obtain advances on anticipated tax credits for employers for costs associated with paid sick and family leave. The Act allows employers to receive an advance tax credit from the IRS rather than having to be reimbursed on the back end. The CARES Act also provides penalty relief for failure to deposit tax amounts in anticipations of the credits.
Additional guidance from the IRS and DOL providing instructions on the process to obtain the tax credits and addressing additional questions and details on the expanded FMLA and paid sick leave provisions under FFRCA is expected in April.
We are monitoring developments and will continue to update you.
Our Advisors offer in-depth analysis and are ready to help you successfully navigate employee benefits and health insurance.