COVID-19 Employer Advisory Session

ONEDIGITAL’S CORONAVIRUS ADVISORY HUB

Visit onedigital.com/coronavirus/ for resources on how to monitor, prepare for and respond to any healthcare, safety or workplace issues that stem from the coronavirus (COVID-19).

Q2 2020

Quarterly Legislative and Regulatory Update

PRESENTED BY:

Annette BechtoldSVP, Regulatory Affairs and Compliance

Agenda

Compliance Changes and Considerations

Q2 2020

• COVID-19- Related Compliance Changes

• HR 7010, Paycheck Protection Program Flexibility Act of 2020

• Employee Benefit Plan Modifications

• ACA and Compliance Obligations

• Legislative and Regulatory Landscape

• SCOTUS Health Care Case Updates

• Administrative and Legislative Developments

• Advocacy Agenda

COVID-19-Related ComplianceChanges

• HR 7010, Paycheck Protection Program Flexibility Act of 2020

• Employee Benefit Plan Modifications

• ACA and Compliance Obligations

Photo by Fusion Medical Animation at Unsplash.com

HR 7010 - Paycheck Protection Program Flexibility Act of 2020 Enacted June 5, 2020

Provision Original PPP Loan Provision Updated PPP Loan ProvisionLoan term/maturity (excess left

after loan forgiveness)2 years 5 years

Loan - Covered Period 2/15/2020 – 6/30/2020 2/15/20 – 12/31/20

Loan Forgiveness - Covered

Period

8 weeks from disbursement of

funds

the earlier of 24 weeks from disbursement of funds or

12/31/20 (borrowers receiving loans prior to 6/5/20

may elect, i.e. keep the original 8-week covered period)

Payment Deferral6 months from the end of the

covered period

Must submit loan forgiveness application within 10

months after the last day of the covered period

Loan Forgiveness Reduction

Based on Reduction in Full-Time

Equivalent (FTE) Employees

Waived if number of FTE employees

is restored by 6/30/20

Waived if number of FTE employees is restored by

12/31/20 or qualify for the Exemption Based on

Employee Availability*

Loan Forgiveness Limitation75% of the loan forgiveness amount

must be attributable to payroll costs

Must use at least 60% of the covered loan amount for

payroll costs Application corrects to 60% of forgiveness amount

Reductions in Staff

• Average number of FTE employees/mo. → during CP or APCP

• ÷ Average number of FTE employees/mo. → 2/15/19-6/30/19 or 1/1/20-2/29/20 (employer’s choice)

• Seasonal employers may also choose a consecutive 12-week period between 5/1/19 and 9/15/19 or either of the two periods listed above

Reduction Determination – based on Full-Time Equivalent (FTE) Employees

• Employers may choose one of two ways to calculate full-time equivalent employees:

•Actual = for each employee, take the average number of hours worked per week, divide by 40, and round to the nearest tenth

•Simplified = Count each full-time employee working 40 hours or more per week as 1.0 and each employee who works less than 40 hours per week as 0.5.

Calculating Full-time Equivalent (FTE) Employees

• Do not count employees for whom, a good faith, written offer, of rehire was made during CP/APCP but was declined by employee; or

• who were fired for cause, voluntarily resigned, or voluntarily requested and received a reduction in hours

• AND these positions were not filled by a new employee

FTE Employee Exemptions

•Employer is exempt from FTE employee reduction if:

•The employer reduced its FTE employee levels in the period beginning February 15, 2020 and ending April 26, 2020; AND

•The employer restored its FTE employee levels by not later than June 30, 2020 to its FTE employee levels in the pay period that included February 15, 2020

FTE Employee Safe Harbor

Exemption Based on Employee Availability

• Removes the loan forgiveness reduction based on change in staffing/i.e. full-time equivalent employees, if, in good faith, the borrower can document that they have:

• an inability to rehire the individuals who were their employees on February 15, 2020; AND

• an inability to hire similarly qualified employees for unfilled positions on or before December 31, 2020; OR

• can document that the business cannot “return to the same level of business activity as such business was operating at before February 15, 2020, due to compliance with requirements established or guidance issued by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration during the period beginning on March 1, 2020, and ending December 31, 2020, related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID–19.”

New PPP Application Reflects Provisions of New Law

Considerations for Loan Forgiveness

Does the employer want 100% loan forgiveness and is

it feasible?

When will the employer incur and pay enough payroll costs to earn loan forgiveness on all

or the part of the loan they want forgiveness for?

Did they downsize, i.e. reduce their staff? If so, will they be able to rehire to prior levels by June 30 based or do they

anticipate needing extra time?

Did they reduce salaries of those earning less than

$100,000 by more than 25%? If so, will they be able to

restore those by June 30 or will they need more time?

Can the employer achieve 75%/25% payroll vs non-

payroll cost criteria in the 8-week period?

Deferral of Payroll Taxes

• Cares Act allows employers to defer payroll taxes for 2020

• Repayment schedule:

• 50% by 12/31/21

• 50% by 12/31/22

• Originally not available to those with PPP loans

• Now allowed as of enactment of HR 7010

New Simplified Loan Forgiveness Application

EZ Form can be used if:

• Self-employed, independent contractor or sole proprietor; OR

• There was no reduction in both salaries (by more than 25%) and FTEs during the Covered Period orAlternative Covered Period; OR

• There was no salary reduction of more than 25% and the borrower was unable to operate during the Covered Period at the same level of business activity as before February 15, 2020 due to COVID-19 guidance placed between March 1, 2020 and December 31, 2020

Updated Loan Forgiveness Application

Discussions underway in House Small Business Committee regarding possibility for automatic forgiveness of PPP loans up to $150,000

COVID-Related Benefits Changes

Group Health Plan Change Description of Change Timing and Compliance

OTC medications and menstrual products

Over-the-counter drugs and menstrual care products are qualified medical expenses under FSA, MSA, or HSA without a prescription

Expenses incurred on or after January 1, 2020

HDHP first-dollar services will not disqualify the plan

• Expenses related for testing or treatment, if paid prior to deductible, will not cause plan failure

• Temporary expansion for telehealth and remote services prior to satisfaction of the deductible

• Applies to expenses incurred on or after January 1, 2020.

• Applies to plan years beginning on or before December 31, 2021

COVID-19 diagnostic testing

CARES Act requires group health plans and health insurance issuers offering group or individual health insurance to cover (without cost-sharing) any qualifying coronavirus preventive service

Takes effect 15 business days after the date on which the recommendation is made relating to the ”qualifying coronavirus preventive service”

Health plan enrollments, and premium payments and rebates

Insurance carriers allowing premium payment delays, special enrollments for uninsured employees, and premium rebates

• Claim payment may be suspended until premiums are paid

• Rebates must be allocated to plan participants to the extent it represents employee premium dollars - handle like MLR distributions

COVID-Related Benefits Changes

Extension of plan deadlines – HIPAA,COBRA, ERISA plan

documents

Request for HIPAA special enrollment, COBRA notices and elections, claim filing,

provision of SPD, SMM, and adverse claims appeals

extended

Effective March 1, 2020 and ends 60 days after COVID-19

ending announcement –limited extension to 7/15/20

for 5500s or M-1

COBRA ModelNotice

New model notice to help individuals understand their choices between the group

health plan, Exchange plan, or Medicare, if eligible

FAQ describes benefits of enrolling in Medicare over

COBRA, the order health plans pay benefits, potential

penalties of delaying Medicare

COVID-Related Cafeteria Plan Changes

Group Health Plan Change Description of Change Timing and Compliance

Cafeteria plans Employers may amend cafeteria plan to allow a prospective, mid-year change, even with out valid change in status, for employer-sponsored health coverage, health FSA, or dependent care account• New election• Modify existing election• Revoke an electionApplies to self-funded and fully-insured health plans, all health FSAs, including limited purpose

• Allowable in the 2020 calendar year• May apply to expenses back to January 1,

2020• Must adopt a plan amendment on or

before December 31, 2021 – notification to employees required

FSA • Carryover amount increased from $500 to $550• Ability to reimburse individual health care

premiums prior to the beginning of a plan year• Grace period and carryover may be carried over for

12 months

• Effective for 2020 plan years• Must adopt a plan amendment on or

before the end of the plan year

IRS Notice 2020-29 - COVID-19 GUIDANCE UNDER § 125 CAFETERIA PLANS AND RELATED TO HIGH DEDUCTIBLE HEALTH PLANSIRS Notice 2020-33 - CAFETERIA PLANS - MODIFICATION OF PERMISSIVE CARRYOVER RULE FOR HEALTH

New IRS Guidance on Leave Donation

• Cash payments for victims of COVID-19 are not wage

• not included in gross income

• employee cannot claim as a charitable contribution

• Must be made to the IRC Section 170(c) organizations for the relief of victims of the COVID-19 pandemic in the affected geographic areas

• Paid to the IRC Section 170(c) organizations before January 1, 2021

• Employers may deduct these cash payments in accordance with IRC Section 170 or IRC Section 162 if the employer otherwise meets the respective requirements.

ACA and Other Compliance Obligations

ACA Repeals

• 2.3% excise tax on the sale of certain medical devices

• HIT – health insurance tax adding 2-3% to premiums

• “Cadillac” excise tax – 40% tax on value of health plans that exceed threshold

PCORI Fees

• Applies to all health plans

• Extends for 10 years; from 2020 - 2020

• Fees for plan years ending 1/1/19 – 9/30/19 are $2.45 per covered life payable 7/31/20

• Fees for plan years ending 10/1 – 12/31/19 are $2.54 per covered life – payable 7/31/20

FFCRA/CARES & Affordability

• Employers using look-back measurement method must continue coverage during stability period

• Leaves of absence cannot negatively or positively impact affordability

CMS Relaxes Enforcement of MLR Report

• ACA’s Medical Loss Ratio provision requires health insurance issuers (issuers) offering group or individual health insurance coverage to:

• submit a report to the Secretary of the Department of Health and Human Services concerning their medical loss ratio (MLR) and

• issue an annual rebate to enrollees if the issuer’s MLR is less than the applicable MLR

https://www.cms.gov/f i les/document/Issuing -2019-MLR-Rebates- in-Response-to-COVID-19.pdf

• Due to COVID, CMS is adopting temporary policies of relaxed enforcement. These policies allow issuers to:

• Prepay enrollees for a portion, or all, of the estimated 2019 MLR rebate

• Comply with reporting requirements by new extended deadline

• Modify standard notices to reflect practices

• Aggregate de minimis rebates

Legislative and Regulatory Landscape

• SCOTUS Health Care Case Updates

• Administrative and Legislative Developments

• Advocacy Agenda

Status of Pending Court CasesA

CA

Co

nst

itu

tio

nal

ity • Lower court decision

finds individual mandate unconstitutional and inseverable

• Appellate Court agrees unconstitutional but remands severability issue back to lower court

• SCOTUS agrees to hear case

• 5/14/20 – amicus briefs filed -

• Hearings may take place as early as fall A

sso

ciat

ion

Hea

lth

Pla

ns

-Pa

thw

ay 2

• DOL provides alternative pathway for associations to form for insurance purposes

• District Court vacates commonality of interest other than industry or trade and participation of sole proprietors

• DOL files appeal

Co

ntr

acep

tive

Man

dat

e • The contraceptive mandate was added to ACA’s required preventive services (2012)

• SCOTUS determines religious employers are exempt (2014)

• HHS and administration expand right to exemption to those wanting to protect moral beliefs in (2017)

• SCOTUS hears oral arguments (5/2020)

Tran

spar

ency

in D

rug

Pri

cin

g • HHS issued rule requiring transparency in drug pricing

• Requiring drugmakers to publish drug prices

• Court of Appeals strikes down rule stating the HHS required disclosure of wholesale drug prices extends beyond normal administration

• HHS did not say whether they would appeal the decision

CMS Finalizes Nondiscrimination Rules

• Sec.1557

• prohibits discrimination based on race, color, national origin, sex, age, and disability

• Applies to certain health care providers, health benefit plans, and health insurers

Keeps civil rights, language assistance and disability protections, but no longer requires the following:

Define sex discrimination to include gender identity and sex stereotyping

Health plans and insurers to cover gender reassignment surgery

Maintenance of specific grievance procedures to address complaints

Distribution of non-discrimination notices and tagline translations in at least 15 languages in significant

communications

Limits application of Section 1557 to the healthcare activities of entities not principally engaged in healthcare only to the extent they are funded by HHS

HEROES Act – H.R. 6800Passes House May 15, 2020 (208-199)

• provides FY2020 emergency supplemental appropriations to federal agencies;

• provides payments and other assistance to state, local, tribal, and territorial governments;

• provides additional direct payments of up to $1,200 per individual;

• expands paid sick days, family and medical leave, unemployment compensation, nutrition and food assistance programs, housing assistance, and payments to farmers;

• modifies and expands the Paycheck Protection Program, which provides loans and grants to small businesses and nonprofit organizations;

• establishes a fund to award grants for employers to provide pandemic premium pay for essential workers (COBRA);

• expands several tax credits and deductions;

• provides funding and establishes requirements for COVID-19 testing and contact tracing;

• eliminates cost-sharing for COVID-19 treatments;

• extends and expands the moratorium on certain evictions and foreclosures; and

• requires employers to develop and implement infectious disease exposure control plans.

• Medicare and Medicaid, • health insurance, • broadband service, • medical product supplies, • immigration, • student loans and financial aid, • the federal workforce, • prisons, • veterans benefits, • consumer protection

requirements, • the U.S. Postal Service, • federal elections, • aviation and railroad workers, and• pension and retirement plans.

Proposed Rule on Certain Medical Care Arrangements

• Would allow tax preferred treatment for the following “medical expenses” or “medical insurance”

• Health care sharing ministries

• Direct primary care

• HMO membership

• Government programs, e.g. Medicare Parts, A, B, C, & D, CHIP, Medicaid, TRICARE

• HRAs may provide reimbursement if integrated with health plan

• Not in effect

• Comments due in 60 days

• Watch for final guidance

Advocacy

• Federal vs state legislation

• Claim resolution –benchmark vs. arbitration

Surprise Billing

• Cost and cost transparency

• AccessPrescription Drugs

• Treat COBRA as Creditable Coverage

• Medicare Observation StatusMedicare

• Single Payer

• Employer Exclusion of Health Insurance

Preserving Employer-Sponsored Coverage

• Streamline Employer Reporting

• 30/40 HoursACA Administration

• Expansion of contributions

• Expansion of 213(d) expenses HSA Savings Reforms

Primary Secondary

Resources

Your resource for navigating business and workplace challenges arising from the coronavirus pandemic

Gain access to resources to help you monitor and respond to this rapidly evolving situation:

• Cutting Edge Health Plan Cost Impact Tool

• On-Demand COVID-19 Employer Advisory Webinars

• Employer FAQ

• Benefits, HR and Compliance Guidance Tools

onedigital.com/coronavirus/

Helping Employers Make the Most of a $2 Trillion-Dollar Economic Lifeline

Mitigate risk and position your organization for financial stability and future growth post-pandemic:

• CARES Act FAQ

• Information and latest updates on SBA’s Paycheck Protection Program

• Articles, downloads and other resources to help you understand and communicate the current economic landscape

onedigital.com/stimulus-guidance/

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