Spring’s Managing Partner Makes Captive Review Power 50 List

Karin Landry Comes in at #17 of 50 Across the Globe

We are proud to announce that our Managing Partner, Karin Landry, has once again been named a Power 50 captive professional – a global accolade that recognizes the captive industry’s top performers and thought leaders. Karin has been named to this annual list for over a decade now, speaking volumes about her commitment to excellence within the captive space. It also exhibits her ability to meet and exceed expectations from clients, partners and colleagues, as it is driven by a peer-based voting system.

We want to thank Captive Review for assessing the top captive champions across the globe and giving them this esteemed acknowledgement, and we especially want to congratulate all the amazing talent represented on this list. We look forward to continuing to drive the industry forward with innovative thinking and quality, objective and results-driven work.

 

Congress Passes the American Rescue Plan Act

Congress has passed, and President Biden has signed, the American Rescue Plan Act, 2021 (ARPA), the third COVID-19 stimulus bill.  This new $1.9 trillion stimulus package includes several health and welfare benefits-related provisions relevant to employers and plan sponsors, as summarized below. COVID-19 law

FFCRA Paid Leave Extended and Enhanced

While COVID-19 vaccines are starting to become more readily available, the pandemic continues. In recognition, Congress extended through September 30, 2021, the refundable payroll tax credits for emergency paid sick leave (EPSL) and extended family and medical leave (E-FMLA), which were enacted pursuant to the Families First Coronavirus Response Act.  As with the extension through March 31, 2021 under the second stimulus package (the Consolidated Appropriations Act, 2021), only the tax credits are extended, which means compliance with the EPSL or E-FMLA requirements is voluntary for employers after December 31, 2020.

The ARPA expands FFCRA leave in several ways for employers who choose to offer it from April 1, 2021 through September 30, 2021:

  • The 10-day limit for EPSL resets as of April 1, 2021. Employees were previously limited to 80 hours from April 1, 2020 through March 31, 2021.
    • Paid leave continues to be limited to $511 per day ($5,110 total) for an employee’s own illness or quarantine (paid at the employee’s regular rate), and $200 per day ($2,000 total) for leave to care for others (paid at two-thirds of the employee’s regular rate).
  • A new “trigger” is added under both the EPSL and E-FMLA provisions.  Employees qualify for leave if they are:
    • seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID-19, and the employee has been exposed to COVID–19 or the employee’s employer has requested such test or diagnosis;
    • obtaining immunization related to COVID–19; or
    • recovering from any injury, disability, illness, or condition related to such immunization.
    • MBWL Note:  The ability of an employer to receive a tax credit for providing paid time off for an employee to receive the vaccine is a clear indication of the federal government’s desire to facilitate employees receiving a vaccine.
  • Leave under the E-FMLA provision is increased from $10,000 to $12,000, with $12,000 being the maximum an employer may claim for an employee in 2021.
  • Leave under the E-FMLA provision is expanded to be available for any EPSL-qualifying reason, which is when an employee is unable to work or telework because the employee:
    • is subject to a federal, state, or local quarantine or isolation order related to COVID-19;
    • has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
    • has COVID-19 symptoms and is seeking medical diagnosis;
    • is caring for an individual who is subject to a quarantine or isolation order;
    • is caring for a child if the school or day care center has been closed, or the child-care provider is unavailable, due to COVID-19 precautions; or
    • is experiencing any other substantially similar condition specified by the regulatory agencies.
  • E-FMLA leave taken on or after April 1, 2021 is not subject to the 10-day elimination period that applied previously under FFCRA.
    • An employee’s eligibility for E-FMLA may depend on when they used E-FMLA previously and how the employer establishes its 12-month FMLA period (e.g., calendar year, fixed period, measure-forward, or “rolling” 12 months).
  • For leave taken on or after April 1, 2021, the employers may take a credit against Medicare payroll tax only (1.45%); however, the credit continues to be refundable.
    • ESPL and E-FMLA credits are available for qualified health plan expenses and for the employer’s share of Medicare and Social Security taxes.
  • ARPA clarifies that refundable credits may be received by state and local governments that are tax exempt under Code 501(a).
  • ARPA adds a new nondiscrimination requirement that eliminates the credit for any employer that discriminates in favor of highly compensated employees, full-time employees, or employees based on tenure.

Dependent Care Assistance Program Limit Increase

In February, the IRS released Notice 2021-15, which provides guidance related to the relief for health FSAs and dependent care assistance programs (DCAPs) contained in the second stimulus bill. Unfortunately, the Notice failed to clarify with any certainty whether an employee may be taxed on any DCAP reimbursements in excess of $5,000 for the calendar year.  That issue is now settled by the ARPA, which increases the DCAP exclusion from $5,000 to $10,500 (from $2,500 to $5,250 in the case of a separate return filed by a married individual) for 2021. This relief is only available for calendar year 2021; however, it also implies that an employee could elect to increase their DCAP election to the newly available $10,500 limit for 2021 (based on the relief in Notice 2021-15).  A DCAP must be amended by the end of the 2021 plan year to take advantage of the increased exclusion limit.

Temporary Premium Tax Credit Enhancements

The Affordable Care Act’s premium tax credit program is significantly enhanced for 2021 and 2022. The existing income limit of 400% of the federal poverty level, after which individuals will no longer qualify for a premium tax credit, is lifted for 2021 and 2022. In addition, the applicable percentage of household income that individuals must pay for Marketplace coverage has been reduced at all income levels.  Special rules also apply to those individuals receiving unemployment compensation during 2021.

MBWL Note: The increased eligibility for premium tax credits makes it ever more important for applicable large employers (ALEs) to offer affordable, minimum value coverage to their full-time employees to avoid potential penalty exposure.

Temporary PTC Percentages Under ARPA
In the case of household income (expressed as a % of poverty line) within the following income tier: The initial premium percentage is— The final premium percentage is—
Up to 150.0% 0% 0%
150% to 200% 0% 2%
200% to 250% 2% 4%
250% to 300% 4% 6%
300% to 400% 6% 8.5%
400% and up 8.5% 8.5%

 

2021 PTC Percentages (Pre-ARPA)
In the case of household income (expressed as a % of poverty line) within the following income tier: The initial premium percentage is— The final premium percentage is—
Up to 133.0% 2.07% 2.07%
133% to 150% 3.10% 4.14%
150% to 200% 4.14% 6.52%
200% to 250% 6.52% 8.33%
250% to 300% 8.33% 9.83%
300% to 400% 9.83% 9.83%
400% and up Ineligible for PTC

COBRA Subsidy

The ARPA provides significant assistance to employees and their families who are eligible for COBRA (or state mini-COBRA) due to an involuntary termination of employment or reduction in hours.  The law provides a 100% subsidy for COBRA premiums from April 1, 2021 through September 30, 2021. The subsidy applies to group health plans other than health FSAs.

Employers who are subject to COBRA under ERISA (private employers) or the PHS Act (state and local governmental employers) are responsible for complying with the COBRA subsidy provisions.  Insurance companies are responsible for complying with the COBRA subsidy provisions for insured group health plans that are not subject to federal COBRA (e.g., when state “mini-COBRA” requirements apply to small plans that are not subject to federal COBRA, or to large group plans after federal COBRA is exhausted).  Additional highlights include:

  • The subsidy applies to an “assistance eligible individual” (AEI) who is any COBRA qualified beneficiary who is eligible for, and elects, COBRA during the period of April 1, 2021 through September 30, 2021, due to an involuntary termination of employment or reduction in hours.  (The reduction in hours is not required to be involuntary.)
  • AEIs must be offered at least a 60-day window within which to elect COBRA coverage.
    • The 60-day period begins April 1, 2021 and ends 60 days after the date the notice is provided to the individual.
    • AEIs include individuals in their COBRA election period, and individuals who would be AEIs but whose COBRA coverage lapsed due to non-payment prior to April 1, 2021.
    • MBWL Note: Many AEIs will still be within their COBRA election period as a result of the Department of Labor’s disaster relief (Notice 2021-01).
  • COBRA coverage elected during the subsidy period will be effective April 1, 2021; employees are not required to elect retroactive to the date of their qualifying event or any other date prior to April 1, 2021, nor are they required to pay outstanding premiums for prior periods of coverage in order to secure subsidized coverage.
  • Employers will be entitled to an advanceable, refundable tax credit against Medicare payroll taxes (1.45%) to pay for coverage during the subsidy period. The DOL will provide forms and instructions for employers to apply for the credit.
    • Additional guidance is expected for multiemployer (union) plans and professional employer organizations (PEOs).
  • The subsidy is available until the first to occur of:
    • the qualified beneficiary becoming eligible for other group health plan coverage (other than coverage consisting only of excepted benefits, such as dental or vision, coverage under a health FSA, or coverage under a qualified small employer health reimbursement arrangement (QSEHRA));
    • the qualified beneficiary becoming eligible for Medicare;
    • the end of the qualified beneficiary’s maximum COBRA duration; or
    • September 30, 2021.
  • Qualified beneficiaries who fail to notify the plan that they are no longer assistance-eligible can be liable for a $250 penalty, which may be waived if the failure was due to reasonable cause and not willful neglect. An intentional failure can result in a penalty of $250 or 110% of the amount of premium assistance received, if greater.
  • Employers may allow currently enrolled AEIs to select new plans.  An individual has 90 days from the date they are notified of the enrollment option to elect a different plan.  This option is available only if:
    • the premium for such different coverage does not exceed the premium for coverage in which such individual was enrolled at the time such qualifying event occurred;
    • the different coverage in which the individual elects to enroll is coverage that is also offered to similarly situated active employees; and
    • the different coverage is not coverage consisting only of excepted benefits, such as dental or vision, coverage under a health FSA, or coverage under a QSEHRA.
  • Required Notices to Individuals
    • General Notice / Notice of Subsidy Availability. Individuals who become eligible to elect COBRA during the subsidy period (April 1, 2021 – September 30, 2021) must be provided a notice that describes the availability of the premium assistance. The notice requirement may be satisfied by amending existing notices or by including a separate attachment. The notice must include:
      • the forms necessary for establishing eligibility for premium assistance;
      • the name, address, and telephone number to contact the plan administrator and any other person maintaining relevant information in connection with such premium assistance;
      • a description of the extended election period;
      • a description of the obligation of the qualified beneficiary to notify the plan when they are no longer eligible for a subsidy and the associated penalty for failure to do so;
      • a description, displayed in a prominent manner, of the right to a subsidized premium and any conditions thereon; and
      • a description of the option to enroll in different coverage if the employer so permits.
    • Notice of Extended Election Period. AEIs must be offered at least a 60-day window within which to elect COBRA coverage.
      • The 60-day period begins April 1, 2021 and ends 60 days after the date the notice is provided to the individual.
      • This includes:
        • individuals terminated on or after April 1, 2021;
        • individuals in their COBRA election period on April 1, 2021 (including any COVID-19-related extensions); and
        • individuals who would be AEIs but whose COBRA coverage lapsed due to non-payment prior to April 1, 2021.
    • Notice of Subsidy Expiration. Informs AEIs that the subsidy period is ending.
    • The notice must disclose that:
      • premium assistance for the individual will expire soon and the date of such expiration;
      • the individual may be eligible for coverage without any premium assistance through COBRA or coverage under a group health plan.
    • The subsidy expiration notice is not required if the subsidy is ending due to the individual becoming eligible for another group health plan or Medicare.
    • This notice must be provided not more than 45 days but no less than 15 days before the premium assistance ends.
    • Model Notices. The DOL must issue model notices of subsidy availability and extended election period within 30 days of enactment, and a model notice of subsidy expiration within 45 days of the law’s enactment.

What Does This Mean For Employers?

Employers and plan sponsors should consider whether they will adopt the extended FFCRA leave provisions and/or use them to incentivize employees to receive a COVID-19 vaccine. They should also ensure their COBRA vendors are prepared to assist in identifying and notifying assistance eligible individuals within 60 days of April 1, 2021.  The DOL also plans to provide outreach consisting of public education and enrollment assistance relating to premium assistance. Their outreach will target employers, group health plan administrators, public assistance programs, States, insurers, and other entities as the DOL deems appropriate. The outreach will include an initial focus on those individuals eligible for an extended election period. We also expect the DOL and other agencies to issue guidance on various issues related to the subsidy in the coming weeks.

About the Author.  This alert was prepared for Alera Group by Marathas Barrow Weatherhead Lent LLP, a national law firm with recognized experts on ERISA-governed and non-ERISA-governed retirement and welfare plans, executive compensation and employment law.  Contact Stacy Barrow or Nicole Quinn-Gato at sbarrow@marbarlaw.com or nquinngato@marbarlaw.com.

The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers or our clients.  This is not legal advice.  No client-lawyer relationship between you and our lawyers is or may be created by your use of this information.  Rather, the content is intended as a general overview of the subject matter covered.  This agency and Marathas Barrow Weatherhead Lent LLP are not obligated to provide updates on the information presented herein.  Those reading this alert are encouraged to seek direct counsel on legal questions.

© 2021 Marathas Barrow Weatherhead Lent LLP.  All Rights Reserved.

Legal Alert: IRS Provides Guidance on FSA Relief Authorized in the Consolidated Appropriations Act, Grants Other Cafeteria Plan Relief

IRS Provides Guidance on FSA Relief Authorized in the Consolidated Appropriations Act, Grants Other Cafeteria Plan Relief

We are just weeks shy of the one-year anniversary of the President’s declaration of the COVID-19 National Emergency, and the COVID-19 National and Public Health Emergencies are still in effect.  As a result of the long-term impact of the pandemic, many employees faced forfeiting their unused health FSA and dependent care assistance program (DCAP) funds at the end of the 2020 plan year.COVID-19 law

As a result, and as we previously reported, a second stimulus relief bill (the Consolidated Appropriated Act, 2021) was signed into law on December 27, 2020, which provided much-needed relief for health FSAs and DCAPs.  On February 18, 2021, the IRS released Notice 2021-15, which provides additional guidance related to the relief in the stimulus bill as well as further relief for cafeteria plans and HRAs.  The guidance and relief are summarized in more detail below.

IRS Guidance Related to the Second Stimulus Bill (CAA, 2021)

Health FSA and DCAP Carryovers – The stimulus bill authorized employers offering a DCAP or health FSA to allow participants to carry over all unused DCAP and health FSA contributions or benefits remaining at the end of the 2020 plan year to the 2021 plan year.  Notice 2021-15 clarifies that:

  • Employers may require employees to make an election in the 2021 or 2022 plan year to access the carryover from the previous plan year.
  • The carryover relief applies to all health FSAs, including limited purpose health FSAs.
  • If an employee uses the mid-year election change relief discussed elsewhere in this alert to prospectively elect to participate in the health FSA mid-year, the employee can access the full amount of their carryover from 2020 retroactive to January 1, 2021.
  • Employers can restrict the amount employees can carryover, i.e., they do not have to allow the full unused amount from 2020 or 2021. Employers need to specify the limit to employees in the plan amendment and any communications to employees.
  • Employers may allow employees to opt out of the carryover to preserve HSA eligibility.
  • The amount carried over may be from multiple plan years, i.e., if an employee has a remaining balance at the end of the 2020 plan year and it is still remaining after the end of the 2021 plan year, it will be accessible during the 2022 plan year (as a carryover) if the employer adopts the carryover relief for the 2021 plan year.

Extended Grace Period – Employers offering a DCAP or health FSA may extend the grace period for using any benefits or contributions remaining at the end of a plan year ending in 2020 or 2021 to 12 months after the end of the applicable plan year.  The Notice clarifies that:

  • The extended grace period is available for up to 12 months, meaning employers may elect a shorter period of time.
  • The relief applies to both general purpose and limited purpose health FSAs.
  • For purposes of HSA eligibility, employers can permit employees to opt out of the extended grace period.

 

Spend Down – Similar to DCAPs, employers offering a health FSA may allow participants who cease participation during the 2020 or 2021 plan year to continue to be reimbursed from any unused benefits through the end of the plan year (and applicable grace period) in which participation ceased.  In Notice 2021-15, the IRS clarified the following:

  • Employers do not have to allow employees who terminate mid-year to spend down for the remainder of the plan year.  Instead, they can adopt a shorter period of time.
  • The spend-down can be used for anyone who terminates employment, loses eligibility for the plan due to a reduction in hours, or loses eligibility because they made a new election during calendar year 2020 or 2021.
  • Even if the employer adopts the spend-down relief, it must still offer COBRA for individuals with an underspent health FSA account.  The COBRA premium established by the employer cannot include the amount carried over or available due to the extended grace period relief.

 

DCAP Reimbursement for Children Who Turned 13 During the Pandemic – Employers offering DCPAs in plan years with open enrollments that ended on or before January 31, 2020 may choose to reimburse employees for dependent care expenses for children who turned 13 during the pandemic. The relief applies for the subsequent plan year (e.g., calendar year 2021 plans) to the extent the employee has a balance at the end of the 2020 plan year after any relief adopted by the employer.  The IRS clarified that:

  • The employer may adopt this relief without also adopting the extended grace period or carryover.

Health FSA and DCAP Election Changes – Employers offering a health FSA or DCAP may allow employees to make prospective election changes (subject to annual limitations) to their 2021 contributions without experiencing a change in status event. The IRS clarified the following:

  • Employers may allow employees to make the following changes on a prospective basis:
    • Revoke an election
    • Make one or more elections; or
    • Increase or decrease an existing election

If an employee elects to revoke DCAP or health FSA expenses, the employer may not refund any contributions to employees.  The employer may choose to treat the contributions made before the elections are revoked the following ways:

  • The contributions may remain available to reimburse medical or dependent care expenses incurred for the rest of the plan year;
  • The contributions are only available to reimburse expenses incurred before the revocation takes effect (and not later incurred expenses); or
  • The contributions are forfeited.

If the employer takes the second or third approaches listed above, then the health FSA is no longer treated as HSA-disqualifying coverage.  Therefore, an impacted employee could begin participating in an HSA as soon as health FSA participation is terminated.

Other FSA Clarifications

The IRS further clarified that employers may adopt an extended grace period or carryover, but not both.  Employers can adopt some, all, or none of the FSA relief provided under the stimulus bill.  The relief is also available to employers who previously did not offer a carryover or grace period – they can adopt them for the 2020 and 2021 plan years so employees may benefit from the relief.

Further, the employer can adopt relief for some, but not all health FSA or DCAP participants, subject to nondiscrimination rules; however, any amount carried over or the extended grace period will not be taken into account for purposes of nondiscrimination testing.

Additionally, the IRS clarified that, for purposes of the relief, employers may amend the plan to allow employees to make a mid-year election to be covered by a general purpose health FSA for part of the year and a limited purpose health FSA for the remainder of the year. If the employee does so, then any permissible HSA contribution is based on the number of months the employee was covered under the limited purpose health FSA.  Further, unused amounts in the limited purpose health FSA can be transferred to the general purpose health FSA or vice versa; however, the general purpose or limited purpose health FSA can only reimburse applicable (based on the type of health FSA), allowable expenses incurred after the change in coverage, respectively. If, under the relief, an employee makes a mid-year election change from an HDHP to a non-HDHP mid-year and elects to participate in a health FSA, then the health FSA must be operated as a limited purpose health FSA for the months the employee was otherwise HSA-eligible, and then may operate as a general purpose health FSA for the remaining months (when the employee was not enrolled in HDHP coverage).

Finally, the IRS clarified that in no instance can an employee receive a refund of any unused FSA contributions in cash or in another form of taxable or non-taxable benefits.

Unfortunately, the IRS failed to clarify with any certainty whether an employee may be taxed on any DCAP reimbursements in excess of $5,000 for the calendar year.  While the relief provides that the annual limits under Section 129(a) of the Code apply to amounts contributed to the DCAP for the plan year, not the amounts reimbursed or available for reimbursement, if the employer adopts the extended grace period or carryover, this does not directly answer the question.  The guidance does, however, clarify that the W-2, Box 10 amount for the DCAP does not need to be adjusted to take into account the amount available in the extended grace period or carryover.  We also note that the American Rescue Plan Act of 2021, a bill to enact President Biden’s COVID-19 relief package, includes a provision that, if passed, would increase the DCAP exclusion from $5,000 to $10,500 (from $2,500 to $5,250 in the case of a separate return filed by a married individual) for 2021.

Additional IRS Relief

Notice 2021-15 also includes additional relief for cafeteria plans and HRAs.

Election Changes for Health Coverage – Similar to the IRS’ initial COVID-19 relief issued last year in Notice 2020-29, Notice 2021-15 allows employers to amend their cafeteria plan to allow employees to make mid-year election changes with respect to employer-sponsored health coverage. Specifically, employers may allow employees to do the following on a prospective basis:

    • Make a new election if the employee initially declined coverage;
    • Revoke an existing election and make a new election to enroll in different health coverage sponsored by the employer; or
    • Revoke an existing election on a prospective basis, provided that the employee attests in writing that the employee is enrolled, or immediately will enroll, in other health coverage not sponsored by the employer.

As was the case in 2020, the employer can adopt all, some, or none of this relief.  Employers can limit the number of election changes permitted and/or designate a time period during which such changes can be made, and the employer may limit the ability of employees to change from one type of health plan to another. Finally, the employee may not revoke an existing election for comprehensive health coverage by attesting to enrollment in a limited purpose dental and/or vision plan.

 

HRAs and FSAs

Pursuant to the CARES Act, employers were permitted to amend their plans to allow HRAs, health FSAs to reimburse expenses incurred for over-the-counter drugs without a prescription, as well as menstrual care products effective January 1, 2020. These expenses can also be reimbursed under HSAs and Archer MSAs.  In the Notice, the IRS permits employers to amend their cafeteria plans (for purposes of the health FSA) and HRAs to reimburse these expenses effective January 1, 2020.

What Does This Mean For Employers

Pursuant to Notice 2021-15, employers must amend their plan to adopt any of these changes no later than the last day of the first calendar year beginning after the end of the plan year in which the amendment is effective.  In other words, employers must amend a calendar year 2020 plan by December 31, 2021, and a calendar year 2021 plan by December 31, 2022.  In the meantime, the employer must communicate these changes to employees and must operate the plan in accordance with the changes between the time the amendment is effective and when it is ultimately adopted by the employer.  Employers should effectively communicate the changes to employees and ensure they operate in accordance with those communicated changes, including any limits they intend to impose.


About the Author.  This alert was prepared for Alera Group by Marathas Barrow Weatherhead Lent LLP, a national law firm with recognized experts on ERISA-governed and non-ERISA-governed retirement and welfare plans, executive compensation and employment law.  Contact Stacy Barrow or Nicole Quinn-Gato at sbarrow@marbarlaw.com or nquinngato@marbarlaw.com.

The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers or our clients.  This is not legal advice.  No client-lawyer relationship between you and our lawyers is or may be created by your use of this information.  Rather, the content is intended as a general overview of the subject matter covered.  This agency and Marathas Barrow Weatherhead Lent LLP are not obligated to provide updates on the information presented herein.  Those reading this alert are encouraged to seek direct counsel on legal questions.

© 2021 Marathas Barrow Weatherhead Lent LLP.  All Rights Reserved.

9 Areas of Focus for HR Right Now – Parts 8 and 9

We are wrapping up our thoughts on key issues industry professionals are still up against as a result of the pandemic. We appreciate you taking the time to tune in, and we hope you numbers 1-7 provided some useful insights, or at least reassured you that you’re not alone. Here are our final thoughts (for now), numbers 8 and 9.Remote Corporate Culture

 

  1. Benefits & Culture

No matter where you work, things looked markedly different this year. HR professionals have been tasked with maintaining a culture virtually. Benefits professionals are wondering if what they offer is what is needed. Employees are facing so many challenges that engaging with their organization might be the last thing on their mind – they just want to do their jobs and get by. Some employers are implementing outside-the-box ideas for fringe benefits, such as:

  • Childcare assistance
  • Caregiver benefits
  • Paying for Netflix or other streaming services
  • Money toward grocery delivery
  • Fitness app subscriptions
  • Virtual classes on meditation, cooking, or language learning
  • Sharing recipes
  • Start a virtual book club
  • Anything that can boost mental, physical, social and financial health

In addition, telehealth services are obviously more pertinent than ever, and employers need to be sure they have some sort of telehealth option. If you have employees that aren’t wild about the idea of telehealth, have conversations about why, or share your own experiences.

Another new trend we noticed popping up was that some organizations have taken “flexibility pledges”, where meetings are prohibited during certain hours, employees are encouraged to decline meetings they truly don’t need to attend, etc.

Something that has stuck with me and should stick with employers is that employees will remember what kind of support they received from their company during this time. When the dust settles, that will impact their loyalty. So, whatever you do, do something. Don’t pretend that nothing has changed.

When it comes to leadership, executives and managers need to be talking the talk. If you want to encourage work-life balance, maybe avoid sending emails at 9PM. Schedule calls that all parties take while on a walk outside. Say thank you on a regular basis for all of the hard work being put in.

  1. Beyond COVID

As employers and employees alike get more comfortable with what is more like the “normal” now, versus the “new normal”, it’s important for us to look to the future, one that hopefully does not involve COVID-19. Regardless of any changes made by the Biden administration, the consensus seems to be that we’ve all seen the value and importance of having paid leave options, and we expect this to be more than passing trend. We are starting to see a movement for caregiver leave specifically, and there was discussion around possible changes to the Fair Labor Standards Act (FLSA) to accommodate more flexible work schedules. We definitely expect state leave laws to continue to develop at an increasing rate and to encompass a gamut of areas: sick leave, caregiver leave, paid family and medical leave, parental leave, etc.

While we are still in the thick of the pandemic, there are positive signs ahead – treatments are improving, vaccines being administered, and we’ve figured out to some degree what safe behavior looks like. Once COVID-19 passes, testing and treatment of other viruses, like the flu or strep throat, might change when it comes to the workplace, and you can bet employees will think twice before showing up to work when sick.

 

At the end of the day, employers should remember that, above all else, we need to be extra human right now. This may manifest in different ways depending on the organization, but I hope these reflections on COVID challenges have given you some food for thought, and some ideas to take back to your company.

Legal Alert: EEOC Issues Notice of Proposed Rulemaking Related to Wellness Programs

This alert is of interest to all employers that sponsor workplace wellness programs. 

Since 2019, employers faced uncertainty regarding the status of wellness program incentives under the ADA and GINA. On January 7, 2021, the EEOC issued a Notice of Proposed Rulemaking on Wellness Programs Under the ADA and GINA that addresses this issue. The proposed rules deviate somewhat from prior EEOC guidance and positions.

COVID-19 law

Specifically, the proposed rules apply the ADA’s insurance “safe harbor” to health contingent wellness programs offered as part of, or qualified as, an employer-sponsored group health plan, thereby segregating them from health contingent wellness programs offered to all employees, regardless of their participation in the employer’s health plan.  Instead, the latter are lumped in with non-health contingent wellness programs (i.e., wellness programs that involve a disability-related inquiry or medical exam but are not activity-based or outcome-based) and subject to the ADA wellness rules.

Consistent with the EEOC’s announcement in the summer of 2020, the proposed rules require any incentives provided for participatory wellness programs and/or wellness programs not offered as part of a group health plan to be “de minimis.”  If the rules are finalized as proposed, employers may no longer rely upon the 30% (or 50% for smoking cessation) limit on incentives for these types of programs.

Finally, the proposed rules amend the GINA regulations by, among other things, limiting wellness program incentives for employees who complete health risk assessments that contain information about their spouse or dependents’ family medical history or other genetic information to a similar de minimis amount.

The proposed rules are described in more detail below.

Background

As background, under the ADA, wellness programs that involve a disability-related inquiry or a medical examination must be “voluntary.”  Similar requirements exist under GINA when there are requests for an employee’s family medical history (typically as part of a health risk assessment).  For years, the EEOC had declined to provide specific guidance on the level of incentive that may be provided under the ADA, and their informal guidance suggested that any incentive could render a program “involuntary.”  In 2016, after years of uncertainty on the issue, the agency released rules on wellness incentives that resembled, but did not mirror, the 30% limit established under U.S. Department of Labor (DOL) regulations applicable to health-contingent employer-sponsored wellness programs.

While the regulations appeared to be a departure from the EEOC’s previous position on incentives, they were welcomed by employers as providing a level of certainty.

However, the rules were subsequently challenged by the AARP, which alleged that the final regulations were inconsistent with the meaning of “voluntary” as that term was used in ADA and GINA.  After much back and forth in the lawsuit, in December 2017, the court vacated, effective January 1, 2019, the portions of the final regulations that the EEOC issued in 2016 under the ADA and GINA addressing wellness program incentives.  This was, in most part, due to the timing proposed by the EEOC to develop new regulations.

Accordingly, since January 1, 2019, employers have been operating with little guidance or clarity regarding whether incentives provided for participatory wellness programs would be agreeable to the EEOC.

EEOC Proposed Wellness Regulations

ADA Proposed Wellness Regulations

The EEOC’s proposed rule seeks to amend two sections of the ADA regulations, related medical examinations and inquiries and the insurance safe harbor.  In the preamble to the proposed rule, the EEOC recognizes that the meaning of “voluntary” is in the eye of the beholder but takes the position that if incentives are too high, then employees may feel coerced to disclose protected medical information in order to be rewarded or avoid a penalty.  Accordingly, participatory wellness programs that include a disability related inquiry and/or a medical examination or health contingent programs that are not part of, or do not qualify as, a group health plan must not impose terms that would adversely affect the terms, conditions, or privileges of employment for employees who do not participate and, therefore, must limit incentives to a de minimis amount.

While “de minimis” is not specifically defined, the EEOC provides some examples to help guide employers, including:

  • Providing a water bottle
  • Providing a gift card of “modest” value

Items the EEOC indicates would not be de minimis include:

  • Providing a $50 a month premium reduction for completing a health risk assessment
  • Paid airline tickets
  • Annual gym memberships

The EEOC requested comments on the types of incentives that should/should not be considered de minimis.

The proposed rules list four factors that can be used to determine whether a wellness program is “part of” a group health plan:

  1. the program is only offered to employees who are enrolled in an employer-sponsored health plan;
  2. any incentive offered is tied to cost-sharing or premium reductions (or increases) under the group health plan;
  3. the program is offered by a vendor that has contracted with the group health plan or issuer; and
  4. the program is a term of coverage under the group health plan.

The proposed rules included other protections for employees.  Specifically, they (1) prohibit employers from retaliating, interfering with, coercing, intimidating, or threatening employees, such as coercing them to participate in the program or threatening disciplinary action if they don’t participate, (2) protect employee confidential information obtained by a participatory wellness program or a health-contingent wellness program that is not part of the group health plan by requiring information collected to be aggregated in a form that does not disclose, and is not reasonably likely to disclose, the identity of specific individuals, (3) with limited exceptions specific to carrying out wellness program functions, prohibit the employer from requiring the employee to agree to the sale or disclosure of medical information or waive confidentiality protections under the ADA to participate in the program; and (4) clarify that employers must still comply with other federal civil rights laws.

Finally, because the EEOC is now proposing a de minimis incentive standard for most wellness programs, it no longer believes that it is necessary to require employers to issue a unique ADA notice that describes, among other things, the type of medical information that will be obtained and the purposes for which the information will be used.

GINA Proposed Wellness Regulations

Under the proposed GINA rules, employers may provide de minimis incentives to employees who complete health risk assessments that contain information about their spouse or dependents’ family medical history or other genetic information.  The EEOC uses the same examples of what would be de minimis under the ADA for purposes of GINA, such as providing a water bottle or a modest gift card.

The proposed rule does not prohibit an employer from offering a greater incentive (i.e., a non-de minimis incentive) to employees who provide their own genetic information as long as the employer makes it voluntary for the employee to complete the questions regarding genetic information (and the instructions clearly indicate which questions are voluntary), or to an employee who completes a health risk assessment that includes genetic information, if the employee participates in a disease management program, other program that promotes a healthy lifestyle, and/or meet a particular health goal, as long as the programs are also offered to individuals with current health conditions or health risks.

The EEOC uses an example of an employer who offers $150 for completion of a health risk assessment which requests information about family medical history or other genetic information but makes it clear that the incentive is available regardless of whether the employee completes any questions related to genetic information.  The assessment identifies which questions are related to genetic information.  Employees can earn $150 if they disclose family medical history and participate in a program designed to encourage weight loss or a healthy lifestyle; however, if the employee does not want to complete the questions related to genetic information, they can still earn the $150 if they attain a certain health outcome by participating in other activities.  The incentive complies with GINA.

What’s Next for Employers?

The wellness regulations are proposed at this time and it is uncertain when they will be finalized; however, if history is any indication, any final regulations will be challenged in court.  While employers are not required to make any changes to their wellness programs at this time, they should continue to monitor developments and work with employee benefits counsel when designing their wellness programs.  The release of final regulations may be further delayed if the Biden administration freezes new rules pending further review.

9 Areas of Focus for HR Right Now – Part 7

Thanks for joining us on this nice little reflective exercise. There has been so much news to keep up with this year, that we thought it would be helpful to put pen to paper on our key COVID takeaways. We hope our numbers 1 through 6 provided some food for thought, and also some helpful advice. We are back this week with number 7, and it’s a big one.

 

  1. Leave & Accommodations

Leave laws are always front and center for us at Spring, but this year we had different considerations. While this topic interplays with many of the other themes on this list, I thought it important to reiterate some key legislative items we’ve been dealt this year.leave management covid

 

Currently there are very few legal parameters for supporting working parents during the pandemic, and no protections for employees worried about exposing people in their household. Any accommodations allowed here are largely based on the discretion of the employer. For working parents, consider flexible hours and different shifts. Further, companies should think about whether teleworking could work more permanently, you are likely to face some employee hesitancy to return to the office. This will be especially important depending on your office location and the case rates in that area.

 

As we think about traditional ADA accommodations processes and try to carry them out in a COVID world, we pose the following questions:

  • If an employee self-identifies themselves as high-risk, should an employer be asking for proof?
  • If an employee states they cannot wear a mask due to a disability, but cannot provide documentation, what does the employer do?
  • If an employee is asking for leave but is not eligible under ADA or FMLA, what other options are available?

I recently presented at DMEC where we suggested implementing short-term accommodations trials, especially when there is difficulty obtaining documentation, which there has been due to closing of medical offices to non-emergency patients and reluctance to visit medical offices out of fear. So if an employee asks for accommodation without documentation, try something that you find reasonable for 3 or 6 months without asking for medical information, and then revisit the trial at that point. Further, exhaust all return to work options (whether in-person or remote) first, and use leaves as a last resort.

With the expiration of the FFCRA, Emergency Paid Sick Leave (EPSL) and Emergency Family and Medical Leave (EFMLA) is no longer required, but the tax credit has been extended. Click here for more details on that. All of these complexities are making the case for federal leave law, in which we could avoid this patchwork of different leaves, but speakers remarked that while the desire is there, there are too many challenges to get it going during this economic climate.

Several states have implemented their own leave policies related to COVID: California, New York, New Jersey, Colorado, Washington D.C., with pending legislation in Massachusetts. Employers in these states will need to weave these into their programs.

Further, while there is no leave currently for those afraid to return to the workplace, employers should be cautious as it is possible for debilitating anxiety to occur in these cases, which could trigger a leave.

 

At the end of the day, while employers often worry about misuse of programs, research shows that less than 5% of individuals taking leave are abusing it. Further, as engrained in our culture, people are generally shamed of needing time of work to take care of themselves or others. To this end, we need to take a caring lens when it comes to leave and accommodations. Lastly, communicate your policies often, be proactive, make it easy for employees to find available resources, check in on  your colleagues, and be sure to have formal Stay and Work and Return to Work programs in place and updated.

 

Don’t miss our series wrap-up, numbers 8 and 9, coming to your inbox next week!

9 Areas of Focus for HR Right Now: Parts 5 and 6

Thanks for tuning back in as we share our most noteworthy reflections around how priorities have changed for folks in this industry. We hope you caught numbers 1-4 (link). After over six months of combatting COVID-19, we have figured a lot out, but questions remain. Here we are with numbers 5 and 6 on our list.Women in the workforce COVID

 

  1. Women in the Workforce

Policies like maternal leave and breastfeeding accommodations have long been debated, but this year women are facing even more pressure. For one, it’s been reported that women continue to shoulder the burden of having children while working at home. I am sure there are plenty of involved dads out there, but it does seem to be women who are largely being tasked with homeschooling, activities, meals, etc. and who are being interrupted by children during the workday. They may be struggling to keep up with the demands of work and home, and feeling like they have to choose. We hope that once we start seeing consistent success in education during the pandemic, and eventually vaccines, women will gain back their confidence. However, employers should be thinking about how to be flexible with working mothers so that they don’t have to take leave, as reengagement will be difficult.

Another hot topic related to women is the issue of pregnancy during these COVID times. Many pregnant women have extra fear of being exposed to the virus and are likely to err on the side of caution, meaning they may be reluctant to return to the workplace. Things get tricky here, as pregnancy is not a disability in the eyes of the ADA and therefore does not offer an accommodation to pregnant women. Further, because of the Pregnancy Discrimination Act, employers cannot single out pregnant employees. This conundrum has several states trying to fill this pregnancy gap in upcoming legislation. Finally, let us not forget, as employers, about single women lacking a support system at home.

 

  1. EAPs

I got a lot of value out of one DMEC session focused on Employee Assistance Programs (EAPs) and I thought I would share. EAPs are a severely under-utilized tool. This is due to lack of awareness, stigma around mental health and addiction, company culture, confidentiality concerns, and accessibility or time constraints. Many employees don’t realize the amount of free or discounted services associated with EAPs, with costs being another barrier.  However, as we saw, mental and behavioral health problems are rising at an unprecedented rate, and EAPs could be a critical mitigating factor, but only if they are leveraged.

When it comes to EAPs, you should:

  • Ensure managers are adequately trained on the program(s) offered
  • Partner with your provider to increase communications and remove obstacles
  • Link EAP access to other HR programs such as wellness initiatives
  • Monitor program effectiveness through regular surveys and performance checks
  • Check in with employees before, during and after an EAP request – did they find the resources they were looking for?

We may see EAPs transform from a “nice to have” to a “must have” in the future. If that’s the case, all of us in this industry need to understand how to better drive utilization, because it’s clearly not enough to simply provide one. Spring can help with this!

 

We’ll be back soon with our #7 and beyond.

9 Areas of Focus For Employers Right Now: Parts 3 and 4

We are back with more industry food for thought. We hope you caught #s 1 and 2, telework and workplace safety here. We are continuing on with more unique challenges HR, benefits and absence management professionals are still facing in light of the pandemic.

 

  1. Mental and Behavioral Health

Mental and behavioral health has long been a concern for employers, but COVID-19 complicated this area in a myriad of ways. Research shows that by the end of the year, it’s projected that someone will die by suicide every 20 seconds. This could be the next pandemic, in that COVID-19 will lead to PTSD and increased rates of depression. In conjunction with suicide, overdose rates are rising and alcohol sales have skyrocketed. Domestic violence is also of particular concern as many have been stuck at home in unsafe environments, and with children largely out of schools and programs, there are less opportunities to report issues.employee mental health

One DMEC presentation shared that 45% of employees surveyed reported their mental health being negatively impacted in some capacity by COVID-19, and that it is often more difficult for older adults, those working in healthcare, and those with pre-existing conditions. The rapidly changing news on public health and the crisis is further contributing to anxiety.  However, the number one stressor for employees across the board pertains to finances.

Non-job related factors affecting mental health right now include:

  • Childcare
  • Health of family members and self
  • Social disconnectedness
  • Postponing or canceling of events and celebrations
  • Grief/loss

Then, of course, there are job stressors that may come into play, such as career development and relationships at work.

Now that I’ve painted a very grim picture, let’s talk about what employers can do to mitigate these mental and behavioral health complexities. Here are some ideas:

  • Conduct manager sensitivity training
  • Understand what signs of depression might look like, especially in this virtual world. An example might be morning fatigue from lack of sleep
  • Offer flexibility when possible – this could mean scheduled breaks or a switch from full-time to part-time
  • Treat mental health as you would physical health problems
  • Ensure employees understand what resources are available, such as EAPs
  • Offer benefits like 401(k) and retirement planning, HSAs and/or flexible spending accounts, emergency hardship assistance, etc.
  • Offer thoughtful perks like noise-canceling headphones, as those dealing with depression will have a harder time focusing
  • Leverage your disability carrier for help

Confronting and assisting with mental and behavioral health problems is not only a compassionate move, but a sound business decision as well. An employee with a mental health or addiction issue will be about half as productive; a DMEC presenter stated that this level of lost productivity can cost a company with 1,000 employees a minimum of $2.4 million a year.

Essentially, those who were experiencing anxiety, addiction, or depression before are facing magnified conditions now, and we have a larger subset of people who were not struggling in these areas prior to COVID-19 but now are. Your employees could be worried their spouse is going to lose his/her job so they are putting in overtime to secure their own job. Others are dealing with pre-existing conditions, aging parents who need extra care, children at home, a lack of social life, and so on.

As mental and behavioral health problems continue to soar, everyone can benefit from an employer proactively addressing them.

 

  1. Travel

The vast majority of employers have banned non-essential business travel. For personal travel, quarantine policies may come into play. The future of business travel, business travel policythat is, in a post-COVID world, remains unclear. One DMEC presentation cited a poll that showed 28% of employers planning on reducing business travel after the pandemic, and 51% of companies are unsure what they will do. On the other hand, 62% of employees surveyed stated they would prefer to travel less when the pandemic is over than they did before it started.

 

Be sure to check back in for #5 and beyond!