This is the second in a series of articles discussing the impact that the COVID-19 (coronavirus) pandemic and the governmental responses to it have had on employee benefits. The first article addressed key issues involving employer group health plans. This article focuses on the impact on group health plan continuation coverage, HIPAA privacy, and other welfare benefit plans.
Group Health Plan Continuation Coverage Requirements
Employers have certain responsibilities under the Consolidated Omnibus Budget Reconciliation Act (COBRA). If employees experience a loss of coverage as a result of a business closure-for example, due to a termination of employment or a reduction in hours-then the impacted employees should be provided with the required COBRA notice. To the extent that there is no loss of coverage as a result of a business closure, there will be no obligation to provide employees with the ability to elect COBRA continuation coverage.
Small employers (i.e., those with fewer than 20 full-time employees) that are not subject to federal COBRA requirements should also be aware of Ohio’s mini-COBRA law (Ohio Revised Code §3923.38 and §1751.53). Under Ohio’s law, eligible employees who lose health insurance coverage because they have been involuntarily terminated (other than for gross misconduct) may continue coverage for up to 12 months. Unlike the federal law, however, a loss of coverage due to a reduction in hours is not a qualifying event under Ohio’s mini-COBRA law.
Significantly, the Ohio Department of Insurance’s March 20th guidance includes a directive affecting continuation coverage whether an employer is subject to the federal COBRA or Ohio continuation coverage requirements. If a group health plan has at least one active employee enrolled in the plan, all former employees may receive continuation coverage either under COBRA (20 or more employees) or Ohio’s state continuation rules (if under 20 employees).
HIPAA Privacy Obligations
Employers are reminded that the HIPAA privacy rules apply to their group health insurance plans rather than employers themselves. This means, in the context of the coronavirus outbreak, the disclosure of a positive coronavirus diagnosis (that is, “protected health information”) from the health plan to the employer would be a HIPAA violation. However, such a disclosure from an employee to his or her supervisor or HR manager would not be “protected health information” under HIPAA because the information did not come from the group health plan. Therefore, the employer’s decision to inform other employees of the positive diagnosis would not raise HIPAA privacy issues.
Employers should be aware that while HIPAA will not be implicated by such a disclosure by an employee, the employer must consider its obligations under the Americans with Disabilities Act (ADA) and other applicable local, state and federal privacy laws when making a decision disclosing the diagnosis to others in the workplace. The CDC states in its published Interim Guidance for Businesses and Employers that if an employee is confirmed to have the coronavirus, employers should inform other employees of their possible workplace exposure to the coronavirus, but maintain confidentiality (e.g., not identify by specific name) as required by the ADA.
Welfare Benefit Plans
Employee eligibility under other welfare benefit programs may also be impacted during a business closure related to the coronavirus. This may include eligibility under an employer’s short-term disability, long-term disability or life insurance contracts. Employers are encouraged to review their existing contracts and policies with respect to welfare benefit programs to determine the impact of any business closure.
- Short Term Disability
Does a coronavirus quarantine qualify as a disability under an employer’s short-term disability plan? The events that qualify for benefits under a short-term disability plan are described in the plan’s policy or plan document. In general, however, a quarantine period would not fall within the definition of disability, but the time spent recovering from a coronavirus diagnosis may be within the applicable definition.
- Use of Flexible Spending Account Funds
Whether a terminated employee can access accumulated FSA funds after termination depends on the language in the FSA plan document, Typically, these documents will specify a time period after a termination of employment (30, 60 or 90 days are common) during which an employee can submit reimbursement requests for eligible expenses that had been incurred prior to the employment termination date.
When day care centers are closed because of the coronavirus, participants with dependent care FSAs may seek alternative childcare arrangements or reductions in the amount of employee contributions to these accounts. From the employer’s perspective, the employer should confirm that the expenses are being incurred to pay for services so that the employee can continue to work. Also, the closing of a childcare center under a governmental shut down order may be enough to permit the employee to modify or revise their dependent care FSA contributions prospectively.
- Changes to Cafeteria Plan Elections
Cafeteria plans may permit employees to revoke or change elections midyear as a result of a change in the employment status of the employee (or the employee’s spouse or dependents), such as a reduction in work hours that affects the employee’s eligibility or cost of coverage. The change in election must be consistent with the change in status. Employees who are absent from work on FMLA leave must be allowed to either revoke their medical coverage and flexible spending account contributions, or to continue coverage but discontinue payment of the employee share of the premium costs and repay their share upon returning to work. Employees who have a significant increase or decrease in qualified dependent care costs due to school closures may change their dependent care flexible spending contributions consistent with the change in costs. Employers should review their plan documents to determine which of these options are permitted and whether they should amend the plan to increase flexibility.
Disclaimer: The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail.