Recent legislation and IRS rule modifications have introduced several important changes to employee benefit plan coverage and administration. Below is a brief outline of the affected areas.
First, group health plans are required to cover the cost of COVID-19 diagnostic testing without cost-sharing such as deductibles, copayments, or coinsurance. Most health plans have also offered to waive the patient share of cost for COVID-19 treatment, but please confirm with individual carriers before communicating any coverage changes to employees.
Second, employees can use funds in a health Flexible Spending Account (FSA) or an HSA to reimburse the cost of menstrual care products as well as Over-the-Counter (OTC) drugs and medicines without a prescription. In addition, participants may change their Health FSA elections for the rest of the current plan year without needing to provide a reason to do it. Options include revoking an election so that no further salary reduction contributions will be required and making a brand new election when none was made during open enrollment. If plans include a grace period, employees now have until December 31st of 2020 to spend unused 2019 FSA funds on qualified medical expenses.
Third, employees participating in a deferred compensation plan can take penalty-free withdrawals or a plan loan if they or their spouse tests positive for the coronavirus, or if they experience adverse financial consequences as a result of being quarantined, furloughed, laid off, having work hours reduced, being unable to work due to lack of child care or the result of the closure or reduction in hours of a business owned or operated by the individual. Note that distributions are still subject to income tax and loans must be repaid with interest.
Fourth, several COBRA administration due dates were extended. Currently, the election deadline is the later of 60 days from the date the notice was first mailed or loss of coverage. Dates falling within the “Outbreak Period” will now be disregarded when calculating the deadline date. The deadline for paying the first COBRA premium now will be 45 days after the qualified beneficiary’s COBRA election date. Since the election date has been extended to 60 days after the end of the Outbreak Period, the deadline for paying the first premium could be as late as 105 days after the end of the Outbreak Period. In addition, all monthly premiums for coverage during the Outbreak Period will now be due 30 days after the end of the Outbreak Period.
Districts should contact their plan administrators for more details and to determine specifically how these changes impact your plans.