- Posted by Jessica Waltman
- On July 17, 2020
Several pieces of COVID-19 related legislation and regulatory guidance issued over the past month impact businesses and employer group health plans. These policy measures, which cover the Paycheck Protection Program, new employer-paid leave requirement guidance, and COVID-19 testing requirements for employers and health plans, are summarized below.
Paycheck Protection Program
President Trump recently signed legislation extending the Paycheck Protection Program (PPP) loan application deadline through August 8, 2020. It gives eligible business owners five more weeks to apply for low-interest and mostly forgivable federal loans. PPP loan funds can be used to help companies pay health insurance costs and other qualified expenses. The new law merely extends the application PPP deadline and makes no structural changes to the program.
However, the Small Business Administration, which oversees the PPP, has made some structural program changes, mainly to implement the Paycheck Protection Program Flexibility Act of 2020 (PPPFA). This law, which was signed in June, gives PPP borrowers and existing loan recipients more options, including extending the timeframe employers have to spend PPP funds. The timeframe may now be 24 weeks instead of eight. It also increases the loan maturity timeframe from two to five years and makes other changes to make greater loan forgiveness easier.
To accommodate the PPPFA provisions, the SBA released a new long-form PPP loan forgiveness application and revised instructions. The SBA also published a shorter and simpler version of the forgiveness application, Form 3508-EZ, and accompanying instructions. Finally, the SBA updated several existing interim final rules to reflect the program changes added by the new law. More regulations related to the PPPFA requirements are expected over the coming weeks.
FFCRA Paid Leave Requirements
The Internal Revenue Services released guidance to let businesses know that if employees took paid sick or family leave created by the Families First Coronavirus Response Act (FFCRA), specific tax reporting requirements apply. In addition to including those wages in an employee’s overall compensation for tax reporting purposes, employers will need to report any FFCRA paid leave wages separately on Form W-2 in Box 14, or through a separate statement.
Employers must do this so that any employees who also have self-employment income have the information they will need to claim FFCRA qualified sick or family leave equivalent tax credits on their tax returns. The IRS notice includes model language employers can use to explain to employees that FFCRA leave payments may limit the amount of qualified sick or family leave tax credits employees with self-employment income may wish to claim.
Besides the W-2 reporting any businesses that are subject to the Families First Coronavirus Response Act’s (FFCRA) paid sick leave, the Department of Labor (DOL) recently issued new guidance about paid leave options and COVID-19-related summer child care needs.
The original FFCRA paid leave FAQ guidance is unequivocal that school merely being out for the summer does not qualify a parent to take FFCRA paid leave. However, if the employee can document that their preexisting summer childcare arrangements are unavailable, they may be eligible for two weeks of paid sick leave and an additional ten weeks of FFCR childcare leave. The employer would then be eligible for a paid leave tax credit to cover their paid leave wages and related health insurance costs.
The new DOL guidance addresses how employees might appropriately document the unavailability of a summer camp or summer childcare program due to COVID-19. Many of them closed before the summer started. Generally, a parent’s mere interest in a camp or program that closed is not enough documentation to justify the FFCRA leave. However, some circumstances indicate a child would have attended, had the program not closed in response to COVID-19. Appropriate evidence of this includes:
- Records that the child(ren) applied to, or was enrolled in the summer camp or program before it closed;
- Evidence the child(ren) went to the camp or program in prior summers and was eligible to participate again; or
- Proof of submission of a deposit or payment of tuition.
The guidance also explains there could be circumstances where such records could be hard to produce. In those instances, employers, and ultimately the DOL and IRS will have to consider it on a case-by-case basis.
The Trump Administration recently released a new round of frequently asked questions (FAQs) covering the scope of the mandate that all health insurance plans, including employer group plans and self-funded health benefit arrangements, include COVID-19 diagnostic testing without cost-sharing. The Equal Employment Opportunity Commission also recently issued guidance about coronavirus testing in the workplace, which details the parameters of what kind of tests employers can require employees to take.
The FAQs clarifying the requirement that private health insurers to cover COVID-19 testing free of cost-sharing and other coverage requirements like pre-authorization applies to all diagnostic tests that are either:
(1) approved by the Food and Drug Administration (FDA);
(2) on the list of tests with emergency authorization from the FDA,including tests from labs and manufacturers that have validated their tests, informed the FDA, and offer them according to FDA guidance;
(3) developed in and authorized by a State that has notified the Secretary of Health and Human Services (HHS) of its intention to review tests intended to diagnose COVID–19; or
(4) are approved by HHS via other guidance (although there are none in this category to-date).
Multiple tests and even an in-home test must be included as long as a healthcare provider orders it for COVID-19 diagnostic purposes. Appropriate facility fees fall under the scope of the testing mandate too. However, the guidance also clarifies that health insurance plans do not have to cover every COVID-19 test first-dollar without restrictions. The coverage mandate only applies to tests necessary to diagnose the coronavirus. The FAQs specifically note that testing related to the workplace, public health surveillance or contact tracing, or any other purpose beyond diagnosing or treating COVID-19 falls beyond the scope of the free testing requirement. Insurance may cover those tests, but standard lab and screening cost-sharing and utilization requirements may apply.
Alternatively, employers who want to give their employees free access to COVID-19 diagnostic tests for back-to-work safety purposes can directly provide the tests through a worksite clinic or other arrangement. Recent guidance has made it clear that workplaces that only provide COVID-19 diagnostic tests do not create a separate group health plan arrangement according to ERISA.
If an employer does decide to test employees for work-related purposes, they need to abide by the new Equal Employment Opportunity Commission COVID-19 testing requirements. The EEOC has ruled that individuals in the workplace with the virus are a direct threat to others. So, employers may require employees to take a diagnostic test to determine if they actively have COVID-19. Businesses can also ask employees to submit to temperature checks, medical screenings, and other measures to ascertain active COVID-19 risks. What companies cannot do is require employees to take a COVID-19 antibody test before they return to work or at any time. The EEOC prohibits mandatory antibody tests specifically, noting that they would constitute a compulsory medical screening that would violate the Americans with Disabilities Act. Employers also have to treat any medical data they get as a result of workplace COVID-19 screenings asa protected medical record according to the Americans with Disabilities Act (ADA). Most disclosures are prohibited, but an employer can share COVID-positive test results with public health agencies and others for safety reasons.