The U.S. Department of Labor recently issued temporary regulations implementing the emergency paid sick and family leave provided under the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Here are some highlights of the regs’ impact on group health plans.
Maintenance of coverage
Employers must maintain group health plan coverage on the same terms as if an employee didn’t take paid sick or family leave and remained employed during the leave period. For instance, if an employee with family coverage takes paid sick or family leave, family coverage must be maintained during the leave.
The same group health plan benefits must be provided to the employee (and covered family members) as before the leave — including medical, surgical, hospital, dental, eye care, and mental health and substance abuse coverage. These requirements also apply to benefits provided through a supplement to a group health plan, whether provided through a health Flexible Spending Account or other cafeteria plan component.
If an employer provides a new health plan or benefits (including a new benefit package option) while an employee is on paid sick or family leave, the employee is entitled to the new or changed plan or benefits to the same extent as if he or she wasn’t on leave. This also applies if an employer changes health benefits or plans during an employee’s paid sick or family leave.
Other plan changes (for example, to premiums or deductibles) applicable to all employees also apply to employees taking leave. Employees on leave must be notified of the opportunity to change benefits or plans.
Payment of premiums
Employees participating in a group health plan who take paid sick or family leave must pay the same portion of the premium as before the leave. If premiums are adjusted, the employee must pay the adjusted employee premium amount on the same terms as other employees. The employee’s share of premiums must be paid by the method normally used during any paid leave (for instance, through a payroll deduction).
For unpaid leave, or if the pay provided by the FFCRA doesn’t cover the employee’s premiums, the regulations direct employers to existing regulations under the Family and Medical Leave Act. These prescribe options employers may use to obtain payment.
Reinstatement or termination
Employees (and their family members) who choose not to retain group health plan coverage while taking paid sick or family leave are entitled, on their return, to have coverage reinstated on the same terms as before the leave. This must be allowed without any additional requirements (for instance, without waiting periods).
Except as required by COBRA, an employer’s obligation to maintain health benefits during paid sick and family leave ends when the employment relationship would have terminated if the employee hadn’t taken the leave — for example, because the employee fails to return from leave or the employer closes.
The temporary regs are effective through December 31, 2020. Our firm can provide further details.