ACA Considerations During COVID-19 Outbreak
With all that is happening right now with the COVID-19 virus, we thought it would be helpful to think through how it might affect ACA reporting and employer-sponsored plans. Here are some things to consider:
Expanded Definition of Minimum Essential Coverage
The Families First Coronavirus Response Act mandated that all medical coverage, including those offered by employers, provide COVID-19 testing at zero cost to the patient. This includes co-pays, deductibles, or co-insurance of any kind. In most cases, the patient needs a referral from a doctor prior to receiving the test in order for the coverage to apply. A referral means the patient doesn’t have to pay for the test, supplies used during the procedure, and the facility charge.
The IRS also issued guidance that the full coverage of COVID-19 testing does not impact a plan’s status as a High Deductible Health Plan, similar to the exclusions for preventive screenings.
Treatment of Furloughed Employees
As the COVID-19 emergency sends ripples through the stock markets and upends industries such as travel and hospitality, many organizations are furloughing staggering numbers of employees to protect their businesses. The Affordable Care Act may not be top of mind in these decisions, but considerations must be made to avoid costly penalties in the future.
A majority of employers use the look back measurement methodology to determine the full-time or part-time status of an employee. This results in a stability period, which usually matches the look-back period, in which the employee must be considered as full time or part time regardless of their current number of scheduled or worked hours. If an employee is in a stability period as full time and is furloughed or placed on leave, without being officially terminated, the ACA states an offer of coverage must remain until the end of the stability period. If not, the employer could face penalties if offers of coverage drops below the 95% threshold or if the employee enrolls on the marketplace and receives a premium tax credit.
Reduction of hours may result in loss of coverage which is a COBRA-qualifying event and you would need to offer COBRA to your furloughed employees. However, as long as there is no loss of coverage, a furloughed employee would have the ability to maintain their current benefits.
A furloughed employee is still considered an active employee, so the issue that remains is affordability of the offered COBRA coverage. Since most COBRA requires employees to cover 100% of the cost, this amount may not pass any of the affordability safe harbors.
Treatment of Rehired Employees Post-Pandemic
For employers who lay off and terminate employees, considerations and planning should be made if they rehire those employees after the pandemic subsides. If the break in service is less than 13 weeks (26 weeks for educational entities), then the employee must be remain in their stability period when they are rehired and, if they were in a stability period as a full time employee, offered coverage as soon as possible.
If you have questions about how to handle ACA considerations during this time, don’t hesitate to reach out us. To learn more about how to measure seasonal employees, see our blog post.
Categorized in: ACA