Like so many others in the payroll and benefits administration sector, we began 2020 with an eye on a number of trends that we were expecting to emerge over the course of the year. Much has changed within the last few months thanks to the COVID-19 pandemic. Some of what we anticipated for 2020 will not likely come to fruition.
So, where do we stand right now? It is a mixed bag. Larger companies and multinational corporations have not been impacted as severely as most small businesses. As such, their benefits packages have remained largely intact. Small businesses, not so much.
Here are the things we think are most important to know about employee benefits for small businesses right now:
Health Insurance and Testing
COVID-19 testing was not even a consideration for health insurance providers at the start of the year. It is now. What health plans cover is a matter of federal law and individual company policies. For example, consider who pays for COVID-19 testing.
The Families First Coronavirus Response Act (FFCRA) requires health insurance plans to cover COVID-19 testing fully. Signed into law in mid-March, the FFCRA does not allow health insurance providers to require a co-pay for testing. The same is not true for COVID-19 treatment.
Co-payments for treatments are allowed under the FFCRA. How much is allocated by insurance companies for this purpose is determined on a case-by-case basis. Employees should check with their health plan administrators to find out what their treatment co-pays will be.
Continuing healthcare coverage for furloughed and laid-off workers can be a tricky proposition for employers. Generally speaking, laid-off employees are no longer eligible for employee sponsored health insurance unless they are willing to go through the COBRA system.
Where furloughed employees are concerned, it is up to health insurance providers and employers to work things out. Employers can keep furloughed workers on health insurance plans if they are willing to pay the premiums, but most plans have to be amended. That requires permission from the carrier.
Paid Leave and Disability
Employers with fewer than 500 workers are required by the FFCRA to provide up to 12 weeks of paid leave to allow workers to care for children or other dependents as a result of the pandemic. Up to 80 hours of emergency paid sick leave must also be provided to full-time employees.
Washington does not expect employers to bear the financial burden of expanded leave. To help cover the costs, employers can take advantage of tax credits. Any money spent to provide paid leave can be deducted from federal employment taxes. Amounts spent in excess of an employer's tax liabilities can be claimed from the IRS as a cash refund.
Continuing Retirement Benefits
Retirement benefits are similar to health benefits for furloughed workers inasmuch as employers can continue contributing to retirement plans. However, retirement plans do have to be amended first. It is up to employers and plan administrators to implement the right amendments to protect employee retirement accounts.
Note that continuing retirement benefits only applies to furloughed workers. Laid-off workers can leave their accounts intact, but employer contributions must cease.
Employee benefits are taking a hit just like everything else. This is an evolving situation, so understand that any of the information in this post is subject to change. We encourage clients to consult with us or another qualified professional before making any changes to benefits packages.
In the meantime, we will be here to continue assisting our clients throughout the crisis. We remain fully committed to effectively managing payroll and benefits administration in every respect.