An in-depth view into COVID-19 and its impact on ACA Eligibility

An in-depth view into COVID-19 and its impact on ACA Eligibility

Passage of the federal Families First Coronavirus Response Act (FFCRA) at the beginning of March provides important healthcare protections for employees throughout the country who are facing job loss or uncertainty. However, these same protections may be causing a great deal of uncertainty among employers trying to determine how to best measure eligibility for health coverage under the Affordable Care Act (ACA).

In particular, two new paid sick leave provisions under the FFCRA – the expanded Family Medical Leave Act (FMLA) and the Emergency Paid Sick Leave Act – are raising questions about ACA eligibility. It’s vital that employers understand how these acts affect eligibility in order to mitigate the risk of accruing costly ACA employer responsibility fines.

First, let’s take a look at the two policies, each of which applies to organizations with 50-500 employees (with some exceptions), and begin on April 1, 2020 and end on December 31, 2020:

The expanded FMLA covers employees who are unable to work because they must care for children at home due to COVID-19 related school closures/unavailable childcare. However, unlike other FMLA leave provisions, under the expanded Act employees will be compensated for most, if not all, of their leave. Eligible employees may use vacation, personal, medical or sick leave to cover the first 10 days. After that, employers will pay employees two-thirds of their regular pay rate, multiplied by the employee’s normal hours of service in a given week. The expanded Act provides for up to 12 weeks of compensation.

The second provision, Emergency Paid Sick Leave, requires employers to provide up to 80 hours of paid sick leave to full-time employees (with caps on weekly maximums) if they are off work due to quarantine or other doctor-ordered prevention measures of COVID-19, or to care for a child.

Based on these new sick leave provisions being announced, here is a list of FAQs Health e(fx) has compiled to assist you:

How do employers measure worked hours under these provisions?
Employers should follow existing paid-time-away-from-work rules: Paid sick hours will be calculated the same as hours worked, other paid sick time taken, or paid time off taken.

Special unpaid leaves of absence will follow existing leaves of absence rules, in that protected leaves may be handled one of two ways:

      1. the protected leave period is excluded from the measurement period, or
      2. the employer may credit the employee with hours based on average hours worked, excluding the measurement period.

All employers must treat FMLA, Uniformed Services Employment and Re-employment Act (USERRA), and jury duty leaves as special – or protected – leaves of absence. Employers may elect to protect other leaves of absence and exclude leaves in the measurement period so as to not negatively impact employees’ measurement qualification for offers of coverage.

Unprotected leaves of absence are unpaid and include those not addressed by FMLA, USERRA, or jury duty and that the employer has not elected to protect (i.e., sabbaticals or extended unpaid time away from work). These periods of time are not excluded from the measurement period and may impact employees’ eligibility for offers of coverage in the subsequent stability period.

How will getting laid off impact eligibility for those who have, and have not, been enrolled?
If employees are sent home and don’t work, but remain classified as active employees, their ACA benefits eligibility will continue through the current stability period. How their measurement period is impacted will depend upon whether the employee is on a leave of absence and whether that leave is protected. If the employee is not on a leave of absence, then they will not accrue any hours, and that could impact eligibility for the next offer of coverage.

Enrolled employees who lose coverage due to termination are eligible for COBRA continuation of coverage. If an employee is hired back within 13 weeks (26 weeks for educational institutions), they must be treated as an ongoing employee and offered the group health coverage they were entitled to based on their stability period.

Can COVID-19-related university/college closings qualify as an eligible event for a dependent to enroll, off-year, into an Employer’s plan?
Yes, if a dependent loses their student medical coverage due to the closing of a university or college, they may be eligible for coverage through a parents’ (if eligible) or their own employer’s group health coverage. The applicable employer should be notified that the student has lost coverage and determine if they are eligible for coverage under the employer plan, as a qualifying event.

Will working from home impact residency for state mandates?
Under traditional group health coverage, working from home does not affect an individual’s state residency for the purposes of employer tax filing for state mandates, since employer shared responsibility reporting is typically based on where an individual employee resides, not an employer’s base of operation or office location. If, however, an employee’s tax withholding or income is earned in a new state and the employee pays taxes in the new state, employee reporting may be impacted.

How do we treat furloughed employees?
The key here is how one defines “furloughed.” If an employer generously considers a furlough as an employee on a protected leave of absence, then a furloughed employee, who has qualified for benefits, would continue to qualify for benefits for the stability period and would not experience a negative impact based upon their leave or in their benefits eligibility for the following stability period.

Note – If an employer considers furloughs protected leave, the Health e(fx) system is able to protect these hours for you, so that these employees will get credit for furloughed hours. After a period with zero hours, the Health e(fx) system automatically assigns a terminated status to employees, and clients should discuss potential system changes with their Account Manager to ensure their plan is supported. 

Another option is to continue to classify a furloughed employee as active and not on protected leave, which could affect their measured hours. Employees would accrue zero hours, since they’re not working, but they will appear in the benefits file as actively enrolled. Therefore, there would be no change in benefits for the current stability period, as well as no change in hire date or seniority. Once these employees come back to work, nothing would change. However, after a period of  time the Health e(fx) system will terminate these employees, so clients should discuss potential system changes with their Account Manager.

Note –  An employer can elect to offer the employee benefits, even if they’re not technically eligible, provided the employer does so consistently for employees who are similarly situated in that employee group. Remember, employers can always be more generous than what the ACA calls for; it all depends on the goals you’re trying to achieve. Health e(fx) can accommodate multiple arrangements.

What if we elect to change our eligibility requirements due to COVID-19 and coronavirus?
Plan documents include eligibility rules. If an employer decides to be more generous than the eligibility rules detailed in its plan documents, then the documents for the group health plan and any subsequent stop loss policy need to be updated to ensure that the group health plan administrator or insurer and the stop loss carrier cover claims.  (This could result in a huge financial impact if the stop loss claim or insured claim isn’t covered).

Note – If the employer does adjust their plan eligibility rules, then the Health e(fx) plan manager setup may also need to be updated. Be sure to discuss any plan eligibility changes with your Health e(fx) Account Manager.

Stay up-to-date with the latest information
Without a doubt, we are living in unprecedented times. At Health e(fx), we’re committed to providing you with the latest information about the rapidly changing ACA environment and how it’s affected by COVID-19. We encourage you to frequently check out our new COVID-19 resource page for the latest happenings in the federal and state legislation. We are here to help.