From the Multnomah Lawyer: MBA Health Plan Makes Accommodations in Response to COVID-19
The MBA sponsors medical, dental and vision plans for member attorneys and their employees. Many firms have had questions about coverage for employees who have been laid off or had hours reduced.
The MBA plan allows employers to change their hourly requirement making it possible for the employer to cover employees who are not working full time if the employer still wants to cover them. The MBA contracts also provide for a 90-day leave of absence, which allows employers to continue to cover their employees and pay for their coverage during that 90-day period, even if they are not actively at work. If the employer chooses not to pay for the employees’ coverage and the employee is effectively terminated, the plan would then offer COBRA coverage to those employees. The recently passed federal legislation also has a number of effects on the MBA plan. This summary was prepared by Evan Cole, a benefits consultant at Aldrich Benefits, LP.
Tax Credits for Families First Coronavirus Response Act (FFCRA)
Employers who are subject to the Families First Coronavirus Response Act (FFCRA) will receive some financial relief in the form of tax breaks. Employers who comply with the new law will qualify for a dollar-for-dollar reimbursement on all qualifying wages paid out under FFCRA via a payroll tax credit against the employer’s payroll tax liability.
Qualifying wages are defined as the benefits paid out to an employee who takes paid sick leave, or paid family leave under the FFCRA. For example, if an employee qualifies for the maximum payout amount of $15,110, meaning they took sick leave and family leave, the employer would be entitled to a credit for an equal amount. Additionally, further credits are available to employers should they continue to maintain health insurance coverage for their employees who are out on FFCRA sick or family leave. The amount that the employer pays toward the cost of that employee’s healthcare while they are out on FFCRA leave can apply toward the credit. These credits are only available for applicable benefits paid between April 1 and December 31.
Increased Benefit Flexibility
To provide employers with the financial flexibility required to offer these new benefits, the IRS has said that businesses can retain and access funds that they would, under normal circumstances, pay to the IRS in payroll tax. Before this guidance, the process required employers to deposit federal taxes along with the employer’s portion of Social Security and Medicare taxes with the IRS, and then file a quarterly payroll tax return. However, the new guidance provides significant leeway for employers and allows them to retain the amount of payroll taxes equal to the amount of qualifying FFCRA wages paid.
Frequently Asked QuestionsAre employers with fewer than 50 employees required to provide the benefits?
As of now, yes. However, the Secretary of Health and Human Services has the right to issue regulations that would exempt employers with fewer than 50 employees who determine the benefit jeopardizes the viability of the business.
If I already offer my employees two weeks sick pay or PTO, do I still have to offer them the Emergency Paid Sick Time on top of it?
This Act does not replace your existing sick pay or PTO policy, this is in addition to any benefits currently offered. Employers are not allowed to modify their existing leave benefits and policies after the enactment in an effort to avoid the new requirements.
Do employers have to pay out unused Emergency Paid Sick Time when an employee leaves the company?
The Act specifically states that employers are not required to pay out any unused Emergency Paid Sick Leave at the end of employment.
Does unused Emergency Paid Sick Time rollover to next year?
No, the benefits cease to be available at the end of this year.
Can employers require that employees give advance notice of intent to take Emergency Paid Sick Time?
No, the Act states that employees are not required to give notice prior to the first workday they plan to take Paid Sick Time. However, after the first day of benefits, employers may require the employee to follow reasonable notice procedures in order to continue paid sick time.
Can employers require employees to use up all other forms of available PTO prior to taking advantage of these new Emergency benefits?
No, employers may not mandate that employees use other available benefits prior to using the Emergency Paid Sick Time or Emergency Paid Family Leave. However, employees can, at their discretion, choose to use these other benefits prior to utilizing the new emergency benefits should they so choose.
Can employers require that an employee find a replacement to cover their scheduled hours as a condition of taking the Sick Pay?
No, the Act specifically notes that the Sick Pay cannot be conditioned on finding coverage for the hours/shifts that the employee is going to miss.
What is my total potential exposure per employee?
Based on the limits in place, the maximum exposure per employee is $15,110 ($5,110 maximum pay out available for Paid Sick Time and $10,000 maximum pay out for Paid Family Leave).
Is there any sort of support for employers?
The employers will be provided with a refundable tax credit against the employer portion of the Social Security taxes for up to 100 percent of the qualified sick pay and family leave wages paid in accordance with the Act.
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