Employee Benefits Blog

While my blog post yesterday provided an overview of the American Rescue Plan of 2021 (ARPA), I thought it might be helpful to take a closer look and deeper dive into the employment-related provisions of the ARPA, which President Joe Biden signed into law last night before his televised address to the nation.

Along with providing financial relief to individuals, schools, businesses, and state and local governments, the law contains the following measures of which will undoubtedly be of special interest to employers and their employees:

• A subsidy for COBRA premiums, funded through employer tax credits
• Extension of employer tax credits for FFCRA employee leave voluntarily provided through Sept. 30, 2021
• Expansion of employee earnings eligible for the FFCRA tax credit
• Inclusion of testing and immunization as reasons for FFCRA leave
• Extension of $300 increase in weekly unemployment benefits
• Extension of weekly unemployment benefits for workers who otherwise wouldn’t qualify for these benefits
• Expansion of subsidy for ACA premiums
• Increase in DCAP contribution limits
• Extension and expansion of the employee retention tax credit

Let’s discuss each of these in further detail;

Almost half of Americans state they will not get vaccinated against the COVID-19 coronavirus – at least not right away. Some of this stems from the speed at which the vaccines are being developed, but also from a segment of the population that has always been suspicious of any vaccines (so-called anti-vaxxers).

The possibility that large swaths of the U.S. population may refuse or delay getting any one of the COVID-19 vaccines presents a serious challenge to the nation's health and the health of our business economy.

Employers are in a unique position to help propel vaccinations, accelerating the country towards the 75% vaccination target that has been cited by top infectious disease experts as being required to fully eliminate the need for social distancing.

Company leaders find themselves in this unique position because it's widely believed that they can, in most cases, legally compel their employees to get vaccinated, making it compulsory and a requirement for returning to work.

Now just because something can be done doesn't necessarily mean it should be done. There are persuasive arguments to be made on both sides of the issue. There are also some exceptions to consider, and some basic questions to be answered, such as where to even start among the workforce. We'll do our best to answer a few of these questions today.

Each presidential transition brings changes to the HR and employee benefits landscape. When President Donald Trump took office in 2016, he overturned or revised many of his predecessor’s federal regulations, a common trend between administrations of opposing parties. It is also something likely to continue under President elect Joe Biden.

With any legislative change - regardless of intent or outcome - employers must adapt quickly or risk penalties. This can mean redrafting internal policies, recategorizing workers, changing organizational priorities, rewriting employee handbooks, and any other HR responsibility. Essentially, the more prepared an HR team is, the easier it will be for them to succeed in a changing landscape.

Some of the policies upon which Biden campaigned may not come to fruition. Moreover, wide-sweeping workplace changes may be stifled due to congressional gridlock, though Biden will retain the ability to affect change through executive orders.

However, thinking about these issues early can help inform operational planning and prevent last-minute scrambling when change arrives. To that end, this week’s blog post discusses potential changes employers can expect during a Biden presidency. Here are nine areas to watch;

As of yesterday, Arizona’s new law legalizing recreational marijuana usage began its phased roll-out. Joining Arizona this year in passing less restrictive marijuana laws are Montana, New Jersey, and South Dakota, all of whom legalized recreational marijuana, and Mississippi, who voted in favor of legalizing medical marijuana.

While all marijuana use remains illegal under federal law, the approval of recreational/medical marijuana use at the local level in these states impacts the drug use policies and procedures employers have in place for both applicants and employees. These include how employers can approach testing and disciplinary procedures.

These states are not, of course, the first to legalize marijuana. Eleven other states previously voted in favor of recreational marijuana laws, and 22 have passed medical marijuana legislation. It is therefore helpful to use the experiences of employers in these states as an example to follow.

In this post we will discuss federal and state marijuana legislation, employer and employee rights and responsibilities, specifics about the five states enacting new legislation, and steps employers can take now to be prepared as these new laws roll out.

As of yesterday, Congress is back in session, but only for a few short weeks. If lawmakers can work together to produce another COVID-19 relief package, it's likely to be the last major piece of legislation passed before the 2020 election.

With prior stimulus measures slated to expire over the next few weeks, the economy continuing to falter as the pandemic resurges across the country, and a presidential election looming, the stakes simply couldn't be any higher.

Back in May, the House of Representatives passed its Phase 4 bill, known as the HEROES Act. The bill has been up for review since early July, though Senate Republicans, who prefer a measure with a far more tempered price tag, have been reluctant to consider it.

The House's $3.5 trillion relief bill would extend enhanced unemployment benefits, offer additional direct payments to taxpayers, and provide assistance to state and local governments, among other things.

The Senate is expected to introduce their own version of a relief bill this week that will have to be reviewed and negotiated between the two chambers before they recess in early August.

Several economic proposals impacting small and midsize businesses have been gaining consensus among lawmakers for weeks, so the final version of the Senate bill could contain elements of all of them.

Here are six things employers can likely expect from the Phase 4 bill; 

With daycare centers closed and summer camps turning kids away, employees who socked away money in their Dependent Care Flexible Savings Accounts (DCFSAs) are worried their use-it-or-lose-it account balances are going down the drain.

This concern is also shared by those who tucked away pre-tax savings in Health Care Flexible Savings Accounts (HCFSAs) to cover eligible health care expenditures. With hospitals postponing elective procedures and patients skittish about entering health care facilities, savers simply aren't racking up enough receipts to deplete their FSA balances.

Both groups can now breathe a sigh of relief, since new guidance from the IRS will allow most employees to make midyear pre-tax contribution adjustments to their Health Care and Dependent Care FSAs, which typically aren't permitted once enrollment elections are set.

Historically, the only exception to this rule was if an employee experienced a Qualifying Life Event (QLE), defined by the IRS as a marriage, divorce, job change, birth or adoption of a child, or when a dependent child reaches age 26.

In addition to allowing midyear savings account adjustments, the IRS is also permitting midyear health plan enrollment changes.

As states begin to ease stay-at-home orders, businesses that shut down to minimize the spread of COVID-19 are starting to reopen. But as some employers are finding out, not every employee is ready to get back to work.

Companies that took out loans under the Paycheck Protection Program (PPP) are worried that their staffs' reluctancy to return to work will put their PPP loans in jeopardy of having to be paid back. (Loans under the PPP are only forgivable if employers rehire the same number of full-time employees they used to calculate their PPP loan amount in the first place.)

At the same time, employees who are turning down call-backs from their employers are worried they will no longer be able to collect unemployment benefits, made significantly richer under the CARES Act coronavirus stimulus bill. The New York Times estimates workers in more than half of states are receiving more in unemployment benefits than they did from their normal salaries.

Recognizing this quandary for employers and employees, here's what the Small Business Administration (SBA) and the Department of Labor (DOL) are doing to address this.

Employers are understandably confused when it comes to trying to predict how the coronavirus epidemic will impact their group health plans. Utilization is way down for preventive, elective, and non-emergent services, while expenses directly relating to the testing and treatment of COVID-19 are way up.

Employers aren't the only ones who are perplexed; many employee benefits experts are also in disagreement as to how all this will play out. Willis Towers Watson estimates that employer health care costs might increase by 4 to 7 percent for calendar year 2020, while Gallagher is predicting just the opposite, suggesting that a 15% decrease in medical expenses is possible. Others, as you'll read about later, are suggesting the potential for a staggering 40 percent increase in premiums next year. 

Employers, most notably those with self-funded group health plans, must be mindful of these wide swings in predictions. Regardless of which way things play out, they need to take careful steps to ensure the financial viability of their health plans during this crisis.

So how can employers forecast and prepare for these shifts in cost? It's especially difficult because the impacts of this pandemic are highly dependent on the geographic, demographic, and economic risks which impact every employer quite differently.

Here are some steps self-funded employers should take, along with some predictions on what might happen to various cost-drivers of medical plans.

Americans are suffering from "cabin fever." That's how both New York Governor Andrew Cuomo and President Trump described the American psyche this past weekend, with much of the country growing weary of spending so much time at home. President Trump went even further when he sent out Tweets encouraging citizens of three states to push for more immediate reopenings than planned.

Governors of those states, Minnesota, Michigan, and Virginia, were left confused, having been told just days earlier by the President that the decision to reopen would be left up to them, though just days prior they were told the opposite by the President, who claimed the decision to reopen the country rested solely with him.

Governors are understandably feeling a bit whipsawed by this flip-flopping. Still, it's fair to say that there isn't a governor across the country who isn't eager to ease restrictions that have crippled state economies. The vast majority of Governors, however, are balancing their decisions to reopen with local public health concerns and the White House's very own Guidelines for Opening Up America.

Reopening Means Renewed Opportunities for The Virus to Spread

American workers are also anxious to get back to work, and business owners are desperate to see the wheels of commerce turn again. But the fact of the matter is this - businesses are going to reopen before there is widespread testing for COVID-19, much less general availability of antibody testing, which will indicate if an employee was previously infected and has now mounted an immune response to the disease.

This is to say nothing of the 12-to-18 month roadmap to developing an actual vaccine for the virus, nor the manpower required to do meaningful contact tracking. This means that the coronavirus will have renewed opportunities to spread as workers return to the job.

Without Formal Guidance, Businesses Are Essentially Winging It

Without common and well-defined safety procedures for reopening, businesses are implementing ad hoc procedures with vastly mixed results and constant changes. OSHA is stressing that its guidance isn't regulation, but rather advisory.

Many frustrated business leaders are looking to "essential businesses" that never shut down for guidance, while others are looking for inspiration from companies in overseas markets where the curve of the pandemic subsided weeks ago.

So what should employers do to prepare for reopening? What actions can they take to make workplaces safe? What steps can they take to test workers and keep them healthy?

Here are some suggestions;

With funds reportedly running dry overnight in the $350 billion Paycheck Protection Program, it was with great trepidation that I read an article in the Wall Street Journal this morning suggesting that a second round of coronavirus-related layoffs is already underway, and that very few industries will be spared this time around.

This prediction was further bolstered when the Labor Department announced, just a few hours ago, that 5.24 million more weekly jobless claims were filed last week, exceeding the 5 million expected from most economists. This brings total unemployment claims to just over 22 million, virtually wiping out ten years of spectacular U.S job growth in less than a month. 

It would be an understatement to say that that the damage to the U.S labor market has been profound. And economists say there's more to come. But there's also been considerable discussion recently about markets "opening back up", perhaps as early as the end of this month.

So which industries are next to be hit, can this be avoided, and how long might it take for things to bounce back once we return to what is sure to be a "new normal"?