For those administrating employee benefits, COVID-19 has introduced many new challenges. Remaining compliant with all applicable laws and regulations is critical. Here are some of the areas for which employers should remain vigilant:
- HIPAA – As with all employee health matters, HIPAA privacy and security rules still apply during the pandemic. Because of the increase in remote working, it is important that employers take the appropriate measures to secure their information systems and network (e.g., vulnerability assessments, penetration testing, and employee training) and protect their employees’ sensitive personal health data. The HIPAA privacy policy should clearly reflect the need to adhere to all privacy rules regardless of where an employee is working.
- Health Plan Coverage – Under the Coronavirus, Aid, Relief and Economic Security Act (CARES Act), all employer plans must cover specified preventive services and vaccines. Under the Families First Coronavirus Response Act (FFCRA), group health plans must cover costs relating to diagnostic testing for COVID-19 and healthcare services such as in-person and telehealth visits, as well as urgent care centers and emergency room visits, and not require their plan members to share in certain costs such as deductibles and co-pays.
- Health Plan Coverage Continuation under COBRA – All employers must offer health plan coverage continuation under COBRA to terminated employees or employees who are subject to reduced working hours causing them to lose their health insurance.
- CARES Act Changes to Qualified Retirement Plans – Under the CARES Act, employers can expand access enabling Coronavirus-related distributions to be made from certain retirement plan accounts through December 2020. There are, however, stipulations as to the maximum amounts allowed (i.e., the lesser of up to $100,000 or the participant’s vested account balance) and withdrawal penalties won’t apply as long as the amount of the distributions are repaid and income tax due on the distributions are paid over a three-year period.
The CARES Act also increased the limit of maximum loans to be taken from a 401(k) plan from $50,000 or 50% of the participant’s vested account balance to the lesser of $100,000 or 100% of the vested account balance.
- Reducing/Freezing Defined Benefit Plan Matching Contributions – Employers can reduce or freeze their matching contributions to employees’ defined benefit plans provided that they notify plan participants and/or their beneficiaries at least 45 days in advance of the effective date of the reduction/freeze.
- Terminating Qualified Retirement Plans – Employers can also terminate their qualified retirement plans due to pandemic-related economic impacts with the caveat that upon termination, all plan participants must be fully vested in their accounts, and the employer cannot create a new 401(k) plan within 12 months of the termination with some exceptions.
- Life Insurance Conversion Notices – Employers must inform terminated employees that they have the right to convert their employer-sponsored group life insurance benefits to an individual life insurance policy. Employers who fail to provide this notice of conversion right to the terminated employee could be subject to litigation from a beneficiary and be required to pay the full life insurance benefit.
These are just some of the areas in which employers/plan sponsors need to remain in compliance. It is important that you know all of the rules and regulations and related changes, and/or rely on an experienced third party administrator of employee benefits to help facilitate compliance with existing and changing rules affecting employee benefits.
