President Trump signed the Families First Coronavirus Response Act, H.R. 6201 (FFCRA), on March 18th, 2020.
What is the Families First Coronavirus Response Act, H.R. 6201 (FFCRA)?
Act signed into law in response to the spread and effects of COVID-19. The 3 parts discussed here are:
I. Coverage for COVID-19 testing and treatment
II. Emergency Family and Medical Leave (amendment to existing FMLA)
III. Emergency Paid Sick Leave
Coverage for COVID-19 testing was made effective March 18, 2020 while the leave and paid sick time parts of the FFCRA take effect on April 1, 2020.
I. Coverage for COVID-19 Testing and Treatment
Testing for COVID-19 is included on all health plans with no cost-sharing, meaning: no copays, deductibles or coinsurance apply. This includes High Deductible Health Plans qualified for an HSA without affecting status of the HSA. Employers and employees must keep in mind that this is only for the testing. If you are admitted into a hospital after being diagnosed for example, your regular plan co-insurance and deductibles apply:
Section 101. Coverage of Testing for COVID-19. This section requires private health plans to provide coverage for COVID-19 diagnostic testing, including the cost of a provider, urgent care center and emergency room visits in order to receive testing. Coverage must be provided at no cost to the consumer.
Section 102. Waiving Cost Sharing Under the Medicare Program for Certain Visits Relating to Testing For COVID-19. This section requires Medicare Part B to cover beneficiary cost-sharing for provider visits during which a COVID-19 diagnostic test is administered or ordered. Medicare Part B currently covers the COVID-19 diagnostic test with no beneficiary cost-sharing.
II. Emergency Family and Medical Leave (E-FMLA)
The leave part of the act is an expansion of the already existing FMLA. It requires employers with less than 500 employees to provide paid leave to employees due to the public health emergency. It creates a new category of leave in relation to COVID-19.
It will be made available to employees who are unable to work or telework due to:
· Your need to care for a dependent child under the age of 18 whose school has been closed or a childcare provider is not available due to the public health emergency
How it works:
· The employee must be eligible based on the new category
· Employee must be employed for at least 30 days prior to leave
· First 10 days may be unpaid (see sick leave)
· After 10 days employer must pay employee at, and not less than 2/3 or 66.67%, of their regular rate of pay*
· E-FMLA to last 12 weeks total
· Goes into effect 4/1/20-12/31/20
*Paid leave shall not exceed $200 per day and $10,000 in the aggregate
It is important to note that this expansion does not change or modify any part of the already existing FMLA that protects jobs of employees of employers that have 50 or more.
Determining Rate of Pay
Full-Time Employees:
· Rate no less than two-thirds of the employee’s regular rate of pay (66.67%)
· Based on the number of hours the employee would otherwise be expected to work
Variable Hours:
· The average number of hours that the employee was scheduled per day over the 6-month period leading up to the leave.
· If the employee did not work 6 months, use the reasonable expectation of the employee at the time of hiring.
III. Emergency FMLA Paid Sick Time
This mandate requires that employers with fewer than 500 employees provide paid sick time to employees who are unable to work or telework due to the public health emergency. Paid sick time is made available if the employee cannot work for the following reasons:
1. Employee is subject to a Federal, State, or local quarantine or isolation order related to COVID–19.
2. Employee is advised by a health care provider to self-quarantine due to concerns related to COVID–19.
3. Employee is experiencing symptoms of COVID–19 and seeking a medical diagnosis.
4. Employee is caring for an individual who is subject to an order as described in subparagraph (1) or has been advised as described in subparagraph (2).
5. Employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the childcare provider of such son or daughter is unavailable, due to COVID–19 precautions.
6. Employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
How it Works:
Duration of Paid Sick Time- Full-time employees = 80 hours; Part-time employees = the number of hours that such employee works, on average, over a 2-week period.
Use of Personal or Sick Leave (accrued)- Can be used in the first 10 days of leave under FFRCA.
Rate of Pay-Regular rate of pay.
Employee Notice- Notice of employees’ rights to leave, must be posted in a conspicuous place. Given the current situation, we advise emailing, direct mailing or posting on informational site for all employees. For our current clients, our team will be posting on your company Ease portal as well. Notices were made available, 3/26/20.
Undue Hardship- For small businesses under 50, you may be granted an exception if the requirements would jeopardize the viability of the business.
Carryover- Paid sick time does not carry over from year to year.
Termination of Paid Sick Time- Paid sick time will terminate when the employee is able to return to work.
Other Paid Leave- Employees are not required, and the employer cannot force the employee, to use other paid leave that has been accrued.
Compensation Based on Leave Qualification
Reminder: First 10 days of leave can be unpaid, but employees can choose to supplement with any PTO or sick time.
Tax Credits for Employers
Employers who pay the qualifying leave to their employees, will be able to retain what they would normally pay to the IRS in quarterly payroll taxes. Employers will be allowed to retain the payroll taxes that include federal income taxes, employees share of Social Security and Medicare taxes for all employees. If this is not enough to cover how much the employer is paying out in leave, employer will be able to file with the IRS for accelerated payments.
Tips for Employers on Tax Credits:
1. Work closely with your payroll vendor to track any payments made under the Emergency FMLA or paid sick leave.
2. Work closely with your payroll or tax professional to determine and calculate tax credits
Other Considerations
Notice Requirements: The Secretary of Labor has released the model notice that should be placed in a conspicuous place. Again, under the current circumstances, we advise sending to employees via e-mail, direct mail or posting on an intranet site.
Enforcement: If an employer is found in violation of this mandate, they may be considered to have failed to pay minimum wages and be subject to penalties for each violation.
For more information or questions, contact Anna Dobson at Shepherd & Associates Insurance Services, Inc. anna@shepherd-insurance.com