Trump Issues Executive Orders to Reduce Drug Costs

President Trump has issued executive orders aimed at reducing the cost of medications by tying Medicare payment for outpatient drugs to international prices, passing drug-maker rebates to patients and not middlemen, and allowing individuals to import prescription medications.

Another executive order aims to force community health centers that receive 340B drug discounts to pass discounts for insulin and injectable epinephrine on to patients.

Here’s a run-down of the orders:

Drug importation

The Executive Order on Increasing Drug Importation to Lower Prices for American Patients calls for new regulations that would:

  • Allow individual state health plans to import certain drugs.
  • Authorize the reimportation of insulin products that were made in the United States and later exported, and
  • Set up a system to grant drug importation waivers for individuals to use at authorized pharmacies.

The system that Trump is proposing is reportedly modeled after new laws that took effect in Vermont in 2018, Florida in 2019 and then Colorado and Maine last year, allowing for the importation of certain prescription drugs from Canada. 

Florida’s bill directed the state’s Agency for Health Care Administration to establish a Canadian Prescription Drug Importation Program and an International Prescription Drug Importation Program.

Vermont and Florida have already submitted proposals to the U.S. Department of Health and Human Services to import prescription drugs from Canada, as the president in recent weeks has reiterated his intention to allow states to do so.

Federal law already grants HHS the authority to allow drug imports, as long as the department’s secretary certifies the imported drugs are safe and effective and would lower costs to U.S. consumers.

HHS and the Food and Drug Administration in early August unveiled two pathways that entities could use to import drugs.

Under one pathway, HHS and the FDA would use existing rulemaking authority to allow states, pharmaceutical manufacturers and pharmacists to develop pilot programs to import drugs from Canada “that are versions of FDA-approved drugs that are manufactured consistent with the FDA approval.”

Eliminating secret deals

Another order would prohibit secret deals between drugmakers and pharmacy benefit manager (PBM) middlemen, ensuring patients directly benefit from available discounts at the pharmacy counter.

The Executive Order on Lowering Prices for Patients by Eliminating Kickbacks to Middlemen would pass drug-maker rebates to patients and allow them to apply the rebate to their cost-sharing, such as deductibles in Medicare Part D plans.

The order states that any rebate rule could not be advanced unless the HHS secretary gave public confirmation that it would not raise premiums, taxpayer spending, or out-of-pocket costs. 

In particular, the proposed rule would exclude from safe-harbor protection under the anti-kickback statute price reductions that are not applied at the point-of-sale or other remuneration that drug manufacturers provide to health plan sponsors, pharmacies, or PBMs in operating the Medicare Part D program.

It would also establish new safe harbors that would allow health plan sponsors, pharmacies, and PBMs to apply discounts at the patient’s point-of-sale in order to lower the patient’s out-of-pocket costs.

This would be a significant step in getting drug-maker discounts to patients instead of the PBMs. One of the reasons pharmaceutical prices are so high is the complex mix of payers and negotiators that often separates the consumer from the manufacturer in the drug-purchasing process. 

The result is that the prices patients see at the point of sale do not reflect the prices that their insurance companies, and PBMs hired by those companies, actually pay for medicines. Instead, PBMs negotiate significant discounts off of the list prices, sometimes up to 50% of the cost of the drug, and often the Medicare patient can never enjoy that discount.

International reference pricing

Another executive order, which hasn’t yet been published publicly, would establish an international pricing index that would set the price Medicare Part B pays for the costliest medications covered under the program to the lowest price in other economically advanced countries. 

However, Trump said his administration will hold the order until Aug. 24 because he may not implement it. He said he needs to meet with pharmaceutical executives first.

Epinephrine and insulin discounts

The Executive Order on Access to Affordable Life-saving Medications would require federally qualified health centers to pass along discounts on insulin and injectable epinephrine received from drug companies to certain low-income Americans.

Only patients with low incomes; those with high cost-sharing requirements for insulin or epinephrine; those with high, unmet deductibles; and/or those without health insurance would be eligible for the discount.

What’s next

In all, Trump issued four executive orders that will require the Centers for Medicaid and Medicare Services to draft new regulations, which would likely not be completed by the end of the year. Regulations often take months to draft and then have to be sent out for public comment before final regs are written. 

The regulations will likely only come to fruition if Trump wins the presidency for a second term, as any regulatory initiatives in mid-stream would probably otherwise be abandoned.

Preparing for Open Enrollment During the Pandemic

With the coronavirus showing no signs of slowing, health insurance is likely top of mind for your employees. Many of them will be anxious and it’s likely that they will be more engaged and interested in understanding whether their current coverage is sufficient should they be stricken by the virus.

Not only that, but due to social distancing and with many employees working remotely, employers will need to adjust their open enrollment procedures to make sure they are safe, efficient and a success for both them and their employees.

This year in particular, it’s important that you use a multi-pronged approach that keeps everyone informed and safe.

Comprehensive and simple communications

When you are informing your staff about their benefits and open enrollment procedures, make sure you keep things simple. Don’t delve into too many details that are likely to confuse them, but explain the bigger picture and direct them to other documents and information for the detail.

When explaining the benefits and procedures, don’t get bogged down in insurance jargon. Use everyday language, charts, graphs or infographics, checklists and other tools that make absorbing the information easier.

Use many communication media

Many workplaces are multi-generational and different generations prefer different modes of communication, particularly if you have employees who are working remotely due to the pandemic

To make sure you can reach all of your workforce, blast them information using a number of media. And follow up with phone calls to remote staff that don’t respond.

E-mails and e-mail newsletters

E-mails are an excellent way to communicate important information to employees, and to gather information on what they are opening, reading and forwarding.

You can inform them about open enrollment, provide them documentation on the plan offerings and inform them of upcoming web meetings and other important enrollment information.

Web meetings

Hold webinar meetings with videoconferencing to inform your staff about their benefit choices and what, if any, changes are being made to plans going into the new year.

You should focus on the main topics:  

  • Any increases in health plan premiums,
  • Plan changes like deductibles, out-of-pocket maximums, copays, and more,
  • Network changes,
  • New offerings, and
  • Resources to help your workers choose the right plan.

There will likely be many queries about COVID-19 coverage, so be prepared to answer related questions.

During these web meetings, encourage your staff to ask questions and get answers. Record the meeting for employees that are unable to make it, so they can view it on their own time.

You should require all of your staff to either participate in the actual meeting or view the meeting. Set up a virtual sign-up for them to confirm they attended and received all the information.

Offer benefit support

Not everyone is going to be able to wrap their noodle around everything you went over during the web meeting. And plan documents can sometimes be daunting and confusing to someone who is not experienced in your system or is new to the workforce. 

Additionally, some of your staff may have questions they are not comfortable asking during a group meeting and that would be more appropriately directed at a benefit counselor. This way, they can talk to someone who can guide them in choosing the right plan for them.

Don’t forget text messaging

Since most everyone has a smartphone on their person or nearby at all times these days, sending them text messages is a sure-fire way to get in front of them.

Use texting to notify staff about open enrollment dates, resources about their benefits, upcoming benefit meetings, contact resources, how to access the enrollment and benefit portal, and who to call for assistance.

Company intranet, enrollment portal

Post all of your open enrollment information on your company intranet if you have one, including links to the open enrollment portal. Every time you communicate with your staff, include the link to the open enrollment information.

This page should have all of your enrollment information, including start and end dates, links or pdfs of all plan benefit guides and plan summaries, contact information of key personal and benefit counselors, as well as all other resources they will need to choose their health plan.

The takeaway

By employing a mixture of all of the above strategies, you can conduct a safe and informative open enrollment that can help your staff choose their plan wisely and also feel comfortable about not catching COVID-19 during the process.

A Primer on Changes to 2021 Group Health Plans

While most business owners and executives have been fretting about the COVID-19 pandemic and the effects on the economy and the survival of their business, now is a good time to conduct a review of group health plans in light of changes and new rules for 2021.

Here are some of the main changes that you should consider ahead of the new year:

Out-of-pocket limits – The out-of-pocket limit amounts for 2021 are:

  • $8,550 for self-only coverage.
  • $17,100 for family coverage.

For HSA-compatible high-deductible health plans, the out-of-pocket limits for HDHPs with attached health savings accounts for 2021 are:

  • $$7,000 for self-only coverage
  • $14,000 for family coverage.

New preventative care recommendations

ACA-compliant health plans are required to cover preventative care services with no out-of-pocket costs, and new ones that become effective in 2020 and 2021 include:

  • Perinatal depression prevention.
  • HIV prevention pill for healthy people at risk.
  • Updated recommendation for prevention of BRCA 1 and 2-related cancer.
  • Updated recommendation for breast cancer: medication use to reduce risk.
  • Updated recommendation for hepatitis screening.
  • Updated recommendation for screening for unhealthy drug use in adults.

Flexible spending accounts

This year, the IRS issued a notice that increased the maximum allowable amount of unused funds at year end in FSAs that can be carried over to the next year.

The notice increases the maximum $500 carryover amount for 2020 or later years to an amount equal to 20% of the maximum health FSA salary reduction contribution for that plan year. That means the health FSA maximum carryover from a plan year starting in calendar year 2020 to a new plan year starting in calendar year 2021 is $550.

Additionally, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) allows employers to remove restrictions that funds in FSAs, health reimbursement accounts and HSAs cannot be used for over-the-counter medications.  This is not a requirement that employers relax this rule for their FSA plans, but it allows them to choose to do so.

Summary of benefits and coverage

There are new Summary of Benefits and Coverage (SBC) materials and supporting documents that must be used for all plans that incept on or after Jan. 1, 2021.

Please remember that any changes to benefits in your group plan must be reflected in the SBC plan document and summary plan description.

The takeaway

2021 is fast approaching and with all the chaos of 2020, it would be wise to get a head start on understanding changes in store for the plans you offer. This would benefit both you and your employees.

Insurers Don’t Have to Pay for Testing Returning Workers: HHS

New guidance from the Trump administration absolves insurers of the responsibility of paying for COVID-19 tests that are required for workers who are returning to the job.

The guidance, released by the departments of Health and Human Services, Labor and Treasury, means that employers will likely either have to foot the bill themselves as they screen workers during the pandemic or pass those costs on to their workers. But in states that require employers to test workers, passing testing costs on to staff is usually not an option.

There had been some confusion about who would pay for the tests after the Families First Coronavirus Response Act required insurers to cover COVID-19 tests without patient cost-sharing. The new guidance has added a new caveat to that rule: that insurers cannot require health plan enrollees to pay for the test if it is deemed “medically appropriate” by a health care provider.

“Testing conducted to screen for general workplace health and safety (such as employee “return to work” programs), for public health surveillance for SARS-CoV-2, or for any other purpose not primarily intended for individualized diagnosis or treatment of COVID-19 or another health condition, is beyond the scope of section 6001 of the [Families First Coronavirus Response Act],” the guidance states.

Resistance from advocacy groups

The guidance was met with resistance from employer and consumer groups, with the advocacy group Families USA arguing that the nation’s workers should not be saddled with additional costs during these economically uncertain times.

Employers can require employees to be tested before returning to work, but the Pacific Business Group on Health said it would be highly unusual for a large employer to require testing for employees without paying for the tests in full.

Democrats have asked the administration to withdraw the guidance, but the White House has said it won’t and that it would like to see Congress come up with a solution in its next economic stimulus package for the coronavirus pandemic.

The HHS has said that states should use the $10.25 billion that lawmakers appropriated for testing to help pay for tests of returning workers.

Insurance companies may opt to pay for such tests anyway, as a precautionary measure. America’s Health Insurance Plans, however, is calling on more government support to cover the costs, which it says could be between $6 billion and $25 billion annually.

Alternative Group Plan Funding Gets a Second Look

Watching their group health plan premiums climb higher with each passing year, some employers start looking into alternative funding strategies in hopes they can get a better handle on their employees’ health costs.

While group plans are the standard, larger employers have typically had more options for funding their group health coverage. But now even small and medium-sized employers – even companies with fewer than 100 employees – can benefit from alternative funding approaches.

There are three main types of alternative funding strategies that are available to employers:

  • Captives
  • Private exchanges
  • Full and partial self-funding.

Captives

With a captive, multiple employers pool their resources and share the risk in providing health insurance to their employees. It is essentially a self-insured pool built into a captive insurance company (an insurer that is owned by the entity that created it). The captive has staff that will administer the health plan.

Captives are also multi-year agreements, so once an employer commits to make it worth their investment, they need to stick with it for a period of time.

Group captives will often have a specific funding mechanism that is broken down into four layers:

Layer 1: The employer is responsible for the first $25,000 of any claim made by one of its employees.

Layer 2: All employers involved in the captive will share the costs of that claim if it exceeds $25,000, up to $250,000.

Layer 3: For claims that cost more than $250,000, the captive will secure reinsurance coverage to cover amounts above that level. This reinsurance is also called “stop-loss” insurance.

Layer 4: Another layer of protection known as “aggregate stop-loss” coverage protects each employer in the captive for the total claims of their employees, ranging from 115% to 125% of expected claim costs in a year.

Private exchanges

Typically, businesses using a private exchange will offer employees a credit that can be applied toward the purchase of a health plan. Employees can then access a variety of health plans through an online portal and can chose and enroll in plans that meet their needs.

Private exchanges are run by insurance carriers or consultancies, and plans on the exchange are regulated as group coverage. Employees shopping on these exchanges are not eligible for the Affordable Care Act’s tax credits or cost-sharing subsidies.

Most employers currently using private exchanges are large; therefore, most private exchange plans are regulated as large-group coverage and are not part of the ACA’s single risk pool. However, to the extent that smaller employers participate in private exchanges, they are subject to the ACA’s small-group rating regulations and risk-pool requirements.

One of the main features of private exchanges is that they enable employees to comparison-shop among multiple health insurance plans.

Self-insuring

There are many different types of self-insurance, from minimum-premium or risk-sharing arrangements to a fully self-funded plan, in which the employer is responsible for all claims.

Employers can choose from:

Retrospective premium arrangements – The insurer will credit back a portion of the unused premium to the employer (typically as a credit for the following year). This is often used in a fully insured arrangement.

Minimum premium arrangements – The employer pays fixed costs (administration charges, stop-loss insurance and network access fees) and claim costs up to a maximum liability each month.

Partial self-funding -The employer takes on more liability and pays fixed costs (administration, network access, stop-loss premiums and some fees and taxes). It’s partial self-funding because the employer will purchase individual stop-loss insurance, which caps the employer’s liability on any given claim to a certain amount, say $50,000.

That way, the employer is self-insuring most of their employees’ medical needs, but is protected in case some of those claims become catastrophic.

Full self-funding – This is like partial self-funding except that there is no stop-loss insurance and the employer is responsible for all costs that are not shared by its employees.  This kind of arrangement is usually only available to large employers.

The takeaway

These alternative funding approaches are what is available now. But the industry is innovating to making health care and insurance more affordable for all involved.

Protecting Your Firm from Employee Benefit Lawsuits

Employment practices and employee benefit-related lawsuits are on the rise – and employers have to be eternally vigilant when it comes to meeting their compliance obligations as plan sponsors.

Take the case of Visteon, a global automotive industry supplier, which outsourced its payroll and enrollment/disenrollment functions to outside plan administrators. 

But because of internal mistakes at the firms that Visteon outsourced these noncore HR functions to, some of its former employees who should have received COBRA eligibility notices after leaving the firm never received them. At first it was just a handful, but ultimately 741 co-workers signed on to a class-action lawsuit

Visteon argued in court that it was not its own mistakes that had caused the error, and that it had made a good-faith effort to hire outside experts to take over this function for them. Payroll and enrollment, after all, are not core competencies for an auto parts supplier, the company said, and it had been relying on the expertise of these other payroll companies to properly execute these functions and provide these notices.

The court didn’t buy Visteon’s argument. Rather, it held the company responsible in 2013 for poor internal tracking systems, negligence in overseeing its third party administrators, and failure to accept responsibility for its COBRA notification efforts.

That exposed them to the statutory penalty of $110 per worker per day for failure to provide notification.

In the end, for doing what tens of thousands of employers are doing nationwide – relying on third party administrators to handle payroll functions that are regulated under COBRA – Visteon was slapped with $1.8 million in penalties.

Employers are frequent lawsuit targets

As much as companies rely on their employees to generate profits, simply having them around and administering their benefit plans potentially exposes employers to significant possible liability.

According to a survey from insurer CNA, employment-related disputes are the fastest-growing category of civil lawsuits in America.

Employers face risk from the potential of lawsuits employees may bring for alleged failure to fulfill their fiduciary duties as sponsors of retirement plans under ERISA, for example, or for accidental or unauthorized leaks of personally identifiable information, which carries significant penalties under HIPAA.

Sponsors of defined contribution pension plans, such as 401(k)s, are particularly frequent targets of lawsuits for various fiduciary failures, errors or omissions.

Protecting your firm from legal action

So how can employers protect themselves against the potential costs of employee benefit-related litigation? You should:

  • Carefully monitor your plan third party administrators. Insist that they document their own compliance practices to you. Don’t take their word for it.
  • Reconcile your own lists of recently departed employees with your payroll company’s COBRA notifications.
  • Understand that your commercial general liability insurance policy usually will not cover you against liability arising from improper administration of employee benefit plans, ERISA, COBRA, USERRA, wage and hour laws, Title VII related lawsuits, and the like.
  • Consider employment practices liability insurance. This coverage will often protect against lawsuits like this and cover legal expenses, and even judgments.
  • Conduct regular reviews with advisers of investments in pension and 401(k) plans. Investments should be reviewed at least annually – and quarterly is not unusual.
  • Ensure that fees paid to 401(k) and other plan administrators are not excessive. You don’t have to go with the cheapest provider (that can be trouble, too). But if you do choose a higher-fee vendor, document why you made that decision so that you can show your reasoning in court and defend your decision-making as sound and prudent.
  • Invest in data security and HR compliance expertise.

Testing Workers for COVID-19 Raises Privacy, Discrimination Issues

Employers whose businesses continue to operate are obviously concerned about the coronavirus spreading through their worksites, so many have started testing their workers.

Recent U.S. Equal Employment Opportunity Commission guidance authorized employers to conduct COVID-19 testing and check temperatures of employees. But doing so could expose a business to a number of employee legal actions from invasion of privacy to discrimination and wage and hour charges, say employment law attorneys.

While the EEOC guidance refers to existing Americans with Disabilities Act regulations requiring that any mandatory medical test of employees be “job related and consistent with business necessity,” it left many questions unanswered.

So, if you decide to start testing workers, you will have to navigate a number of issues, such as:

  • Which tests are appropriate?
  • What are the standards for protecting workers’ privacy?
  • Should employees be paid for the time they wait in line to be tested?
  • Should you get written consent?
  • How will you ensure that the policy is applied consistently?

Employment law experts say there is often a surge in employee lawsuits when new rules or guidance are being issued, and more so with such a sensitive issue as one’s health during a pandemic. 

 The kinds of claims that employers may see as a result of employee testing include:

  • Invasion of privacy
  • Failure to protect employees’ personal health information
  • Discrimination
  • Retaliation
  • Wage and hour actions if waiting for testing takes time.

What you can do

Typically, employers would not be allowed to test a worker’s temperature for a specific disease, but these are unusual times and the threat of infection is too great.

Most lawyers are interpreting the EEOC guidance as meaning that employers may take steps to determine whether employees entering the workplace have COVID-19 because an individual with the coronavirus will pose a direct threat to the health of others. Therefore, an employer may choose to administer COVID-19 testing to employees before they enter the workplace to determine if they have the virus. 

To cover your bases, you should plan your testing in detail, including:

  • How you will be conducting tests (providing at-home test swab kits, testing upon arrival, or offsite).
  • Designate a person who is authorized to conduct tests.
  • Document how you will be administering tests.
  • Plan for how you will account for false positives or false negatives.
  • Decide how often should you be testing.
  • Budget for the testing.
  • What will you do if a worker tests positive or has a fever (if you are just checking temperatures)?
  • Don’t have exceptions to the policy or, if you do, keep them to a minimum. The more exceptions to a policy, the more likely you are to be sued.
  • The policy should comply with guidance from the Centers for Disease Control and Prevention, such as using non-contact thermometers and ensuring social distancing during the process.

Insurance

The risk of being sued when administering testing is real and you should do everything you can to make sure it’s carried out fairly and consistently. But even if you do everything by the book, you can still be sued.

During bad economic times when people are losing their jobs, employee lawsuits tend to rise and, even if you are eventually found to have acted within the confines of the law, you still have to pay the legal fees.

One type of policy that could step in to protect you is employment practices liability insurance. EPLI will cover awards and legal costs in employee-initiated lawsuits. Each policy is different though, so it’s best to consult with us first.

If you are testing or are considering testing your staff, you may want to consider it.

How to Handle Group Health Coverage for Laid-off, Furloughed Staff

As the COVID-19 pandemic wears on, many employers have had to lay off or furlough staff due to a tremendous drop-off in business. Besides the loss of income they face, these workers will often also lose their employer-sponsored health insurance.

With this in mind, many employers have been wondering if they can permit coverage to continue during the time the staff is temporarily laid off or furloughed due to the COVID-19 outbreak. If you are looking at options for keeping these employees on your group plan, you’ll need to read your policy to see if it’s possible and explore all of your options.

The options

Most group health plans will define what constitutes an eligible employee. Typical requirements include working at least 30 hours a week. The policy may also address how long an employee can be absent from work before they lose eligibility for the plan. Some policies allow coverage to continue for a furloughed employee, but not for someone who is laid off.

Another option is to approach your group health plan provider and ask them to amend policy language to allow for laid-off or furloughed staff to continue coverage. If your policy doesn’t address these workers or prohibits keeping them on the plan, you will need to approach the insurance company about this.

Due to the COVID-19 pandemic, several states have issued orders requiring or encouraging insurers to let employers make changes to their eligibility requirements.

Some states have extended grace periods to give employers and workers more time to make their premium payments if they are under financial duress. You can check with your state’s insurance department to see what accommodations are available.

If you maintain health insurance for furloughed employees, you need to decide if you will require them to continue paying for their share of the premium. Some employers allow employees to defer their contribution until they are working again.

Whatever you decide, you will need to have the appropriate documentation and administrative procedures in place.

COBRA and exchanges

Most employers who have staff they cannot keep on the group health plan, will be required to offer them and their covered beneficiaries continuation coverage through COBRA.

But COBRA can be expensive, and most workers are better off purchasing coverage on an Affordable Care Act insurance exchange. 

They can qualify for a premium tax credit if they have seen their income fall or disappear, and shop for a plan that will likely cost them less than COBRA continuation coverage. If any employee is laid off, they qualify for a special enrollment period to sign up on the exchanges.

Additionally, about a dozen states have also opened up special enrollment periods during the coronavirus crisis for people who are suddenly uninsured to sign up for coverage.

The dangers

Whatever you do, you should not try to game the system by continuing to keep laid-off or furloughed staff on the group health plan if the plan prohibits it. Some of the risks you would face include:

  • Your plan potentially losing its tax-exempt status (health benefits are usually not taxed). This would cause both you and your employees to potentially be saddled with back taxes.
  • The insurance company could deny claims for employees it determines were ineligible to participate in the plan.
  • COBRA violations, in particular for failing to send out notices to laid-off staff who are no longer eligible for the group plan.
  • A possible fiduciary breach under the Employee Retirement Income Security Act) if plan assets were used to pay for benefits of non-eligible individuals.

COVID-19 Changes to Health Plans Must Be Documented, Circulated

A number of plan sponsors have made changes to their group health plans in response to the COVID-19 pandemic, such as covering testing and sometimes treatment without any cost-sharing by the plan enrollee.

But any changes that are made must be followed up by amending the plan and communicating the changes to the enrollees.

Under the Employee Retirement Income Security Act, all health plans are required to deliver a Summary Plan Description (SPD) to enrollees to inform them of the full spectrum of coverage and their rights under the plan.

Whenever a plan sponsor makes a material modification to the terms of the plan or the information required to be in an SPD, they must amend the plan and let participants know about the change through a Summary of Material Modification (SMM).

Material changes

To qualify as “material,” a change must be important to plan enrollees. Examples include adding or eliminating a benefit, changing insurance companies, or changing rules for dependent eligibility.

Plan changes related to the COVID-19 pandemic that would have to be included in the SMM and SPD could include:

  • Offering continuing coverage to staff who would otherwise lose coverage due to a furlough, layoff or reduction of hours.
  • Changing eligibility terms to allow workers who may not have been eligible for coverage before to secure coverage (this could include part-time workers).
  • Covering a larger portion of an employee’s premium share.
  • Adding an employee assistance program to provide counseling for workers who may be undergoing unusual stress.
  • Adding telemedicine coverage.
  • Using funds in health savings accounts (HSAs) and flexible spending accounts (FSAs) to purchase over-the-counter medications.
  • Covering COVID-19 testing with no cost-sharing. 
  • Covering COVID-19 treatment without cost-sharing.

Some of the above changes are required by new laws and health plans must respond accordingly by changing their SMMs and SPDs. For example, the Families First Coronavirus Response Act requires that group health insurance and individual health insurance plans cover coronavirus testing with zero cost-sharing.

And the Coronavirus Aid, Recover and Economic Stabilization Act reverses an Affordable Care Act rule that barred policyholders from using funds in HSAs and FSAs to pay for over-the-counter medications. 

When the plan sponsor adopts these changes, it must also amend its plan summaries.

And SMMs must be delivered to plan participants within 60 days after a change has been adopted. You can deliver the SMM by mail, e-mail or posting it on your company’s intranet site. It’s recommended at this time that you opt for e-mail delivery.

One of the issues that may come up with any changes implemented in response to the COVID-19 outbreak is that some of the changes may be temporary. 

If that’s the case, the plan needs to include the termination date of any benefits that are adopted on a temporary basis.

However, if you don’t know how long the temporary benefits will be in effect, their temporary nature must be communicated in the SMM. Employers need to issue another SMM when the temporary benefit or coverage term ends.

The takeaway

This is an unusual time and unusual times call for unusual measures. It’s unusual for changes to be made to a plan in the middle of a plan year but because of the way the pandemic crash-landed, many plan sponsors have had to make changes. 

That said, you should work with us and your carrier on ensuring that the amended documents are sent out to staff.

As the employer, you should be aware of all the changes that have been made in response to COVID-19 so you can discuss them with any employees that have concerns or questions.

Some Insurers Step Up Group Health Plan Assistance

Some health insurers are helping business workers in group plans maintain employee benefits during the COVID-19 pandemic, a new survey has found. 

Social distancing and stay-at-home orders have put the hurt on hundreds of thousands of businesses across the country, which has forced them to reduce employees’ hours, furlough them or lay them off.

Besides all those employees seeing their pay drastically curtailed or disappear altogether, it also affects their employee benefits, with health coverage topping the list.

With so many people concerned they may lose coverage and business owners equally worried about their employees, some insurers are stepping up by extending coverage for affected group plan participants. 

The survey by insurance research organization LIMRA found that 42% of group health plans are automatically continuing coverage for all employees for a specified period of time, and another 22% are extending eligibility on a case-by-case basis to employees whose status has changed.

About 35% of insurance companies have adjusted reinstatement rules to make it easier for those affected by COVID-19 to regain coverage, and a similar number are extending the timeframe in which employees may elect to pay or continue coverage if separated from their employer.

Nearly all carriers in the survey said they are offering premium grace periods of 60 days on average to workers unable to pay their premiums due to COVID-19, while others plan to reassess or extend those timelines if needed.

These moves are important, considering that about 70% of all workers in the U.S. receive health coverage from their jobs, according to LIMRA.

The typical scenario

When an employee is laid off or furloughed, their hours are essentially reduced to zero, which can result in a loss of eligibility to participate in their employer’s group health plan.

Group health insurers will have written documents that outline the rules for particular plans. These rules include a definition of eligible employees, including how long an employee can be absent from work before the employee will lose eligibility for insurance coverage.

Health plan documents do not usually differentiate between an employee who is terminated and one who is laid off and one who is furloughed.

To be eligible under the typical plan’s rules, an employee must work a minimum number of hours per week (usually at least 30). If an employee is under protected leave – such as Family Medical Leave Act protection – benefits continue during leave.

In other words, an employee who is not meeting the hours requirement or is not actively at work (work from home is considered actively at work) based on being terminated, furloughed  or laid off – even temporarily – will generally have their benefits terminated. They should then receive an offer of COBRA or state continuation, unless state law does not require it due to an employer’s size.

However, if an employee continues to remain eligible for the business’s group health plan during an unpaid absence, the employer will need to determine how to handle their insurance premium payments.

The takeaway

If you are concerned about benefits continuation for laid-off, furloughed or terminated employees, you can call us to see if your health plan has made any special arrangements during the COVID-19 outbreak.

We can check to see if there is any way to continue coverage for any affected employees, and for how long and at what cost to you.

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