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COVID-19 Legislation Affects Employer-Sponsored Health Plans, Addresses FMLA and Sick Leave



Families First Coronavirus Response Act, H.R. 6201

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Congress has passed, and the President has signed, legislation intended to ease the economic consequences stemming from the novel coronavirus disease (COVID-19) outbreak by expanding FMLA and sick leave available to employees and providing tax credits to employers providing the leave. The legislation also affects employer-sponsored health plans. Here are details:

  • Mandated Coverage. Group health plans and insurers offering group or individual health insurance must cover—without cost-sharing, preauthorization, or other medical management requirements—FDA-approved, in vitro diagnostic products to detect the virus that causes COVID-19. The coverage must include related services furnished during urgent care, emergency room, or in-person or telehealth provider visits that result in an order for or administration of a covered diagnostic test. This requirement, which cross-references HIPAA portability definitions and enforcement provisions, and also applies to grandfathered health plans, is effective from the date of enactment for the duration of the public health emergency declared by the Secretary of HHS.
  • FMLA Expansion. The legislation includes the Emergency Family and Medical Leave Expansion Act, which amends the FMLA to require employers with fewer than 500 employees to provide paid public health emergency leave to certain employees through December 31, 2020. The emergency leave generally is available when an employee who has been employed for at least 30 days is unable to work or telework due to a need for leave to care for a son or daughter under age 18 because a school or place of care has been closed, or a childcare provider is unavailable, due to an emergency with respect to COVID-19 that is declared by a federal, state, or local authority. The first 10 days of leave may be unpaid and then paid leave is required, calculated based on an amount not less than two-thirds of an employee’s regular rate of pay and the number of hours the employee would otherwise be normally scheduled to work, not to exceed $200 per day and $10,000 in the aggregate. Certain exemptions and special rules apply, and a tax credit may be available (see below). [EBIA Comment: No changes have been made to the FMLA’s health benefit provisions. But the additional leave rights may result in more employees taking FMLA leave, which will affect administration of group health plans. Employers should review their policies and procedures in light of the changes (e.g., new definitions and temporary timeframes).]
  • Emergency Paid Sick Time. Private employers with fewer than 500 employees, and public employers of any size, must provide 80 hours of paid sick time to full-time employees who are unable to work (or telework) for specified virus-related reasons. Part-time employees are entitled to sick time based on their average hours worked over a 2-week period. This amount is immediately available regardless of the employee’s length of employment. The maximum amounts payable vary based on the reason for absence. Employees who are (1) subject to a quarantine or isolation order, (2) advised by a health provider to self-quarantine, or (3) experiencing symptoms and seeking diagnosis, must be compensated at their regular rate, up to a maximum of $511 per day ($5,110 total). Employees caring for an individual described in category (1), (2), or (3), caring for a son or daughter whose school is closed or child care provider is unavailable, or experiencing a “substantially similar condition” specified by HHS must receive two-thirds of their regular rate, up to a maximum of $200 per day ($2,000 total). Employers cannot require employees to find a replacement worker or use other sick leave before this sick time. Employers may exclude health care providers and emergency responders, and the DOL can issue regulations exempting businesses with fewer than 50 employers. The sick leave mandate takes effect not later than 15 days after enactment and expires December 31, 2020.
  • Tax Credits. The legislation provides payroll tax credits for employers that make required sick or family and medical leave payments, as described above. The credit is increased for expenses the employer pays or incurs to provide and maintain a group health plan that are excludable from employees’ income as accident and health plan coverage and are “allocable” to these leave payments under rules to be prescribed by the Treasury Secretary. Various limitations apply—e.g., on the amount of wages and number of days taken into account—and the credit is not available to certain governmental employers.

EBIA Comment: In addition to legislation, administrative actions are likely to affect employers and their benefit plans over the coming weeks and months, at the federal, state, and local levels. Given the nature of the emergency, most of these actions will demand immediate attention. The federal government maintains numerous websites to assist businesses with COVID-19 responses. For more information about the sick time provisions, watch for an update to EBIA’s Fringe Benefits manual at Section XXII.G (“Other Laws Affecting Vacation/PTO Plan Design”). For more information about the FMLA, see EBIA’s Group Health Plan Mandates manual at Section XVII (“Family and Medical Leave Act (FMLA)”); we will also be updating our coverage to address the mandates associated with COVID-19.

Contributing Editors: EBIA Staff.

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