DOL Temporary Regulations Address Group Health Plan Coverage During COVID-19-Related Paid Leave

The DOL has issued temporary regulations implementing the emergency paid sick and family leave provided by the Families First Coronavirus Response Act (FFCRA) (see our Checkpoint article) and Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (see our Checkpoint article). The temporary regulations are effective April 1–December 31, 2020, and address many details regarding COVID-19-related paid sick and family leaves, including which employers must provide leave and the employer’s responsibility to maintain an employee’s coverage under its group health plan during leave. Here are highlights of the group health plan aspects of the regulations:

• Maintenance of Health Plan Coverage. The regulations explain that an employer must maintain group health plan coverage on the same terms as if the employee did not take the paid sick or family leave and remained continuously employed during the leave period. For instance, if an employee with family coverage takes paid sick or family leave, then family coverage must be maintained during the leave. The same group health plan benefits must be provided to the employee (and covered family members) as before the leave, including coverage for medical, surgical, hospital, dental, and eye care, and mental health and substance abuse treatment. These requirements also apply to benefits provided through a supplement to a group health plan, whether or not provided through a health FSA or other cafeteria plan component.
• Changes to Health Plan Coverage. If an employer provides a new health plan or benefits (including a new benefit package option) or changes health benefits or plans during an employee’s paid sick or family leave, the employee is entitled to the new or changed plan or benefits to the same extent as if the employee was not on leave. Other plan changes (e.g., to premiums or deductibles) that apply to all employees would also apply to employees taking leave under these provisions. Employees on leave must be notified of the opportunity to change benefits or plans.
• Paying for Coverage. Employees participating in a group health plan who take paid sick or family leave must pay the same portion of the premium as before the leave. If premiums are adjusted, the employee must pay the adjusted employee premium amount on the same terms as other employees. The employee’s share of premiums must be paid by the method normally used during any paid leave (e.g., through a payroll deduction). For unpaid leave, or if the pay provided by the FFCRA is insufficient to cover the employee’s premiums, the regulations direct employers to existing conventional FMLA regulations, which prescribe options employers may use to obtain payment.
• Reinstatement and Termination of Coverage. Employees who choose not to retain group health plan coverage while taking paid sick or family leave (and their family members) are entitled, upon returning from leave, to have coverage reinstated on the same terms as before the leave, without any additional requirements to qualify (e.g., without waiting periods). Except as required by COBRA, an employer’s obligation to maintain health benefits during paid sick and family leave ends when the employment relationship would have terminated if the employee had not taken the leave (e.g., because the employee fails to return from leave, or the employer closes its business).

EBIA Comment: The requirements in these temporary regulations for maintaining group health plan coverage during COVID-19-related paid sick and family leave generally follow the existing regulatory requirements regarding conventional FMLA leave. The lengthy series of FAQs issued by the DOL (see our Checkpoint article) also build on existing FMLA principles and generally align with these temporary regulations. The DOL continues to add and revise these FAQs. One recent addition addresses a limited nonenforcement policy under which, through April 17, 2020 (30 days after the FFCRA’s enactment), the DOL will not bring enforcement actions against employers making good faith efforts to comply. Once the nonenforcement period is over, however, the DOL will retroactively enforce violations back to the April 1, 2020, effective date if employers have not remedied their violations. For more information on how the FMLA affects group health plans, see EBIA’s Group Health Plan Mandates manual at Sections XVII.C (“Maintenance of Group Health Plan Benefits”), XVII.D (“Paying for Coverage During FMLA Leave”), and XVII.E (“Recovering Health Coverage Premiums From the Employee”). And look for our upcoming coverage of COVID-19-related issues for group health plans, including emergency childcare leave under the FMLA, in EBIA’s Group Health Plan Mandates manual.

Contributing Editors: EBIA Staff.