The $900 billion COVID-19 relief bill passed by Congress at the end of 2020 is robust and nuanced. It covers a lot of ground, and can be confusing to navigate. As professionals in the insurance and benefits field, we went ahead and summarized the key points most relevant to our clients and colleagues.
1. FFCRA Paid Leave
The COVID-19 pandemic continues and the vaccine is unlikely to be available on a wide-scale basis in the next several months. In light of this, the refundable payroll tax credits for emergency paid sick leave (EPSL) and extended family and medical leave (E-FMLA), which were enacted pursuant to the Families First Coronavirus Response Act, is extended through March 31, 2021. Notably, only the tax credits are extended, which means compliance with the EPSL or E-FMLA requirements is voluntary for employers after December 31, 2020.
The policy behind this may have been to incentivize employers to continue allowing employees in the middle of FFCRA leave as of January 1, 2021, to finish out, and be paid for, any remaining leave to which they would have otherwise been entitled. The tax credit is only available for leave that would otherwise satisfy the FFCRA, had it remained in effect, i.e., if employees for whom the employer provides paid leave would otherwise meet the eligibility requirements under the FFCRA and did not use the full amount of EPSL or E-FMLA leave between April 1, 2020, and December 31, 2020.
2. FSAs and DCAPs
- Employers offering a Dependent Care Assistance Program (DCAP) or health FSA may allow participants to carry over all unused DCAP and health FSA contributions or benefits remaining at the end of the 2020 plan year to the 2021 plan year.
- Employers offering a DCAP or health FSA may extend the grace period for using any benefits or contributions remaining at the end of a plan year ending in 202
0 or 2021 to 12 months after the end of the applicable plan year.
- Similar to DCAPs, employers offering a health FSA may allow participants who cease participation during the 2020 or 2021 plan year to continue to be
- reimbursed from any unused benefits through the end of the plan year (and applicable grace period) in which participation ceased. This is often referred to as a “spend down” provision when included in a traditional DCAP.
- Employers offering DCAPs may reimburse employees for dependent care expenses for children who turned 13 during the pandemic. The relief applies to plan years with open enrollments that ended on or before January 31, 2020 (e.g., calendar year 2020 plans). It also applies for the subsequent plan year (e.g., calendar year 2021 plans
) to the extent the employee has a balance at the end of the 2020 plan year after any relief adopted by the employer, such as an extended grace period or carryover. The relief allows the employer to substitute “age 14” for “age 13” for purposes of determining eligibility for reimbursement of a child’s expenses. In general, DCAP eligibility ends at age 13, except in cases of mental or physical incapacity.
- Employers offering a health FSA or DCAP may allow employees to make prospective election changes (subject to annual limitations) to their 2021 contributions without experiencing a change in status event.
3. Surprise Billing
A hot topic of late, surprise billing will be banned starting in 2022. This includes a ban on the consideration of reimbursement rates by Medicare, Medicaid, CHIP, or TRICARE, as well as a ban on “usual and customary charges” which should prevent providers from suggesting higher rates.
More specifically, healthcare consumers won’t get balance bills when they seek emergency care, are transported by air ambulance, or upon receiving nonemergency care at an in-network facility but from an out-of-network physician or laboratory. Instead, they will pay the deductibles and copays outlines in their in-network plans, and the insurer and the provider will use arbitration to come to an agreement on acceptable payments, leaving the patient out of the process. For those without insurance, the secretary of the Department of Health and Human Services will create a provider-patient bill dispute resolution process.
4. Direct Economic Relief
While not quite as generous as the last wave, this $286 billion portion of the latest stimulus bill allows for:
- Direct payments of $600 for individuals making up to $75,000 per year, and $1,200 for couples making up to $150,000 per year, as well as a $600 payment for each dependent child
- An additional $300 per week for all workers receiving unemployment benefits will be provided through March 14, 2021
- An extension of the Pandemic Unemployment Assistance (PUA) program, with expanded coverage to the self-employed, gig workers, and others with nontraditional work engagements
- The Pandemic Emergency Unemployment Compensation (PEUC) program, giving additional weeks of federally-funded unemployment benefits to individuals who exhaust their regular state benefits
- An increase in the maximum number of weeks an individual can claim benefits through state employment, the PEUC program, or the PUA program, to 50 weeks
5. Small Business Relief
As the Amazons of the world rake in revenue, small businesses have been left in a tough spot throughout the pandemic. The $325 billion piece of the bill includes the following relief for small businesses:
- Over $284 billion for first and second forgivable Paycheck Protection Program (PPP) loans
- Lending options
- Expanded PPP eligibility for 501(c(6) nonprofits
- $20 billion in grants for small businesses in low-income communities
- $3.5 billion worth of continued small business administration (SBA) relief
- Enhancements for SBA lending
- $15 billion allocated toward live venues, independent movie theaters, and cultural institutions
6. COVID-19 Testing, Treatment & Prevention
As the US grapples to keep up with the demand for testing and treatment as cases continue to surge, Congress has set aside $69 billion to address this dire situation. This section includes funding for the procurement of vaccines and therapeutics as well as for vaccine distribution. $300 million of this will be reserved for high risk and/or underserved areas. $22 billion will go to states for testing, tracing and mitigation programs. Mental health, support for healthcare providers, and COVID-19 research are all accounted for within this bucket.
As schools of all types and levels struggle with remote learning and protection from the virus, the bill includes $82 billion to assist, including allowances for states, K-12 schools, and higher education institutions that have been significantly impacted.
8. Child Care
Child care has become one of the biggest struggles for working parents throughout COVID-19. How can they mind their children at home while doing their jobs? Or, how can child care centers keep children and their families safe? As such, $10 billion has been allocated for the child care sector through the Child Care and Development Block Grant (CCDBG) program. The funds can be used to provide child care assistance to families, as well as to aid child care businesses with their new challenges. Of this, $250 million will be set aside for the Head Start providers for low-income children and families.
9. Coronavirus Relief Fund Extension
The bill includes a provision that extends the availability of funds provided to states and localities by the Coronavirus Relief Fund in the CARES Act from 12/30/20 to 12/31/21.
10. Employee Retention Tax Credit
The bill extends and expands the refundable Employee Retention Tax Credit (ERTC), part of the CARES Act, helping to keep more employees on payroll and more small businesses and nonprofits afloat.
11. Student Loans
The student loan provision of the original bill was been extended, so through the end of 2025, employers can make payments toward employees’ student loans – up to $2,500 annually – and have that amount be excluded from workers’ taxable income.
In addition, the bill expanded the lifetime learning credit, a tax break worth up to $2,000 per return can be used to offset the cost of undergrad, grad, or professional degrees.
There are also two important, miscellaneous tax issues we wanted to mention:
- You are able to deduct qualifying expenses that exceed 7.5% of adjusted gross income on your federal income tax return, as long as you itemize your return. This is now permanent.
- Workers whose payroll taxes have been deferred since September now have until 12/31/21 to pay back the government (extended from 4/30/21).
On top of our abbreviated list of must-knows, the bill also includes sections pertaining to Private Mortgage Insurance (PMI), environmental tax credits, broadband, transportation, farming and agriculture, and more. What the bill does not include is state and local aid funding, liability protection from COVID-19 lawsuits, and relief for the restaurant industry, among other areas.
About the Author
Managing Partner at Spring Consulting Group, an Alera Group Company
Karin Landry, ACI, CLTC, GBA is the Managing Partner for Spring Consulting Group. Karin has over 25 years of experience in the insurance, health care, risk financing, retirement and benefits industries. She is an internationally recognized leader in captive insurance strategy, benefits and financing. She is Past-Chairman of the Board of The Captive Insurance Company Association and a member of the ERISA Industry Committee and was recently appointed to the Board of Directors for Fallon Community Health Plan. She is also a Professor of Employee Benefits and member of the finance committee for the International Center of Captive Insurance Education part of the University of Vermont. Karin’s expertise around benefits allowed her to co-author a white paper for Business Insurance Magazine titled “Captives for Benefits: How to Use a Captive to Save Money and Enhance Benefits Coverage”, which is currently a top seller. Both Vermont and the US Virgin Islands asked Karin for input and guidance with their recent legislative changes. Prior to joining Spring, Karin was President of Watson Wyatt Insurance & Financial Services in the United States and Head of the Health & Welfare division for the eastern region.