COVID-19 Employer Playbook

Will they be able to Change Back? Yes. In the same way that childcare costs going from “something” to zero, when children return to school/childcare and costs then go from zero to something. The event of going back to school and/or childcare facilities re-opening gives cause for another dependent care election change. What about the Health FSA? Unfortunately, these change in cost rules do not apply to health FSA plans. Health FSA elections may not be changed because of a change from the expected cost upon which the employee made their election.

Special Open Enrollments

What is the Purpose? Many carriers are offering a special open enrollment period for employees who previously waived coverage (or waived coverage for their dependents). The carriers recognize that family circumstances may have changed as a result of the COVID-19 pandemic and thus are proactively offering this special open enrollment. Notably, if an employee waived off coverage in favor of a spouse’s health plan, if the spouse’s employment is terminated, there is already a HIPAA special open enrollment exception that allows for the family to elect coverage under the employee’s health plans. How Does it Work? Most carriers are offering a special open enrollment period and requesting that employers make an election as to whether they offer it to employees. The windows that carriers are allowing are all over the map. Some carriers are allowing just a one-week window while others are allowing a 60-day window for this special election period. Employers wishing to pass on the special open enrollment opportunity to employees must affirmatively respond to the carrier regarding the offer. Notification to Employees Employers offering the special open enrollment period will need to notify all eligible employees of the special offer. Importantly, if notification is not provided to eligible employees, but certain employees opt onto the plan as a result of the special OE, it could be deemed discriminatory. Are All Employees Eligible? No. Notification doesn’t actually need to be sent to all employees. Rather, notification only needs to be sent to employees who have waived off the health plan, since they are the only employees who could take advantage of the special OE. Notably, the special OE period is not an open plan change opportunity for other currently covered employees. Are Contributions Pre-tax? Unfortunately, no. Remember those strict election change rules under Section 125? Well, a special OE offered by the carrier (even in COVID-19 times) is not a defined status change event. Thus, employee contributions for newly elected coverage must be made outside of the Section 125 plan on a post-tax basis. Importantly, the employer portion of the health plan premium may be provided to the employee on a tax-free basis, so there is no need to impute income to the employee for the value of the employer portion of the premium.

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