The coronavirus relief bill passed by the House May 15 would subsidize COBRA coverage, ease restrictions on cafeteria plans and flexible spending arrangements (FSAs), offer reinsurance for certain COVID-19 costs incurred by employer health plans, and impose new health plan mandates. The sweeping measure — the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act (HR 6800) — would also enhance the health, leave, payroll and employer financial aid programs enacted earlier. Drafted by House Democratic leaders, the bill has no chance of Senate passage but provides a blueprint for negotiations with Senate Republicans and the White House on a final package. While prospects for a compromise are uncertain, any deal could include some of the House bill’s health, leave and other workplace proposals.
The HEROES Act would fully subsidize COBRA premiums from March 2020 to February 2021 and require revised COBRA notices — both while the subsidies are available and afterward.
The legislation would provide a 100% subsidy for continuation coverage elected under COBRA or provided to furloughed employees. Individuals eligible for this assistance would pay no portion of the premium for health coverage. Employers and insurers that comply with certain reporting requirements would receive refundable tax credits equal to the premiums that individuals otherwise would have owed.
The subsidy would be available retroactively to March 1, 2020, and extend through Jan. 31, 2021. Individuals who lose their jobs, have reduced hours or are furloughed would be eligible for subsidized continuation coverage. Employers could allow subsidy-eligible individuals to switch to less-expensive coverage. Employers or group health plan administrators would have to inform assistance-eligible individuals about the availability of the subsidy and, in the case of COBRA-eligible individuals, an extended election period.
The bill calls for improved COBRA election notices to ensure qualified beneficiaries understand all of their coverage options, including the availability of public exchange plans and possible financial assistance under the Affordable Care Act. The model COBRA election notice issued by the Department of Labor (DOL) already contains some of this information, although it is not required by statute. The bill also directs the DOL to update its model COBRA general and election notices and allow an opportunity for public comment to ensure they are clear and understandable to the average participant.
The bill contains a number of provisions — many recommended by plan sponsors — that would give more flexibility to cafeteria plans, health FSAs and dependent care FSAs during the pandemic. Here are some key provisions:
New mandates. The HEROES Act includes a number of new requirements for group health plans:
Balance-billing ban for virus treatment. The bill expands and extends the financial aid to healthcare providers established in the Coronavirus Aid, Relief and Economic Security (CARES) Act (Pub. L. No. 116-136). Providers receiving these funds could not balance-bill patients for COVID-19 testing and treatment costs exceeding the cost-sharing amount that would apply for a participating provider.
Reinsurance program for employer costs. A government-run risk corridor program would reimburse employer health plans — including self-insured plans — for certain COVID-19-related costs for plan years 2020 and 2021. Under the program, if the “target amount” — generally, all employer and employee costs reduced by administrative costs — exceeds 105%, plans would be reimbursed 75% of the additional cost.
The HEROES Act would extend through Dec. 31, 2021, the emergency sick and family leave programs (and related payroll tax credits) created by the Families First Coronavirus Response Act (FFCRA) (Pub. L. No. 116-127). The bill also would:
The bill would temporarily modify through Dec. 31, 2022, the FMLA’s employee eligibility requirements for nonemergency leave, reducing the required tenure to 90 days rather than 1,250 hours worked over 12 months.
The HEROES Act would expand the CARES Act’s employee retention credit that covers 50% of eligible employee compensation, including health benefits, to a maximum of $10,000 per employee between March 12, 2020, and Jan. 1, 2021. The bill would:
The HEROES Act marks an opening bid by House Speaker Nancy Pelosi, D-CA, in advance of negotiations with the Republican-controlled Senate and the Trump administration. Senate Republicans call the bill a nonstarter, and many want to take more time to see how the nearly $3 trillion in aid already enacted is working before approving a new round of relief.
While those negotiations will be a relatively long and difficult process, political pressure for additional government aid will likely intensify over the coming months. A compromise package could come sometime this summer.