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The Stacks – 1st Quarter 2021

Best Practices for Updating the Employee Handbook in a Pandemic

By Philip Qualo, J.D.

For many employers, the start of the holiday season usually brings forth the time of year to brush the dust off of the employee handbook and determine what changes are desired, and required, for the upcoming year. Although employers have generally been quick to adopt and enforce policies addressing COVID-19, the rapidly changing guidance and onslaught of personal and professional restrictions necessitate swift revisions as best practices and requirements continue to change from day to day.

In general, employers should review and revise their employee handbooks at least annually to account for changes in local, state, and federal laws and workplace safety requirements. After an unprecedented year that unleashed a pandemic on the world, however, employers and their compliance teams are scanning their employee handbooks, scratching their heads, and wondering where to begin. In finalizing our own employee handbook for a hopefully better 2021, I thought it would be helpful to share some lessons I learned on updating an employee handbook in challenging times


Avoid Non-Static COVID-19 Provisions

As updating an employee handbook multiple times within a fiscal year can be an administratively burdensome task, a best practice is to ensure all policies included or updated in the handbook are relevant, as well as static, for the duration of the applicable fiscal year. This has been simple in most years, however, in response to the COVID-19 pandemic, the federal government passed a series of comprehensive laws, with rapidly approaching expiration dates, aimed at protecting American workers by regulating group health plans and imposing new leave paid entitlements on covered employers, such as the Families First Coronavirus Response Act (FFCRA). In addition to the FFCRA, state and local laws guidance continue to be updated at an unpredictable frequency that often necessitates a quick and temporary change to workplace rules in order to comply safety requirements. For employers that sponsor self-funded plans, it is also important to keep in mind that for any newly enacted leave entitlements that continue coverage, the applicable Plan Document should be amended to reflect this continuation of coverage and communicated to the stop-loss carrier so ensure no gaps in coverage.

In order to avoid the challenge of updating and re-distributing an employee handbook multiple times within a single year, it may be helpful to limit specific references to COVID-19. For example, I chose to use terms such as “Public Health Emergency” and “Pandemic” where possible. If COVID-19 has taught us anything, it is that life is unpredictable. Now that we have collectively experienced and continue to endure this pandemic, we now know that public health emergencies and pandemics can happen to us… yes, even to us. As such, including language in an employee handbook referencing an employer’s responsibility to contain a public health emergency or pandemic would apply to COVID-19 and other critical health crisis that poses a threat to workplace safety.

For policies with an approaching expiration date, or that are likely to change frequently based on changing guidance, it may be helpful to generally reference them in the employee handbook and detail them in a separate platform or notice that can be updated and re-distributed with ease. For example, we use an intranet platform to house our most up to date COVID-19 policies. This allows for quick enhancements of relevant policies and immediate notification to employees. Although any platform accessible to all employees may be appropriate, an employer should take the additional step of distributing, announcing, or where applicable, requiring sign-off for each and every change to document compliance with notification requirements.

For example, I expanded the handbook to include language that referenced the “Direct Threat Exception” to Americans with Disabilities Act (ADA) limitations to explain my employer’s ability to temperature check and inquire about health status. In this provision, I chose to leave out the term “COVID-19” because the direct threat exception would likely apply to any other declared public health emergency that may arise. The temperature check policies, on the other hand, may not be applicable in a different type of pandemic.


So You’re Saying Not to Include Any COVID-19 Language?

Employee handbooks are more than just a collection of policies for most employers, they are a snapshot of that year, a yearbook of sorts. Although some memories are better left … not remembered…employers may one day want to reminisce on challenging year. On the other hand, as COVID-19 is likely not going anywhere as soon as we hoped for, it may be a good idea to include some static references to COVID-19. So I would not recommend pretending COVID-19 does not exist when it comes to the employee handbook.

For example, in our own employee handbook, I developed a paragraph that describes COVID-19, briefly, and details our companies commitment to follow all state, local, federal and Centers for Disease Control (CDC) guidance. As this guidance is subject to change, and has from day to day since the start, I did not include specific references to our face mask policy. Is this important? – absolutely. Is the handbook, however, the best place to house a policy that may be outdated by the time it is distributed? – probably not.

In summary, there are rarely two employee handbooks that are entirely alike in this world. There are not many rules surrounding what needs to go in one, or what needs to go out. For the most part, employee handbooks are not even legally required. It is, however, a strongly recommended best practice for an employer to maintain one and ensure appropriate policies as determined by their specific compliance needs. Therefore, employers are free to include any and every COVID-19 policy and language they desire. In minimizing the non-static language, however, employers can demonstrate compliance with all applicable rules while sparing the administrative burden involved in reconciling existing handbook provisions with the day to day changes to mandated workplace safety guidance.


COBRA Coverage and COVID-19

By: Kevin Brady, Esq.

It is an unfortunate, but well-known, fact that the COVID-19 pandemic has had a significant impact on the U.S. economy. With the unemployment rate reaching a high of 14.7% in April, it is no surprise that many hard-working Americans lost their jobs. Given that many Americans rely on those jobs for their health plan coverage, the loss of income, combined with the loss of health coverage, has been and could continue to be catastrophic for many.

On the (somewhat) bright side of things, those who lose their jobs are not always left optionless, as most individuals who lose their employer-sponsored health coverage will generally be eligible for continued coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA provides workers and their families the option to continue group health plan coverage (for a limited period of time) under certain circumstances which cause a loss in group health plan coverage. Further, the employee, rather than a combination of the employee and employer, bears the full cost of coverage when enrolled in COBRA. From the individual’s perspective, the cost alone, especially in the midst of the pandemic and the resulting economic uncertainty makes COBRA a tough sell for former employees, especially those who have other coverage options available. 

From an employer’s perspective, administering COBRA coverage effectively- and most importantly, correctly is a difficult task. Employers have strict obligations under COBRA. They must provide adequate notice of a “qualifying event” to ensure that their former employees and their dependents are offered coverage. What makes things even more complicated, is that employers who self-fund their health plan coverage actually serve as both the employer under COBRA (subject to certain obligations), and the plan administrator (subject to a distinct set of obligations) as well. This nuance only adds to the multitude of obligations and the resulting confusion that an employer must contend with. As is this case with a great many other things, those obligations have become even more difficult to understand and satisfy in the wake of the COVID-19 pandemic.

As mentioned above, COBRA provides the opportunity to continue group health plan coverage if certain criteria are satisfied. Private employers who employ 20 or more workers, are generally subject to COBRA if they offer if a group health plan. COBRA must be made available for the “covered employees” of the employer, and their dependents, if they experience what is known as a qualifying event.

The COBRA regulations provide that a qualifying event may be any of the following occurrences:

  • Voluntary or involuntary termination of the covered employee’s employment other than by reason of gross misconduct;
  • Reduction of hours of the covered employee’s employment; Divorce or legal separation of the covered employee from the employee’s spouse;
  • Death of the covered employee;
  • A dependent child ceases to be a dependent under the generally applicable requirements of the plan;
  • A covered employee becomes entitled to benefits under Medicare; and
  • An employer’s bankruptcy, but only with respect to health coverage for retirees and their families.

While the situations and occurrences which are considered qualifying events may be widely known, what is often overlooked is that the qualifying event must also cause a loss of coverage under the plan. Therefore, if plan coverage does not terminate as a result of the qualifying event, then the individual does not become eligible for an offer of COBRA coverage from the employer.

One instance where this principle is becoming more and more relevant, relates to employees who are furloughed or laid off. Given the economic uncertainty surrounding the COVID-19 pandemic, an unprecedented number of employers have turned to workforce reduction measures such as furloughs and/or layoffs to ensure business continuity.

On the surface, a layoff or furlough may appear to be a qualifying event which triggers an offer of COBRA coverage to the affected individuals. While it may very well be a qualifying event, it very much depends on the facts and circumstances of the given case. For example, many health plans choose to continue plan coverage in the event of a leave of absence, or even a temporary layoff or furlough. This approach is actually quite common. Although typically outlined within an employer handbook or policy manual, effectively outlining the instances in which plan coverage will be continued within the plan document can mitigate the risk of a potential dispute with the stop loss carrier.

In essence, the employer must review the plan document to determine whether it properly allows for continued coverage while an individual is furloughed or laid off. If the plan outlines said continuation, then the individual has not experienced a qualifying event and the employer’s obligation to offer COBRA coverage has not been triggered.

Of course, the individual may become eligible for COBRA continuation coverage if they do not ultimately return to work or if their continued plan coverage expires during the maximum coverage period of COBRA. If that is the case, the employer’s obligations would then be triggered, and the employer would be required to offer coverage in accordance with COBRA’s requirements. Fortunately for employers, there is some flexibility in the timeframe in which the offer of coverage must be made.

The Internal Revenue Service (IRS) along with the Department of Labor (DOL) issued final rules which extend a number of important benefit plan timeframes. As it relates to COBRA, plan administrators do have some flexibility as it relates to their obligation to notify the individual of COBRA coverage.

On the other hand, the rules also extend the period in which individuals can elect COBRA coverage, as well as the period of time in which an individual must pay their premiums. These extensions are sure to make administering COBRA eligibility another difficult task for the foreseeable future.

Any way you look at it, COBRA continuation coverage generally imposes a number of obligations on employers, plan administrators, and those who would enroll in COBRA coverage as well. Determining what those obligations are, how to apply them, and who may be eligible for them is no small feat even without the regulatory and economic uncertainty of the COVID-19 pandemic factored in. In order to avoid potential compliance issues, as well as mitigating the risk of reimbursement issues down the road, plan administrators should pay special attention to these COVID-19 related issues. Review the plan document to determine whether individuals furloughed and laid off are eligible to continue coverage under the plan, or alternatively under COBRA. Until the economic consequences of the pandemic dissipate, the complications and nuances associated with COBRA continuation coverage are sure to persist along with it.


Planning Ahead:  COVID-19 and Other Considerations for 2021 Health Plan Renewals

By: Jennifer M. McCormick, Esq.

As summer fades away and the leaves start to fall, many of us must start planning for 2021.  The expectations and goals we set in January of 2020 have likely required review and adaptation. As a result of COVID-19, employers encountered unprecedented hurdles. In addition to the economic costs facing employers due to this pandemic, employers need action plans to address the logistical and morale challenges of COVID-19.  While financial considerations are typically on the list of perpetual concerns, employers must now ensure they have action plans for employees needing to balance work and childcare, workplace safety, and the continually evolving regulations regarding COVID-19. Thankfully, with 2021 around the corner, employers have an amazing opportunity to boost employee morale and mitigate costs with thoughtful plan design.  Employers can (and should) use the upcoming renewal opportunity to let their health benefits shine and invite excitement for employees about their 2021 health benefits.

In planning for the upcoming benefit year, design modifications can generally be categorized into two categories: (1) regulatory changes; and (2) recommended changes.  Lingering uncertainty and future unknowns make both categories of design modifications equally important. 

Regulatory Changes 

While the list of regulatory items that must be changed may seem overwhelming, some of the changes may ultimately be welcomed by employers or employees.

For example, benefit updates for COVID-19 related services and modified rules regarding continuation coverage were likely well received by employees.  In addition to the benefits and continuation coverage provided for by The Coronavirus Aid, Relief, and Economic Security (CARES) Act and Families First Coronavirus Response Act (FFCRA), the Department of Labor (DOL) and Internal Revenue Service (IRS) issued regulations offering additional relief for participants.  Specifically, the regulations allow additional time for participants to take actions such as electing (or paying premiums for) continuation coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA) and filing an appeal of an adverse benefit determination or requesting an external review.  Relief will apply retroactively from March 30, 2020 until 60 days after the end of the national emergency.  

Relevant regulations did specify that penalties would not be imposed if plans were administered in compliance with the extended timeframes, even if contrary to the specific terms of the underlying plan document materials.  Ambiguity surrounding deadlines, however, leads to unnecessary confusion for individuals enrolled in the health plan.   To eliminate this concern, plan materials should be updated and include details regarding the extended timeframes.  Disclosure and inclusion of such information will also function to mitigate potential gaps that may arise between plan materials and stop loss policies.

In addition to the tolling of certain timeframes, employees may also welcome the updated Summary of Benefits and Coverage (SBC) templates for 2021, also requiring revision and implementation.  The SBC is intended to provide uniform and consistent information regarding available plan benefits.  While modifications to the 2021 SBC template are not extensive, they do include updates to the coverage examples and the removal of information pertaining to the individual mandate.

Regarding employers, however, certain review and revision may be needed pertaining to plan out-of-pocket maximums.  Specifically, on an annual basis the Department of Health and Human Services (HHS) determines the adjustments for the Affordable Care Act (ACA) in-network out-of-pocket maximums for non-grandfathered plans.  In addition, the IRS sets the standard for high-deductible health plans. These iterations are expected annually and should be reviewed and applied in alignment with employer intentions.   

The interesting twist on out-of-pocket maximums that employers may be contemplating (or have already addressed) is the policy change on drug manufacturer assistance calculations for non-grandfathered plans.  An employer plan is not required, but may, count toward the out-of-pocket maximum drug manufacturer assistance, coupons, or other cost reductions. This is true even if the assistance in question is available on a drug without a generic equivalent.  This update may create an opportunity for cost-savings as plan out-of-pocket maximums are reviewed; however, employers should examine whether any other state laws require consideration.

Another regulatory update seemingly well received by both employers and employees is the relief contained within IRS Notice 2020-29. This relief, while temporary until December 31, 2020, relaxed the rules for mid-year election changes offered under Section 125 cafeteria plans.  Pursuant to this guidance, employees (if the employer decides to offer this optional election, and documents the offering accordingly by way of amendment) could revoke an existing health plan election if certain factors were met.  For employees, this opportunity might be the flexibility needed to reduce or modify coverage as finances face greater and continued uncertainty. For employers, this offering might foster goodwill among employees anxious to make plan modifications as a result of less certain financial times.

Recommended Changes

Since the list of 2021 required regulatory changes may not be as extensive as in prior years, employers may want to consider modifying benefits to account for the evolving needs of their workforce.

Health benefits remain valuable during the pandemic.  Employers who consider implementation of 2021 updates that coalesce with employee needs and wants will only enhance goodwill.  For example, as part of end of year discussions, an employer should consider polling employees to identify benefits they consider absent or not robust enough.  It is possible the stress of a pandemic means more employees are desirous of holistic health options such as acupuncture or nutritional counseling. Identifying benefit enhancements that most effectively promote employee wellness and have the greatest potential to improve employee happiness and productivity is of paramount importance.

Incentivization of certain behaviors under the plan is one avenue employers might explore. It is evident that certain benefits were more heavily accessed than others during this past year. Heeding feedback regarding the needs of employees during this trying time poses an opportunity to incentivize utilization that benefits both the employer and the employee.  For example, many appointments with primary care physicians were postponed due to limited availability, discouraged, or canceled, and employees did not have access to care as they would under traditional circumstances.  An alternative, offering focused medical care for employees while promoting financial predictability (i.e. potential cost savings) for the health plan, is direct primary care.  As permissible per other plan agreements, the addition of a direct primary care benefit should be considered.  This additional benefit would create direct access for employees to connect with a physician and receive the customized, tailored care needed during these challenging times, simultaneously easing ‘access to care’ anxiety during a pandemic.

In addition to direct primary care, technology offers availability of greater connections to care via telehealth and telemedicine.  Telehealth services have been valuable as this option reduces the risk of exposure or transmission of COVID-19, while still providing the necessary virtual care. For example, telehealth has been useful for screening and accessing whether potential COVID-19 patients need to be seen in a hospital setting or care can be managed from home. Over the course of the pandemic, eased restrictions encouraged providers and patients to utilize telehealth services. Employers should revisit their benefit designs to determine whether and to what extent telehealth services are currently available to participants, and whether further modifications are necessary. By way of illustration, employers should review whether telehealth is a current standalone benefit or offered only through a specific vendor.  The availability of telehealth services should be clearly addressed and denoted within the plan materials to eliminate coverage related confusion under the health plan.

At the outset of COVID-19, many individuals feared limited supplies, supply chain disruptions, or quarantine status restrictions would impact the ability to access necessary medications.  It is very common, and for myriad reasons, however, for health plans to impose prescription refill restrictions. Limited access has the potential of leaving employees in a situation where they are without life-saving medications.  With the continued unknowns of the pandemic, employers may consider relaxing refill protocols, ensuring access to critical prescriptions.  As permissible by the relevant plan agreements, employers could allow a 90-day supply instead of a 30-day supply in certain circumstances, investigate the availability of home delivery for prescription drugs, or evaluate mail-order pharmacy services. Prescription drug design flexibility not only has the potential to safely improve employee access to medication, but also create alternative prescription options that save money for the health plan.

Employees continue to face uncertainty as it relates to COVID-19, and this likely creates additional worry, stress and anxiety.  Many employees are parents and caregivers and entering another school year with distance and remote learning, presents challenges for everyone. Pandemic related hardships and disruptions have had a negative impact on mental and behavioral health. As a result, taking care of mental and behavioral health needs is essential.  Enhanced benefits should be prioritized as employees need access to resources to address any mental and behavioral health concerns they face during these challenging times.  Employers should examine the current health plan to determine whether revised benefits are necessary to offer increased support.

Next Steps

With the end of the year rapidly approaching, employers must soon make critical decisions about employee benefit offerings.  Once solidified, a review and update of the current health plan materials is necessary to ensure these benefit modifications are described accurately.

In addition to updating plan document materials, employers must review and revise other corresponding agreements and policies to ensure seamless and gap free benefit administration. For example, the updated plan document materials should be compared against the stop loss policies, network agreements, and vendor agreements to identify (and eliminate) coverage gaps.

It may seem like an overwhelming task, but by proactively revising employee benefit materials to address these items employers can generate employee enthusiasm for the upcoming 2021 benefit year.