Dear Valued Member,
These are unprecedented times for us all. As we face new and daily challenges brought on by the Coronavirus (COVID-19) pandemic, I wanted to personally reach out and let you know that Pinnacle is here for you. Our business and services are considered essential, so we will continue to be fully operational and work tirelessly to address any questions or concerns during this time.
Like many businesses, Pinnacle has transitioned most of its employees to remote work accommodations. The health and safety of our members, employees, and communities are at the forefront of our efforts to ensure a seamless transition while providing exceptional service.
Our members should expect the same level of excellence from PCMI. Our customer service team is on hand and ready to assist you, Monday through Friday, 7 a.m. to 5:30 p.m. P.T. at 800.649.9121. If you are unable to call during business hours, our automated system is available 24 hours a day, seven days a week and offers quick and convenient access to frequently requested information.
In the coming days and weeks, we will continue to actively monitor this pandemic to ensure our team is prepared and ready to support you in any way possible. I’ve never been more proud of the hard work and dedication shown by our team. We at Pinnacle consider it a privilege to be able to continue our operations, without interruption, through this trying time.
I wanted to thank everyone who has reached out in the spirit of helping others. We will get through this together, and I appreciate the strength of our members, employees and communities more than ever.
President, Pinnacle Claims Management Inc.
June 2, 2020
Dear Valued Clients,
In response to the COVID-19 outbreak and resulting National Emergency declaration, the Departments of Labor (DOL), Health and Human Services, and Internal Revenue Service (the “Departments”) issued rules and guidance that mandate extensions of certain timeframes for participants covered under group health plans and allow plans to ease restrictions on some FSA plan regulations, as explained in the following paragraphs.
As always, Pinnacle is here for you. If you have questions, please call our customer service team at 800.649.9121, or visit Pinnacle’s COVID-19 resources page here: http://www.pinnacletpa.com/Resources-COVID-19. Please use this as a resource as needed.
Extension of Group Health Benefit Plan Timeframes
The Departments recognize that plan participants may encounter problems, such as exercising rights to COBRA continuation coverage or difficulty filing or perfecting claims, and extend timeframes for certain activities. This is accomplished by excluding the “Outbreak Period” when calculating plan deadlines for the specified activities. The Outbreak Period is identified as the period beginning with the declaration of National Emergency (March 1, 2020) and ending 60 days after the National Emergency ends.
The new rules extend timelines under eight scenarios for employees, as explained below. The examples that follow each scenario assume that the National Emergency ended on April 30 and the Outbreak Period will end on July 29, 2020. The DOL and IRS have stated that the Outbreak Period may be revised based on the impact of the virus in different parts of the country.
1. HIPAA Special Enrollment Period. Under HIPAA, employees have 30 days to request enrollment in a plan following (i) the loss of other group coverage, or (i) acquisition of a new dependent. The enrollment period is extended to 60 days for employees who lose or gain eligibility under Medicaid or CHIP. The new rules extend the enrollment period by disregarding the Outbreak Period.
Example: Mary previously declined to participate in her employer-sponsored health plan. On April 1, 2020, Mary gave birth and would like to enroll herself and her child into her employer’s plan. Under the new rules, Mary may enroll as early as the child’s date of birth, but the enrollment period will extend through July 29, 2020, the 30th day after the end of the Outbreak Period.
2. COBRA Election Period. The 60-day election period for COBRA Continuation Coverage is disregarded during the Outbreak Period.
Example: Paul is laid off from his job and loses his employer-sponsored health coverage. He receives his COBRA election notice on April 1, 2020. Under the extension rules, the Outbreak Period is disregarded in the calculation of Paul’s election period, and the last day of the election period will be 60 days after June 29, 2020.
3. COBRA Payment Period. Under COBRA, a qualified beneficiary has 45 days from the date of his COBRA election to make his first premium payment. After the initial payment, premiums must be paid by the end of the 30-day grace period that begins on the first day of each month. The rules extend the payment deadlines by disregarding the Outbreak Period.
Example: Juan elected COBRA continuation coverage on February 1; his initial payment was due March 17, and his first monthly payment due on April 1. Juan missed both payments. Under the rules, the Outbreak Period is disregarded in the calculation of payment due dates, and the initial payment, as well as payments for April, May, and June are considered timely if received by July 29, 2020, 30 days after the end of the Outbreak Period.
4. COBRA Notice of Qualifying Event. COBRA requires that a participant notify the plan within 60 days of a qualifying event (such as a divorce) that would cause a dependent to lose eligibility, or a disability that would extend the maximum COBRA extension period. The rules extend the 60-day notification period by disregarding the Outbreak Period.
Example: Ella and her husband are covered under her employer’s group health plan. Their divorce was finalized on March 1 and, as a result, her husband lost eligibility for coverage under her health plan. Ella and/or her former husband have until 60 days after the end of the Outbreak Period (August 28) to notify the plan of the divorce, allowing the former husband to continue coverage under COBRA.
5. Deadline for filing medical claims. The rules extend the period in which a medical claim must be filed by disregarding the Outbreak Period.
Example: Eric receives medical treatment on April 1, 2020. His medical plan requires that claims be received within 90 days of the date the expense is incurred. Under the rules, the deadline for filing Eric’s claim is extended to 90 days after the end of the Outbreak Period, or September 27, 2020.
6. Deadline for appealing an adverse benefit determination. ERISA imposes strict deadlines in which a participant may appeal an adverse benefit determination. The new extension rules extend the period in which an appeal may be filed by disregarding the Outbreak Period.
Example: Arlene receives a denial of a medical claim on February 1, 2020 and has 180 days to appeal the determination. Twenty-eight days passed between the date of the denial and the start of the Outbreak Period, so Arlene must file her appeal within 152 days (180-28 days following February 1 to March 1) after the end of the Outbreak Period.
7. Deadline for requesting external review. Under ERISA, a participant has four months after receipt of an adverse benefit determination or notice of rescission of coverage to request an independent medical review. The rules extend this period by disregarding the Outbreak Period.
Example: Richard receives the denial of a medical claim on medical necessity grounds on April 1, 2020, and has four months to request an external review. Under the new rules, Richard must request the external review within four months of the end of the Outbreak Period.
8. Deadline to perfect request for external review. A plan participant who submits an incomplete request for external review may perfect the request within the initial four-month filing period. The rules disregard the Outbreak Period in the calculation of this date.
Example: Richard receives the denial of a medical claim on April 1 and requests an external review on April 15. On April 20, he receives notification that his external review request is incomplete. Richard may perfect his request within the initial four-month filing period. Under the rules, the filing period ends 180 days after the end of the Outbreak Period.
The rules also offer relief to group health plans by disregarding the Outbreak Period when determining the deadline for providing a COBRA election notice. Under COBRA, an employer must notify the plan administrator of a qualified beneficiary’s COBRA eligibility within 30 days of loss of coverage, and the plan administrator must then deliver the election notice within 14 days.
Example: Howard’s employer notifies the plan administrator on March 15 that Howard is a qualified beneficiary under COBRA. Under the extension rules, the plan administrator has until July 13 – 14 days after the end of the Outbreak Period – to provide the COBRA election notice to Howard.
Relaxation of Certain FSA and Cafeteria Plan Rules
The IRS recognizes that the COVID-19 crisis will likely interrupt scheduled medical procedures and appointments and, as a result, employees are more likely to have unused balances in their FSA accounts at the end of the 2020 plan year or grace period. As a result, new IRS guidelines offer employers the discretion to amend their FSA plans to temporarily extend the applicable grace period for using FSA funds. Additionally, the agency has provided employees and employers increased flexibility with respect to mid-year elections under cafeteria plans. Employers who sponsor a Section 125 plan have the option to amend their plans to take advantage of these new rules but are not required to do so. Finally, the list of FSA-eligible expenses has been expanded to include certain over-the-counter medications and products.
1. Expansion of FSA Grace Period. Employers may amend their cafeteria plans to permit employees to apply unused funds remaining in a health or dependent care FSA as of the end of a grace period ending in 2020 or plan year ending in 2020 to pay or reimburse expenses incurred through December 31, 2020. The extension of time for incurring claims is available to both cafeteria plans that have a grace period, and those that allow a carryover (prior to the new ruling, health FSAs could either adopt a grace period or provide for a carryover amount but cannot have both).
Example A: ABC Company’s 2019 plan year runs from July 1, 2019 to June 30, 2020. The company provides a health FSA with a 90-day grace period; as a result, employees may use 2019 contributions to pay for services incurred through September 30. Bob, an employee of ABC, was scheduled to have elective surgery in May, 2020; however, his surgery was postponed until October 15 and he had $1,500 remaining in his health FSA at the end of the grace period. If the company elects to amend the plan and extend the grace period, Bob may use his 2019 FSA balance to pay for his surgery, as well as any other eligible expenses incurred prior to December 31.
Example B: Acme Company provides a health FSA with a $500 carryover policy but no grace period. Its plan year runs from July 1, 2019 to June 30, 2020. Jill has a remaining balance in her health FSA for the 2019 plan year of $2,000. In October she undergoes surgery that had been postponed due to the COVID-19 crisis; her total costs are $1,900. Even though the company did not previously offer a grace period, the new rules permit Jill to be reimbursed from the health FSA for $1,900 from the $2,000 remaining in her FSA at the end of the 2019 plan year, leaving $100 unused from the 2019 plan year. Under her plan’s carryover rules, Jill is allowed to use the remaining $100 until June 30, 2021.
2. Changes to Mid-Year Elections. An employer, in its discretion, may amend one or more of its cafeteria plans to allow an employee who is otherwise eligible to make prospective election changes (including an initial election) during calendar year 2020. Plans may be amended to allow employees to prospectively:
a. make a new election for coverage, if the employee initially declined to elect employer-sponsored coverage;
b. revoke an existing election and make a new election to enroll in different plans offered by the same employer, or change from individual coverage to family coverage;
c. cancel coverage under an employer-sponsored plan, provided that the employee attests in writing the he or she is enrolled in, or immediately will enroll, in other coverage;
d. revoke or change a health FSA election, or make a new election; or
e. revoke or change a dependent care election, or make a new election.
The employer has discretion to determine the extent to which election changes are permitted.
Example: Scott is a full-time telecommuter with two small children in daycare. Scott’s company amends its dependent care FSA to allow mid-year changes to dependent care elections. Due to the COVID-19 pandemic, the child care center closes and Scott is caring for his children while he works from home and as a result, he is contributing more to his dependent care FSA than he will be able to use during the plan year. Under the new regulations, Scott may reduce his dependent care election, even though he has not experienced a change in status under IRS or plan regulations.
3. Expansion of FSA Eligible Expenses. Effective January 1, 2020, over-the-counter medicines and products have been returned to the list of expenses that are eligible for reimbursement under participants’ flexible spending accounts. Eligible over-the-counter expenses include:
a. Pain relief medications such as acetaminophen and nonsteroidal anti-inflammatory drugs (NSAIDs);
b. Cold and flu products;
c. Allergy products such as antihistamines and decongestants;
d. Heartburn medications; and
e. Menstrual products.
April 2, 2020
Dear Valued Clients,
As always, Pinnacle is here for you. If you have questions, please call our customer service team at 800.649.9121, or visit Pinnacle’s COVID-19 resources page here: http://www.pinnacletpa.com/Resources-COVID-19.
On March 13, 2020, President Trump declared a national emergency in response to the health crisis caused by COVID-19. On March 18, 2020, the President invoked the Defense Production Act to expand the nation’s ability to produce medical supplies, including ventilators and personal protective equipment. While the situation is dire, the federal and state governments are taking this matter seriously in an effort to turn the tide and flatten the curve. Below is brief summary of the government response so far. We have also included:
- A description of the new COVID-19 mandates applicable to health benefit plans;
- New employer leave law requirements, including links to federal FAQs that are being routinely updated;
- Guidance for covering furloughed employees;
- Information and resources for employers who are interested in applying for monetary relief;
- A brief description of the new laws’ business tax provisions;
- Best practices for employers to help slow the spread of COVID-19; and
- Additional federal and state resources for employers
To date, three federal laws have been passed to address the crisis and provide relief to Americans:
- The Coronavirus Preparedness and Response Supplemental Appropriations (CPRSA) Act (Phase 1)
- The Families First Coronavirus Response Act (FFCRA) (Phase 2)
- The Coronavirus Aid, Relief, and Economic Security (CARES) Act (Phase 3)
On March 6th President Trump signed the CPRSA that included $8.3 billion in emergency supplemental funds for essential federal agencies responding to the coronavirus crisis. On March 18th, the FFCRA became law and was designed to mitigate the impact on individuals by providing low income food and nutrition assistance, unemployment insurance, emergency leave, and employer tax credits to partially offset the costs of required leave. The CARES Act, signed into law by the President on March 27th, is a $2.2 trillion-dollar relief package that includes:
- $500 billion in financial assistance for large distressed businesses;
- $350 billion in low-interest loans to small businesses;
- $100 billion in financial assistance to hospitals;
- $1,200 in financial assistance for the lowest income taxpayers;
- An additional 13 weeks of unemployment compensation benefits; and
- An employee extension credit
Right now, Congressional democrats are preparing a fourth bill (Phase 4) to address the pandemic. This Phase 4 package could include more direct payments to Americans, spending on infrastructure and may be even larger than the $2.2 trillion dollar CARES Act. House Speaker Nancy Pelosi stated that she would like to see the next bill feature more money for state and local governments, increased worker protections, more assistance to hospitals, and more opportunity for family and medical leave.
We’ll go through how the new legislation will impact employees.
1. EMPLOYEE BENEFITS IMPACT
A. No Cost Screening and Testing for COVID-19
The FFCRA and CARES Act impose cost sharing restrictions on insured and self-insured group health benefit plans (including grandfathered plans) for the testing and screening of COVID-19 and the associated office visit. Insurance carriers and self-insured group health plans (even grandfathered plans) must cover the testing, screening, and associated office visit in and out-of-network.
The FFCRA requires the coverage of FDA-approved COVID-19 diagnostic testing products, including items and services furnished during a provider visit (office, telehealth, urgent care, and emergency room) to the extent those items and services relate to the furnishing or administration of the testing product or the evaluation of the individual’s need for the testing product. The mandated coverage must be provided without any cost sharing (including deductibles, copayments, and coinsurance) requirements or prior authorization or other medical management requirements.
The CARES Act expands the coverage mandated under the FFCRA and requires group health plans and health insurance issuers to cover, without cost-sharing, any qualifying coronavirus preventive service. For this purpose, a “qualifying coronavirus preventive service” means an item, service or immunization that is intended to prevent or mitigate COVID-19 and that is:
- An evidence-based item or service that has in effect a rating of ‘‘A’’ or ‘‘B’’ in the current recommendations of the U.S. Preventive Services Task Force; or
- An immunization that has in effect a recommendation from the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention with respect to the individual involved.
Under the CARES Act, a group health plan or issuer shall reimburse the provider of the diagnostic testing as follows:
- At the negotiated rate, if the health plan has a negotiated rate for such service with the provider in effect before the public health emergency was declared pursuant to Section 319 of the Public Health Service Act (prior to March 13, 2020).
- If there is not a negotiated rate, the cash price for such services as listed by the provider on a public website, or such plan or issuer may negotiate a rate with such provider for less than such cash price. Each provider of diagnostic testing for COVID-19 shall make available on a public website the cash price for such testing. Failure to comply with such internet posting may result in monetary penalties of up to $300 per day.
2. FFCRA PAID LEAVE
The FFCRA provides all American businesses with fewer than 500 employees funds to provide employees with paid leave, either for the employee’s own health needs or to care for family members. The legislation was passed to ensure that workers are not forced to choose between their paychecks and the public health measures needed to combat the virus while at the same time reimbursing businesses. The FFCRA mandates paid sick time and paid family medical leave to employees impacted by COVID-19. Employers with fewer than 500 employees will have to take immediate action to prepare to comply with the new law, which goes into effect on April 1, 2020.
The FFCRA has several components, including:
- paid family and medical leave
- paid sick time
- tax credits for paid family and medical leave and paid sick time
- unemployment insurance
- medical plan components
- several immediate public health related matters
The Wage and Hour Division of the Department of Labor has developed a series of frequently asked questions about COVID-19 and its effects on wages and hours worked under the Fair Labor Standards Act (FLSA), job-protected leave under the Family Medical Leave Act (FMLA), and paid sick leave and expanded family and medical leave under the FFCRA. You can find the Department of Labor FAQs here.
3. COVERAGE CONTINUATION DURING FURLOUGH OR MANDATED LEAVES
Most employer sponsored employee group health benefit plans contain detailed eligibility rules that condition eligibility on full-time employee status. Employers who are considering extending coverage to laid off or furloughed employees should review their benefit plans and insurance policies to determine how to treat employees or former employees who no longer qualify under the terms of the employer’s plan. Self-insured employers may have more flexibility to determine their plan’s eligibility rules; however, they should ensure that any changes to extend eligibility are agreed to by their stop loss or reinsurance carrier.
4. CARES ACT BUSINESS PROTECTION PROGRAMS
A. PAYCHECK PROTECTION PROGRAM
The CARES Act includes the Paycheck Protection Program that is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. The Small Business Administration (SBA) will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, health benefits premiums, rent, mortgage interest, or utilities. The Paycheck Protection Program will be available through June 30, 2020.
(1) Who May Apply?
This program is for any small business with less than 500 employees (including sole proprietorships, independent contractors and self-employed persons), private non-profit organization or 501(c)(19) veterans organizations affected by coronavirus/COVID-19. Businesses in certain industries may have more than 500 employees if they meet the SBA’s size standards for those industries.
Small businesses in the hospitality and food industry with more than one location could also be eligible at the store and location level if the store employs less than 500 workers. This means each store location could be eligible.
(2) How to Apply?
Employers may apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. Employers should consult with their local lender to determine whether it is participating in the program. Lenders may begin processing loan applications as soon as April 3, 2020. Employers may begin preparing applications and may download a sample form here to see the information that will be requested. To apply for a loan visit SBA.gov
(3) Loan Details and Forgiveness
The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees. Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease. Paycheck Protection Program loans may have a principal loan amount of up to $10 million (limitations apply). Loans may have a term of up to 10 years and bear interest at a rate of no more than 4% per annum (with payments to be deferred for at least 6 months and at most 1 year).
B. Economic Injury Disaster Loan and Loan Advance Program
Small business owners in all U.S. states, Washington D.C., and territories are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000.
The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing. The loan advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. Funds will be made available within three days of a successful application.
To apply for a COVID-19 Economic Injury Disaster Loan, click here.
C. SBA Debt Relief
The SBA Debt Relief program will provide a reprieve to small businesses as they overcome the challenges created by the COVID-19 health crisis.
Under this program:
- The SBA will also pay the principal and interest of new 7(a) loans issued prior to September 27, 2020.
- The SBA will pay the principal and interest of current 7(a) loans for a period of six months.
D. SBA Express Bridge Loans
The Express Bridge Loan Pilot Program allows small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 with less paperwork. These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing and can be a term loan or be used to bridge the gap while applying for a direct SBA Economic Injury Disaster loan. If a small business has an urgent need for cash while waiting for a decision and disbursement on an Economic Injury Disaster Loan, they may qualify for an SBA Express Disaster Bridge Loan.
- Up to $25,000
- Fast turnaround
- Will be repaid in full or in part by proceeds from the EIDL loan
Employers can find an Express Bridge Loan Lender by connecting with their local SBA District Office.
5. BUSINESS TAX PROVISIONS
The CARES Act provides significant business tax relief including:
- Employee Retention Credit
- Delay of Employer Payroll Taxes
- Changes to Net Operating Loss Rules
- Changes to Business Loss Limitations
- Modification of Credit for Prior Year Minimum Tax Liability of Corporations
- Changes to Business Interest Limitations
- Qualified Improvement Property
For more information on these business tax sections, please see our companion article linked here.
6. SLOW THE SPREAD OF COVID-19 GUIDANCE
The Centers for Disease Control and Prevention (CDC) has developed interim guidance for businesses and employers to respond to COVID-19 linked here. The guidance is routinely updated. Most states have issued stay at home orders, including California and Arizona (where the majority of our clients and enrollees reside). The only exceptions are for essential critical infrastructure workers. This means that most employees--to the extent possible--are working from home.
The CDC recommends the following to reduce risk of contracting COVID-19 and to slow the spread of the disease:
- Avoid contact with COVID-19 infected individuals.
- Practice responsible social distancing by avoiding large gatherings and maintain distance (approximately six feet) from others when possible.
- Wash your hands often with soap and water for at least 20 seconds. Use hand sanitizer with at least 60% alcohol if soap and water are not available.
- Avoid touching your eyes, nose, and mouth with unwashed hands.
- Cover your mouth and nose with a tissue when you cough or sneeze or use the inside of your elbow. Throw used tissues in the trash and immediately wash hands with soap and water for at least 20 seconds.
- Clean and disinfect frequently touched objects and surfaces, such as workstations, keyboards, telephones, handrails, and doorknobs. Dirty surfaces can be cleaned with soap and water prior to disinfection. To disinfect, use products that meet the EPA’s criteria for use against SARs-CoV-2 (the novel coronavirus that causes the disease COVID-19).
7. OTHER HELPFUL RESOURCES
A. Federal Agencies and State Departments of Health