Congress Delays Return, Employers Advance COVID-19 Policy Proposals

Congressional leaders’ decision not to reconvene on April 20 as originally planned sets the stage for the House and Senate to continue operating on an emergency footing, largely limiting legislative action for now to measures that can pass by unanimous consent. Both chambers have been out since late March, with the exception of brief pro-forma sessions every few days, and House and Senate leaders announced this week that lawmakers won’t meet again before May 4.

Still, talks between congressional leaders and the White House are continuing on two COVID-19-related packages. Republicans and Democrats remain at odds over the first bill. Republicans want to quickly approve additional funding for the small business loan program in the recently enacted CARES Act, while Democrats want changes to that program, as well as additional money for hospitals, food assistance and state and local governments.

At the same time, lawmakers are negotiating an entirely new set of programs for a "phase 4" bill, a reference to following the three previous COVID-19 response packages that Congress has passed. Employers are urging lawmakers to include a number of health policy proposals in phase 4 legislation aimed at limiting loss of coverage and supporting the entire healthcare delivery system.

We at Mercer have rejoined the Alliance to Fight for Health Care (formerly the "Alliance to Fight the 40" which successfully led the effort to repeal the Cadillac Tax) to focus on protecting and strengthening the employer-based healthcare system. One of the Alliance’s immediate concerns is that the COVID-19 pandemic is making it difficult, if not impossible, for some employers and employees to pay for health coverage amid the economic fallout.

To that end, the Alliance is asking Congress to subsidize 90% of COBRA premiums for eligible individuals, and this week saw House Democrats release a COBRA subsidy proposal that would cover 100% of premiums for workers who are furloughed or who lose their jobs. 

Other Alliance priorities include nationally uniform paid leave requirements, payroll tax credits for health coverage to mitigate the economic pressures, and supporting policies that would allow for federal funds or loans to assist struggling companies to continue their health coverage.

Legislation to end surprise medical bills could also be included in a phase 4 package. Several committees in the current Congress have been working on legislation over the past year, but lawmakers continue to be divided over the best way to settle payment disputes between health plans and providers. Key House and Senate lawmakers are now pushing for compromise language backed by employers and health insurers that would pay out-of-network providers a benchmark rate based on median in-network rates in the area but allow for arbitration if the benchmark rate is more than $750. 

Health and Human Services Secretary Alex Azar said last week that hospitals receiving funds from the $100 billion provided for hospitals and health systems in the CARES Act will be barred from sending balance bills to patients for care related to the virus.

On the regulatory front, the American Benefits Council, of which Mercer is also a member, this week sent a letter to the Treasury Department and IRS requesting guidance on a number of key healthcare issues to help employers and employees. The requests, each of which is described in more detail in the letter, urge that employers be permitted, but not required, to:

  • Allow employees to reduce, suspend or increase their health flexible spending arrangement (FSA) contributions, even absent a change in status event. 
  • Allow employees to reduce, suspend or increase their dependent care FSA contributions, notwithstanding the substantial flexibility that currently exists under the cafeteria plan rules, to account for the possible array of fact patterns and ongoing uncertainty. 
  • Allow employees to elect into health coverage mid-year, on a pre-tax basis for themselves and their family members who previously declined coverage, even absent a change in status event. This would include flexibility for employers to determine which employees are offered the mid-year enrollment opportunity and to offer the election period at different times for different categories of employees. 
  • Provide employees with an opportunity to change their coverage election, even absent a change in status event, with the employer having the discretion to determine which coverage options would be available for election and which employees would be eligible to change their coverage options. 
  • Provide additional carryover amounts, longer grace periods, and both carryover and a grace period for health FSAs, as well as allowing terminated employees to cash-out their health FSAs. 
  • Provide, in the dependent care FSAs, carryover of unused amounts, an extension of the current grace period and the ability to cash-out unused amounts upon termination of employment. 
  • Offer employees the ability to cash out pre-tax commuter expense balances.
  • Allow employees to elect to cash out accrued but unused paid time off benefits without triggering constructive receipt concerns.

We’ll report back on how Congress and the agencies respond and will continue to work with our allies to develop and advocate for healthcare and leave policies that help employers and their employees weather the storm. 

Geoff Manville
by Geoff Manville

Principal, Mercer’s Law & Policy Group

Dorian Smith
by Dorian Smith

Partner, Mercer’s Law & Policy Group

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