Medicare and Employers with Less than 20 Employees/COBRA Pit-Fall

When employees reach age 65 they have decisions to make regarding Medicare.  These decisions could have serious consequences.

Employers with less than 20 employees

Employees participating in the company health insurance MUST enroll in Medicare Part B when turning 65. In groups with less than 20 employees the government considers Medicare the employee’s primary insurance and the employer provided insurance as secondary coverage.

The employer can subsidize the cost of an employee’s Medicare Part B and Medicare subsidy. This has typically proven to be less expensive than the insurance companies individual group health rate.

How can COBRA trip up Medicare enrollment?

Employees older than age 65 who deferred Medicare enrollment typically receive an eight-month special enrollment period, starting the month after employment ends or their group health insurance ends, whichever happens first. Employees should beware that if after ending employment they elect to use COBRA for their insurance for more than eight months (and COBRA coverage is generally available for up to 18 months), then the penalties for missing the special enrollment period and enrolling late are significant and, in the form of higher premiums, continuous.

Supreme Court Blocks Vaccine-or-Testing Rule

 The U.S. Supreme Court today blocked the Occupational Safety and Health Administration's (OSHA’s) emergency temporary standard requiring businesses with at least 100 employees to ensure workers are vaccinated against the coronavirus or wear masks and undergo weekly COVID-19 testing. But it allowed the federal government to require COVID-19 vaccination for health care workers at Medicare- and Medicaid-certified providers and suppliers.

The first decision criticized OSHA’s rule as a “blunt instrument” that “draws no distinctions based on industry or risk of exposure to COVID-19.” It also called the rule a “significant encroachment into the lives—and health—of a vast number of employees.”

In the second decision, the court noted that “health care workers around the country are ordinarily required to be vaccinated for diseases.” The Occupational Safety and Health Act does not plainly authorize the rule, the court stated.

Shrm 1-13-22 

Prepare for Upcoming ACA Reporting Deadlines in 2022

 

Update: IRS Offers Extension for Delivering Employee Forms The IRS, after initially saying there would be no automatic deadline extension for delivering Affordable Care Act (ACA) 1095 reporting forms to employees at the start of 2022, has now proposed a permanent, automatic 30-day extension, until March 2, for furnishing employee forms. The proposal says employers and insurers may take advantage of the extension for 2021 reporting forms before the rule is finalized. The proposal does not change the due dates for filing these forms with the IRS.

Employers should ensure that they and their service providers are prepared to furnish health care reporting forms to employees and file these forms with the IRS in this first quarter of 2022 as required under the Affordable Care Act (ACA), as the IRS will no longer grant penalty relief upon showing good-faith efforts to comply.

The ACA requires applicable large employers (ALEs)—employers that during the prior year had 50 or more full-time employees or the equivalent when part-time employees' hours are combined—to submit reporting forms to the IRS and to distribute these forms to employees by the following deadlines:

ACA Requirement	Deadline
1095 forms delivered to employees	Jan. 31, 2022 (proposed automatic extension to March 2)
Paper filing with IRS*	Feb. 28, 2022
Electronic filing with IRS	March 31, 2022

*Employers that file 250 or more information returns with the IRS must file the returns electronically.

Source: IRS.

Biden Administration’s Vaccine Policy for Health Care Workers Blocked Nationwide

 On Nov. 30, a federal district court in Louisiana ruled that the directive for health care workers is temporarily blocked nationwide, following a decision on Nov. 29 from a federal district court in Missouri that blocked the Biden administration's vaccine directive for health care workers in 10 states. 

However, also on Nov. 29, Supreme Court Justice Stephen Breyer denied a request from workers for a Massachusetts hospital system to suspend the system's COVID-19 vaccine requirement. We've gathered articles on the news from SHRM Online and other outlets.

States Argued the Directive Would Lead to Staffing Shortages

U.S. District Court Judge Matthew Schelp in Missouri appeared persuaded by the 10 states' argument that the mandate would lead to staffing shortages. "The scale falls clearly in favor of health care facilities operating with some unvaccinated employees, staff, trainees, students, volunteers and contractors, rather than the swift, irremediable impact of requiring health care facilities to choose between two undesirable choices—providing substandard care or providing no health care at all," Schelp wrote in a 32-page order.

(The Hill)

Federal Government Overreach?

In a lawsuit filed Nov. 10 against the Centers for Medicare & Medicaid Services (CMS), 10 states—Alaska, Arkansas, Iowa, Kansas, Missouri, Nebraska, New Hampshire, North Dakota, South Dakota and Wyoming—claimed that the federal government has overreached its authority to dictate what happens in their states. "This case illustrates why the police power over compulsory vaccination has always been the province of—and still properly belongs to—the states," they said in the lawsuit. 

(The New York Times) 

Judge: Congressional Approval Needed to Require Vaccinations

The CMS did not get approval from Congress to require vaccinations for health care workers, Schelp wrote. He asserted this was necessary given the directive's "vast economic and political significance." He also noted the rules were issued without a standard period for public comment. 

"CMS seeks to overtake an area of traditional state authority by imposing an unprecedented demand to federally dictate the private medical decisions of millions of Americans," the judge wrote. "Such action challenges traditional notions of federalism."

(Springfield News-Leader)

Health Care Providers Preparing for Staff Shortages

Some hospitals, nursing homes and other health care providers are preparing to operate without up to one-third of their staff at the start of next year if those workers don't comply with the federal vaccine directive.

(The Wall Street Journal)

Louisiana District Court Judge's Opinion

"There is no question that mandating a vaccine to 10.3 million health care workers is something that should be done by Congress, not a government agency," Judge Terry Doughty of the U.S. District Court for the Western District of Louisiana wrote. He added, "It is not clear that even an act of Congress mandating a vaccine would be constitutional."

(The New York Times)

By Allen Smith, J.D.

November 30, 2021

Eligible Employers Have More Time to Apply for PPP Loans

Employers that need help covering payroll costs during the pandemic will have an additional 60 days to file a Paycheck Protection Program (PPP) application under a bill President Joe Biden signed into law on March 30.

The application period was set to close on March 31, but the PPP Extension Act of 2021 gives eligible employers until May 31 to apply.

The PPP is designed to help struggling businesses with 500 or fewer employees keep workers employed during the COVID-19 crisis by providing loans that are forgivable if certain criteria are met. The program aims to "provide a direct incentive for small businesses to keep their workers on payroll," according to the U.S. Small Business Administration (SBA), which oversees the program.

Employers should note that the American Rescue Plan Act (ARPA), which was signed into law on March 11, added $7.25 billion to the PPP and expanded the program to cover more nonprofits and digital media companies.

Michael Mahoney, an attorney with Ogletree Deakins in Morristown, N.J., said the intent behind ARPA is to expand eligibility and enable access to loans for businesses that continue to be severely impacted by the COVID-19 pandemic.

ARPA "also affords some recipients of Shuttered Venue Operator [SVO] grants eligibility for PPP loans, and on a more technical note, makes changes to payroll cost exclusions," explained William Eck and Stanley Jutkowitz, attorneys with Seyfarth Shaw in Washington, D.C.

Expanded Coverage

"The American Rescue Plan Act expands the types of tax-exempt organizations eligible for PPP loans," Eck and Jutkowitz noted. Under the act, all types of tax-exempt organizations are eligible for PPP loans, except certain social-welfare organizations, such as homeowners' associations. Tax-exempt organizations are subject to size and lobbying limitations. Depending on the organization type, the size limit is 300 or 500 employees per physical location. ARPA also extended eligibility for PPP loans to certain internet news publishers.

The act revised prior legislation to allow businesses that receive a PPP loan after Dec. 27, 2020, to apply for an SVO grant if conditions are met. SVO grants are also administered by the SBA and apply to small theaters, museums, live venue operators and some additional businesses.

"Specifically, if a PPP borrower receives a first draw or second draw PPP loan after Dec. 27, 2020, the amount of any subsequently approved SVO grant will be reduced by the amount of the first draw or second draw PPP loan," Eck and Jutkowitz said. "If a borrower receives both a first draw and second draw PPP loan after Dec. 27, 2020, the amount of any subsequently approved SVO grant will be reduced by the combined amount of both PPP loans."

Mahoney noted that ARPA focused on providing funding to smaller businesses that had not previously received relief. "This includes the lifting of an eligibility bar on small-business owners convicted of non-fraud felonies."

Loan Eligibility

Most businesses are eligible for a first loan if they employ 500 or fewer employees. However, businesses that employ more than 500 workers may be eligible if they meet the SBA's size standards for their industry.

Employers may be eligible for a second draw if they: 

Have no more than 300 employees.

Received a first draw PPP loan and used the full amount only for authorized uses.

Can show at least a 25 percent reduction in gross receipts between comparable quarters in 2019 and 2020.

Patrick Dennison, an attorney with Fisher Phillips in Pittsburgh, noted that the latest FAQs make clear that applicants may not use the SBA's established size standards or the alternative size standard to qualify for a second draw PPP loan, though there are a few, narrow exceptions for specific business types. 

"In general, the size eligibility requirement for Second Draw PPP Loans are narrower than the size eligibility requirement for First Draw PPP Loans," the SBA said. "With some exceptions, an applicant is eligible for a Second Draw PPP Loan only if it, together with its affiliates (if applicable), employs no more than 300 employees."

Loan Forgiveness

The covered period for loan forgiveness begins on the date the loan was originally disbursed and ends on a date selected by the borrower that is at least eight weeks—and not more than 24 weeks—after the date of loan disbursement, he explained.

Employers can apply for loan forgiveness if the following criteria are met during the covered period:

Employee headcount and pay levels are maintained.

Loan funds are spent on payroll costs and other eligible expenses.

At least 60 percent of the funds are spent on payroll costs.

For the second draw, employee headcount and compensation levels must be maintained in the same manner as required for the first draw.

First draw and second draw PPP loans "can be used to help fund payroll costs, including benefits, and may also be used to pay for mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations," according to the SBA. Some payroll expenses are excluded, such as federal employment taxes and payments to independent contractors.

Mahoney recommended that businesses start compiling the information needed to submit a loan forgiveness application during the covered period. "This will streamline loan forgiveness and ensure that the business is able to make informed business decisions over the course of its loan."

Employers should carefully review information on the SBA and Treasury Department websites. "The most common mistake employers make concerning PPP loans is failing to keep up with the changes in rules or guidance," Dennison noted.

Excerpt for SHRM article dates 3-31-21

New Covid Legislation to provide COBRA subsidies

One of the more pertinent provisions in ARPA is the impact it has on COBRA subsidies moving forward. The legislation offers federal subsidies for COBRA premiums at 100 percent coverage. These subsidies apply from April 1 to September 30, but they are not retroactive.

Organizations will be required to cover the monthly premium expense but will be able to reimburse these expenses through a quarterly credit against payroll taxes. If the overall amount an employer pays for subsidized coverage is greater than its quarterly tax liability, it may claim a refund. One major component of this subsidization that sets it apart from a normal COBRA-election period is that it allows qualified individuals to make a prospective COBRA election for the period beginning April 1 without requiring payment of premiums retroactive to the original loss of coverage.

In regards to eligibility, any employee who lost health coverage for qualifying reasons between November 1, 2019, and September 31, 2021, could take advantage of COBRA subsidies. More specifically, these subsidies will be available to any previously covered employee or family member who may have lost coverage due to involuntary termination or reduction of hours and are still within their 18-month eligibility period. Any individual who loses their job from now until September will be able to instantly elect to stay on their employer’s health plan. However, as previously mentioned, an individual is only eligible if their termination was involuntary. It is also available to those who did not elect COBRA when initially eligible, or anyone who elected but subsequently dropped coverage. 

Subsidized coverage will terminate if the qualified individual exhausts the 18-month COBRA period prior to September 30. It could also end if the individual becomes eligible for coverage under another group health plan during the subsidy period or becomes eligible for Medicare. Additionally, since COBRA-election deadlines were already extended as a result of the pandemic, many individuals are still within their original COBRA-election periods. 

Those who are eligible under these parameters can sign up during a 60-day SEP beginning April 1. Plan administrators will be required to amend existing COBRA notices and share a separate document with forms necessary for the employee to establish eligibility, but they must act quickly due to the relatively short timeframe. For efficacy’s sake, organizations should begin identifying potentially eligible employees as soon as possible.

Several details of the rollout of this will be decided in regulatory guidance from the relevant federal agencies. We anticipate this federal guidance to include precisely how to set up these provisions, likely prior to the implementation date of April 1. Specifically, the Treasury Department may permit an advance credit for employers, while the Department of Labor is expected to issue model COBRA notices addressing the subsidy.  

Excerpt from NAHU Article dated March 12, 2021

Sign-ups for Biden's Obamacare special enrollment period nearly triple

 More than 206,000 people signed up for Affordable Care Act policies on the federal exchange in the first two weeks of the special enrollment period ordered by President Joe Biden, federal data released Wednesday shows.

Uninsured Americans who want to buy 2021 coverage on healthcare.gov could start doing so on February 15, thanks to an executive order Biden signed in January. Special enrollment runs until May 15. Most states that operate their own marketplaces are also extending their enrollment seasons.

"These numbers are an encouraging sign — but we can't slow down until every American has the security and peace of mind that quality, affordable health coverage provides," Biden said.

Typically, signing up for coverage outside of the traditional enrollment period in the fall is restricted to those who lose their job-based policies or have a change in status, such as a divorce. Last year, only 76,000 people picked Obamacare plans during the second half of February, according to the Centers for Medicare and Medicaid Services, which runs the federal exchange.

Excerpt from article By Tami Luhby / CNN