On March 18, 2020, Congress enacted, and the President signed, the Families First Coronavirus Response Act. This is the second piece of federal legislation enacted in the last two weeks to help the nation stave off the adverse impacts of the Coronavirus that is sweeping across the nation. For an overview of the first act, visit our post Understanding the Coronavirus Preparedness and Response Supplemental Appropriations Act of 2020.
This newer legislation is divided into several Acts, the most important of which are as follows:
1. Second Coronavirus Preparedness & Response Supplemental Appropriations Act.
2. Nutrition Waivers
3. Emergency Family and Medical Leave Expansion Act
4. Emergency Unemployment Insurance Stabilization and Access Act
5. Emergency Paid Sick Leave Act
6. Specific Health Care coverage Provisions for Coronavirus Testing & Treatment
7. Tax Credits for Paid Sick and Paid Family and Medical Leave
The various provisions are meant to respond to the Coronavirus outbreak by providing, among other things, paid sick leave, tax credits, free Coronavirus testing, expanded food assistance and unemployment benefits, and increased Medicaid funding to help the nation weather the ominous storm hitting the country as a result of the Coronavirus.
Second Coronavirus Preparedness & Response Supplemental Appropriations Act
The first section of the statute provides supplemental emergency appropriations for several federal agencies to respond to the Coronavirus outbreak. Each agency that receives funding must report to Congress on the anticipated uses of the funds. Each state and local government that receives funding must ensure its respective State Emergency Operations Center receives regular real-time reporting on aggregated virus testing and results data from state and local public health departments. Additionally, the data must be transmitted to the CDC.
The legislation provides a supplemental appropriation of $500,000,000 to the Department of Agriculture (“USDA”) for the Special Supplemental Nutrition Program (“SNAP”) (i.e., food stamps) and $400,000,000 for several emergency food assistance programs. The first tranche of money will be distributed through USDA-approved state plans that provide emergency SNAP benefits to households with children who would normally receive free or reduced-price school meals. This aid will be provided to eligible families regardless of whether they currently receive SNAP benefits. The second tranche of money will be used by the USDA to purchase commodities for emergency distribution to the public in those areas of the U.S. affected by the Coronavirus. USDA will make $100,000,000 of this aid available through grants to the Northern Mariana Islands, Puerto Rico, and American Samoa for nutrition assistance in response to a Coronavirus public health emergency.
The Act adds $82,000,000 in supplemental funding to the Department of Defense’s Defense Health Program for diagnostic testing and health services to identify, prevent and treat the Coronavirus among our armed forces.
The Act provides $15,000,000 to the Department of Treasury’s Internal Revenue Service to implement the tax credits included in the legislation.
The Act provides the Department of Health and Human Services (“HHS”) with an additional $1,314,000,000 to fund public health and nutrition programs and the Public Health and Social Services Emergency Fund. This part of the Act provides a supplemental appropriation of $64,000,000 for Indian Health Services provided to combat the Coronavirus. It provides $250,000,000 for elderly nutrition and public health services associated with combating the Coronavirus. It also provides $1,000,000,000 to the Public Health and Social Services Emergency Fund to reimburse the costs of providing Coronavirus diagnostic testing and health services to individuals without health insurance.
The Act provides the Department of Veterans Affairs’ with $60,000,000 for diagnostic testing and health services associated with combating the Coronavirus.
Nutrition Waivers
The second section of the statute expands the availability of several food and nutrition programs administered by the USDA and its state partners. It also waives certain requirements to ensure the benefits of those programs can be delivered to as many children and adults as possible while the Coronavirus pandemic continues.
The first title, Maintaining Essential Access to Lunch for Students Act (“MEALS”), modifies USDA food and nutrition programs to allow waivers of certain requirements for the school meal programs, including waivers that increase federal costs during a Coronavirus related school closure. The waivers must be requested by a state or eligible service provider and be for purposes of providing meals and snacks during such school closures.
The second title, COVID-19 Child Nutrition Response Act, authorizes the USDA to grant waivers from a variety of requirements to prevent exposure to or created by the virus, including (1) the child nutrition program requirements to all states under the National School Lunch Program, (2) to allow non-congregate feeding in the Child and Adult Care Food Program, and (3) the nutritional content requirements for meals served in child nutrition programs. This title also allows the USDA to grant waivers from certain requirements under SNAP for the Women, Infants, and Children (“WIC”) Program.
The third title authorizes emergency SNAP benefits during a public health emergency caused by the Coronavirus. It temporarily suspends work requirements under SNAP during this public health emergency, which will allow more participants in the program to continue to receive SNAP benefits. The USDA can also allow states to provide emergency food allotments to households participating in the program that are needed to address temporary food shortages resulting from the pandemic.
Emergency Family and Medical Leave Expansion Act
The third section of the legislation amends the Family and Medical Leave Act of 1993, which is administered by the U.S. Department of Labor.
The amendments allow an employee to take public health emergency leave through December 31, 2020, to care for the employee’s child during a Coronavirus public-health emergency. More specifically, employers of fewer than 500 workers must provide up to 12 weeks paid leave for an employee who cannot work because the school or child-care provider of the employee’s child is closed as a result of this public-health emergency declared by a federal, state or local government authority as a result of Coronavirus.
While employers aren’t required to pay employees for the first 10 days of such emergency leave, employees can use any paid leave they’ve accrued for the emergency leave. After the first 10 days, employers must pay not less than two-thirds of the employee’s regular pay for the number of hours per week the employee normally works. The maximum amount of compensation for such leave is $200 per day and $10,000 in aggregate for each employee. In addition, employers are generally required to restore an employee’s former position after she uses emergency leave unless the employer (1) has fewer than 25 workers, and (2) made reasonable efforts to retain the employee’s position but it no longer exists due to economic conditions caused by the public health emergency.
The Department of Labor may, with good cause shown, (1) exclude certain health care providers and emergency responders from being eligible for public health emergency leave, and (2) exempt employers with fewer than 50 employees if these emergency requirements would jeopardize the viability of the business as a going concern. Not great news for health care providers. We will see how this exemption plays out over time in the real world. Employers subject to multi-employer collective bargaining agreements may make contributions to a multi-employer fund to fulfill the employer’s obligations under these amendments, and employees can get compensation from such funds for public health emergency leave taken under this Act.
Emergency Unemployment Insurance Stabilization and Access Act of 2020
The fourth section of the legislation amends the Social Security Act to provide emergency grants of funds to each state’s account in the Unemployment Trust Fund. These supplemental funds must be used to provide additional unemployment benefits to individuals residing in each state. The amount of funds granted to each state is based on the Department of Labor’s determination of the proportion of total taxable wages attributable to each state during the preceding year. The Act increases to 100 percent the federal share of payments to states for extended and regular unemployment compensation through December 31, 2020. The Treasury is required to transfer to the Social Security Administration those sums the Secretary of Labor estimates are needed to make the supplemental grants required by this Act, and those sums are not required to be repaid.
Under this provision, 50 percent of a state’s grant will be transferred to a state if it certifies its unemployment compensation program does the following: (1) requires employers to notify employees about the availability of unemployment compensation at the time the employee separates from the employer, (2) ensures that unemployment applications are available in-person, by phone, or online, and (3) provides employees with assistance processing unemployment applications.
The remaining 50 percent of a state’s grant will be allotted if it shows: (1) the number of unemployment claims has increased by at least 10 percent compared with the same quarter in the previous year, (2) it has committed to maintaining and strengthening access to the unemployment compensation system by its employees, and (3) has taken steps to ease eligibility requirements and access to unemployment compensation by individuals, including waiving work search requirements, waiting-week requirements, and non-charging employers directly impacted by the Coronavirus.
Within a year of enactment, each state receiving an emergency grant under the Act must submit a report to Congress, and the Secretary of Labor, that includes analyses of the recipiency rate for unemployment compensation in the state, how it has changed over time, and the steps the state has taken to increase recipiency rates. The Department of Labor is required to assist the states in raising public awareness about the availability of short-time compensation programs and provide technical assistance and guidance for these programs to the states.
Emergency Paid Sick Leave Act
The fifth section of the legislation requires employers to provide paid sick leave to employees who are unable to work due to the effects of the Coronavirus.
Full-time employees are entitled to 80 hours of paid sick time if the employee cannot work for any of the following reasons: (1) she is subject to a governmental quarantine or isolation order, (2) she has been advised by a health-care provider to self-quarantine, (3) she is experiencing symptoms of Coronavirus and seeking a medical diagnosis, (4) she is caring for an individual who is subject to governmental or self-quarantine, (5) she is caring for her child because the child’s school or child-care provider is closed, or (6) she is experiencing a substantially similar circumstance related to Coronavirus as specified by HHS.
Part-time employees are entitled to paid sick leave for the same reasons, based on the average number of hours a part-time employee works during an average two-week period.
The paid sick leave authorized by the Act cannot be carried over from one year to the next. It’s available immediately regardless of how long the employee has been employed by the employer. And the employer cannot require an employee to use other paid leave provided by the employer before the employee uses the paid sick leave available under this legislation.
Employers must
provide conspicuous notice in the workplace of the emergency paid sick time
requirements under this legislation, and the Department of Labor must provide
publicly-available model notices within 7 days after enactment of the Act.
Employers cannot discharge, discipline or in any way discriminate against an employee who takes leave in accordance with the Act, or takes action to enforce her rights under the Act. An employer who violates the emergency paid sick leave requirements is subject to fines and imprisonment under the Fair Labor Standards Act of 1938.
An employer who is subject to a multi-employer collective bargaining agreement can make contributions to a multi-employer fund to fulfill its obligations under this Act, and employees can secure compensation from the fund based on the hours they have worked under the collective bargaining agreement for the specific sick leave taken under the Act. The employer is not required to pay an employee for un-used paid sick leave if the employee resigns, retires or is terminated. The emergency paid sick time requirements expire on December 31, 2020.
This provision is sweeping. It covers employers with fewer than 500 employees and federal, state, and local public agencies. Employers must pay covered employees the regular rate of pay up to (1) $511 per day ($5,110 in aggregate) for paid sick time used by an employee who experiences symptoms of Coronavirus or is required or advised to self-quarantine, or (2) $200 per day ($2,000 in aggregate) for paid sick time used by an employee to care for his or her child or other impacted person. The Department of Labor may, by regulation, exclude certain health care providers and emergency responders from eligibility for emergency paid sick leave. It may also exempt employers with fewer than 50 employees if it determines the Act’s requirements would jeopardize the viability of the business as a going concern.
Specific Health Care Coverage Provisions for Coronavirus Testing & Treatment
This sixth section of the legislation requires private health insurance to cover testing for the Coronavirus without imposing cost-sharing requirements – like deductibles, co-payments and co-insurance – or prior authorization or other medical management requirements on patients for the duration of the public health emergency declared on January 31, 2020. The coverage includes the cost of administering such approved tests and related visits to health care providers.
It requires Medicare to cover, without cost-sharing, visits to health care providers that relate to Coronavirus testing during this public health emergency.
The legislation requires Medicare Advantage (“MA”) plans to cover, without cost sharing, Coronavirus testing and related health care visits during the public health emergency. As with private insurance, MA plans cannot impose prior authorization or other medical management requirements on patients for the duration of this public health emergency.
It requires Medicaid and Children’s Health Insurance Program (“CHIP”) – which covers low-income children and pregnant women – to cover Coronavirus testing and treatment visits to health care providers without any cost-sharing during the public health emergency. State Medicaid programs may also cover Coronavirus testing and related treatment visits for uninsured individuals during this emergency period, and such coverage is 100 percent of the federal medical assistance percentage (“FMAP”) so the federal government pays all allowable costs.
This section of the Act amends the Public Health Service Act to extend liability protections to certain manufacturers, distributors, prescribers, and users of approved respiratory protective devices that are subject to specific emergency use authorizations and used during the emergency period. An emergency use authorization allows for the use of drugs, biological products or devices to respond to a public health emergency even though they are not approved by the FDA.
During the emergency period the Departments of Defense and Veterans Affairs are prohibited from requiring cost-sharing for Coronavirus testing and related treatment visits for active duty military and veterans. Civil servants who are enrolled in a health benefit plan are also not subject to cost-sharing requirements for these services.
This section of the Act requires HHS to cover, without any cost-sharing, Coronavirus testing and related treatment visits for all Native Americans who receive health services through the Indian Health Service (“HIS”) regardless of whether such services are covered under IHS.
This section amends the Social Security Act by increasing the FMAP for all states and territories during the public health emergency period by 6.2 percentage points. To receive the increase, a state (1) must not impose eligibility standards or procedures that are more restrictive than those in place on January 1, 2020, (2) must not charge higher premiums than those charged on January 1, 2020, (3) must ensure all eligible beneficiaries remain eligible during the entire emergency period, and (4) must provide coverage without imposing cost sharing for any test services and treatments for Coronavirus. The section finally increases Medicaid funding for U.S. territories for fiscal years 2020 and 2021 by several millions dollars per year.
Tax Credits for Paid Sick and Paid Family and Medical Leave
The tax provisions in the statute are complex. The following is a summary. For more detailed information about these new and amended tax provisions please consult your tax accountant or tax attorney.
The legislation allows a credit against payroll taxes for 100 percent of the employer-paid qualified sick leave wages paid each calendar quarter subject to specified limitation in the statute and Internal Revenue Code (“IRC”). The amount of sick leave wages taken into account for purposes of the credit may not exceed $200 for any employee. The aggregate number of days taken into account is limited to a specific number of day each quarter.
The legislation allows a refundable income tax credit for 100 percent of sick leave amounts of self-employed individuals under the Emergency Paid Sick Leave Act. For other employees, the credit 67 percent. You should maintain appropriate documentation to establish your eligibility for this credit.
The legislation allows an employer a 100 percent payroll tax credit for qualified family leave wages paid by the employer for each calendar quarter. The amount of qualified family leave wages that may be taken into account for each employee is limited to $200 per day and $10,000 for all calendar quarters.
The legislation allows a refundable income tax credit for 100 percent of the qualified family leave amounts of self-employed individuals, subject to a specified formula for determining the leave amounts. Self-employed individuals should maintain documentation prescribed by the Internal Revenue Service to establish eligibility for this credit.
The legislation provides that wages required to be paid to employees under the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act shall not be considered wages for purposes of the Federal Insurance Contributions Act (“FICA”).
This is the second of three pieces of legislation enacted by Congress and signed by the President in the last three weeks, including the recently enacted $2,000,000,000,000 stimulus package that will the subject of our next blog, which will be posted shortly. Even now, Congress is contemplating additional legislation to protect public health and save the economy. We will cover it here so stay tuned.