Health Plans Must Pay 100 Percent of the Cost for Over-the-Counter COVID Testing

By: Jennifer Berman, CEO, MZQ Consulting

On January 10, the Department of Labor issued FAQs establishing new requirements for health plans to pay for over-the-counter (OTC) COVID-19 tests as preventive care. The new guidance, which applies to both fully insured and self-funded health plans, will go into effect for tests purchased on or after January 15, 2022.

The FAQs specifically require that plans cover OTC COVID-19 tests without imposing any cost-sharing, prior authorization, or other medical management requirements.  The guidance also expressly provides that these tests must be made available without an order or individualized assessment by a public health provider.  Notably, the FAQs do address several ways that plans can help limit their overall expenditures.

Reimbursement Programs

The FAQs expressly state that plans are not required to directly reimburse sellers of OTC COVID-19 tests.  Instead, a plan may require participants to submit claims for reimbursement using existing procedures.  However, the DOL “strongly encourage[s]” plans to create direct coverage programs with test retailers, so that plan participants do not need to pay upfront and seek reimbursement later.  It is important to note that plans are not permitted to limit their coverage to only tests purchased through preferred pharmacies or other specific retailers unless it meets the conditions of the Direct-to-Consumer Program safe harbor described below.  So, it may take plans a while to establish means of paying retailers for OTC tests directly, particularly with retailers that are not already part of their pharmacy network.

Direct-to-Consumer Programs Allow Plans to Limit Reimbursable Amount

If a plan creates “direct-to-consumer” programs with its pharmacy network and a direct-to-consumer shipping program that meets certain DOL requirements, then they are permitted to limit the overall amount they will pay for OTC tests from other retailers.  Specifically, if the rules outlined below are followed, a plan may limit the amount it reimburses a participant after the fact for an at-home test purchased outside of its preferred network to $12 (or the cost of the test, if lower).

For a plan’s direct-to-consumer program to legally limit reimbursement amounts for tests purchased elsewhere, the program must:

  • Not require participants to seek reimbursement post-purchase;
  • Have the systems and technology in place to process payments directly with no upfront out-of-pocket costs; and
  • Be available through an adequate number of retail locations (including both in-person and online locations).

If a plan elects to rely on this safe harbor but is unable to meet the requirements for a period of time (i.e., because of shipping delays), then the plan cannot limit the amount it reimburses participants who choose to purchase tests elsewhere during such a period.

Limits on the Number or Frequency of Tests

No limits can be placed on traditional COVID testing ordered by a health care provider.  However, plans may limit the total number of OTC COVID-19 tests available without cost-sharing to no less than eight tests per month (or 30-day period).  This limit applies separately to each participant in the plan.  So, if four family members are covered under “family coverage,” that family could be reimbursed for 32 tests per month.  Plans cannot limit tests to a smaller number over a shorter period.  For example, it would be impermissible to limit a participant to four tests over a 15-day period.

Avoiding Fraud

Plans are permitted to take reasonable steps to avoid fraud as long as they do not “create significant barriers.”  Plans are specifically prohibited from requiring individuals to submit multiple documents or go through numerous steps to receive their tests.  That said, they may require participants to certify tests are being purchased for their personal use, not for employment purposes or resale.  It is also fine for a plan to require proof of purchase (such as a UPC code or receipt) when a participant is seeking direct reimbursement.

Educational Programs

Plans may create educational programs on the effective use of COVID-19 tests, so long as these materials make it clear that the plan will pay for tests as required.

 Educational materials may include:

  • Guidance on how to access and use OTC tests and the differences between OTC tests and other available tests;
  • Quality information on OTC tests, including information about their efficacy;
  • Information on how to obtain tests directly from the plan, through designated lower-cost sellers, or through direct-to-consumer programs; and
  • Instructions on how to submit a claim for reimbursement.

Next Steps

As noted above, the new OTC COVID-19 coverage rules go into effect January 15.  Carriers and third-party administrators will be scrambling in the coming days to deploy programs that facilitate compliance with these rules.  As such, we highly recommend being on the lookout for announcements about how your specific service provider intends to meet these requirements.  We will continue to monitor this program and provide additional updates if they become available.

Good Faith Compliance Standard Announced for Broker Compensation Disclosure Requirements

By: Jennifer Berman, CEO, MZQ Consulting

Among its many new requirements for employee benefit plans, the Consolidated Appropriations Act, 2021 (CAA) created new compensation disclosure requirements related to group health plans. Specifically, the new rules require brokers and consultants anticipated to earn $1,000 or more in direct or indirect compensation related to group health plans to disclose that compensation to the plan sponsor reasonably in advance of entering into an agreement to provide that service. This requirement is designed to facilitate the plan sponsor’s compliance as a fiduciary to ensure that compensation is reasonable and that no conflicts of interest exist for plan service providers.

As explained in more detail below, the requirement is effective for contracts or arrangements entered into, extended, or renewed on or after December 27, 2021. However, before last week, the Department of Labor had not issued any guidance to assist plan service providers or plan sponsors with complying with these rules. As a result, the law went into effect with many unanswered questions from service providers and plan sponsors alike on how to comply. Acknowledging these open questions and that no regulations are forthcoming, the DOL issued Field Assistance Bulletin No. 2021-03 on December 30, 2021, announcing a new temporary enforcement policy related to these requirements. 

The new policy provides that the DOL will not exercise enforcement action against plan service providers or fiduciaries that comply with the new rules using a “good faith, reasonable interpretation of ERISA.”  In announcing this policy, the DOL expressly acknowledges that disclosures will look different for different types of compensation arrangements. However, the DOL emphasizes that disclosure must include information about indirect compensation, stating that “the Department is of the view that a significant goal of the new disclosure requirements is to enhance fee transparency, especially for service arrangements that involve payment of indirect compensation.”  The guidance also addresses the following open questions about the disclosure requirements:

Q1:    Can covered service providers “look to” the DOL’s guidance on the compensation disclosure rules for retirement plans in determining how to comply with the new rules?

           Yes, while group health plan compensation arrangements differ from retirement plan compensation arrangements, many concepts overlap. As such, the DOL’s explanations of the disclosure requirements “may be useful” in interpreting the disclosure requirements for group health plans.[1]

Q2:    Do the new disclosure requirements cover both fully insured and self-funded group health plans?

           Yes. The rules apply to all group health plans. This would include any plan subject to COBRA.

Q3:    Do the new disclosure requirements apply to “excepted benefit” plans such as limited scope dental and vision plans?

           Yes. See above.

Q4:    “Covered service providers” are defined in the statute to include providers of brokerage services and consulting services, but the law does not define these terms. Is this definition limited to service providers who are licensed as, or who market themselves as, “brokers” or “consultants”?

           No, the determination if a service provider meets the definition of a “covered service provider” depends on the facts of the situation.  A covered service provider must provide brokerage or consulting services. The statute lists examples of circumstances in which such services may be provided[2] but does not actually define the terms. The DOL will allow service providers to make their own determination as to whether they are a covered service provider so long as they determine their status reasonably and in good faith. In making this determination, service providers should keep in mind that the DOL “is of the view that a significant goal of the new disclosure requirements is to enhance fee transparency, especially for service arrangements that involve the receipt of indirect compensation.” The DOL further warns that it will question any service provider that receives indirect compensation “from third parties in connection with advice, recommendations, or referrals regarding any of the listed sub-services” but determines it is not a covered service provider. Such service providers should be prepared to explain that their conclusion is consistent with a reasonable, good faith interpretation of the statute.

Q5:    How should compensation that cannot be determined in advance be disclosed before a contract or arrangement is entered into with a group health plan?

           Covered service providers must determine a reasonable method for describing this potential compensation in advance. The statute provides that the required description of compensation or cost:

“may be expressed as a monetary amount, formula, or a per capita charge for each enrollee or, if the compensation or cost cannot reasonably be expressed in such terms, by any other reasonable method, including a disclosure that additional compensation may be earned but may not be calculated at the time of contract if such a disclosure includes a description of the circumstances under which the additional compensation may be earned and a reasonable and good faith estimate if the covered service provider cannot otherwise readily describe compensation or cost and explains the methodology and assumptions used to prepare such estimate.”

           Further, if compensation falls within a projected range based on the occurrence of a future event or other features of a service arrangement, disclosing that range may be sufficient. However, the DOL notes that its retirement plan guidance specifically provides that “such ranges must be reasonable under the circumstances surrounding the service and compensation arrangement at issue. To ensure that covered service providers communicate meaningful and understandable compensation information to responsible plan fiduciaries whenever possible, the Department cautions that more specific, rather than less specific, compensation information is preferred whenever it can be furnished without undue burden.”[3]

           Ultimately, the adequacy of any disclosure will be determined based on the facts and circumstances of the service contract or arrangement. In deciding if a disclosure is adequate, the principal objective of the statute—providing the plan fiduciary with sufficient information to determine if compensation is reasonable and the severity of any potential conflict of interest—should be considered.

Q6:    The new rules state that beginning December 27, 2021, “[n]o contract or arrangement for services between a covered plan and a covered service provider, and no extension or renewal of such a contract or arrangement, is reasonable” unless the compensation disclosure requirements are met. How does this rule apply to service contracts or arrangements entered into before December 27, 2021?

           If there is a written contract or arrangement between the broker/consultant and the plan, the date the contract is “executed” will be the date it is considered “entered into” for this purpose. For example, suppose the parties sign a services agreement for services effective January 1, 2022, on December 15, 2021. In that case, the compensation disclosure rule does not apply because the contract was “entered into” on December 15, 2021, before the effective date of December 27, 2021.

           Suppose a “broker of record” letter is used to appoint a covered service provider. In that case, the arrangement is considered “entered into” as of the earlier of (1) the date on which the BOR is submitted to the insurance carrier, or (2) the date on which a group application is signed for insurance coverage for the following plan year.  These events must occur in the ordinary course of business and not avoid the disclosure obligations for these rules to apply.[4]

Q7:    Does the law apply to both large and small group health plans?

           Yes, this disclosure requirement applies regardless of plan size. In this way, it is different than the Form 5500 reporting requirements, which generally only apply to groups with more than 100 participants.

Q8:    Does the DOL intend to issue regulations on the compensation disclosure rules?

           The DOL is not required to issue regulations on these requirements, which borrow heavily from and mirror longstanding retirement plan compensation disclosure rules. Accordingly, the DOL does not believe comprehensive regulations are needed. However, the DOL will continue to monitor the situation and seek feedback on what additional guidance may be helpful.

Considering the size and scope of the new disclosure requirements, we anticipate that the DOL will certainly receive additional requests for guidance in the months and years to come. In the meantime, the rules are now effective for both new covered service provider contracts or arrangements and upon renewal or extension of existing arrangements. Therefore, it is incumbent upon covered service providers and plan sponsors to ensure appropriate disclosures are made. We will continue to carefully monitor developments related to these rules and be in touch with any additional guidance when it becomes available.  


[1]  29 CFR § 2550.408b-2(c); 77 FR 5632 (Feb. 3, 2012), Reasonable Contract or Arrangement Under Section 408(b)(2)—Fee Disclosure (Final Rule), https://www.govinfo.gov/content/pkg/FR-2012-02-03/pdf/2012-2262.pdf; and 75 FR 41600 (July 16, 2010), Reasonable Contract or Arrangement Under Section 408(b)(2)—Fee Disclosure (Interim Final Rule), https://www.govinfo.gov/content/pkg/FR-2010-07-16/pdf/2010-16768.pdf.

[2] A service provider may be considered a “covered service provider” if it provides: (1) brokerage services “to a covered plan with respect to selection of insurance products (including vision and dental), recordkeeping services, medical management vendor, benefits administration (including vision and dental), stop-loss insurance, pharmacy benefit management services, wellness services, transparency tools and vendors, group purchasing organization preferred vendor panels, disease management vendors and products, compliance services, employee assistance programs, or third party administration services,” or (2) consulting services “related to the development or implementation of plan design, insurance or insurance product selection (including vision and dental), recordkeeping, medical management, benefits administration selection (including vision and dental), stop-loss insurance, pharmacy benefit management services, wellness design and management services, transparency tools, group purchasing organization agreements and services, participation in and services from preferred vendor panels, disease management, compliance services, employee assistance programs, or third party administration services.”

[3] 77 FR 5632, at 5645.

[4] Read literally, this answer would seem to suggest that the compensation disclosure requirements would never apply to a relationship with a broker appointed via BOR prior to December 27, 2021 because that appointment letter would always have been submitted earlier than an application for coverage for any forthcoming plan year.  However, we believe that a more appropriate good faith interpretation of this language might consider it to be only a transition rule.  Under such an interpretation, for existing BOR arrangements, a disclosure would be required annually reasonably in advance of the date the group insurance application is signed for insurance coverage for the following plan year.

Enforcement of OSHA COVID-19 Mandate Set to Begin January 10

By: Jennifer Berman, CEO, MZQ Consulting

On Friday, December 17, 2021, the Sixth Circuit Court of Appeals issued a decision allowing OSHA to enforce its COVID-19 vaccination mandate for employers with 100 or more employees.  This decision reverses an earlier ruling from the Fifth Circuit Court of Appeals which created a nationwide stay on the enforcement of the mandate.  The Sixth Circuit found that OSHA has “demonstrated the pervasive danger that COVID-19 poses to workers—unvaccinated workers in particular—in their workplaces.”  Prior to issuing its decision, the Sixth Circuit was awarded jurisdiction over all the cases challenging the mandate nationwide—this means the next stop for those attempting to stop the implementation of the mandate will be the United States Supreme Court.

The Department of Labor quickly responded to this decision announcing that it will begin enforcement imminently.  Specifically, OSHA will begin enforcing the following requirements for applicable employers on January 10th:

  • Establish an official vaccination policy. This policy needs to be in writing and include specified data elements.  OSHA has issued a model policy to aid employers.
  • Determine vaccination status of each employee, obtain acceptable proof of vaccination, and maintain records and a roster of employee vaccination status.
  • Provide employees with four hours of paid leave to get their first and/or second vaccine doses.
  • Require employees to promptly provide notice of positive COVID-19 test or COVID-19 diagnosis to the employer.
  • Remove any employee who receives a positive COVID-19 test or COVID-19 diagnosis from the physical workplace (employees who test positive may continue to work remotely).
  • Ensure employees who are not fully vaccinated wear face coverings when indoors or when occupying a vehicle with another person for work purposes.
  • Report work-related COVID-19 fatalities to OSHA within 8 hours and work-related COVID-19 in-patient hospitalizations within 24 hours.
  • Make certain vaccination-related records and policies available to employees, their representatives, and OSHA upon request.

OSHA’s statement further provides that it will not issue citations for non-compliance with the weekly testing requirements until February 9th, “so long as an employer is exercising reasonable, good faith efforts to come into compliance with the standard.”  The rules require covered employers to:

  • Ensure employees who are not fully vaccinated are tested for COVID-19 at least weekly (if in the workplace at least once a week) or within 7 days before returning to work (if away from the workplace for a week or longer).
  • Record each COVID-19 test result that each employee provides and keep the results of tests they have conducted.

As a reminder, OSHA has significant penalty authority. The penalty for an OSHA violation is $13,653 for each violation, and the penalty for a willful or repeated violation is $136,532 per violation.  We will continue to carefully monitor developments related to this mandate and update you as additional information becomes available.

ACA Reporting Deadline Extended and the End of “Good Faith” Compliance

By: Jennifer Berman, CEO, MZQ Consulting

On November 22, 2021, the Internal Revenue Service (IRS) published proposed regulations that introduce significant changes to the Affordable Care Act (ACA) reporting process for both large and small employers.  These changes specifically impact the Form 1095-B & Form 1095-C distribution deadline and good faith transition relief.

Automatic Extension to the Distribution Deadline

Section 6055 and 6056 of the ACA reporting regulations require that employers furnish Forms 1095-B and/or Forms 1095-C to employees no later than January 31st of the year following the applicable calendar year.  In other words, under the formal rules, forms for the 2021 calendar year need to be distributed by January 31st, 2022.  However, since 2015, the IRS has consistently extended this deadline, typically by 30 days.  In 2020, the IRS requested comments about this extension while also indicating that they would not continue to offer such relief for future filings.

In response to various concerns commenters submitted about the reporting requirements, and contrary to the warning they issued in 2020, the IRS issued an automatic 30-day extension to the January 31 filing deadline in the proposed regulations.  This rule will apply to reporting for the 2021 calendar year and is likely to be made permanent thereafter when the regulations are finalized.

Under these rules, forms will be considered timely as long as employers furnish them to employees no later than 30 days after January 31st.  In cases where the 30th day following the standard deadline falls on a weekend or legal holiday, employers must distribute forms to employees no later than the next business day.  This automatic extension indicates that forms furnished after the 30-day grace period will be considered late (and subject to corresponding penalties), and that employers will not be able to request additional time past the 30 days to furnish forms to employees.

While this automatic extension offers considerable relief to employers, groups must keep in mind that individual state reporting requirements may conflict with this change.  Specifically, the State of California currently requires employers to distribute forms to California residents no later than January 31st, regardless of any Federal extension.  Thus, despite the proposed extension, pending any changes to California rules, employers that have applicable employees who reside in California should strive to furnish these forms by the original deadline.  It is also notable that the proposed regulations do not extend the March 31st deadline for e-Filing forms with the IRS.

Good Faith Transition Relief Eliminated

Since 2015, the IRS has also provided good faith transition relief to ACA reporting.  This relief has shielded employers from penalties for incorrect and/or incomplete ACA filings, provided that the employers have made a “good faith effort” (tried their best) to comply with the requirements.

The proposed regulations confirm the IRS’s indication that they would not extend this transition relief past 2020: good faith transition relief will not be available for the 2021 ACA filing, nor for any subsequent filing year.  This change will make it much harder in the future for employers to avoid ACA penalties based on incorrect filings.

How Do these Regulations Impact Employers?

It is more important now than ever that employers strive to ensure their initial submissions to the IRS are accurate and complete.  This means employers not only need to file, they also need to “get it right”—from minute details such as employee name and SSN to critical information about employee eligibility and lowest-cost contributions.

Employers who submit erroneous filings now face a much higher risk related to inaccurate/incomplete information return penalties, up to $280 per form for 2021, which is typically doubled to account for the error that was both furnished to the employee and e-Filed with the IRS.  These penalties are in addition to, not in lieu of, the ACA’s employer mandate penalties that are often triggered by erroneous filings.  The IRS does accept corrections filings that rectify ACA submissions; however, for any such filing submitted for 2021 or beyond, this could lead to an automatic information return penalty.

OSHA Suspends Enforcement of Vaccine Mandate

By: Jennifer Berman, CEO, MZQ Consulting

As we have previously shared, the fate of OSHA’s COVID-19 mandate for large employers will ultimately be decided by the federal courts.  Last week, the Fifth Circuit Court of Appeals affirmed its prior decision blocking the mandate from going into effect until the legal issues could be decided on their merits. In its ruling, the court suggested that the OSHA Emergency Temporary Standard (ETS) is merely a “pretext” intended to help create a federal vaccine mandate and that any such mandate exceeds the power of the federal government under the United States Constitution.

The Fifth Circuit case was only one of many filed nationwide challenging the validity of the OSHA mandate.  All these cases have now been consolidated and will be heard by the Sixth Circuit Court of Appeals.  In the meantime, OSHA has formally announced that they will suspend enforcement of the mandate pending resolution in the courts. 

OSHA posted the following statement on its website for the ETS:

“On November 12, 2021, the U.S. Court of Appeals for the Fifth Circuit granted a motion to stay OSHA’s COVID-19 Vaccination and Testing Emergency Temporary Standard, published on November 5, 2021 (86 Fed. Reg. 61402) (“ETS”). The court ordered that OSHA ‘take no steps to implement or enforce’ the ETS ‘until further court order.’ While OSHA remains confident in its authority to protect workers in emergencies, OSHA has suspended activities related to the implementation and enforcement of the ETS pending future developments in the litigation.”

This is a welcome relief for employers scrambling to comply with the aggressive implementation deadlines outlined in the ETS.  It also means that it is unlikely that OSHA will begin enforcement of the first elements of the mandate on December 6, 2021.  It is, however, essential to note that there is every indication that OSHA will continue to defend the mandate in court.  Thus, while the final fate of the mandate is very uncertain, we still strongly recommend large employers prepare for the possibility it will ultimately be enforced.

2022 Health FSA Limits Published

On November 10, 2021, the Internal Revenue Service issued Revenue Procedure 2021-45 that sets forth various 2022 tax-related limits that have been adjusted for inflation. The table below identifies updates to the 2022 health and fringe benefit plan limits addressed in the notice:

Benefit20212022
Maximum Annual Employee Contribution to a Health Flexible Spending Account (Health FSA)$2,750$2,850
Health FSA Carryover Limit$550$570
Adoption Assistance Programs$14,440$14,890
Maximum Annual Employer Contribution to Qualified Small Employer HRA (QSEHRA)$5,300 (self-only coverage) $10,700 (family coverage)$5,450 (self-only coverage) $11,050 (family coverage)
Maximum Monthly Benefit for Qualified Transit Passes, Van Pool Services, and Qualified Parking$270$280

Update on the Large Employer Vaccine Mandate

As we shared last week, the U.S. Occupational Safety and Health Administration (OSHA) published its long-awaited COVID-19 vaccination and testing emergency temporary standard for large employers. It generally mandates businesses with 100 or more employees to require that their employees be vaccinated against COVID-19 or wear masks and be tested for COVID-19 weekly. Then, this past weekend, the U.S. Court of Appeals for the 5th Circuit put an emergency and temporary halt on the new regulation.  In addition to defending against the Court cases challenging the mandate, the Biden Administration has explicitly advised employers to proceed with their plans for implementing its requirements.

The legal issues surrounding the vaccine mandate will continue to play out in the courts over the coming days.  In fact, many experts predict that the United States Supreme Court will ultimately decide the validity of the mandate.  In the meantime, however, businesses subject to the vaccine mandate should ensure they are in a position to comply, should the mandate become effective.  If the mandate is fully implemented, OSHA can cite and financially penalize employers for general non-compliance with all or specific aspects of this policy or cite employers for violations in particular instances. The penalty for an OSHA violation is $13,653 for each violation, and the penalty for a willful or repeated violation is $136,532 per violation.

If the emergency standard holds, affected employers will need to do the following by December 6, 2021:

  • Establish an official vaccination policy. This policy needs to be in writing and include specified data elements.  OSHA has issued a model policy to aid employers.
  • Determine vaccination status of each employee, obtain acceptable proof of vaccination, and maintain records and a roster of employee vaccination status.
  • Give each employee, in a language and at a literacy level the employee understands:
  • The requirements of the new standard and the specific policies and procedures the company has adopted to implement the federal requirements.
  • The CDC document “Key Things to Know About COVID-19 Vaccines.”
  • Information about protection against retaliation and discrimination.
  • Information about the criminal penalties for knowingly supplying false statements or documentation.
  • Provide employees with four hours of paid leave to get their first and/or second vaccine doses.
  • Require employees to promptly provide notice of positive COVID-19 test or COVID-19 diagnosis to the employer.
  • Remove any employee who received positive COVID-19 test or COVID-19 diagnosis from the physical workplace (employees who test positive may continue to work remotely).
  • Ensure employees who are not fully vaccinated wear face coverings when indoors or when occupying a vehicle with another person for work purposes.
  • Report work-related COVID-19 fatalities to OSHA within 8 hours and work-related COVID-19 in-patient hospitalizations within 24 hours.
  • Make certain vaccination-related records and policies available to employees, their representatives, and OSHA upon request.

Then, by January 4, 2022, employers will need to:

  • Ensure employees who are not fully vaccinated are tested for COVID-19 at least weekly (if in the workplace at least once a week) or within 7 days before returning to work (if away from the workplace for a week or longer).
  • Record each COVID-19 test result that each employee provides and keep the results of tests they have conducted.

Ultimately, every business needs to make its own compliance decisions about how to proceed with both the requirements themselves and implementation, taking into consideration their workforce’s specific needs and dynamics. However, as the emergency standard’s requirements are a floor, not a ceiling, there is nothing preventing an employer from implementing vaccination, testing, and masking requirements for their employees right now. Affected businesses may also choose to adopt more generous policies about giving people paid leave, paying for testing and face coverings, and granting additional sick leave for COVID cases and quarantines. 

In any case, the compliance timelines outlined above are aggressive, and employers subject to the mandate need to be actively working to implement the required provisions in order to avoid being unable to comply with the stated deadlines if the Court upholds them.

Biden Administration Publishes COVID-19 Vaccination or Testing Mandate Emergency Rule for Large Employers

By: Jessica Waltman, Principal, Forward Health Consulting

On November 4, 2021, the U.S. Occupational Safety and Health Administration (OSHA) published its long-awaited emergency temporary standard requiring employers with 100 or more employees to either ensure the members of their workforce are vaccinated against COVID-19 or are tested for the virus at least once a week and wear face coverings.  The Biden Administration also published different vaccination requirements for federal contractors and medical facilities that receive federal funding.

The new requirement for private businesses will go into effect on November 5, 2021.  By December 4, 2021, employers must have their vaccination and testing policies written out and communicated to employees.  Employees must demonstrate vaccination or submit to weekly testing and mask-wearing by January 4, 2022. The Biden Administration estimates the emergency measure will impact up to 84 million American workers.

How do employers count to 100 employees?

Employers must include all their employees located in all U.S. locations as of November 5, 2021.  Part-time, hourly, and seasonal employees who are working on that date count in the total. It does not matter if employees are vaccinated or not. They may work at home, or outside, or other locations, or have a reasonable accommodation against getting a vaccine.  Every W-2 employee counts.  If an employer has 100 or more employees on November 5 and later dips under 100 employees, the rule still applies to the business. If a company gains employees and goes over 100, then the rule applies when the workforce increases.  

Do companies with joint ownership, franchises, staffing firms, etc., count their employees together or separately?

Jointly owned companies count their employees together if they utilize common worksite safety policies and enforcement.  Individual franchise owners count their employees separately, and the franchisor counts “home office” employees together.  Staffing firms count all their employees, including those they place in separate locations, together.  Employers that utilize staffing firms do not include the staffing firm employees in their count. However, employers that are required to comply with this rule based on their direct employee count can mandate their staffing firms to have their employees comply.

Do all employees have to follow these rules? 

Businesses with 100 or more employees need to follow these rules or implement a stricter mandatory vaccination policy.  However, of their employees, three types of employees have an exception to the rule.  If any of the following conditions are true, then the employee does not need to comply personally:

  1. The employee does not ever report to a workplace where other individuals are present;
  2. The employee is working from home (the exemption only applies while the person is working from home); or
  3. The employee works exclusively outdoors.

All other employees must either submit proof of vaccination or show proof of COVID-19 testing every seven days and wear a face covering at work.  A “face covering” is defined as consisting of two or more layers of fabric, secured to the head with straps or ties, covering the nose and mouth, and solid with no slits or holes.

How do employers document compliance?

Employers need to develop a written mandatory vaccination policy or vaccination and testing policy by December 4, 2021. The written vaccination policy needs to include many specific data elements, but OSHA provides employers with a compliant template to use.

Businesses also need to determine the vaccination status of each employee, obtain acceptable proof of vaccination from vaccinated employees, maintain records of each employee’s vaccination status, and maintain a roster of each employee’s vaccination status. In addition, employers must record each COVID-19 test result provided by each employee and keep the results of tests they have conducted. The employer must treat all this information as confidential employee medical information and store it securely and separately from other employee personnel records.

Do employers have to follow these rules exactly?

The standards outlined in the emergency standard are a floor, not a ceiling.  What this means is that employers may adopt stricter vaccination, testing, or masking requirements for their employees.  Affected businesses may also adopt more generous policies about giving people paid leave, paying for testing and face coverings, and granting additional sick leave for COVID cases and quarantines.  Affected employers will not remain in compliance with the law if they apply lesser requirements than those the emergency standard requires.

What happens to employers that do not follow the new requirements?

OSHA can cite and financially penalize employers for general non-compliance with all or specific aspects of this policy or cite employers for violations in particular instances.  OSHA can also require employers to take compliance abatement measures.  OSHA will determine whether an employer has intentionally disregarded its obligations or exhibited a plain indifference to employee safety or health, both of which will result in stricter penalties. The penalty for an OSHA violation is $13,653 per violation; however, we will note that the penalty for a willful or repeated violation is $136,532 per violation.

What happens to employees who do not follow the new requirements?

Suppose an employee refuses to comply with workforce vaccination and testing policies. In that case, employers may take disciplinary action, keeping in mind and in compliance with other federal and state employment laws and protections.  If an employee lies about vaccination status or falsifies vaccination records, this is a federal criminal offense.

Is this a permanent requirement?

It is a temporary standard which, as of now, will last for six months.  The Biden Administration could elect to make this standard, or a revised version of it, permanent before May 4, 2022. If they do not, then this emergency standard will expire on May 4, 2022.  OSHA is currently seeking public comment on the standard, including about making it permanent.

What about conflicting state requirements?

The new federal OSHA standard supersedes any State or local requirements that ban or limit an employer’s authority to require vaccination, face covering, or testing. OSHA’s authority to preempt such State and local requirements stems from Section 18 of the OSH Act and general conflict preemption principles. As the Supreme Court has explained, once OSHA implements federal standards addressing an occupational safety and health issue, States may no longer regulate that issue except with OSHA’s approval.  If an employer subject to this rule is concerned about a contradictory state or local-level requirement, they may want to consider mandating weekly testing and face coverings.

What happens in States that implement their own workplace safety rules separate from OSHA (OSHA State Plan jurisdictions)?

The regulation applies to both states where OSHA handles all workplace safety rules and the states with OSHA-approved state-administered programs (OSHA State Plan jurisdictions).  State plan jurisdictions have 30 days to adopt either the requirements in this emergency standard or stricter requirements.  These states need to notify OSHA of their implementation plans within 15 days.

How do employers and employees document vaccinations?

Each employer must require each vaccinated employee to provide acceptable proof of vaccination status, including whether they are fully or partially vaccinated. The items in the following list constitute acceptable documentation for proof of vaccination:

  1. The record of immunization from a health care provider or pharmacy;
  2. A copy of the U.S. COVID-19 Vaccination Record Card;
  3. A copy of medical records documenting the vaccination;
  4. A copy of immunization records from a public health, state, or tribal immunization information system; or
  5. A copy of any other official documentation that contains the type of vaccine administered, date(s) of administration, and the name of the health care professional(s) or clinic site(s) administering the vaccine(s).

If an employee cannot produce acceptable proof of vaccination as listed above, a signed and dated statement by the employee will be sufficient. The employee’s report must:

  1. Attest to their vaccination status (fully vaccinated or partially vaccinated);
  2. Attest that they have lost or are otherwise unable to produce proof required by this section; and
  3. Include the following language: “I declare (or certify, verify, or state) that this statement about my vaccination status is true and accurate. I understand that knowingly providing false information regarding my vaccination status on this form may subject me to criminal penalties.”

Who pays for the vaccinations?

COVID-19 vaccinations (including booster shots) must be covered by private health insurance policies’ public health coverage programs in the United States. There are other federal mechanisms to provide uninsured individuals with cost-free access to COVID-19 vaccinations.

Do employers have to give employees time off to get a COVID-19 shot?

Employers subject to this standard must provide up to four hours of paid time off, at the employee’s regular pay rate, for vaccination. For this rule’s purpose, the paid leave applies to initial vaccination doses, not booster shots. Any other leave that the employee has accrued, such as sick or vacation leave, cannot offset the four hours of paid time that the employee is entitled to for purposes of receiving a vaccination.

Employers may require employees who have accrued paid sick leave to use that leave when recovering from vaccination side effects. Likewise, employers who do not specify between different types of leave (i.e., employees get one kind of leave) may require employees to use that leave when recovering from vaccination side effects. When an employer provides employees with multiple types of leave, such as sick leave and vacation leave, the employer can only require employees to use their sick leave when recovering from vaccination side effects. However, an employer cannot require an employee to go into the negative for paid sick leave if they do not have accrued paid sick leave when they need to recover from side effects experienced following a primary vaccination dose.

Employers do not have to give retroactive leave to employees who are already vaccinated.

Does this regulation force employees to get vaccinated or quit their jobs?

No.  Employers may adopt stricter mandatory workplace vaccination policies if they want to do so (while complying with other federal laws about reasonable accommodations). Still, this regulation does not require any employee to get a vaccination.  If an employer is following the terms of this standard, then affected employees either need to provide proof of immunization by January 4, 2022 or undergo COVID-19 testing every seven days and wear an acceptable face covering at work.  

If an employer opts to require weekly employee masking and testing, who pays for the tests?  What about the face coverings?

Generally speaking, employers do not need to pay for any costs associated with testing; employees who choose to be regularly tested and wear a face covering in lieu of vaccination will need to bear the corresponding costs. However, employer payment for testing may be required by other laws, regulations, or collective bargaining agreements, or other collectively negotiated agreements.  Of course, employers may also choose to provide tests and pay for all or part of the testing costs.

This standard does not require employers to provide free face coverings or pay for employees’ face coverings.  As with testing, employers may provide appropriate masks or reimburse for their costs if they choose to do so.

Do employees who are not vaccinated need to wear masks all the time?

No.  The rules specify that each employee who is not fully vaccinated wears a face covering when indoors and when occupying a vehicle with another person for work purposes, except:

  1. When an employee is alone in a room with floor to ceiling walls and a closed door.
  2. For a limited time while the employee is eating or drinking at the workplace or for identification purposes in compliance with safety and security requirements.
  3. When an employee is wearing a respirator or facemask.
  4. Where the employer can show that the use of face coverings is infeasible or creates a greater hazard that would excuse compliance with this paragraph (e.g., when it is important to see the employee’s mouth for reasons related to their job duties, when the work requires the use of the employee’s uncovered mouth, or when the use of a face covering presents a risk of serious injury or death to the employee).

What notification do employers need to give to employees about the new requirement?

The employer must give each employee, in a language and at a literacy level the employee understands:

  1. The requirements of the new standard and the company’s specific policies and procedures adopted to implement the federal requirements.
  2. The CDC document “Key Things to Know About COVID-19 Vaccines”
  3. Information about protection against retaliation and discrimination.
  4. Information about the criminal penalties for knowingly supplying false statements or documentation.

Employers may choose any method of informing employees so long as each employee receives the information specified in the standard in a language and at a literacy level they understand. For example, an employer may provide this information to employees through email communications, printed fact sheets, or in discussion at a regularly scheduled team meeting.

Do employers need to provide any information to the federal government to comply with this standard?

Employers need to report work-related COVID-19 fatalities to OSHA within eight hours of learning about them and work-related COVID-19 in-patient hospitalizations within 24 hours of the employer learning about the hospitalization.

While employers do not need to submit their written vaccination and testing plans or their employee vaccination status and employee testing result records to OSHA routinely, they may be requested to do so by federal regulators.  Employers must provide their documentation to OSHA for examination and copying within four business hoursof a request!

What happens if an employee gets COVID-19?

An employer must immediately have any employee who receives a positive COVID-19 test or is diagnosed with COVID-19 vacate the workplace.  Employers must keep the employee removed until the employee:

  1. Receives a negative result on a COVID-19 nucleic acid amplification test (NAAT) following a positive result on a COVID-19 antigen test if the employee chooses to seek a NAAT test for confirmatory testing;
  2. Meets the return-to-work criteria in CDC’s “Isolation Guidance”; or
  3. Receives a recommendation to return to work from a licensed healthcare provider.

COVID-19 positive employees may continue to work from home.

What resources are available to help employers with compliance?

Along with the emergency standard, OSHA published many resources about the requirement for employers and employees.  They are all available at www.osha.gov/coronavirus.

Clarification on Outbreak Period COBRA Deadlines

By: Jennifer Berman, CEO of MZQ Consulting

On October 6, 2021, the Department of Labor, the Department of Treasury, and the Internal Revenue Service jointly released Notice 2021-58. The Notice further clarifies how the “outbreak period” rules impact certain COBRA-related deadlines.

As previously reported, in response to the COVID-19 pandemic, deadlines related to COBRA elections and premium payments were extended in March 2020. At that time, plans were required to disregard the period for elections and premium payments until 60 days after the end of the National Emergency. February 2021 guidance then clarified that the “extension” created by the “outbreak period” cannot exceed one year.  At the end of the year-long extensions, the original deadlines associated with COBRA would apply.

The emergency relief extended the following COBRA timeframes:

  1. Initial 60-day election period.
  2. Due dates for premium payments.
  3. The time period for notification of qualifying events.
  4. The date for plans/employers to provide COBRA election notices.

Total Available Extension is One Year

Notice 2021-58 clarifies that the year-long extension for electing COBRA and the year-long extension for making premium payments run concurrently in most situations.  This means that a qualified beneficiary could not wait for a full year (plus the 60-day election period) to elect COBRA and then another full year (plus the 45-day payment period) to pay for coverage.  Said differently, the maximum time period between when a qualified beneficiary first becomes eligible to elect COBRA and when payment is due is 1 year plus 105 days.  This is comprised of the year-long extension + 60-day election period + 45-day payment period.

Transition Relief

The agencies note that some qualified beneficiaries may not have previously understood that the multiple extensions of up to one year are unavailable. Therefore, the Notice also provides that any COBRA premium made by November 1, 2021, will be considered timely so long as it is made within one year and 45 days following the date of their COBRA election.

Reminder

As a reminder, the extension described here does not apply to qualified beneficiaries electing the COBRA subsidy under the American Rescue Plan (ARP) of 2021.  The regular COBRA deadlines apply to the ARP subsidies, which generally expired on September 30, 2021.

Updated Guidance on COVID-19 Vaccines

By: Jennifer BermanCEO of MZQ Consulting

On September 30, 2021 and October 4, 2021, respectively, the Department of Health and Human Services (HHS) and the Department of Labor (DOL) issued updated guidance regarding COVID-19 vaccinations.

The HHS guidance specifically relates to recent questions regarding the HIPAA Privacy Rule. The new FAQs provide that HIPAA does not prohibit businesses or individuals from asking their customers or clients whether they have been vaccinated. This is the case both because HIPAA only applies to covered entities, and because HIPAA does not apply if a covered entity (such as a hospital) asks patients or visitors for their vaccine status. The new HHS FAQs also specify that HIPAA doesn’t apply when an employer asks an employee their vaccination status. This is because the Privacy Rule doesn’t apply to employment records. While it is permissible to ask for this information, employers must keep vaccination status confidential and store that information separately from other employment-related information under the Americans with Disabilities Act.

The DOL FAQs address the requirement that health plans pay for COVID-19 vaccinations in full. Specifically, the FAQs clarify that non-grandfathered health plans must pay for COVID-19 vaccination without any participant cost sharing requirements. This includes any COVID-19 vaccination provided in accordance with an Emergency Use Authorization (EUA) or a Biologics License Application (BLA). This “free” coverage applies to any COVID-19 vaccination permitted under an EUA or BLA, including: the administration of a third dose to certain individuals, the administration of booster doses, and the expansion of the age demographic for which the vaccine is approved.

The DOL FAQs also address the issue of whether health plans can incentivize employees to get vaccinated (or charge more to those who are not). The FAQs provide that any such program would be considered an activity-based health contingent wellness program and would be subject to the HIPAA nondiscrimination rules applicable to such programs. These rules cap the total reward/penalty for all wellness related activities (other than those for tobacco cessation) at 30% of the total cost of coverage. Additionally, if such a program is offered, the plan must provide a “reasonable alternative” method to qualify for the reward/avoid the penalty if getting the vaccine would be “unreasonably difficult due to a medical condition or medically inadvisable.” The example in the guidance of a reasonable alternative is requiring an employee to follow the CDC masking recommendations for unvaccinated people. All plan participants must be notified of the reasonable alternative method. Finally, the FAQs emphasize that any employer with different rates for vaccinated vs. non-vaccinated employees must use the rates for unvaccinated employees when determining if an offer of coverage is affordable for purposes of the ACA’s employer mandate.

Generally, this recent guidance affirms the MZQ Consulting team’s preexisting interpretation regarding these issues. It is nevertheless helpful to hear directly from the agencies on these pressing and timely issues.

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