COVID-19

General COVID-19 Questions

Will PayFlex be updating the website FAQs for employers and employees?
We will update as more information becomes available.

If we decide we want to change our plan offerings, what do we need to do?

1. If you decide to allow mid-year FSA election changes:

• Update your Plan Document and Summary Plan Description (SPD) – you have until December 31, 2021 to formally amend your plan.
• Let your PayFlex Account Manager know.
• Make your employees aware.
  • If needed, click here to download a member-facing template to assist with communicating to your employees. Feel free to use this template to deploy to your employees, or add to internal communications, intranet sites, etc.
  • We can also deploy to your employees on your behalf (at no cost). To request a deployment, contact your PayFlex Account Manager. You’ll be asked to fill in the placeholder details within the template to help ensure employees have the accurate next steps.

2. If you decide to increase the health care FSA carryover amount to $550:

• Update your Plan Document and Summary Plan Description (SPD) – you have until December 31, 2021 to formally amend your plan.
• Let your PayFlex Account Manager know.
• Make your employees aware.
  • If needed, click here to download a member-facing template to assist with communicating to your employees. Feel free to use this template to deploy to your employees, or add to internal communications, intranet sites, etc.
  • We can also deploy to your employees on your behalf (at no cost). To request a deployment, contact your PayFlex Account Manager.

3. If you decide to extend your grace period, please know that our PayFlex teams are working together to fully understand the new guidance and its impact.

• We need to consider what’s possible via our systems (and operationally) to help ensure a positive client and member experience.
• Once we determine how to best administer an extended grace period, we’ll notify you/employers with next steps.
• In the meantime, below are important details to keep in mind:
  • Extending the grace period may impact functionality of the PayFlex debit card. We’ll share more information as needed.
  • Extending the grace period will also affect HSA eligibility.
    • If a member is allowed the extended grace period to incur FSA expenses, they won’t be eligible to contribute to an HSA through the duration of the grace period.
    • Members with a Limited Purpose FSA won’t be impacted.

Can the plan year be extended?
No.

Does COVID-19 have an impact on FSA’s use-it-or-lose-it rule? For example, will employees lose money even though many doctors’ offices are closing?
The IRS hasn’t announced any new guidance for FSA plan year requirements or the use-it-or-lose-it rule.

What do IRS Notice 2020-29 and IRS Notice 2020-33 change?
On May 12, 2020, the Treasury Department and the Internal Revenue Service (IRS) issued two notices to assist with the nation’s response to the 2019 Novel Coronavirus outbreak (COVID-19) for § 125 cafeteria plans during calendar year 2020. These notices impact Health Care and Dependent Care Flexible Spending Account (FSAs) --  IRS Notice 2020-29 and  IRS Notice 2020-33.

Employers who offer a Health Care FSA and/or a Dependent Care FSA, can now choose to:

• amend their plans to allow employees to make election changes during calendar year 2020, without the need for a qualifying event.
• amend their plans to allow the 2020 carryover maximum of up to $550 for health care FSA.
• extend their FSA grace period until December 31, 2020.

Note: This guidance isn’t mandated and is retroactive to January 1, 2020. You, as the employer, can decide what you want to allow related to your plan offerings.

Is testing and treatment related to COVID-19 covered prior to meeting the annual deductible?
The Internal Revenue Service (IRS) announced that testing and treatment related to the Coronavirus Disease (COVID19) can be covered under a high-deductible health plan (HDHP), prior to meeting the annual deductible, without affecting HSA eligibility. Also, keep in mind that members can use their Health Savings Account (HSA) and Flexible Spending Account (FSA) funds to pay for testing and eligible medical treatment related to COVID-19.

Open Enrollment

How is PayFlex handling open enrollment this year?
PayFlex is offering several open enrollment solutions to employers such as an open enrollment website, videos and virtual open enrollment sessions.

How can I request virtual open enrollment sessions?
You can contact your PayFlex Account Manager.

Grace Period & Run Out Extensions

Do my employees have to do anything special to submit claims if we have extended our run-out or grace period deadlines?
No. Claims can be submitted as usual. Any claims that were denied while run-out/grace period deadline was being adjusted have been reprocessed.

Can the “run-out” be extended?
Yes. Employers have the option to extend their plans run-out deadline date. If an employer chooses to extend the run-out deadline, the new run-out deadline will appear on the PayFlex member website on the member’s dashboard.

Can the “grace period” be extended?
Yes. With IRS Notice 2020-29, grace period deadlines can be extended.

Can the “grace period” be added?
Yes. If an employer doesn’t currently offer the grace period (or carryover for health care FSAs) the grace period can be added.

Furloughs & Changes to Employee Pay

What happens to FSAs during a furlough (aka, leave of absence)?

Health care FSAs:

• If the employee fails to pay the required premium during a furlough, coverage can be terminated for non-payment.
  • If the employer maintains benefits during a furlough, the employer can collect the employee’s share of premium to maintain the coverage during a paid or unpaid leave of absence. Premiums Payroll contributions for the election (monthly amount) may be collected (as determined by the employer’s policy) in one of the following manners:
    • Catch up
    • Pre-pay
    • Pay-as-you-go
  • In cases where there is paid leave, the employer may collect those premiums through salary reductions under the cafeteria plan. However, for periods of unpaid leave, where the “pay as you go” method for collection is utilized, the employee would remit those amounts to the employer on a post-tax basis.
  • If furloughed employees lose their eligibility for FSAs at the start of the leave, then in some cases health care FSA members are offered COBRA continuation coverage.
• Employees with a positive cash balance would be able to elect COBRA coverage to use those dollars for expenses incurred after the date they lost eligibility for health care FSA coverage.
• COBRA continuation of the health care FSA isn’t offered to those employees who have already “used up” their accumulated account balances prior to the qualifying event.
• If furloughed employees lose health care FSA eligibility due to the employer plan design, the employer has two options:
  • Allow an employee going on unpaid leave to either revoke or continue health care FSA coverage or members can pay before they leave.
  • Require that health care FSA coverage continue but allow the employee to discontinue contributions.
• If the employer continues coverage during an unpaid leave, the employer may recover the employee’s share of the premiums (via payroll deductions) when the employee returns to work.

Dependent care FSAs
Typically, the dependent care FSA contributions are stopped during a leave. This is the case since the employee is not eligible to incur expenses during the leave. Dependent care FSA is not a COBRA eligible benefit. When the employee returns from leave, they can make a new election for the remainder of the year. The calendar year max would need to be considered.

If an employer is reducing employee pay/salaries due to the COVID-19 impacting their business, can their employees reduce their health care FSA election amounts due to this unforeseen change in their income?
A “change in income” isn’t a qualifying event that would allow an election change. However, if an employee’s employment status changes and that change affects their benefit eligibility, then they’re allowed to cancel elections mid-year.

For example: If an employee moves from full-time (FT) to part-time (PT), and PT employees aren’t eligible for the FSA, then their FSA election can be stopped mid-year.

CARES Act & over-the-counter items

Are telehealth services covered by an HSA?
Due to the CARES Act (Section 3701), a high-deductible health plan (HDHP) with a health savings account (HSA) can temporarily cover "telehealth and other remote care services" prior to a patient reaching the deductible, without regard to whether the telehealth services relate to COVID-19. This provision is effective immediately for plan years beginning on or before December 31, 2021.

An individual can have an HSA qualified HDHP which covers "telehealth and other remote care services" before they’ve met their deductible, without jeopardizing HSA eligibility.

Now that OTC items are eligible without a prescription, how does this impact members who have an RX-only PayFlex debit card?
If members have an Rx-only PayFlex Card, the card will also work for eligible OTC items. This is because our debit card doesn’t distinguish an RX from an OTC because they share the same pharmacy Merchant Category Code (MCC).

Can employees make mid-year health care FSA elections? For example, a member didn’t make an FSA election before, but now that OTC is covered, they want to make an election.
Yes. With IRS Notice 2020-29, employers may allow for election changes without a qualifying event.

Should the employer’s Plan Documents be updated if they reference the OTC with prescription requirement?
Yes. Now that all OTC items are eligible without a prescription, employers should review their plan documents and update as needed. If you have not updated your plan documents, please contact your PayFlex account manager.

When can consumers begin to purchase OTC products with their PayFlex debit card (without a prescription)?

• After April 15, 2020, merchants will begin to adopt the new standards for OTC items. Menstrual products were added the Eligible Product List the week of May 15, 2020.
• Some merchants update their inventory monthly, quarterly, or annually, so adoption dates will vary.
• As each merchant adopts the new standards, consumers can purchase OTC items through them with a card swipe.
• If the PayFlex Card doesn’t work at time of purchase, members can pay out of pocket and request reimbursement from their PayFlex account.

What new products does the OTC provision include?
It’s estimated that approximately 17,500 new OTC products are eligible with this change. These include OTC items that were removed from eligibility with the passage of the Affordable Care Act (ACA), as well as items that have been submitted for or rejected from eligibility since. Because menstrual care products have never been eligible with tax-advantaged accounts, we don’t have a firm estimate on the number of those items currently.

COBRA

Have any changes been made to COBRA due to COVID-19?
The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) recently announced deadline relief and other guidance under Title I of the Employee Retirement Income Security Act of 1974 (ERISA). This new ruling is designed to help employee benefit plans, plan participants and beneficiaries, employers and other plan sponsors, plan fiduciaries, and other service providers impacted by the coronavirus outbreak.

In addition, the Department of the Treasury and Internal Revenue Service (IRS) announced timeframe extensions affecting participants’ rights to healthcare coverage, portability, and continuation of group health plan coverage under COBRA. Click here to read the full announcement.

This new guidance states that if the following deadlines/timeframes occurred on or after March 1, 2020, these deadlines/timeframes are extended until 60-days after the yet-to-be-announced end of the COVID-19 National Emergency. This period of time is known as the “Outbreak Period”.

• Special health plan enrollment periods.
• The deadline for members to notify a health plan of a qualifying event or disability.
• The deadline that a member enrolls in coverage under a health plan.

Specific to Consolidated Omnibus Budget Reconciliation Act (COBRA):

• COBRA Election: the 60-day deadline to elect COBRA continuation coverage.
• COBRA Premium Payments: the 45-day (for the initial payment) and 30-day (for subsequent payments) deadlines to timely pay COBRA premiums.
• Second COBRA Qualifying Event and Disability Extension Notices: the 60-day deadline by which qualified participants must notify the plan of certain qualifying events (e.g., divorce or legal separation, a child ceasing to be a dependent under the term of the plan) or disability determination.
• Benefit Claims and Appeals: the deadline under the plan by which participants may file a benefit claim (under the terms of the plan), and the 180-day (for group health plans) and 60-day (for other welfare benefit plans) deadlines for appealing an adverse benefit determination.

How PayFlex is complying with the deadline extension IRS mandate?

• PayFlex will accept late COBRA elections, as long as the participant’s last day to submit their election was on or after March 1, 2020. Participants must mail their completed COBRA Enrollment Form to the address provided on the enrollment form before or upon conclusion of the Outbreak Period.
• PayFlex will accept late COBRA premium payment, as long as the participant’s last day to postmark their premium payment was on or after March 1, 2020.
  • For participants whose COBRA accounts were terminated for nonpayment, upon premium receipt COBRA coverage will be reinstated to the paid through date.
  • Premium payment must be postmarked before or upon conclusion of the Outbreak Period.
• PayFlex will honor and process special enrollment, second COBRA qualifying event and disability extension requests, if received before or upon conclusion of the Outbreak Period.
• PayFlex will reinstate participants who have been administratively terminated, due to nonpayment within the standard grace period.
  • Participants who don’t pay their premium within the standard grace period will receive a term letter in the normal course.
  • However, terminated participants can reinstate their coverage retroactively by submitting premium before or upon conclusion of the Outbreak Period.
  • PayFlex will retroactively reinstate participants’ coverage, to their paid through date, upon premium payment receipt.

Commuter Benefits

Where can my employees get more information about their commuter benefits?
Edenred, our transit partner, has added COVID-19 Updates and Policies to their website and the employee commuter ordering platform and can be referenced for the most up to date information.

Dependent Care Flexible Spending Account (FSA)

Can members retroactively change their dependent care FSA elections?
Yes. Employers can choose to allow adjustments to dependent care FSA elections due to COVID-19.

Can contributions already made to dependent care FSAs be refunded?
No. While depending on the plan, a member may be able to change their election to $0 for the rest of the year, any contributions already made can’t be refunded.