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Posted May 14, 2020

COVID-19 employee benefits

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Since a flurry of new legislation, including the Families First Coronavirus Response Act and the CARES Act, was passed to address healthcare, childcare and sick leave expenses, HR administrators have fielded a variety of benefits-related questions from employees. 

As Robert Deshaies, president of WEX Health, recently told Employee Benefit News,Outside of our own industry, employee benefits are generally a hot topic once a year—during open enrollment. Now, when so many Americans are struggling to make ends meet, benefits are back in the news in a big way, with the focus on the ways employee benefit plans can help them through this uncertain time.”

Beyond giving employees guidance on what these new laws mean for the benefits coverage, employers are also implementing solutions to bring relief to employees during the COVID-19 pandemic. Here are three creative solutions:

Situation No. 1: Employers want to offset employees’ coronavirus-related medical expenses.

New, unforeseen expenses are creating medical burdens for employees whose insurance carriers do not fully cover COVID-19-related expenses. According to the Kaiser Family Foundation, even privately insured COVID-19 patients “face significant out-of-pocket costs for covered care.” At the same time, employers want to be able to empower their employees to seek medical care during this time and to help them keep their Health Savings Account (HSA) dollars in place if possible.  

Solutions: Employers can introduce a limited-purpose COVID-19 HRA, provide HSA funding acceleration and/or remind employees of resources for discounts.

To allow employers to help their employees mitigate the costs of coronavirus care, WEX has designed two possible solutions for our partners. One of these, created specifically to help participants hold onto their HSA dollars, is for an existing employer to offer its employees a limited-purpose, HSA-compatible Health Reimbursement Arrangement (HRA) as a new benefit. This account should be stacked prior to the HSA and can accept claims via the mobile app or online account.

Another option is for the employer to provide HSA Advance, which lets employees access future contributions. Easy to implement mid-year, this provides a fully automated mechanism for employees to re-pay employers as contributions are received. And employers can establish flat dollar amounts for all employees.

Situation No. 2: Employees are working remotely and need their employer to pay for office supplies.

With business continuity plans around the globe requiring staff to work from home, employees are incurring costs to outfit their home office with computer and phone accessories, ergonomic items, and more. And many of these employees have varying financial resources and may not have access to corporate credit cards.

Solution: Employers provide employees with a work-from-home benefit account.

To provide cash flow benefit to both employer and employee, employers may consider establishing a new card-based program that offers employees ready access to funds when they need them. Limited merchant category codes can control where funds are used. And since President Trump’s emergency declaration triggered the provisions of Section 139 of the Internal Revenue Code, whereby employers can make tax-free payments to employees to cover reasonable COVID-19 expenses, employers may be able to make tax-free contributions to employees and to take a tax deduction.

Situation No. 3: Employees who are essential workers need help with dependent care while schools are closed.  

With children home from school, employees face increased costs and complexities when it comes to caring for young children and disabled family members. This, of course, is especially problematic when the employees are essential workers at hospitals, groceries and pharmacies, where on-premises employees are vital to public well-being.

Solution: Employers introduce a new temporary dependent care benefit.

One option for covering employees’ dependent care expenses is for employers to offer a new dependent care benefit. Again, Section 139 may allow tax-free contributions to employees.

To help employers administer these and other solutions during the COVID-19 pandemic, WEX Health is stepping forward with SpeedLift, highly elastic, quick-implementation solutions supported by a steady stream of communications meant to help consultants, administrators and employers understand and act quickly on late-breaking legislation, rulings and executive orders. Learn more here.

The information in this blog post is for educational purposes only. It is not legal or tax advice. For legal or tax advice, you should consult your own counsel.

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