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COVID-19, Employers and Benefit Plans

April 17, 2020 by Bryce Horomanski, J.D.

UPDATE (4/27/20):   On April 23, the President signed into law the Enhancement Act. The Act provides an additional $310 billion to the Paycheck Protection Program. This Act was developed in response to the original $349 billion allocated in the CARES Act last only two weeks. The Enhancement Act does not change any of the terms for the original Paycheck Protection Program and small businesses can continue to use the application form linked below.

While COVID-19 upended everyday life across the country, the Federal government has taken steps to help alleviate some of the economic pressures associated with COVID-19. Below is a summary of these actions and what they mean for employers, benefits professionals and employees.


On March 27th, President Trump signed into law the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”). While the stimulus checks have received the bulk of the media attention, the CARES Act also aims to help businesses, both large and small, that have been or expect to be impacted by the pandemic by offering low-interest loans. (For more information on the stimulus checks, please view the IRS’s Economic impact payments: What you need to know.)

Small Businesses Loans (fewer than 500 employees)

The CARES Act allocated $349 billion for small businesses, eligible nonprofits, self-employed individuals and independent contractors through the Paycheck Protection Program. The Paycheck Protection Program provides those eligible with a 2-year loan with a fixed interest rate of 0.50%. More information about the Paycheck Protection Program can be found at the Treasury Department’s Paycheck Protection Program (PPP) Information Sheet: Borrowers. The application can be at:  Paycheck Protection Program Application Form. These small business loans can be forgiven if the business meets certain requirements.

Larger Businesses Loans (above 499 employees)

The CARES Act allocated $500 billion for businesses that employ 500 or more employees. Of the $500 billion, $46 billion has been earmarked for air carriers and businesses critical to maintaining national security. Both mid-sized businesses (500 to 10,000 employees) and large businesses (above 9,999 employees) will have access to low-interest loans or loan guarantees, with the interest rate capped at 2%. These loans do come with more restrictive application requirements though.

Mid-size businesses must certify:

  • That the economic conditions brought about by COVID-19 make the loan request necessary to support ongoing operations;
  • The funds will be used to retain at least 90% of the business’s workforce at full compensation;
  • The business intends to restore not less than 90% of the workforce that existed as of February 1, 2020;
  • The business was created or organized in the United States, it is domiciled in the United States, and it has significant operations and a majority of its employees in the United States;
  • The business is not a debtor in bankruptcy proceedings;
  • The business will not outsource or offshore jobs for the term of the loan plus 2 years;
  • The business will not do away with any existing collective bargaining agreements for the term of the loan plus 2 years; and
  • The business will remain neutral in union organizations for the term of the loan.

These loans for mid-size businesses will have no principal or interest payments due or payable for the first six  months of the loan.

For a large business to be eligible for a business loan the Treasury Department must determine:

  • Credit is not reasonably available;
  • The loan is being prudently incurred;
  • The loan is adequately secured or the rate reflects the rate of default;
  • The loan is as short as is practicable, and in no event longer than 5 years;
  • That the business agrees it will not purchase public entity securities of the business nor will it make payments of dividends or other capital distributions for the term of the loan plus 12 months;
  • The business agrees to maintain its employment levels as of March 24, 2020, through September 30, 2020, to the extent practicable, but in no case shall it make reductions of more than 10% of that level;
  • That the business is incorporated or organized in the United States and it has significant operations and a majority of its employees in the United States; and
  • The business has incurred or is expected to incur losses, either direct or indirect, due to COVID-19 such that continued operations are in jeopardy.

For both mid-size and large businesses, accepting these loans does come with some additional stipulations as well. These include the inability to increase the compensation of employees who earn more than $425,000 per year, nor can the businesses offer those employees significant severance or termination benefits.

For the full language of the CARES Act please visit the Federal Register.


On March 18th, 2020, the Families First Coronavirus Response Act (“FFCRA”) was signed into law by President Trump. The FFCRA requires private-sector employers with fewer than 500 employees or covered public agencies, regardless of size, to provide paid sick leave or expanded family and medical leave for specified reasons related to COVID-19. This includes paid sick leave for employees for varying reasons, with the amount of pay varying based on the reason for sick leave. Employers with fewer than 50 employees may qualify for exemptions from specific requirements of the FFCRA. More specific requirements can be found on the Department of Labor’s Families First Coronavirus Response Act: Employer Paid Leave Requirements.

In response to the added economic burden FFCRA could place on small businesses, on April 1st, 2020, the Department of Labor implemented a Temporary Rule: Paid Leave under the Families First Coronavirus Response Act. The Temporary Rule will reimburse private American employers for the cost of providing employees with paid leave taken for reasons outlined in FFCRA. The reimbursement will come in the form of tax credits to the business. The temporary rule is in effect from April 1, 2020, through December 21, 2020. For more information on the Temporary Rule, please see the U.S. Department of Labor’s Wage and Hour Division’s Temporary Rule: Paid Leave under the Families First Coronavirus Response Act.

IRS Notice 2020-15

On March 11, 2020, The Internal Revenue Service (“IRS”) issued Notice 2020-15, in which it advised that high-deductible health plans (HDHPs) can provide health benefits associated with testing and treatment of COVID-19 without a deductible or with a deductible below the minimum deductible and still satisfy the HDHP requirements. Thus, an individual covered by such a plan shall not lose his or her Health Savings Account eligibility. The full language of the Notice can be found on the IRS’s website.

Other Resources

As the COVID-19 situation and the Federal response to it continues to evolve, it is important to keep abreast of the latest information and guidelines. Below are links to organizations with dedicated COVID-19 resources, listed in alphabetical order.

HaynesBoone – COVID-19 Advisory

Morrison Foerster – Coronavirus (COVID-19) Resource Center

Pillsbury Law – COVID-19 (Coronavirus) Resource Center

SHRM – Coronavirus and COVID-19

Thompson Hine – COVID-19 Task Force

Vorys – Coronavirus Task Force

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