The opinions expressed in this presentation are those of the speaker. The International Society and International Foundation disclaim responsibility for views expressed and statements made by the program speakers.

Disaster Preparedness for Benefits and HR

Jay M. KirschbaumVice President, Compliance Services

Lockton CompaniesSt. Louis, Missouri

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Introduction.

Business continuity planning.

HR and benefits continuity planning.

HR and benefits issues: Tax ERISA COBRA HIPAA MHPAEA ACA

PHSA requirements

FMLA USERRA

Topics

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Introduction

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Natural Disasters

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Louisiana: 2006

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Joplin/Tuscaloosa: 2011

Tuscaloosa, Alabama Joplin, Missouri

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New Jersey: 2012

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Oklahoma: 2013

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California: 2017

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Texas: 2017

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Ellicott City, Maryland: 2018

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San Francisco: 1906

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San Francisco: 1989

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New Madrid, Missouri: 1811 and 1812

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New Madrid, Missouri: 1811 and 1812

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Man-Made Disasters

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Oklahoma City: 1995

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New York City: 2001

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Boston: 2013

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Resources

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https://www.ready.gov/business

https://www.osha.gov/Publications/osha3088.pdf (2001)

https://www.fema.gov/media-library/resources-documents/collections/357 (2014)

Resources

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Planning

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Identify potential hazards. Assess vulnerabilities. Analyze potential effects.

Risk assessment. Hazard prevention. Deterrence. Mitigation. Emergency planning.

Business impact analysis. Time-sensitive/critical processes. Operational impact. Resource requirements.

Planning: Initial

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Identify resource requirements for: Emergency response. Business continuation. Communication requirements.

Emergency response plan.

Communications plan.

Business continuity plan. https://www.fema.gov/media-library-data/1389019980859-

b64364cba1442b96dc4f4ad675f552e4/Business_ContinuityPlan_2014.pdf

IT plan.

Employee assistance.

Incident management.

TRAINING.

Planning: Documentation

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Set performance objectives.

Risk assessment.

Resource assessment.

Develop relationship with emergency service providers and coordinate planning.

Regulatory assessment.

Develop protective actions. Evacuation. Shelter. Shelter in place. Lockdown.

Develop emergency procedures and draft plan.

Communicate plan.

Train and practice plan.

Develop Emergency Response Plan

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Functional organization. Identify key personnel. Emergency contact information Insurance and broker contact.

Disaster recovery team. Key members of senior management. HR manager. Facilities manager.

Maintenance staff. Insurance claim representative.

Safety officer. IT/communications. IT/security. Security.

Business Continuity Planning

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Evacuation. Two exits from every floor. More depending on building or

fire codes.

Sheltering.

Shelter in place.

Lockdown.

Emergency Response Plan

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Who? Customers. Employees and their families. News media. Community. Company management, directors, investors. Government officials (emergency and others).

Local and state emergency management agencies.

Suppliers. Realtors. Financial institutions. Insurance broker/claim representatives.

What? Specific message targeted to each recipient.

Communication Plan

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How? Communications hub – information center.

At least one alternative available – build in redundancy.

Traditional Telephone. Land, cell, 800.

Newspaper. Snail mail. Notices on premises.

Electronic notifications. Texts. Email. Fax. Website. Social media. Twitter.

Facebook.

Other.

Supplies. Hard copies of all plans. Site and building diagrams. Copiers. Documentation forms. Message boards (flipcharts, whiteboards). Office supplies!

Communication Plan

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Employees. Protection, care during absence, return to

work. Ancillary workforce—assess need.

Contractors. Employees in alternative roles. Retirees.

Physical plant and impact.

Critical business needs. How to continue in event of disaster.

Effect on demand for company goods or services. Communicate plans with customers.

Demand for supplies. Advance commitment from vendors.

(Tulane story) Communicate plans with vendors.

Update regularly.

Business Continuity: Assessment

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Potential effect on company financials.

Potential effect on travel—domestic and international. Quarantines. Border closures.

Determine availability to access reliable, secure updates and information.

Business Continuity: Assessment

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Plan for absences. Personal injury/illness. Family member injury/illness. Community damage/quarantine. School/business closures. Public transportation closure. Other travel disruptions.

Determine employee access to: Healthcare services. Mental health and social services.

Determine whether employer will be needed to improve or provide other services.

Identify employees with special needs and develop plans to support them.

Business Continuity: Employees

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Communication. Redundant method. Additional languages.

Medical. Employer group medical plan.

Precert or preauthorization? Provider referrals? Rx requirements? Out-of-network reimbursements.

EPOs. Direct contracts.

Housing. Employer-provided/reimbursement. How long?

Meals.

Family.

Work.

Addressing Employee Needs

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First responders. Housing. Meals. Family issues. Compensation.

Disaster Recovery Team

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Compliance questions

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Payments or loans to employees.

Employer plan considerations. Group medical plans. Reporting and disclosure

requirements.

Leave requirements. FMLA. Military leave.

No Good Deed Goes Unpunished

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Payments and loans from employers to employees

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Direct payments from employers to employees. General rule.

§61: compensation includible in income.

§162: deduction for employer.

§139: special rule for disasters.

Salary continuation. Compensation.

General rule applies.

Not for services?

Paid leave.

Gift? Not in employment context.

Employer-Provided Disaster Payments or Loans

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Enacted after 9/11. Permits tax-free (income and employment) payment:

Expenses incurred as a result of a “qualified disaster.” Not compensated by insurance or otherwise. By employer or other person. To reimburse or pay reasonable and necessary. Personal, family, living or funeral expenses.

Repair or rehabilitation expenses for personal residence or contents.

By common carrier (such as an airline) as a result of a disaster.

By federal, state or local government.

Employer Disaster Payments—§139

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Qualified disaster: Terroristic or military action. Presidentially declared disaster. Resulting from catastrophic common carrier accident. If determined by applicable authority to warrant assistance.

Employer Disaster Payments—§139

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Generally: Foregone interest taxable. Exception for loans up to $10,000.

Treated as tax-free.

Query—can excess be covered by §139?

Interest-Free Loans

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General rule: Constructive receipt and charitable deduction limits. Donated leave is taxable to the donor.

Generally exempt from ERISA as a payroll practice.

Exceptions Medical emergencies. Major disasters. 9/11 response.

Katrina response.

Formalized—IRS Notice 2006-59 Major disaster leave-sharing plan.

Donor NOT taxed.

Recipient IS taxed (and amount subject to withholding, FICA, etc.)

Leave Donation Programs

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Exception Medical emergencies:

Leave Donation Programs (continued)

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Exception IRS Notice 2006-59 Major disaster leave-sharing plan.

Major disaster as declared by President. Written. Permits donor to donate accrued leave to other employees

who have been adversely affected by major disaster. Caused severe hardship to employee or family member that

necessitates absence from work.

Cannot exceed maximum employee accrues during the year. Leave recipient must use donated leave for purposes related

to disaster and be paid at normal rate of compensation. Plan adopts reasonable limit, based severity of the disaster,

on period when leave may be donated and used.

Leave Donation Programs (continued)

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Exception IRS Notice 2006-59 Major disaster leave-sharing plan.

Leave recipient may not convert donated leave into cash in lieu of leave. May use donated leave to eliminate negative leave balance arising from affects of

major disaster.

May substitute donated leave for leave without pay used because of major disaster.

Employer must make reasonable determination, based on need, regarding amount of leave each recipient may receive under the plan.

Leave donated due to major disaster my be used only for employee affected by that disaster.

Unused amounts must be returned to donor within a reasonable time so that the donor will be able to use the leave. Unless amounts are so small as to be administratively impracticable or unreasonable).

The amount returned is proportionate to amount donated.

Leave Donation Programs (continued)

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Employer plans

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Group medical plans. ERISA-mandated claims and appeals procedures. COBRA. HIPAA.

FMLA.

Welfare Benefits and Leave

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Written plan document.

Annual report.

Disclosure to participants and beneficiaries – SPDs+.

Fiduciary obligations.

Claims decisions. Extensions? Congressional or administrative.

ERISA Obligations

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Generally requires: Continued coverage. To individuals who would

otherwise lose coverage due to: Death. Termination or reduction of hours. Divorce or legal separation. Medicare entitlement. Dependent child change in status. Employer’s bankruptcy. Call-up of reservist.

At employer cost plus 2 percent.

COBRA

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Understanding the maximum required periods.

COBRA Qualifying Events

Termination (unless gross misconduct) 18 months

Reduction of hours 18 months

Death of a covered employee (spouse/dependents) 36 months

Death of a qualified beneficiary (decedent’s dependents) 36 months

Bankruptcy proceedings (retiring employer) 36 months

Second or subsequent qualifying events (first 18 months) 36 months

Divorce or legal separation 36 months

Loss of dependent status 36 months

Medicare entitlement 36 months

Medicare entitlement following initial qualifying event (first 18 months) 36 months

Disability after initial qualifying event (first 60 days) 29 months

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Initial notice—within 90 days of enrollment.

Qualifying event notice—to employer.

Election notice—to employee. Within 44 days of event.

Notice of unavailability.

Early termination notice.

Department of Labor Rules: Notice Requirements

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Identify plans subject to COBRA.

Provide initial notice of COBRA rights.

Disclose COBRA requirements and procedures in SPD.

Identify qualifying events.

Identify qualified beneficiaries relative to each qualifying event.

If provided notice that does NOT trigger COBRA, provide notice, with reasons.

Offer COBRA to each qualified beneficiary.

If elected, provide continuation coverage.

If coverage ends early, provide affected individual notice of reasons.

Employer/Plan COBRA Requirements

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Elect COBRA within 60 days of receipt of notice. Unintended consequences.

Pay first premium within 45 days of election.

Pay subsequent premiums within 30 days of due dates. Periodic payments acceptable. Plan must accept payments as timely if short by lesser of:

$50 or 10 percent of amount due.

Plan can inadvertently extend grace period.

Provide notice within 60 days of divorce or end of dependency.

Pay in form and manner as specified by plan. If not specified, any reasonable method is acceptable.

Qualified Beneficiary Obligations

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Adopt current notices and procedures. Review with counsel. Send new initial notice to all covered employees and spouses?

Establish procedures for responding to notices from individuals who are not eligible, as appropriate.

Establish procedure for sending early termination notice, as appropriate.

Standardize transmission procedures. First-class mail!

Standardize process for receipt of all COBRA materials. Old school—date stamp and save postmarks.

Keep records of all notice with proof of “mailing.”

Document, document, document (and back up).

Implementation Tips

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HIPAA: The Big Picture

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Basics. 12 weeks/12-month period for specified

reasons. No need to request “FMLA” to trigger

rights. Continuous and intermittent permitted. Review state laws that might be more

generous. Coordinate with ADA.

Covered employers.

Purpose.

Children/parents.

Serious health condition.

Fundamentals of FMLA

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For employers with multiple work sites, it is important to include language in your current FMLA policy informing employees whether all locations, regardless of size, are covered OR work sites that do not meet the eligibility requirements are excluded.

The FMLA applies to all public agencies, including state, local and federal employers; schools; and

Private-sector employers who: Employ 50 or more employees. For 20 or more work weeks. Within a 75-mile radius (measured in

surface miles).

Who is a Covered Employer?

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An eligible employee under the FMLA: Worked 12 months for the organization or

employer. Consecutive months of service are not required. Up to a seven-year break in service.

Worked for a total of 1,250 hours in the most recent 12 months.

All employees on payroll count toward the 50-employee requirement.

A work-site count is made at the time of a leave request.

Eligible Employees

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The FMLA allows 12 weeks of protected, unpaid leave for the care of: A newly born, adopted or foster-placed child. A spouse, child or parent with a serious health condition. Your own serious health condition.

Note: The DOL updated Fact Sheet #28F in August 2013 regarding the definition of a spouse: “’Spouse’ means a husband or wife as defined or recognized under state law for purposes

of marriage in the state where the employee resides, including ‘common law’ marriage and same-sex marriage.”

Update: The DOL revised the definition of a spouse to include same-sex marriages regardless of the state the employee lives in as of March 27, 2015. The DOL has moved from a “state of residence” rule to a “place of celebration” rule for the definition of a spouse.

Amount of Leave Allowed

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Hospital care.

Physical or mental condition.

Pregnancy or prenatal care.

Chronic, serious condition.

Multiple medical treatments.

Reasons For Leave: Serious Health Condition

12 weeks in a 12-month period.

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Bonding leave may be taken by an employee for the: Birth of his or her own child, or as an in loco parentis. Placement of a child with the employee for adoption or

foster care. Intermittent bonding leave is prohibited unless the employer

allows it or it is allowed under state leave law.

Leave must be taken within one year of the event.

Reasons For Leave: Bonding With a Child

12 weeks in a 12-month period.

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12 weeks of leave during a 12-month period due to a qualifying exigency arising out of deployment to a foreign country.

26 weeks of leave during a 12-month period to care for a family member or covered veteran who was injured or ill as a result of service in the military. Also known as service member caregiver leave or military caregiver leave. Amended in 2013 to include covered veterans.

2008 Family Military Leave AmendmentEligible Employees are Entitled to Protected Leave For a Qualifying Military Caregiver

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The employer must maintain: Group health insurance. Other benefits (company policy).

Premiums must continue to be paid by the employee and employer. The employee may elect to

discontinue benefits while out on FMLA leave. No waiting period when the

employee returns to work.

FMLA and Benefits

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Reason for leaveMaximum leave

entitlement*Care of child, parent or spouse who has a serious health condition. 12 weeks

Employee’s own serious health condition. 12 weeks

Disability due to pregnancy or pregnancy-related conditions. 12 weeks

Bonding with newborn child or child placed in connection with adoption or foster care.

12 weeks

Qualifying exigency. 12 weeks

Care for a seriously ill or injured service member or veteran. 26 weeks

Reasons For Leave and Leave Entitlement Annualized Leave Provided by the FMLA

*In a single 12-month period.

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The employee provides 30 days’ notice (unless unforeseeable).

If leave is unforeseeable, the employee must comply with call-in procedures for absences. Unless unusual circumstances exist.

The employee provides notice of qualifying exigencies as soon as possible (FMLA).

Notice requirements: Employee

Note: Know your company’s process when receiving time-off requests and/or when you learn an employee needs time off.

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For the FMLA, the employer provides:

Notice Requirements: Employer

Eligibility, rights and responsibilities notice Certifications Designation notice

Provide form within five business days of FMLA leave notification or becoming aware that FMLA leave may apply.

Attach to the notice of eligibility and rights and responsibilities form the appropriate certification form (employee has 15 calendar days to return).

Provide notice within five business days after receiving the appropriate certification form.

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Reasonable medical certifications may be requested. Given after notice of need

for leave. Employer: Within five business days. Employee: Respond within 15 calendar

days.

Medical Certifications and Exams

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Employees who may be called to service/reserves/National Guard.

Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). Requires employer to provide re-employment and benefits rights for leaves for

military and certain other public service personnel.

Enacted to: Encourage military service by eliminating or minimizing disadvantages of

military duty. Minimize disruption to lives of employees taking military leave and providing

prompt reemployment following service; and Prohibit discrimination against employees taking leave for military service.

Armed Forces Personnel

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No employers are exempt.

Non-benefits protections. Nondiscrimination.

Cannot refuse to allow service, discriminate or retaliate. General right to reinstatement.

If application made within specified timeframes after termination of service. Protection of period following return against termination without cause.

Benefits protected. Extended COBRA protection. Reinstatement of medical plans. Accrual of vacation. FMLA rights preserved. Retirement benefits—loan protections.

USERRA Overview

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Two types of leave related to military service:

FMLA Military Amendment

Active duty leave

Up to 12 weeks during the usual 12-month period (as selected by employer).

Caregiver leave

Up to 26 weeks of leave during the 12-month period (when the caregiver leave commences).

Counts against the FMLA leave allowance and is reduced by any other FMLA leave taken during the period.

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Uniformed services. Active or reserve duty, voluntary or involuntary,

plus time off for training or instruction.

Commissioned Corps of Public Health Service.

Other categories designated by president in time of war or national emergency.

Governor call up of National Guard? Not USERRA so not protected by USERRA. State laws may apply. Employers may choose to voluntarily treat like

USERRA.

What Constitutes Military Service?

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FMLA—to determine eligibility: Employee returning from military service credited with time he or she would have worked.

Welfare benefits: Health plans must provide COBRA-like continuation rights.

Runs concurrently with COBRA. Cost.

Service 30 days or fewer. Regular employee rate.

Longer than 30 days. COBRA rates.

24 months (vs. 18 for regular COBRA).

Life, disability and other types of plans subject to parity requirement. No worse than anyone else on leave of absence.

Reinstate all benefits up on return from USERRA leave.

USERRA Application

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Retirement plans: Pension plans including both ERISA and non-ERISA plans. No break in service for USERRA-qualified employees. Funding rules for DC and DB plans. Plan loans.

Payments can be suspended. Same level of payment can be resumed with balloon payment or reamortization. Maximum interest during leave—no more than 6 percent (regardless of plan rate).

Administrative procedures: USERRA rights poster.

https://www.dol.gov/vets/programs/userra/USERRA_Private.pdf

Adopt notification procedures regarding continuation coverage. Adopt procedures for late/nonpayment of premiums. Applicable plans should comply with both COBRA and USERRA.

Entitled to most beneficial if different.

USERRA Application

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Eligibility Voluntary or involuntary. Active duty. Active duty for training. Initial active duty for training. Inactive duty for training. Full-time National Guard. Examination to determine fitness for

duty. Funeral honors for duty performed by

National Guard or reserves.

Re-Employment Rights

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Cumulative leave not to exceed five years (with exceptions). Entitled to re-employment provided they take necessary steps. Advance notice to employer. Exceptions if military necessity, impossible or unreasonable.

Exceptions to re-employment rights: Separation from uniformed service with dishonorable or bad

conduct discharge. Separation under other-than-honorable conditions. Dismissal or court martial. AWOL or imprisoned by civilian court.

Re-Employment Rights

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Return-to-work requirementReport to work at the beginning of the first regularly scheduled work period following the end of service plus eight hours, or as soon as possible thereafter if satisfying the deadline is unreasonable or impossible through no fault of the employee.

Submit application for employment no later than 14 days after the completion of the service, or as soon as possible thereafter if satisfying the deadline is unreasonable or impossible through no fault of the employee.

Submit application for employment no later than 90 days after the completion of service.

Report to work at the beginning of the first regularly scheduled work period following the end of service plus eight hours, or as soon as possible thereafter if satisfying the deadline is unreasonable or impossible through no fault of the employee.

Apply for work or submit application as above (depending on length of absence) when recovery is over, but recovery limited to two years. The two-year period is extended by any minimum time required to accommodate circumstances beyond the employee’s control that make compliance with the deadlines unreasonable or impossible.

Period of absenceLess than 31 days.

More than 30 days but less than 181 days.

More than 180 days.

Any period if the absence was for purposes of an examination for fitness to perform service.

Person who is injured or ill as result of (or aggravated by) military service.

Specific Timeframes

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Evacuation OSHA

Egress -https://www.osha.gov/pls/oshaweb/owadisp.show_document?p_table=STANDARDS&p_id=10113

Employee alarm systems -https://www.osha.gov/pls/oshaweb/owadisp.show_document?p_table=STANDARDS&p_id=9819

Evacuation planning - https://www.osha.gov/SLTC/etools/evacuation/index.html

National Fire Protection Association https://www.nfpa.org/codes-and-standards/all-codes-and-standards/list-of-codes-and-

standards?mode=code&code=101&DocNum=101

FEMA Shelter design - https://www.fema.gov/media-library/assets/documents/4498

Additional Resources

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“If you ask me anything I don’t know, I’m not going to answer.”– Yogi Berra

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