COVID -19:  FFCRA & CARES Act – A Helpful Guide

By  Dorothy M. Cociu

As I write this article, I am, like all of you I’m sure, confined to my home office, where I’ve been for a number of weeks during the COVID-19 pandemic.  I’m fortunate as I’m perfectly healthy, as are all of my family and friends at this point. Of course, others have not been quite so lucky.  For all of us, however, our lives have been likely forever changed… From the way we greet people, the way we spend time with friends and relatives, and the way we wonder about whether our finances will hold out during this pandemic and its economic impact on all of us.

We can’t shake hands. We can’t give hugs. For many of us, we couldn’t even spend the Easter Holiday with our family and friends, as we were all following safer at-home orders, to protect our loved ones and ourselves.  Our new normal is Facetime and Zoom gatherings, virtual happy hours or chat sessions.  For those who have or have had family members and friends in the hospital, we couldn’t visit them.  We couldn’t hold their hands.  We couldn’t wipe away their tears of sadness and fear.  But, we can be thankful for their recoveries and for our ability to bounce back and survive.  We can be thankful for technology to allow us to stay somewhat connected, but for most of us COIVD-19 brought with it a longing to just be close to our loved ones. I think that with everything that has happened over the last few weeks and months, we now have a profound sense of longing for closeness and will cherish more than ever our friends and families.

Now, it’s time to get moving forward, and try to recover from the financial and emotional devastation caused by COVID-19.  Our businesses and those of our employer clients are required to offer federally required paid sick leave and expanded family medical leave under FFCRA.  Although employers will receive tax credits, those will not be seen until the filing of next year’s tax forms.  The CARES Act will provide hopefully some relief, but the truth is, most of us will look back at 2020 as one of the most financially and emotionally challenging years of our lifetimes.

My job today is to attempt to break it down for you, in as simple terms as possible, how to administer the complexities of the FFCRA, and provide some basic guidance on the CARES Act. This is not an easy task, but I will do my best.  For those of you who prefer videos, I recorded one for The California Association of Health Underwriters in early April, and it was published on their COVID-19 page of the CAHU website on April 13, 2020.  To view that, here is the link:  Note that you must login as a member to view this video.  For those of you who haven’t logged into the new CAHU website yet, you will need your NAHU ID or login information.

COVID-19 Brief Background

As we all know, we do not expect to have a vaccine for COVID-19 until 2021, but we are hoping for the new antibody tests to be available soon to help us all get back to work.  In the meantime, we need to continue our preventive measures, with social distancing, working from home, washing hands and avoiding touching our faces.  Schools will likely be closed for the remainder of the school year.  HHS is now recommending that we wear face masks to cover our nose and mouth when we go out in public… Many retail establishments, such as grocery stores, are now requiring them for entry.  Obviously, the more we educate people, the more we can flatten the COVID-19 infection curve and reduce the spread, while the healthcare workers can continue to give this everything they have and help those who are sick.

On the business side, employers are required to educate their workforce on prevention of COVID-19.  Under FFCRA, they are required to post notices about the FFCRA’s leave rights for paid sick and extended family medical leave.

The IRS of course gave Americans tax relief by extending the deadline to file and pay for 2019 taxes until July 15, 2020.  Other filing provisions, however, remain in place, such as the filing of ACA reporting forms (due March 31, 2020 if filing electronically) and related.

 Brief Timeline

To bring us up to speed, I wanted to include a brief timeline of events related to COVID-19, the FFCRA and the CARES Act.

Date Actions
March 5, 2020 California CDI and DMHC puts health coverage mandate into effect
March 18, 2020 FFCRA signed into law, and health coverage mandate goes into effect; Includes Emergency FMLA and Emergency Paid Sick Leave Provisions, free testing for coronavirus, increased funding for unemployment insurance, food aid, and Medicaid
March 24, 2020 FFCRA:  DOL issues guidance on Paid Sick Leave and FMLA Expansion
March 25, 2020 FFCRA:  DOL issues Paid Sick Leave Poster and Q&A
March 27, 2020 CARES Act signed into law; Announcement of Economic Injury Disaster Loans (EIDL) and Paycheck Protection Program Loans (PPP) Through June 30, 2020
April 1, 2020 FFCRA:  FMLA expansion, paid sick leave, and tax credits go into effect
April 1, 2020 FFCRA:  DOL to issue guidelines on calculation of paid sick leave
April 3, 2020 “Launch” of Paycheck Protection Program; Banks Scrambling
April 4-6, 2020 Major Banks Announce Their PPP Program is Closed; Can’t accept more


Families First Coronavirus Response Act (FFCRA)

The first actions of the FFCRA was to provide coronavirus testing with no cost-sharing, for both fully insured and self-funded health plans, including grandfathered plans.  It seems hard to believe that here in California, those mandates started only on March 5.

In a very short amount of time, we were flooded with regulations and guidance, and for a couple of weeks, we were getting literally hourly, not just daily or weekly, updates and additional guidance.  It was a crazy time and I could barely keep up!  My hats off to the regulators, however, as they did an amazing job getting us all information in a very short amount of time.  I honestly don’t know how they did it so quickly…

Since March 18, when FFCRA was signed into law, a large number of releases were put out by the IRS/Treasury, DOL, HHS and other federal and state agencies, to assist employers in understanding and implementing FFCRA.

The employer provisions are very complicated, because they overlap and provide additional requirements for paid sick leave and FMLA, in addition to current laws.


It’s important to understand that the FFCRA does not replace existing federal or state laws; it exists in addition to them, or alongside them.  FMLA/CFRA, California Paid Sick Leave, California’s Leave for Participation in School Activities laws are still in place.  Existing wage replacement laws and insurance laws are still available, including California Paid Sick Leave, Paid Family Leave (PFL), State Disability Insurance (SDI), Short Term Disability, Unemployment Insurance and Workers’ Compensation still exist and must be administered.  To assist with the confusion, the Department of Labor put together a good chart, which can be found at .


Under the FFCRA, the Paid Sick Leave and extended FMLA rules apply to employers with between 1 and 500 employees, and to pubic employers of any size. If an employer has over 500 employees, they are waived from the FFCRA paid sick leave and paid FMLA leave provisions.  However, they can always be more generous than the law requires.  There is also a possible exemption for employers with less than 50 employees, if they can demonstrate “jeopardy to the viability of the business as a going concern.”  Employers are asked to document how and why this would jeopardize the business, and review the DOL’s Wage & Hour Questions & Answers, which is continually updated.  They are asking that employers DO NOT send any materials to the DOL.  The Q&A, along with a fact sheet for employers and employees, can be found at


Under the FFCRA, the federal government for the first time requires paid leaves.  The six important factors related to the leaves are spelled out below.

If an employee is unable to work or telework, the employer must provide paid sick leave due to a need for leave because:

  • The employee is subject to a federal, state, or local quarantine or isolation order related to COVID–19.
  • The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID–19.
  • The employee is experiencing symptoms of COVID–19 and seeking a medical diagnosis.
  • The employee is caring for an individual who is subject to an order as described in subparagraph (1) or has been advised as described in paragraph (2).
  • The employee is caring for a son/daughter if the school or place of care of the son/daughter has been closed, or the child care provider of such son/daughter is unavailable, due to COVID–19 precautions.
  • The employee is experiencing any other substantially similar condition specified by the Secretaries of HHS, Treasury, and Labor.

Items 1-3 are paid at 100% full pay.  Items 4-6 are paid at 2/3 pay.  There is an exemption for an employer of an employee who is a health care provider or an emergency responder.

FFCRA Paid Sick Leave is effective on April 1, 2020 and sunsets (expires) on December 31, 2020.  It’s not retroactive, so if an employee went on leave prior to April 1 they are not subject to FFCRA.  The amount of pay for items 1, 2 and 3 is based on the regular rate of pay, and items 4, 5, and 6 are based on 2/3 of the regular rate of pay.  The maximums are $511/day and $5,110 in the aggregate for 1, 2 or 3, and $200 per day and $2,000 in the aggregate for items 4, 5, and 6.  Employers are required to pay up to 10 days, or 80 hours for full time, and for part-time, the average they worked over 2 weeks.


As a simple example, if the employee is paid $21/hour, the amount paid is 80 x $21 = $1,680, and if the employee is paid $21/hour, and is entitled to 2/3rds of pay, the amount paid is 80 x $14 = $1,120 ($14 is 2/3 of $21).  If someone has 40 hours of PTO booked, you cannot require them to take that PTO time first.  If someone has zero hours of regular PTO booked, they can still take up to 80 hours for FFCRA.

For the full rate or 2/3rds of rate, employees will receive for each applicable hour the greater of: Their regular rate of pay (last 6 months), The federal minimum wage in effect under the FLSA, or The applicable State or local minimum wage.  Their regular rate of pay includes commissions, tips, and piece rates.


Expanded FMLA is effective April 1 – December 31, 2020 for employers with 1 to 500 employees.  For such expansion, FMLA is amended to add a new basis for up to 12 weeks of leave because of a “qualifying need related to a public health emergency,” which means the “employee is unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school or place of care has been closed, or the child care provider of such son or daughter is unavailable, due to a public health emergency.”  An Eligible Employee must have worked for the employer for at least 30 days prior to the effective date of FFCRA (or March 2, 2020).

The first 10 days of the leave is unpaid (the elimination period).  During this time, the employee may take their accrued sick, vacation, personal or medical leave time in their PTO banked hours if they choose to do so.  After the 10-day elimination period, the leave is paid, again, at 2/3 of their regular pay, up to a maximum of $200 per day, and $10,000 aggregate.

Again, employers with fewer than 50 employees may be able to get an exemption, if the cost would jeopardize the viability of the business going forward.


Tax credits are available to employers Effective April 1 – December 31, 2020.  The benefit available is a refundable payroll tax credit available for Paid Sick Leave and FMLA extension of 100%, up to the limit allowed for paid leave under the FFCRA.  The payroll tax credit will include an amount attributable to employer cost for health coverage, so you need to keep people on their health benefits during this time.  For self-funded plans, they haven’t released guidance yet as to how to calculate cost of coverage (as of the date I am writing this article), but at this point, we assume that will likely be the COBRA rates.

The process will be a dollar for dollar offset against payroll taxes, and guidelines are available on the Treasury website.  Tax credits are NOT available to government employers, however.  There will be a 30-day non-enforcement policy issued by the Department of Labor.


Employers are required to post an Employee Rights poster in their worksites.  For employers with employees working from home or elsewhere, you must also get a copy of the poster to them, either by posting it on your intranet if you have one (and letting employees working from home or elsewhere that it is posted there) or by emailing or mailing it directly to employees working at home.

The poster can be found at:  We have also posted it on the CAHU website on the COVID 19 page, at

There is a simple one-page poster, or a slightly longer, more detailed poster available.  The more detailed is approximately 1 ½ pages and is also available in Spanish.


If you’re covered under a health savings account (HSA) and are enrolled in a High Deductible Health Plan (HDHP), there were questions as to whether you’d be able to receive no-cost testing and treatment for COVID-19.  To answer these questions, the IRS released Notice 2020-15, which says that you are still eligible to contribute to an HSA, even if your plan covers medical care services associated with testing and treatment for COVID-19 below or without a deductible.


A lot of employers are asking about options available to laid off or terminated employees.  First, they should review their Plan Documents to see if COBRA applies.  If so, they should offer COBRA.

Generally speaking, furloughs are often a short layoff, and often employers continue their benefit plans during this time.  However, a layoff is a job termination, so any and all accrued leave is paid out, and COBRA is offered.

It’s important to note also that Covered California allows for a special enrollment for loss of coverage/job within 30 days of the qualifying event.  In addition, Covered California has extended their annual open enrollment due to the Coronavirus through June 30, 2020.  Employers may want to remind their laid off or terminated employees that they could be eligible for subsidies under Covered California, which may make it a much more affordable option than COBRA.  In some cases, some may be eligible for Medi-Cal.


As any other health plan change, the employer’s Plan Document/SPD must be amended to comply with the COVID-19 no-cost screenings.  Self-funded employers will need an amendment, Summary of Material Modifications and a Notice to Employees.  Fully insured employers should check with their insurance carriers to see if they are amending their certificates of coverage.  In many cases, you may still need to make an amendment to the employer Wrap-Around Plan Document.


A question I’m getting a lot from my employer clients is whether or not the information provided to an employer by an employee is subject to the protections of HIPAA.  Information provided to an employer by and employee is generally not subject to HIPAA, because it wasn’t received, created or maintained by the health plan.  For example, in a situation where an employee is self-quarantining because of exposure to the virus and they tell the employer so.  The information didn’t come from the health plan, so technically it’s not subject to HIPAA.  However, if the employer uses health plan Information to determine if an employee has the virus, that information would be subject to HIPAA.  Keep in mind, even if it’s not subject to HIPAA, the employer should treat the health information as sensitive personal health information and should protect it as such.  Here in California, we have a number of additional laws, including the Confidentiality of Medical Information Act, which requires employers to protect any and all health information, regardless of whether it’s created, received or maintained by the health plan.  Therefore, employers should always treat health information as sensitive personal information and apply safeguards to protect it.  Since they probably are already safeguarding HIPAA information, it makes sense to safeguard it in a similar manner.

Another question I have been asked more than once is can an employer tell employees if a co-worker has COVID-19 or suspects they’ve been exposed?  In this situation, it’s clear cut… HIPAA applies, and  HHS guidance says you should notify other employees that a co-worker has been exposed, but they say the employer should not provide the name or names or persons who have or have had COVID-19.  They may figure it out if only one person is absent, but the employer should NOT provide names.

What should an employer do if an employee informs them that they’ve been exposed or tested positive for COVID-19?  They should shut down the office/area and clean/sanitize before re-opening; identify the co-workers who may have been exposed; inform co-workers without identifying the employee and recommend they speak to a health care provider and self-quarantine for at least 14 days; and encourage employees to contact HR with questions. Also advise them that further communication is forthcoming.  In these circumstances, employers should definitely keep communicating with their employees.


Unfortunately, there have been reports of employees who have created false doctor notes or documents to get paid time off under FFCRA, and in some cases those false reports cost the employer greatly in cleaning costs, shut down costs, payment for leaves when employees were sent home to self-isolate for 14 days, and related.  CNN recently reported that the FBI’s Office of the Private Sector notified members of private industry that they should be on the lookout for fraudulent doctors’ notes and falsified documentation from employees claiming positive COVID-19 test results.  Employers should make sure that the notes are on official letterhead from a medical facility, and perhaps call the telephone number on the documents to verify the phone numbers are in fact related to such facilities. The FBI recommends that supervisors should also look at inconsistencies in font and spacing, or signs that a document has been computer edited.

FSA Elections

In another matter, it’s important to note that employees may seek to stop dependent care FSA elections due to school closures, and such change are permissible based on the change in the provider cost (the cost is $0 when day care is closed).


I mentioned the DOL Wage & Hour Questions and Answers above.  I highly recommend that employers review those frequently, as they are being updated consistently.

The CARES Act – Overview

To help businesses suffering due to the Coronavirus outbreak, the federal government enacted the CARES Act (Coronavirus Aid, Relief and Economic Security Act).  This legislation was passed on March 25, and signed into law on March 27, 2020.  It is designed to assist employers with fewer than 500 employees, and it includes corporations, sole proprietors, even independent contractors, self-employed individuals, and tribal businesses.  The CARES Act provides $349 Billion in Small Business Administration loans (SBA).  Many of the health plan provisions of the CARES Act state an effective date of March 18 (the effective date of FFCRA), rather than March 25, to be consistent with FFCRA.

There are basically two types of loans (there are also more 7(a) loans, which I won’t be discussing here), Economic Injury Disaster Loans (EIDL), and Paycheck Protection Plan (PPP) loans.

The Paycheck Protection Program, which most employers are interested in, provides up to a $10 Million cap to employers.  The goal is to keep employees employed; therefore the majority of the loan proceeds must be used for payroll and payroll-related expenses.

Employers can apply through any SBA-certified lender beginning April 3, 2020 thru June 30, 2020.  Lenders include banks, credit unions and other qualified SBA Lenders.

To calculate how much of a loan you may qualify for, you should multiply your 2019 payroll average monthly cost (including health benefits cost) by 2.5.  That is your loan amount.  (For newer businesses, there are other calculations available.)

Under the CARES Act, payroll includes salary, wage, commission, or similar compensation, cash tips or equivalent, payment for sick time, FMLA (exception – FFCRA leaves), vacation, group health insurance premiums, payments for retirement benefits, state or local tax.  What’s excluded includes compensation over $100k, payroll taxes income taxes, compensation to employees outside of the USA, and FFCRA leave expenses (those are given a tax credit).  There are special rules for seasonal employers.

Once the loan is secured, you will be required to track all of the expenses that you used the loan proceeds for over the immediately following 8 weeks.  You must document and return all documentation to your lender to prove that the funds were used only for qualified expenditures.

Qualified expenditures include:  payroll, payroll-related benefits (like health insurance) utilities, rent or mortgage costs, and leased equipment.  The payroll expenses need to be at least 75% of the loan amount.  The utilities, rent, mortgage costs or leased equipment expenses must not exceed 25% of the loan amount.  Be careful with this and keep very good records.


Under the CARES Act, the lender will forgive the qualified portion of the loan used for acceptable items (it becomes a grant you do not need to repay).  However, keep in mind, this loan is all about keeping employees employed.  If you reduce your employee headcount during this time, you will reduce the forgiveness in proportion to the reduction.  For the portion not forgiven, the interest rate is 1% for a two-year term.  There is a 6-month deferment on the first payment and no prepayment penalty.


You may have heard about the significant problems with the initial PPP roll-out.  The SBA did not get the guidance to the banks until approximately 1 am on April 3, 2020 (the date of the launch), so the banks were left scrambling to complete the programming functions needed to automate the process.

Because the banks needed time to get programming completed, there was a slower than anticipated roll-out.  To deal with this, many banks were phasing in applicants by type.  For example, they may have started with single owner companies, then multiple owner companies, then 1099 contractors, etc.

Unfortunately, due to the pre-established limits set by SBA with each lender, some banks met their maximums in the first 24-72 hours after the roll-out and shut down the program, or put it on pause.

Most banks are requiring that you must be a business customer, which caused problems for those whose normal financial institutions were already maxed out on their loan applications limits.  In addition, the SBA system crashed on the Monday following launch.

On April 16, the federal government announced that the funds had run out.  There have been requests for additional funds for this program, and it is likely that additional funds will be authorized by Congress.  So, stay tuned, keep checking back with your banks or check the resources on the government websites, or check the CAHU website. I have been providing CAHU with information for the COVID-19 page since March, and will continue to do so.


There are also Economic Injury Disaster Loans available.  These Include options for a $10,000 grant; they are supposed to be easy and fast.  In fact, SBA claims you will receive this grant within 3 business days of the application filing. It’s a grant and does NOT have to be repaid.  However, at the time of this writing, these funds have also reached their maximums.  Again, Congress is working on additional funds so stay tuned.

You should be aware that the amount received from an EIDL grant is subtracted from the forgiveness amount of the PPP if you’re applying for both.  For example:  If you received $75,000 from PPP and $10,000 from the Economic Injury Disaster Loan Grant, they will subtract the $10,000 you already received from the PPP loan amount.  Any previous EIDL loans an be rolled into the new PPP loans.


There is an excellent US Chamber of Commerce piece that was created almost immediately to educate employers on the PPP and EIDL loans.  I suggest you pull it off their website, or pull it from the CAHU website on the CAHU COVID-19 page.


The CARES Act also includes some health plan changes.  It provides for all testing of COVID-19 is to be covered by private insurance plans without cost sharing for both fully insured and self-insured plans alike.  It includes services/items provided during medical visit, including telehealth visit, urgent care, doctor’s office or ER that result in testing or screening.  It’s effective March 18, 2020 and extends through the end of the public health emergency.  Under the CARES Act, HDHPs can cover telehealth services prior to the patient reaching the high deductible through 12/31/20.  Keep in mind, this is voluntary – if the plan covers telehealth below the deductible, employees will not lose eligibility to contribute to HSA.

There is also an inclusion of OTC medical products as qualified expenses under FSA, HDHP and HRA plans. Once again, these are voluntary; plans must be amended to cover this and claims must be substantiated.  Within this provision, physician prescriptions are not required, and even menstrual products are considered qualified expenses.

In other provisions, the DOL was given the authority to postpone ERISA filing deadlines by one year in the case of a public health emergency (note; this is not guaranteed, so check the DOL website for updates).  The CARES Act also has provisions for Student Loans.  It allows employers to pay to an employee or lender, including principal or interest, up to $5,250 toward an employee’s qualified education loan.  This is not taxable income to employees; payments must be made before 1/1/21 (26 U.S.C. section 127).


This information is current as of the date of this writing, but you should definitely check the CAHU website’s COVID-19 page regularly.  I will continue to update it as new information becomes available.

Dorothy M. Cociu, RHU, REBC, GBA, RPA, LPRT, is the incoming vice president, communications for California Association of Health Underwriters.

Disclaimer:  This information has been gathered from public sources and should NOT be used as legal or tax advice.  Dorothy Cociu, Advanced Benefit Consulting & Insurance Services, and California Association of Health Underwriters always recommend that you seek advice from your legal counsel as situations vary, and because this information is constantly being changed and updated.