Skip to main content
 

Coronavirus Disease (COVID-19)

American Fidelity understands the coronavirus is impacting the daily lives of our customers and is causing possible disruptions to the employers we serve.

We are prepared to handle circumstances related to the coronavirus through our business continuity protocols. Ensuring continuous service for our customers is our top priority. 

Frequently Asked Questions

Updated as of 11/03/2020

General FAQs

Is American Fidelity equipped to service their customers if their operation is forced to close?

American Fidelity provides all colleagues with the technology and equipment to work remotely and securely, if necessary. We are confident that we could maintain our business and claims paying abilities in the event of limited or no access to our facilities.

Out of an abundance of caution and to support a healthy community, all offices are not currently accepting walk-in customers.

Although mail service delays are not something that can be controlled, American Fidelity strives to ensure our service levels remain the same throughout all circumstances. We encourage you to submit claims through your online account and sign up for direct deposit to avoid mail delays.

In an effort to adhere to social distancing mandates and help minimize the spread of COVID-19, American Fidelity can provide employers with the support and resources they need to navigate enrollments virtually. Virtual benefits enrollments allow employees to meet face-to-face by video conference with their account manager. Employees will be able to walk through their enrollment, ask questions, download brochures, and sign required forms.

For group products such as disability, hospital indemnity, group critical illness insurance: You must be employed to meet the eligibility requirements. However, some group policies offer a conversion or continuation provision which may allow you to keep your benefits. Contact Policy Continuation at 800-943-2231 to discuss.  

For individual products such as accident, cancer, and life insurance: You may keep these benefits by setting up automatic bank draft. Learn more at americanfidelity.com/keep-my-coverage or call Policy Continuation at 800-943-2231 to initiate the process.  

Also, keep in mind that we’re following direction from each state on specific policy guidance.

Yes, if you are unable to engage in the normal duties of your job. You would be subject to verification by your healthcare provider(s) and employer. You would also be subject to your plan elimination period and all other policy provisions.

If it is not possible to have an authorized employer representative complete the Employers Report of Claim due to a COVID-19 closure, submit the completed Statement of Insured and the completed Attending Physician Statement, together, along with a note indicating you were unable to obtain a completed Employer Report of Claim due to the closure.

For school employees, your administration office may remain open during the school closure and you should consult the administration office to complete the Employers Report of Claim. Although we cannot guarantee payment, every effort will be made to make a claim determination without this form if an authorized employer representative is not available to complete the form.

We recognize customers may have difficulty obtaining forms from their physicians during this time. We want to be as flexible as possible. Because each situation is different, we recommend calling our customer service team at 800-662-1113 to discuss how this may affect your specific claim.

No, an employer closure would not have an effect on an active disability claim.

Most of our contracts are based on calendar day elimination (waiting) periods, so they are not impacted. Some of our plans that are only available in California are based on working day contracts. So, if a person is scheduled to work on a particular day but the business is closed due to COVID-19, this will still count as a working day. Please see your policy for details on your specific plan.

No. Time off work for quarantine (with no COVID-19 diagnosis) or precautionary measures by physician to limit exposure due to an underlying medical condition (if the underlying medical condition itself is not disabling), would not be covered by disability insurance.

Returning to work, either remote or at your regular location, could have an impact on your disability claim. You should notify our benefits team at 800-662-1113 if you return to work in any capacity, or to discuss questions regarding the impact of work and your disability claim.

Unemployment benefits are listed as an offset in many of our disability insurance policies. If your specific policy has “unemployment” listed as an alternative source of income, your disability payment will be impacted. Log in to your account to download your policy document.

Claim eligibility is determined by your physician claim statement and your time off of work (regardless if you are working at home or at your worksite). If you were to return to work full time and are receiving pay prior to your physician recommended duration, you may not be eligible for benefits on the date you began working again.

American Fidelity disability policies require the insured to be unable to work due to illness or injury. A quarantine for precautionary measures only, where no disabling illness exists, would not be covered. If a quarantine were accompanied by a diagnosis of coronavirus, benefits may be payable, subject to the terms of the policy.

No. The stimulus check is not considered salary and wage continuation and thus not an offset. Your disability benefits will not be affected by the stimulus check. 

If there is a gap in the coverage, new pre-existing condition limitations will apply. To help prevent a gap in coverage, contact Policy Continuation at 800-943-2231 to discuss conversion or portability options. This will help ensure your coverage is maintained (if the policy terms allow it) during the period you are not working for your employer.

Due to Internal Revenue Code (IRC) Section 125 regulations, pre-tax benefits cannot be changed outside of a qualifying life event. At this time, the Internal Revenue Service (IRS) has not published any guidance indicating exceptions to the rules due to COVID-19. We are actively monitoring any changes to the regulations or published guidance and will post them on this page if updates are provided.

Group products such as disability, critical illness, hospital indemnity, and gap insurance require employee to be actively working for coverage to begin and remain in effect.

If a place of business is closed, employees will be considered actively at work if:

  • Not disabled on the insurance effective date, and/or
  • Not absent from scheduled work day due to sickness

The transmission of a communicable virus does not meet the definition of accident under any of our policy definitions. It may be covered as a sickness under a disability policy, subject to the terms of the policy.

Benefits may be payable for hospital admission, hospital confinement, ICU, rehabilitation, and outpatient riders, as a result of COVID-19. COVID-19 is not covered by the health screening benefit since it is not listed as an accepted test.

COVID-19 benefits are paid the same as any other illness. Gap insurance is designed to help pay the deductible, co-insurance, or other out-of-pocket expenses related to inpatient confinement or treatment.

There are no benefits payable on the base cancer insurance plan. However, if you have purchased an ICU rider and you are admitted to ICU as a result of contracting COVID-19, you may potentially be eligible for a benefit.

No. Critical illness insurance provides a benefit to the Insured only when he or she suffers from the following health conditions:

  • Heart attack
  • Coronary artery bypass surgery
  • Permanent damage due to a stroke
  • Permanent paralysis resulting from a covered accident
  • Major organ failure
  • End stage renal failure

Our accident policies do not require in-person visits for evaluation and treatment of accidental bodily injuries. Telemedicine visits are acceptable when medically appropriate.

If there is a gap in the coverage, new pre-existing condition limitations will apply. To help prevent a gap in coverage, contact Policy Continuation at 800-943-2231 to discuss conversion or portability options. This will help ensure your coverage is maintained (if the policy terms allow it) during the period you are not working for your employer.

If a vaccine were developed for COVID-19 it would be covered under the AF™ Limited Benefit Accident Only Insurance wellness benefit, just like flu shots are covered under the immunization benefit.

At this time, changes are not permitted for pre-tax supplemental insurance benefits. Mid-year election change guidance was announced that may allow employees to make changes to some employer-sponsored health coverage outside of a qualifying life event, but this change does not include supplemental insurance products.  

Log in to your online account to access your policy documents to view specific coverage and benefits. 

Group products such as disability, critical illness, hospital indemnity, and gap insurance require employee to be actively working for coverage to begin and remain in effect.

If a place of business is closed, employees will be considered actively at work if:

  • Not disabled on the insurance effective date, and/or
  • Not absent from scheduled work day due to sickness

Due to COVID-19, new mid-year election guidance was announced that may allow you to make a change to your HCFSA election. Contact your employer to find out if you are permitted to make a change.

Due to COVID-19, extended claims periods were announced for some plans that may allow you to incur expenses after your plan year has ended. Please contact your employer to determine if your plan is eligible for the extension and to learn about your current plan’s grace period, carryover, or runoff dates.

We also understand that many people are trying to limit their exposure by practicing social distancing, which may prevent them from being able to conveniently shop for medical supplies.

Our partner, Health E-Commerce, offers exclusive coupons for American Fidelity customers on their online stores. Use the code AF5OFF for $5.00 off your purchase:

Yes, if your daycare or employer closes or reduces hours, you can make a mid-year election change to your DCA. You can reduce your election amount to $0, or change to a lower annual election that covers your adjusted cost of care.

To stop or change your DCA contributions, please contact your employer.

You will be able to make a change to your DCA once daycare services and employment resumes. This would require another change form to be submitted at that time.

Yes. With recent legislation, account-based plans, including Health Savings Accounts, Flexible Spending Accounts, and Health Reimbursement Arrangements, may reimburse individuals for the purchase of over-the-counter drugs and medicines without a prescription from a physician. This reverses a restriction imposed by the Affordable Care Act. This rule also includes reimbursement for menstrual products. View Eligible Expenses 

This change can take effect upon amending the employer’s plan document. The change can be applied to amounts paid or incurred starting January 1, 2020, where permitted by the employer’s plan. At this time, there is no end date for the new legislation. American Fidelity will begin implementing changes on April 15, 2020 for executed amended plan documents.

Yes. The CARES Act allows qualified high-deductible health plans (HDHPs) with a health savings account (HSA) to cover telehealth services before the individual reaches their deductible, regardless of whether the telehealth services relate to COVID-19. This rule is effective now and lasts through plan years beginning in 2021.

The amounts carried over into the new plan year, even though you did not make a new election. You may use your card during the year to pay for eligible expenses.

No, you may not use your card during the Run-Off Period. You may submit eligible claims incurred during the previous plan year via the mobile app, our website, or via mail or fax.

Yes, you may continue to use your card during the 2 ½ month Grace Period. After the Grace Period is over, your card will be disabled.

Due to COVID-19 guidance, FSA accounts are experiencing changes. During the period that American Fidelity is gathering Employer Section 125 Plan changes, updating systems, and updating participant accounts, cards may be temporarily disabled and account balances may not reflect accurately. For example, if your plan has carryover, and your plan year ended recently, the balance may not be showing in your new plan year quite yet. We apologize for any inconvenience.  

Due to COVID-19 guidance, FSA accounts are experiencing changes. During the period that American Fidelity is gathering Employer Section 125 Plan changes, updating systems, and updating participant accounts, cards may be temporarily disabled and account balances may not reflect accurately. For example, if your plan has carryover, and your plan year ended recently, the balance may not be showing in your new plan year quite yet. We apologize for any inconvenience.

New charges on the debit card will pull from the plan year based the date of swipe.  If you are trying to use funds from the previous plan year during the Run-Off Period, please submit manual claims.

Because you are still able to submit claims during your Run-Off Period that were incurred during your previous plan year, any new transactions from the debit card will use amounts from your new plan year.  Please file manual claims and do not use the debit card if you are trying to use up previous year’s funds.  Once the Run-Off Period is over, if  there are still funds left in your account, they will carry over into the new plan year, up to $500, and the debit card will be able to be used.

Hardship withdrawals must fall under one of the “Safe Harbor” provisions that make the withdrawal permissible. Currently, those do not include a specific safe harbor for COVID-19, but they do include medical expenses that exceed 7 1/2% of an individual’s adjusted gross income, and to prevent eviction. 

In the recently passed and signed Coronavirus, Aid, Relief and Economic Security (CARES) Act, there is a provision to establish a withdrawal for individuals or their spouses or dependents diagnosed with the virus, or if the individual suffered adverse financial effects due to the virus up to $100,000 dollars, IF allowed by the employer’s 403(b) or 457(b) plan. These withdrawals will not be subject to the 10% early withdrawal penalty, income tax on the withdrawal may be paid over three years, and the withdrawal may be repaid to the plan over a three-year period from the day of the distribution.

The legislation does not address non-qualified annuities, so normal rules apply for plain non-403(b) and 457(b) annuities. 

Currently, ceasing payments on a 403(b) or 457(b) loan for more than 60 days requires the loan to be reported as a distribution to the Internal Revenue Service. The CARES Act temporarily increases the available loan limits to the lesser of $100,000 or 100% of the participant’s vested account balance. This new limit only applies if the participants, their spouses or dependents are diagnosed with the virus, or if the participant suffered adverse financial effects due to the virus. These new loan limits must be allowed by the employer’s 403(b) or 457(b) plan and applies only to loans made on or before 9/23/2020.

Lastly, if the employer’s 403(b) or 457(b) plan permits, the CARES Act includes a provision to allow existing scheduled loan repayments due between 3/27/2020 through 12/31/2020 to be delayed for up to one year for qualifying employees. Interest will still accrue, and loan terms may be extended for up to three years.

We will be waiving the notary requirement for all annuity distributions, which includes transfers-out, loans, death claims, systematic withdrawals, annuity payout elections as well as transfers-in through May 31, 2020.

In place of the notary requirement we request the following:

  • Scan/copy of current and valid driver’s license or valid state or federally issued photo ID
  • In community property states, a scan or copy of the spouses current and valid driver’s license or valid state or federally issued photo ID will be required
  • The photo ID provided must be a legible image of current and valid government issued photo ID for the signatory party
    • Name mismatches must be supported by a scan of marriage license or divorce decree to support and provide evidence as to the identification of that individual

Yes, the March 31 deadline has been extended until June 30, 2020. Read the full update from the Internal Revenue Service here: https://www.irs.gov/retirement-plans/deadlines-extended-for-403b-plans-and-pre-approved-defined-benefit-plans

First, you and the DCA participant should sign the mid-year change form. If you or your employees are unable to fulfill the requirements of including a wet signature during this time, please email the form to AF-Flex-Elections@americanfidelity.com and provide a statement within the email approving American Fidelity to process the form without signature(s).

If you have reduced hours or closed completely, select Change in Employment Status and in the written explanation state there is a change in the need for daycare services due to the change in employment.

If the daycare provider has changed hours or closed completely, select Significant Cost Increase or Decrease located under Other Qualifying Events and in the written explanation state there is a change in daycare provider or cost of care.

Once complete, you can submit the form to AF-Flex-Elections@americanfidelity.com. You should keep a copy of the form on file for payroll deductions.

IMPORTANT: After the form is submitted, you will also need to make the necessary change on your payroll deduction. If we continue to receive the deduction amount for the participant, we will refund this money to the employer to tax and distribute to employees.

  • For Healthcare FSAs and Limited Purpose FSAs, the full annual election amount will continue to be available from the start of the plan year. Benefits Debit Cards may still be used for eligible medical expenses. Documentation to verify expenses will be required. Learn More about Benefits Debit Cards 
  • For Dependent Care Accounts, according to legal requirements and your Section 125 Plan, we cannot make funds available to participants until funds are received and posted. We are working with employers and monitoring changes in governmental guidance due to the present circumstances for flexibility or relief on this subject.
  • For Health Savings Accounts, if payroll deduction is not available, participants can still contribute to their accounts online or by check. Learn More About HSA Contributions 

Yes. If you need your bill earlier than your regularly scheduled date, please contact your billing representative.

To notify us of an employee who is laid off, follow these steps:

  1. Log in to your online account
  2. Select the Group Admin tab. Then, select Review or Terminate Employee
  3. Type in the participant's last name and click search, then click their name
  4. Select Terminate Employee
  5. Type in:
    1. Effective Date of Termination
    2. Last Month of Premium
    3. Reason for Termination ‘Terminated’
    4. If Other - type in “Temporarily Laid Off”
  6. Select the Terminate Employee button to finalize

If you have a large number of employees who have been laid off, you can email a list to the billing colleague/team who handles your bill.

As a result of the COVID-19 pandemic, many state Departments of Insurance have implemented temporary rules to help provide flexibility and financial relief to policyholders residing in their states.

American Fidelity is following direction from each state regarding insurance premium grace periods and continuation of coverage. 

It is important to notify us of temporarily laid off or furloughed employees. To notify us, follow these steps:

1. Log in to your online account.
2. Select the Group Admin tab. Then, select Review or Terminate Employee.
3. Type in the participant's last name and click search, then click their name.
4. Select Terminate Employee.
5. Type in:

  • Effective Date of Termination
  • Last Month of Premium
  • “Terminated” as Reason for Termination. Or, if Other, type “Temporarily Laid Off”.

6. Select the Terminate Employee button.

If you have a large number of employees who have been laid off, you can email a list to the dedicated billing representative.

Employees must be employed to meet the eligibility requirements on group policies. However, some group policies offer a conversion or continuation provision. Your employees may contact our policy continuation team at 800-943-2231 to discuss their situation.

Below are specifics related to group insurance policy coverage while employees are not Actively at Work due to layoff or furlough during this time: 

If your employee(s) return back to work within 30 days

  • Unpaid policies may be reinstated.
  • Missed premiums need to be paid.
  • The policy will remain in effect as if your employees were never "off work," which provides for consistent coverage and pre-existing condition credit.

If your employee(s) return back to work after 30 days but before 150 days

  • Unpaid policies may be reinstated.
  • The policy will retain the original effective date which provides for pre-existing condition credit.
  • Claims cannot be paid during this time period.
  • No back premiums will be collected for this period.
If your employee(s) return back to work after 150 days
  • Unpaid policies may not be reinstated.
  • New application is required for coverage.
  • New effective date and new pre-existing conditions will apply.

Note on disability insurance coverage:

If employees are terminated, they are not eligible for disability insurance coverage as they are no longer active employees. This means premium will not be collected. Disabilities which begin after termination are not covered. Eligibility requires an employee to be Actively at Work pursuant to the terms of the policy. American Fidelity reserves the right to enforce the terms of the policy.

For Accident Insurance, Cancer Insurance, and Life Insurance Policies

Below are specifics related to individual insurance policy coverage: 

If your employee(s) have been temporarily laid off they are able to pay their premiums directly to American Fidelity

  • After two months of unpaid premium, the policy will go into a grace period. Your employees will receive a notice that premium is due.
  • Employees have an extended grace period to continue their coverage by contacting our policy continuation team at 800-943-2231.
  • Employees can continue coverage by paying their premiums through bank draft, credit card payment, or check.
  • Past-due premium can be paid without penalties or fees.

Customers who pay premiums directly to American Fidelity (not through payroll deduction):

  • Customers may have an extended grace period to continue their coverage by contacting our policy continuation team at 800-943-2231.
  • Customers can continue coverage by paying their premiums through bank draft, credit card payment, or check.
  • Past-due premium can be paid without penalties or fees  

For life insurance policies issued in the state of New Jersey:

  • Customers have an extended grace period to continue their coverage.
  • Customers can continue coverage by paying their premiums through bank draft, credit card payment, or check.
  • Past-due premium can be paid without penalties or fees.
  • An installment plan is available.
  • Contact our policy continuation team at 800-943-2231 for details.

With recent legislation, account-based plans, including Health Savings Accounts, Flexible Spending Accounts, and Health Reimbursement Arrangements, may reimburse individuals for the purchase of over-the-counter drugs and medicines without a prescription from a physician. This reverses a restriction imposed by the Affordable Care Act. This rule also includes reimbursement for menstrual products. View Eligible Expenses 

This change can take effect upon amending the employer’s plan document. The change can be applied to amounts paid or incurred starting January 1, 2020, where permitted by the employer’s plan. At this time, there is no end date for the new legislation. American Fidelity will begin implementing changes on April 15, 2020 for executed amended plan documents.

The CARES Act allows qualified high-deductible health plans (HDHPs) with a health savings account (HSA) to cover telehealth services before the individual reaches their deductible, regardless of whether the telehealth services relate to COVID-19. This rule is effective now and lasts through plan years beginning in 2021.

Recognizing the impact of the COVID-19 Pandemic, the Internal Revenue Service and the Department of Labor released guidance that extends the period of time that a participant has in enrolling in coverage under a health plan, paying for COBRA continuation coverage, submitting claims for coverage and disputing denials of claims for benefits. The guidance also extends the period of time that a group health plan sponsor or administrator has to provide a COBRA election notice. Essentially, the guidance provides that actions that must be taken with the time period from March 1, 2020 until 60 days after the time the federal government declares the COVID-19 emergency (referred to as the “Outbreak Period”) has ended will be disregarded.

 
The guidance states that the following actions that are required to be taken during the Outbreak Period are extended until after the Outbreak Period ends:

  • The 30-day period (or 60-day period, if applicable) to request special enrollment;
  • The 60-day election period for COBRA continuation coverage;
  • The date for making COBRA premium payments;
  • The date for individuals to notify the plan of a qualifying event or determination of disability;
  • The date within which individuals may file a benefit claim under the plan’s claims procedure; and
  • The dates within which claimants may file an appeal of benefits determinations or external reviews.

With respect to group health plans and their sponsors and administrators, the Outbreak Period shall be disregarded when determining the date for providing a COBRA election notice.

To assist with the nation’s response to COVID-19, the IRS recently announced increased flexibility during calendar year 2020 for employers to allow new types of mid-year election changes under Section 125 “cafeteria” plans and extend claims reimbursement periods for Flexible Spending Arrangements.

Under IRS Notice 2020-29, employers can amend their Section 125 plan documents to allow employees to:

  1. Enroll in employer-sponsored health coverage (even if the employee initially declined).
  2. Change plan elections, including moving from self-only to family coverage and vice versa.
  3. Attest that they are dropping coverage to enroll in other health coverage not sponsored by the employer.
  4. Stop, reduce or increase contributions to Healthcare Flexible Spending Arrangements (Healthcare FSAs) and Dependent Care Flexible Spending Arrangements (DCA) accounts.
  5. Take advantage of extended time periods applicable to unused amounts in FSAs to cover expenses incurred through December 31, 2020. The extension of time for incurring claims is also available both to plans that have a grace period and to plans that provide for a carryover.
  6. Be reimbursed for telehealth, other remote care services, and testing/treatment of COVID-19 without a deductible or before the deductible for their HSA-eligible HDHP is met, retroactive to January 1, 2020.

Employers are not required to use this relief. Employers who choose to make these plan amendments may determine the extent to which such election changes are permitted and applied going forward (retroactive changes are not allowed). If you decide to allow these plan changes, you should notify employees right away, but employers have until December 31, 2021 to formalize Section 125 plan document amendments.

What does this mean for my employees?

Your employees may wish to make these mid-year changes for a variety of reasons. For example, you may have employees who pay for dependent care with a DCA, and who no longer need to set aside that money for upcoming summer care.

Other employees may have set contribution amounts with the intent of paying for elective surgery which has been disrupted because of the COVID-19 pandemic. Still others may have not elected coverage during your open enrollment period, but now wish to participate in your plan because of concerns about the pandemic.

Effectively communicating these options and their impacts to your employees should be a priority if you choose to make changes to your Section 125 plan. We encourage you to identify the most appropriate channels for sharing this information with your employees based on their access to your workplace and their communication preferences. In addition to your communication channels, you should also consider tailoring your key messages to fit your specific workforce, based on age, family makeup and other critical factors. Finally, keep a record of these communications for future reference. You may wish to work with a partner who can help you educate your employees on these changes.

The IRS released Notice 2020-35 on May 28, 2020 to postpone the due date for a number of forms related to employment taxes and employee benefit plans. The due date of Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information has been delayed from May 31, 2020 to August 31, 2020.

What is it:  Generally, a Run-Off Period is 90 days after the last day of the plan year and allows participants to submit eligible claims for reimbursement. The claims submitted during the run-off must have been incurred during the plan year. The extension announced by the Internal Revenue Service (IRS) due to COVID-19 is the additional time within which individuals may file a benefit claim under the plan's claims procedure. Essentially, the IRS guidance creates an “Outbreak Period” which started March 1, 2020 and ends 60 days after the nationally declared emergency is ended.  All Run-Off Periods interrupted by the Outbreak Period are extended for the entire Outbreak Period.

How does it work: The extension applies in any situation when the Run-Off Period would otherwise end during the Outbreak Period. The guidance says the Outbreak Period is to be disregarded for purposes of determining the date within which individuals may file a benefit claim. This would include any situation when the deadline for submitting a claim (such as the end of a run-off period) would fall within the Outbreak Period.

Note: HSA reimbursement claims would not be subject to the extension for one or both of two reasons. (1) HSAs are not covered by ERISA or subject to the ERISA claims procedure rules. (2) HSAs generally do not impose any deadline for submitting claims for reimbursement (“shoebox rule” applies to all expenses incurred after the HSA is established). 

Example 1: Plans in the middle of the Run-Off Period when emergency was declared.

A calendar year plan has a Run-Off Period for the 2019 plan year that ends March 31, 2020. One month (31 days) remains on the Run-Off Period when the Outbreak Period begins March 1, 2020. The Run-Off Period will be suspended during the Outbreak Period and will end 31 days after the end of the Outbreak Period.

Example 2: Plans where the Run-Off started during the declared national emergency, but did not end.

A non-calendar year plan with plan year ending June 30, 2020 has a 92-day Run-Off Period that ends September 30, 2020. Assume the Outbreak Period ends July 20, 2020. The first 20 days of the Run-Off Period will be suspended during the Outbreak Period and will not begin to run until the Outbreak Period ends. The Run-Off Period will end 92 days after the end of the Outbreak Period.

Example 3: Plans where the Run-Off Period starts and ends during the declared national emergency

A non-calendar year plan with plan year ending March 31, 2020 has a 91-day Run-Off Period that ends June 30, 2020. The Run-Off Period will be suspended during the Outbreak Period and will end 91 days after the end of the Outbreak Period.

What is it: For unused amounts remaining in a Healthcare FSA or a Dependent Care Account under the Section 125 plan as of the end of a grace period or plan year ending in 2020, a Section 125 plan may permit employees to apply those unused amounts to pay or reimburse medical care expenses or dependent care expenses, respectively, incurred through December 31, 2020.

How does it work: It works similar to the grace period, even though it is separate. Employees have additional time to “incur” expenses in order to use any remaining amounts in their accounts.

What you need to know: May impact those who planned to open an HSA in 2020, unless the Healthcare FSA balance is zero as of the last day of the plan year.

Also, there is no requirement to provide a supplemental Run-Off Period or additional period of time to submit claims incurred during the extended claims period. However, it would be reasonable to offer at least a brief supplemental Run-Off Period to allow for submission of claims incurred late in the extended claims period.  The amount available for carryover will be determined after all claims incurred during the supplemental run-off period have been submitted (by whatever deadline required under the plan) and adjudicated by the plan.

Example 1: An employer sponsors a Section 125 plan with a Healthcare FSA that has a 1/1-12/31  plan year and provides for a grace period ending on March 15 immediately following the end of each plan year. The employer may amend the plan to permit employees to apply unused amounts remaining in an employee’s Healthcare FSA as of March 15, 2020, to reimburse the employee for eligible medical care expenses incurred through December 31, 2020.

The Extended Claims Periods will also impact plans that have a Carryover.

Example with Extended Claims Period:

Assume a non-calendar year Healthcare FSA with a plan year ending June 30, 2020. The plan allows for carryover of up to $500 in unused amounts to the next plan year. The plan is amended to allow an employee with unused amounts remaining as of June 30, 2020 to be reimbursed from those amounts for eligible medical expenses incurred through December 31, 2020, including amounts in excess of $500 

Scenario 1: Most Unspent Funds Utilized. In this scenario, assume an employee has $2,000 in unspent funds as of June 30, 2020, and the employee incurs $1,900 in eligible medical expenses between July 1, 2020 and December 31, 2020. The Healthcare FSA may reimburse the employee $1,900 from the $2,000 remaining at the end of the 2019-2020 plan year. The $100 in unused amounts from the plan year ending June 30, 2020 may be carried over to the plan year beginning July 1, 2020 under the carryover rule and is available to be used for claims incurred through June 30, 2021.

Scenario 2: Carryover Limit Applies to Unspent Funds. As an alternative scenario, assume an employee has $1,250 in unspent funds as of June 30, 2020, and the employee incurs $600 in eligible medical expenses between July 1, 2020 and December 31, 2020. The Healthcare FSA may reimburse the employee $600 from the $1,250 remaining at the end of the plan year ending June 30, 2020, leaving $650 still unused. $500 of the remaining $650 in unused amounts may be carried over to the plan year beginning July 1, 2020 under the carryover rule and is available to be used for claims incurred through June 30, 2021. $150 will be forfeited.

What is it? An employer, in its discretion, may amend one or more of its Section 125 plans (including limiting the period during which election changes may be made) to allow each employee who is eligible to make salary reduction contributions under the plan to make prospective election changes (including an initial election) during calendar year 2020 regarding employer-sponsored health coverage, a Healthcare FSA, or a Dependent Care Account, regardless of whether the basis for the election change satisfies the criteria set forth in regular election change rule.

How does it work? In particular, an employer may amend one or more of its Section 125 plans to allow employees to: 

(1) make a new election for employer-sponsored health coverage on a prospective basis, if the employee initially declined to elect employer-sponsored health coverage;

(2) revoke an existing election for employer-sponsored health coverage and make a new election to enroll in different health coverage sponsored by the same employer on a prospective basis (including changing enrollment from self-only coverage to family coverage);

(3) revoke an existing election for employer-sponsored health coverage on a prospective basis, provided that the employee attests in writing that the employee is enrolled, or immediately will enroll, in other health coverage not sponsored by the employer;

(4) revoke an election, make a new election, or decrease or increase an existing election regarding a Healthcare FSA on a prospective basis; and

(5) revoke an election, make a new election, or decrease or increase an existing election regarding a Dependent Care Account on a prospective basis.

To accept an employee’s revocation of an existing election for employer-sponsored health coverage, the employer must receive from the employee an attestation in writing that the employee is enrolled, or immediately will enroll, in other comprehensive health coverage not sponsored by the employer. The employer may rely on the written attestation provided by the employee, unless the employer has actual knowledge that the employee is not, or will not be, enrolled in other comprehensive health coverage not sponsored by the employer.

What you need to know as an employee:

If your employer allows this change to its Section 125 Plan, your employer can restrict the Healthcare FSA election changes to an amount equal to or higher than the amount already reimbursed. An election cannot be changed to $0 if there have been contributions made or claims reimbursed.

What you need to know as an employer:

If you have subscribed to American Fidelity’s Risk Policy for your Healthcare FSAs, the policy restricts mid-year election changes to permit a change triggered by termination of employment only. No other mid-year election changes are permitted. Therefore, in order for you to allow your employees to make a change to their Healthcare FSA, you would need to notify your American Fidelity account representative to cancel the Risk Policy. Cancelling the policy would mean you are now assuming the risk. In the event your overall account balance is negative at the end of your plan year, you would be responsible for that negative balance. If you are unsure who holds the risk, you may contact your American Fidelity account representative or review your Section 125 Plan Document. In your Section 125 Plan Document, it is indicated whether you as the Employer assume the Uniform Coverage Risk or if American Fidelity assumes that risk for you. It is located under Item 7 Medical Expense Reimbursement Plan in the Adoption Agreement (usually page 5). If it reads, “As outlined in Policy G-905/R1” next to Restrictions, it means that American Fidelity assumes the risk.

 

What is it: Increases the carryover limit (currently $500) of unused amounts remaining as of the end of a plan year in a Healthcare FSA under a Section 125 plan that may be carried over to pay or reimburse a participant for eligible medical expenses incurred during the following plan year. The increase in the amount that can be carried over from one plan year to the next reflects indexing for inflation, and this indexing parallels the indexing applicable to the limit on salary reduction contributions under Code Section 125(i) of the Internal Revenue Code (Code).

How does it work for employees: If your employer allows a carryover and adopts this increase for its Section 125 Plan, the maximum unused amount from a plan year starting in 2020 allowed to be carried over to the immediately following plan year beginning in 2021 is $550 (20 percent of $2,750, the indexed 2020 limit under Internal Revenue Code ("IRC") Section 125(i)). 

How does it work for employers: As a general rule, an amendment to a Section 125 plan to increase the carryover limit must be adopted on or before the last day of the plan year from which amounts may be carried over and may be effective retroactively to the first day of that plan year, provided that the Section 125 plan operates in accordance with the guidance under this notice and informs all employees eligible to participate in the plan of the carryover provision. Because IRC Code Section 125(d)(1) provides that a Section 125 plan must be a written plan, a Section 125 plan offering a Healthcare FSA may not utilize the increased carryover amount permitted under this notice for a plan year that begins in 2020 (or a later year) unless the plan is written in a manner that incorporates the increase by reference or the plan is timely amended to set forth the increased amount.

Continuing Our High Level of Service 

To continue providing a high level of service, we have nearly all our colleagues working securely in remote locations and practicing social distancing in order to:
  • Process Claims
  • Process Bills
  • Answer Calls & Emails
Alternative Enrollments: In the event your upcoming benefits enrollment is disrupted, we are committed to provide alternatives. Contact your account manager to learn more.

What can employers do to help?

In preparation for the unexpected, such as delays in mail service, we recommend the following:

  • Securely submit your American Fidelity bills along with matching payment through your online account.
  • If you are unable to submit your bill electronically, ensure you use the correct P.O. Box address for your specific bill. Please find our mailing addresses here. 
  • Encourage your employees to submit claims through the fastest option with their online account and sign up for direct deposit to avoid mail delays.

Online access is more important than ever.

In preparation for the unexpected, such as delays in mail service, it's important to utilize online tools available.

Register for an Account

Filing online is convenient, secure, and provides faster claim processing than filing by paper. From your laptop or desktop, log in to file a claim and upload documentation.

Register

Download AFmobile®

 Our mobile app is the easiest way to submit your claims and documentation. Upload documentation directly from your device’s picture gallery.

Download on the App Store

Get it on Google Play

Sign Up for Direct Deposit

With direct deposit, claim payments and reimbursements can be deposited directly to your bank account.

Learn More

COVID-19 Related Articles

How COVID-19 Should Change Your Benefits Communication Strategy

COVID-19

As employers look for ways to engage their employees in safe and effective ways, here are strategies for a successful benefits enrollment.

Compliance Roundup: Recent ACA Decisions and COVID-19 Updates

COVID-19

Explore our latest compliance roundup, including recent ACA decisions and COVID-19 updates.

Pregnant in a Pandemic: A Checklist for Maximizing Your Disability Benefits

COVID-19

As much as you may have planned your pregnancy, no one could have predicted that you’d also be doing so during a global pandemic.

Shop for Medical Supplies Online

We understand that many people are trying to limit their exposure by practicing social distancing, which may prevent them from being able to conveniently shop for medical supplies.

Our partner, Health E-Commerce, offers exclusive coupons for American Fidelity customers on their online stores. Use the code AF5OFF for $5.00 off your purchase:

Even if you don’t have an FSA or HSA, you can still shop for health products at these stores.

We will continue to closely monitor this situation and be prepared to take any actions necessary to assist our customers. If there are any questions regarding coverage of our products or services, please contact us at (800) 662-1113.

American Fidelity Assurance Company
americanfidelity.com