A Disincentive to Go Back to Work

An estimated 65-75 percent of out-of-work Americans receiving unemployment benefits are being paid more money per week than they were receiving pre-pandemic from their employment (source: J.P. Morgan “Eye on the Market”, BTN Research).

New Note

The U.S. government auctioned off $20 billion of new 20-year Treasury notes on May 20, its first sale of 20-year paper since 1986. Subsequent auctions of 20-year Treasury notes are scheduled each month going forward. In 1986, the auction of 20-year notes occurred quarterly (source: Treasury Department, BTN Research).  

Would You Pay More?

If U.S. airlines were to stop booking passengers into middle seats in order to achieve some level of social distancing, they would need to raise ticket prices by 43 percent to recover lost revenue (source: International Air Transport Association, BTN Research).

In the wake of COVID-19, millions of Americans have been furloughed or laid off, had their hours cut or found their earnings reduced. As a result, an employee may find it difficult to make their healthcare premiums or may want to add a family member who now needs healthcare coverage to their plan.

Thanks to shutdowns and social distancing, unnecessary medical procedures have been postponed, and childcare facilities have temporarily closed or limited their capacity. As a result, many employees have used less than they planned from their Flexible Spending Account (FSA) or Dependent Care Flexible Spending Account (DCFSA).

Typically, changes to work-sponsored health plans or flexible spending accounts can only be made during the annual open enrollment period, except for qualifying events, such as getting married, having a baby, losing healthcare coverage or the death of a family member. Because of unique circumstances the coronavirus has created, the IRS announced on May 12 it was temporarily permitting employers to allow employees to change plans mid-year.

For the rest of the 2020 plan year, employers may let employees elect health coverage they previously declined or drop their company plan if they attest in writing that they are enrolled or will immediately enroll in other coverage. Employers may permit employees to change their healthcare plan election to one with lower premiums or better coverage, or to change their individual coverage to family coverage.

Likewise, employers may let employees revoke their FSA or DCFSA election, make a new election or decrease or increase their existing election. Employers may also allow staff to use money they hadn’t spent at the end of their 2019 plan year or grace period ending in 2020 through Dec. 31, 2020. FSAs or DCFSAs that offer a carryover can let employees carry up to $550 from 2020 over to 2021. Employees who lose or quit their job should use any unused flexible spending account funds before their last day at their present employer to avoid losing them.

It should be noted, the IRS does not require employers to offer all – or any – of these changes, so interested individuals should check with their HR department. If you or a family member needs help making decisions about healthcare coverage or adjusting to a drop in income because of COVID, please give us a call.