Benefits and Compensation, Coronavirus (COVID-19)

Benefit Considerations in Uncertain Times

The initial fallout from the COVID-19 pandemic is putting new urgency on company benefits. As employees look to their benefits offerings, companies are responding in kind by leveraging, expanding, and creating new benefits to answer the needs of their employee populations.


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As Ayco works with our corporate partners across the United States, we are seeing a number of emerging benefit themes. Below, we’ve outlined some of the most impactful new and enhanced additions for employers to consider implementing to support their people—and how to decide whether to roll out these benefits.

Medical Coverage

Many companies and health insurance carriers are now offering telemedicine services, and some are offering reduced or waived copayments. The Coronavirus Aid, Relief, and Economic Security (CARES) Act now provides for use of telemedicine with a high-deductible health plan without first reaching the deductible.

Given recent Internal Revenue Service (IRS) guidance, employers may also allow for special, midyear enrollment periods to enable employees to make changes to healthcare coverage and flexible spending accounts (FSAs). There are many issues to consider with offering this ability, and as a result, employers are in the early stages of deciding what provisions they will implement.

Additionally, employers should consider communications to ensure employees are aware of benefits they may be eligible for under their Hospital Indemnity Plan and/or their Accident Insurance Plan if it has Sickness Hospital benefits.

If possible, employers may want to think about paying part (or all) of their employees’ premiums during a temporary furlough or layoff or provide assistance for them to obtain coverage through another source such as the Health Insurance Marketplace.

Paid Leave

Paid leave benefits were one of the biggest issues for employers to address at the beginning of the pandemic. They will likely become an area of focus again as companies begin to reopen while many schools, daycares, and summer camps remain closed.

Furthermore, many companies have extended their paid leave benefits to assist in the event an employee or a family member contracts the virus, as well as for those unable to work due to other related issues such as child care.

A small portion of companies have extended paid-time-off (PTO) buy/buyback programs.

Another option is to implement a leave-sharing program that would allow employees to donate accrued leave to other employees.

Given that employees have had limited ability to travel and use PTO due to the pandemic, employers may also want to add or extend PTO rollover rules for this year.

Workforce Transition, Early Retirement, and Voluntary Separation Offers

Companies have been exploring several different options for workforce transitions to help navigate this challenging environment. While designing these programs, employers should carefully consider the eligible group; the package “incentives”; and the impact to health, welfare, retirement, and executive compensation plans.

In conjunction with these programs, companies have also offered financial counseling benefits to help employees gain clarity and confidence in their personal finances as they relate to voluntary separation offers—in line with the company’s overall goals.

Childcare/Eldercare Assistance

We’ve seen companies and providers get creative with how they are upping their childcare and eldercare assistance benefits, as employees have struggled due to school and daycare closures and only a small percentage of companies currently offer a backup childcare/eldercare benefit.

Some providers are offering “crisis assist” benefits to address the increased need at this time, and some are adding to the number of days of coverage each employee is allowed per year. Only a small percentage of companies currently offer a backup childcare/eldercare benefit, but for employers interested in adding one, providers are offering expedited implementation.

A number of companies are also allowing changes to contribution elections for dependent care FSAs if employees have qualifying status changes that warrant either lower or higher care expenses through this time.

Cash Compensation

Many businesses deemed “essential” through the pandemic are providing employees with special cash bonuses or increasing hourly wages in appreciation of continued work.

To support workers experiencing financial difficulties due to the pandemic, some employers have adopted the option of providing interest-free loans, which are not taxable up to $10,000.

If looking to take a more philanthropic approach, companies can implement relief funds to assist employees with expenses such as child care, home office supplies, and medical.

In an attempt to cut costs and avoid/reduce layoffs and furloughs, a number of companies have also implemented temporary pay cuts for top executives through the end of 2020.


The CARES Act allows employers to make several changes to provide more flexibility for employees to access dollars in their 401(k) plans. Although some companies are still reviewing whether to add the new $100,000 Coronavirus Related Distribution (CRD) feature or the increased loan maximum now permitted under the CARES Act, the majority of companies we work with have made decisions.

As of mid-May, less than half of our corporate partners have implemented the CRD, and even fewer are extending the loan maximum.

Other alternatives employers may want to consider are making modifications to loan provisions to increase the number of loans allowed and/or extend the repayment period for existing loans for up to 1 year. To assist furloughed employees, employers can opt to suspend loan payments for up to a year.

A small portion of companies we work with have temporarily suspended or are considering temporarily suspending company matching contributions to the 401(k) and eliminating the purchase discount in the employee stock purchase plan (ESPP) in some cases.

Student Loan Assistance

Companies that have been waiting for legislation around student loan repayment benefits are now considering programs to take advantage of the CARES Act provision for a tax-free loan repayment up to $5,250 for 2020. Most companies we work with have not implemented this benefit but instead have decided to wait for more permanent legislation in this area.

For employers already providing a student loan repayment benefit, any payments made between March 27 and December 31, 2020, will be tax-free.

Nonresident State Tax Withholding

Telecommuting has become the new “norm” in 2020, as most employees are now working from home due to the COVID‐19 pandemic. Nonresident state sourcing rules vary state by state, and telecommuting across state lines, in particular, can cause unexpected income tax results for employees.

For employees who reside in a different state than their normal office, it’s important they keep calendars to track their daily whereabouts. A small number of companies have provided tracking worksheets and asked employees to track days working from home so they can appropriately withhold state and city taxes.

Multistate taxation is a complex issue, so employers may wish to provide education and resources for employees.

We realize every company is affected differently by the ongoing pandemic, and we hope these benefit considerations will help employers and their employees overcome these difficult times. As we move forward in this rapidly changing environment, it will be important to keep a close eye on legislative developments that can assist your company as Congress continues to work to alleviate the hardship caused by COVID-19.

Kathy Barber is the Vice President of Benefits & Compensation at Ayco. Ayco, a Goldman Sachs Company, provides company-sponsored financial counseling services. Ayco believes companies best serve their stakeholders and the greater economy when their employees’ financial lives are clear, understood, and in their own control.

For nearly 50 years, Ayco has aspired to deliver a more productive and engaged workforce to clients by providing employees with a path to financial wellness through holistic and personalized services tailored for each stage of the career cycle, from entry level to the C-suite. Learn more at

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