Covid-19 Medical Leave Costs

ED MUENZNER
Edwin R. Muenzner

CONNECTICUT INSURANCE DEPARTMENT INFORMS SMALL AND MEDIUM-SIZED BUSINESSES THAT THE IRS WILL PROVIDE IMMEDIATE AND FULL REIMBURSEMENT FOR COVID-19 MEDICAL LEAVE COSTS

Connecticut Insurance Department Commissioner Andrew Mais would like businesses to be aware of recent IRS guidance on novel coronavirus COVID-19 – related employee medical leave and new payroll tax credits. The cost of not just the leave but also of health insurance during the leave will be covered.

“This is very good news for small and medium-sized Connecticut businesses with employees on medical leave caring for themselves or family members,” said Commissioner Mais. “It removes a concern and reduces expenses related to employees on medical leave in the hopes of keeping more workers on the payroll.”

The U.S. Treasury Department, Internal Revenue Service (IRS), and the U.S. Department of Labor (Labor) announced in IR-2020-57 that small and midsize employers can begin taking advantage of two new refundable payroll tax credits, designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees. This relief to employees and small and midsize businesses is provided under the Families First Coronavirus Response Act (Act). For COVID-19 related reasons, employees receive up to 80 hours of paid sick leave.

Employers receive 100% reimbursement for paid leave pursuant to the Act.

  • Health insurance costs are also included in the credit.
  • Employers face no payroll tax liability.
  • Self-employed individuals receive an equivalent credit.

Reimbursement will be quick and easy to obtain.

  • An immediate dollar-for-dollar tax offset against payroll taxes will be provided
  • Where a refund is owed, the IRS will send the refund as quickly as possible.

The IRS also noted that eligible employers are entitled to an additional tax credit based on costs to maintain health insurance coverage for the eligible employee during a child care leave period should a child care provider be unavailable due to the Coronavirus. This credit is equal to two-thirds of the employee’s regular pay, capped at $200 per day or $10,000 in the aggregate. Up to 10 weeks of qualifying leave can be counted towards the child care leave credit.

For the most up-to-date information from the State of Connecticut on COVID-19, including guidance and other resources, visit ct.gov/coronavirus.

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Content compiled by Ed Muenzner as a resource for those affected by COVID-19. 
Content not written by Ed Muenzner.

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