Employee Benefits Insurance Services
Employers are taking action to address unexpected revenue losses including layoffs, temporary furloughs, reductions in hours, leaves of absence, etc. In addition, some employers are dealing with employees refusing to come to work. The situation is fluid so here are some important considerations with respect to your health insurance and employee benefits plans. Please consult your broker for additional detail.
Will carriers/vendors provide any type of payment relief if we are unable to pay our premiums?
A few non-medical carriers have extended their grace periods from 30 to 60 days. Although no medical or stop-loss carriers have indicated similar flexibility, all policies do contain a 30-day grace period which may be of use. If you are wondering whether a specific carrier or vendor is offering/able to offer any extensions, please let us know.
What action needs to be taken in the event of a layoff/termination of employment?
Employers have a total of 44 days from the loss of coverage date to mail a COBRA election notice. Be sure to notify your COBRA administrator immediately of any layoff-terms, even if you plan to rehire. Generally, COBRA does not apply to employers with less than 20 employees.
How soon can I reinstate coverage for employees who were terminated and rehired?
This depends. Most carriers are loosening the guidelines on rehires that were terminated due to COVID-19 and are rehired within a defined time-period. Please let us know if you need specific information around a rehired employee.
I am sending my employees home with pay. Are there any issues I should be aware of?
Most insurance contracts and self-funded plan documents contain “actively at work” provisions. For coverage to remain active, employees cannot be off work for more than a few weeks without being on an approved personal/medical leave of absence, or an approved vacation. However, this provision has been relaxed and most carriers are stating that if the premium remains paid for a specific time period they can remain on your plan. Contact us for additional information.
We are reducing employees’ hours but want to continue their coverage. What impact does this have on their benefits?
Insurance contracts and self-funded plans typically have a minimum hour requirement. If your employees are going to be working less than the required hours for a prolonged period of time, it’s a good idea to get approval from your insurance carrier(s) and/or amend your self-funded plan document. We are happy to help with this if needed, just let us know.
We are reducing employees’ hours to a level below the required amount and do not anticipate an increase back to the required levels. What impact does this have on their benefits?
Per the above, a prolonged reduction in hours triggers a loss of coverage and thus a COBRA qualifying event. As such, you’ll want to ensure COBRA notices are handled accordingly.
We have employees refusing to show up at work. What are our options for handling their insurance coverage?
This could be treated as a reduction in hours resulting in loss of coverage and COBRA qualifying event and notice requirement. For those wishing to continue coverage for these employees, your plan’s “actively at work”/leave of absence provisions should first be reviewed. If needed, we can help try to arrange as flexible a position as possible from your carrier(s).
For those wishing to continue these employees’ coverage, but have no wages from which to deduct their portion of premium…similar to FMLA, you may consider the following:
- absorbing the employee’s portion of premiums for them during this period.
- requesting the employee pay their portion in advance of the anticipated period.
- collecting the employees’ accrued portions upon their return, perhaps over several pay periods
CARES Act Infographic
Compliance Bulletin CARES Act Makes Changes for Health Plans
Health Care Providers Web Links
The Look-back Measurement Method and COVID-19
Updating Health Plans for Coronavirus Changes
IRS FAQs -FFCRA Tax Credits for Small and Midsize Businesses
IRS Extends Deadline for Forms 5500 Due Before July 15 2020
COVID-19 Scenarios and Benefits Available Table
HR Benefits resources here.
For older pandemic response information, please visit our Employee Benefits Insurance Services Pandemic Response Information Archive
Please be advised that any and all information, comments, analysis, and/or recommendations set forth above relative to the possible impact of COVID-19 on potential insurance coverage or other policy implications are intended solely for informational purposes and should not be relied upon as legal advice. LP Insurance provides this information as “insurance/risk management advisors” only, not as legal counsel. We have no authority to make coverage decisions as that ability rests solely with the issuing carrier. Questions about the legal aspects of an insurance policy or contract should be referred to your legal counsel to determine the applicability of this information to your business operation. Therefore, all claims should be submitted to the carrier for evaluation. The positions expressed herein are opinions only and are not to be construed as any form of guarantee or warranty. Finally, given the extremely dynamic and rapidly evolving COVID-19 situation, comments above do not take into account any applicable pending or future legislation introduced with the intent to override, alter or amend current policy language.