Some health insurers are helping workers who would otherwise lose health insurance maintain employee benefits during the COVID-19 pandemic, a new survey has found.
Social distancing and stay-at-home orders have put the hurt on hundreds of thousands of businesses across the country, which has forced them to reduce employees’ hours, furlough them or lay them off. Besides all those employees seeing their pay drastically curtailed or disappear altogether, it also affects their employee benefits, with health coverage topping the list. With so many people concerned they may lose coverage and business owners equally worried about their employees, some insurers are stepping up by extending coverage for affected group plan participants.
The survey by insurance research organization LIMRA found that 42% of group health plans are automatically continuing coverage for all employees for a specified period of time, and another 22% are extending eligibility on a case-by-case basis to employees whose status has changed. About 35% of insurance companies have adjusted reinstatement rules to make it easier for those affected by COVID-19 to regain coverage, and a similar number are extending the timeframe in which employees may elect to pay or continue coverage if separated from their employer.
Nearly all carriers in the survey said they are offering premium grace periods of 60 days on average to workers unable to pay their premiums due to COVID-19, while others plan to reassess or extend those timelines if needed. These moves are important, considering that about 70% of all workers in the U.S. receive health coverage from their jobs, according to LIMRA.
The typical scenario
When an employee is laid off or furloughed, their hours are essentially reduced to zero, which can result in a loss of eligibility to participate in their employer’s group health plan.
Group health insurers will have written documents that outline the rules for particular plans. These rules include a definition of eligible employees, including how long an employee can be absent from work before the employee will lose eligibility for insurance coverage. Health plan documents do not usually differentiate between an employee who is terminated and one who is laid off and one who is furloughed. To be eligible under the typical plan’s rules, an employee must work a minimum number of hours per week (usually at least 30). If an employee is under protected leave – such as Family Medical Leave Act protection – benefits continue during leave.
In other words, an employee who is not meeting the hours requirement or is not actively at work (work from home is considered actively at work) based on being terminated, furloughed or laid off – even temporarily – will generally have their benefits terminated. They should then receive an offer of COBRA or state continuation unless state law does not require it due to an employer’s size.
However, if an employee continues to remain eligible for the business’s group health plan during an unpaid absence, the employer will need to determine how to handle their insurance premium payments.
The takeaway
If you are concerned about benefits continuation for laid-off, furloughed or terminated employees, you can call us to see if your health plan has made any special arrangements during the COVID-19 outbreak.
We can check to see if there is any way to continue coverage for any affected employees, and for how long and at what cost to you.
