Employer Health Insurance & Coronavirus

Employers are being faced with a rapidly changing economic environment, the possibility of a forced shut-down, and a workforce who are concerned about income and the need to care for dependents.  The purpose of this email is to provide information surrounding a number of important questions that are facing employers and employees as a result of spread of the Coronavirus.  

Some of the questions that many employers are facing include:

  • What happens to health coverage for an employee who is unable to work due to the need to care for a dependent who is sick or home due to the closure of school or care facility? 
  • What happens to health coverage for an employee who is unable to work due to a layoff resulting from the Coronavirus? 
  • What are our obligations as a result legislation stemming from the Coronavirus emergency?

The answers to these questions, and others, are starting to come into view as a result of the passage of HR 6201 on Saturday, and its transition to the Senate following the passage of technical fixes in the House on Monday night. 

Warner Norcross and Judd has done a very good job summarizing the legislation as it stands right now and we encourage you to read it, but we’d like to draw your attention to a few key items.  

  • There are two key areas of HR 6201:
  • The expansion of the Family and Medical Leave Act to provide additional protections to individuals who are impacted by the Coronavirus in a number of ways. 
  • The provision of sick time for individuals who are unable to work as a result of number of scenarios related to the Coronavirus. 
  • There are a number of gaps within the current legislation that we expect to be addressed in the Senate version, however it is all still very much up in the air.  The gaps are:  
  • Currently the legislation only applies to employers with less than 500 employees. 
  • Currently the legislation does not expand FMLA or provide sick time benefits to any individuals who are unable to work simply due to business determinations (i.e. a business proactively decides to close).  However there are provisions in the legislation that provide sick time benefits to individuals who don’t go to work: 

To comply with a recommendation or order by a public official or health care provider on the basis that the physical presence of the employee on the job would jeopardize the health of others because the employee:

·         was exposed to COVID-19, or

·         exhibits symptoms of COVID-19

We believe that if the Governor, for example, ordered the closure of business this would qualify the member for the sick time benefits.  It is important to note, however, that the “….or ordered by a public official…” language is not included in the expansion of FMLA currently.  As a result, it is possible that employers may have employees who fall into multiple buckets and with different impacts on their benefit eligibility.  

  • Employees who qualify for the expanded FMLA because they are sick and who can remain on the benefit plan. 
  • Employees who quality for the expanded FMLA because they have a family member who is sick or is unable to attend school, etc. and who can remain on the benefit plan. 
  • Employees who are laid off due to a reduction in business or due to a forced closure by an elected official such as the Governor.  In this case, if the employee does not qualify for the expanded FMLA, they will lose eligibility for their benefit plan shortly after the lay off following your eligibility provisions.  In this case, there are two options that an employer may follow to continue health insurance for the employee. 

Option 1: 

Review your plan document/Wrap document to confirm if your plan has a leave of absence/layoff provision included.  If it does, then follow this provision to allow employees to remain on your plan for the period of time specified.  If your plan is fully insured, it is also important to confirm that your plan language matches your carriers eligibility guidelines as well.  

Option 2: 

If your plan does not have a layoff provision and an employer wants to continue coverage and offset the cost of part or all of it, then leveraging COBRA is the next best option. 

  • When you lay your employees off, they will quickly cease to meet the eligibility guidelines for your medical plan and so they will need to be terminated to align with the plan document.  
  • This will then trigger their eligibility for COBRA which they will need to elect to be able to continue to the coverage.  
  • It is possible for an employer to pay the employees COBRA premiums (or a portion of it) for a pre-determined period of time which will be the best way for you to continue to offer coverage. 

We do believe that over time much of this will come out in the wash as the Federal Government has indicated that the primary objective is to mitigate the adverse coverage and financial issues arising from this crisis.  

Here are a few other items that we believe will be useful to you: 

  • We have been asked by many businesses if their business interruption coverage will cover the losses resulting from the Coronavirus.  In many cases the answer is no, however as with 9/11 we believe it is highly likely that the government will step in to address these losses in one way or another.  We are happy to help you review your current policy(s) to help you determine your best course of action. 
  • Here is a link to a dashboard tracking the number of cases of Coronavirus by country and state, almost in real time. 
  • Here is a link to a great analysis of the potential impacts on businesses resulting from this crisis by McKinsey. 

We will keep you updated as we know more about legislation working its way through the Senate.  Another potential impact of this legislation as it stands now is the effective date 15 days following it being signed into law.  

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