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3 in 4 Workers Would Accept Lower-Pay for Better Benefits: Survey

by Inoventive Solutions
October 15, 2024

A new study has found three out of four U.S. workers would accept a job with a slightly lower salary if it offered better health care and medical coverage.

The main driver in workers prioritizing benefits is the rapidly rising cost of group health insurance premiums and out-of-pocket costs, according to the study by Voya Financial.

Besides looking for better health coverage, there’s growing interest among employees for voluntary benefits that can buffer health care costs, like critical illness, accident and dental and vision insurance.

As we approach open enrollment season for policies incepting at the start of the year, the study findings provide food for thought as you try to balance your benefit offerings with employee salaries.

The general theme of the poll was that health insurance and out-of-pocket costs like copays, coinsurance and deductibles are having a real effect on many workers’ finances, and in particular, their ability to save for retirement.

Consider the following:

  • 72% of workers surveyed strongly or somewhat agreed they would take a job with a slightly lower salary for better health care and medical coverage, including lower premiums and out-of-pocket costs.
  • 51% said that high health care costs were having a major or significant impact on their ability to save for retirement.
  • 51% said they would be more likely to stay with their current employer if it provided access to a health savings account (HSA).
  • 51% said they would be more likely to stay with their employer if it provided access to voluntary benefit offerings, and
  • 54% said they would be more likely to stay with their employer if it provided access to mental health benefits and resources.

The above bullet points have one theme in common: reducing the employees’ premium and out-of-pocket outlays.

The takeaway

As open enrollment approaches, consider holding information sessions to help your staff understand the true value the benefits you offer can provide.

Voya Financial found that 75% of workers surveyed strongly or somewhat agreed they were interested in receiving support to maximize their workplace benefits dollars across their:

  • Health insurance,
  • HSAs,
  • Voluntary benefits, and
  • Retirement savings.

For example, “Many individuals may not realize that voluntary benefits can help lessen the financial impact of a covered event such as an illness or accident and can potentially reduce the need to tap into a retirement account for any out-of-pocket medical or other expenses,” said Christin Kuretich, vice president of supplemental products at Voya Financial.

With that in mind, offering benefits like critical illness or accident insurance can provide a safety net in case of one of these events hits one of your staff. 

To better explain benefits to your staff, providing training, individual guidance and literature that explains how best to maximize their benefits. Importantly, employees are increasingly interested in digital tools (like apps or websites) that can provide tools and advice to help them make decisions related to health care, workplace benefits and retirement.

Finally, HSAs can also reduce an employee’s total costs and also help lower their taxable income. HSAs are accounts to which workers contribute with pre-tax funds and then reimburse themselves for out-of-pocket medical costs. Those funds are also not taxed.

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Employers Use Variety of Strategies to Provide Competitive and Cost-Effective Health Care Benefits

by Inoventive Solutions
September 10, 2024

As they wrestle with providing attractive but affordable health care benefits for employees, employers are trying a variety of strategies. A recent report from insurance brokerage Gallagher shows businesses are balancing workers’ physical and emotional health against ever-rising costs.

There are many cost drivers in health care and insurers and employers are in a fine balancing act of trying to keep a lid on costs and also keeping their employees happy. And while firms are leaving no stone unturned in their quest for reducing costs, some are also adding new services employees are keen on.

Here’s what the report found:

Offering more plans

To combat rising costs, many employers (80%) offer more than one health plan. A growing share of employers offer high-deductible health plans (HDHPs) and health savings accounts (HSAs) to employees. The percentage of companies offering such plans has increased five consecutive years and is now at 56%. At the same time, 24% of employers report more employees choosing HDHPs than the other offered plans.

Employers and employees contribute to the HSAs. When employers contribute, they provide about $500 or more for single coverage and $2,000 or more for family coverage.

Weight-loss drugs

Weight-loss drugs such as Ozempic and Wegovy are growing in popularity. However, these drugs (known as GLP-1s) are expensive, and employers are trying to manage the effects of those costs.

Slightly more than half of employers surveyed include weight management in their benefits programs, but they attach strings to the use of weight-loss medications. This may include:

  • Step therapy, which entails trying other, less expensive yet proven pharmaceuticals and health and fitness regimens first.
  • Prior authorization before approving their use.
  • Eligibility requirements. Around one-fifth of employers set eligibility requirements that include a combination of minimum body mass index and comorbid conditions. They do not pay for the drugs for otherwise healthy employees looking to drop a few pounds.

Plan eligibility and scope

Despite rising costs, some employers are expanding eligibility for and the scope of their health care plans.

The Gallagher report shows a small increase in the share of employers offering coverage to employees’ domestic partners and to part-time employees, though these remain the minority.

Some are also offering more specialty coverages. For example, more than half cover hearing aids and behavior analysis for employees’ children with autism. A small but growing fraction (17%) cover gene therapy.

Almost half of employers cover some form of treatment for infertility, including drugs, specialist evaluations, in vitro fertilization and other fertilization procedures. However, controversies surrounding some of these procedures have led to a patchwork of state mandates and restrictions. This has made providing these benefits more complex for companies.

Mental health and leave

More employers are paying attention to their employees’ mental and emotional states in addition to physical wellness. Most are concerned about staff suffering from burnout and stress.

However, they also believe their managers are not able to recognize the signs. More than a fifth now offer training to managers and human resources staff on identifying warning signs and referring employees for help, and that share has grown in the past two years.

Finally, more firms are offering family-focused leave policies. This recognizes the growing emphasis employees place on work-life balance amid tight labor markets.

Almost 90% offer paid bereavement leave (outside vacation leave,) while almost half provide paid time off to bond with a new child, and 15% provide it for taking care of ill or disabled family members.

The takeaway

Employers are faced with two difficult realities. The workforce is aging, meaning that retirements will shrink the pool of available skilled workers. At the same time, health care costs are ever-increasing.

To meet both these challenges, employers are using the strategies detailed above, as well as other approaches. Some combination of them will help you compete in the war for talent while protecting your bottom line.

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As Health Care Costs Bite, Here’s How You Can Help Your Workers

by Inoventive Solutions
January 26, 2023

Recent studies have highlighted an alarming trend in American health care: More and more people are struggling with medical bills and many are delaying care due to high costs.

The most recent poll by Gallup found that 38% of those surveyed said they or a family member had delayed care in 2022 due to high costs. That’s up from 26% in 2020 and 2021. The rapid increase occurred in a year where inflation was at a 40-year high.

Last year’s spike in delayed care was the largest over one year since Gallup first began tracking these data more than two decades ago and it illustrates the breadth of the problem, which likely stretches into the ranks of your own employees.

Even if you are providing them with a robust plan, there are often out-of-pocket cost-sharing and deductibles to contend with. For employees in high-deductible health plans, the costs can be steep.

What you can do

Fortunately, there are steps you can take to help them reduce their out-of-pocket expenses for health care:

Emphasize the importance of preventative care — The best way to prevent or stave off major health issues is through preventative care, such as going to routine checkups and having blood work done as recommended. The COVID-19 pandemic worsened the problem of delayed care and health care providers and patients are still catching up on all that missed care.

But it’s not just regular checkups. Many people are not getting regular care for chronic conditions. Many preventative services are covered with no out-of-pocket cost-sharing, but checkups usually are not.

Depending on the type of plan an employee has, routine and preventative care costs can add up. Some experts suggest creating a cash-assistance fund for workers who may struggle with the costs of those visits.

Highlight digital tools — Digital tools are growing in number, from apps and telehealth options to those that can help your employees manage chronic conditions.

Many insurers and/or providers have apps to help people access care and manage their health. The apps will notify patients when it’s time for checkups or other routine services. These portals typically include telehealth options, which can be a less expensive way to meet with their doctor or a specialist.

On top of that, there are digital tools to help people monitor and manage chronic conditions, like high blood pressure and diabetes — and even rate genetic conditions. They are an inexpensive way to keep a look out for symptoms and changes in vitals that may require a visit with their doctor. Your workers should ask their doctor about any tools that they can be using.

Don’t cut back on health benefits — With the rising health insurance premiums, it may be tempting to offer high-deductible health plans with even higher deductibles. This may keep your premiums where they are compared to the prior year, but it saddles your employees with the potential for even more out-of-pocket expenses.

Urge any employees in HDHPs to sock away funds in their attached health savings accounts for future medical expenses. These accounts are funded with pre-tax dollars and can be saved up for future use. Funds are not taxed when withdrawn, either.

HSAs are portable if the employee changes jobs, and the funds can be invested, much like a 401(k) plan.

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Premium Reimbursement Plans Grow in Usage, Despite Drawbacks

by Inoventive Solutions
December 6, 2022

More employers are opting to fund accounts that their employees can draw on to purchase their own health insurance, either on an Affordable Care Act exchange or on the open individual market, according to a new report.

Individual Coverage Health Reimbursement Arrangements (ICHRAs) offer employees a set budget for premiums, allowing them to pick the health care plan that works best for them.

Some companies have been exploring these arrangements in lieu of providing their group health benefits, in order to save money and reduce the administrative burden, according to the “2022 ICHRA Report” by PeopleKeep, a human resources software company.

The average amount employers funded ICHRAs with was $981 per employee in the year ended June 30, 2022, according to the report. That is twice as much that’s needed to purchase the average lowest-cost gold plan on the marketplace.

But these plans have their drawbacks and are not for all employers. So, it’s important to understand how they work and their limitations.

The ICHRA explained

ICHRAs, created by regulations promulgated by the IRS in 2019, allow employers subject to ACA coverage requirements to forgo purchasing insurance for employees and instead provide extra funds for them to purchase their own health insurance coverage. Here are some ICHRA basics:

  • Regulations allow for employers to offer ICHRAs to some of their employees, and group health benefits to others.
  • Some accounts are restricted to reimbursing only for health insurance premiums, while others also reimburse for out-of-pocket medical expenses. Unspent funds can be saved over the course of the pay period for expenses in the calendar year.
  • Every pay period, the employer will fund the account with a set amount over the course of the year. The employee will pay for their premiums and get reimbursed by showing proof of payment.
  • Employees don’t pay taxes on health care spending reimbursed through the ICHRA.
  • Accounts are not portable when employment ends.
  • For applicable large employers subject to the ACA employer mandate, the ICHRA funding must meet the ACA’s coverage and affordability requirements and be enough to purchase the lowest-cost silver plan on the marketplace.
  • There is no limit on how much an employer can fund the account with.

Not a good fit for all firms

There are many restrictions to ICHRAs as well as drawbacks which employers need to consider:

  • The employee loses the employer-sponsored coverage they’re accustomed to and has to fend for themselves to find coverage that fits within the budget their employer provides. This could cause employee resentment.
  • Offering group health plans to salaried employees and higher-wage staff and ICHRAs to lower-wage workers, who may view it as a two-tier system, could again cause resentment.
  • Having an ICHRA could affect recruitment efforts and retention, as most workers have grown accustomed to their group health benefits.
  • Employees may choose plans that leave them with either higher premiums than they’d pay for a group plan, or higher out-of-pocket expenses on the back end.
  • Employees must use the funds to purchase health insurance and they may not be enrolled in their spouse’s health plan.
  • If your ICHRA is considered affordable according to ACA rules, employees lose the premium tax credit if they opt out of the ICHRA. If your ICHRA is considered unaffordable under ACA rules, they can claim the premium tax credit and waive their right to the ICHRA.

Businesses most suited for ICHRAs

These plans often work best for operations that have:

  • High staff turnover.
  • A large number of lower-paid workers.
  • A mix of salaried and hourly workers.
  • A mix of employees at the company site and remote workers in other regions.

The takeaway

Sticking with a traditional group health plan can help you with recruitment and retention, but for some employers who look to attract workers who do not put a priority on employee benefits, these types of plans could be a good fit.

Making a move to one of these plans takes careful consideration and planning. We can help you sort through the facts and fiction about these accounts.

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Health Expenses a Major Source of Mental Health Issues for U.S. Workers

by Inoventive Solutions
January 12, 2022

A new study has found that more than one in four U.S. workers say expensive medical bills are having a major impact on their mental health.

Mental health issues have come to the fore during the COVID-19 pandemic, spurring employers to expect their group health plans to do more for their workers in this area.

The report on the study by the health care consulting company Centivo urges employers to consider new ways to reduce the medical financial burden some of their employees may be experiencing.

Mental health is already on the radar of employers:

  • Large businesses reported that addressing their workers’ mental and emotional health would be a top priority over the next three to five years, according to a 2021 study by Mercer Consulting.
  • Nearly 40% of employers surveyed by the Kaiser Family Foundation in November 2021 said that they had made changes to their mental health and substance abuse benefits since the pandemic started.

The Centivo report found that:

  • S. workers are increasingly having difficulties in paying for health care, particularly due to high copays, deductibles and other health plan cost-sharing elements.
  • Health care affordability also correlates to sacrifices in care, including mental health care. Twenty percent of study participants who experienced major medical expenses said they skipped or delayed needed mental health care or counseling due to cost concerns.
  • Medical expenses are a significant cause of mental health and well-being issues for both individuals and families.

Stress drivers

The report states that the findings raise concerns about whether some employees can even afford to use their health plans. It stressed two main points:

High deductibles — The report found one of the main drivers of stress was high deductibles and other out-of-pocket costs.

It found that only 10% of those surveyed had a health plan with a zero deductible.

More troubling was that 40% of those with deductibles ranging from $1,000 to $3,999 did not have enough money saved to cover a major medical expense.

Savings trumps more features — The study found that group health plan enrollees’ top priority in their health plans is to save money, both on the front end in premiums as well as the back end in out-of-pocket costs.

Respondents said they would take saving money over expanded features, even if they had fewer choices in their health care. In fact, nearly three out of four respondents said they would trade off being able to see their current provider or specialist for a plan that is 10 to 30% less expensive than their current one.

The takeaway

One interesting finding in the study was the less that employees saved for health care, the more likely they were to report that a major medical expense had affected their mental health. Only those that reported more than $10,000 in savings reported low levels of mental health issues.

That highlights the need for employees to set aside funds for health care expenses through health savings accounts, flexible spending accounts and health reimbursement accounts. These are funded with deductions from the employees’ salaries before taxes are taken out.

Centivo’s chief medical officer, Dr. Wayne Jenkins, said that employers can help their workers reduce their overall medical outlays by working with their employee benefits brokers to:

  • Eliminate or reduce deductibles,
  • Engage with health insurers to provide simple and predictable copays, and
  • Make primary care visits free (which helps physicians diagnose serious ailments earlier, resulting in lower medical costs over time).

Also, businesses may consider “skinny plans,” which typically have fewer provider choices in exchange for lower premiums and out-of-pocket costs.

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IRS to Get Tough on ACA Reporting Form Mistakes

by Inoventive Solutions
January 5, 2022

The time when the IRS offers relief from financial penalties to employers that make errors on their group health insurance reporting forms has come to an end.

Starting this year, the IRS will no longer offer protection against reporting error penalties when “applicable large employers” (ALEs) file their Forms 1094-C and 1095-C and the employer has made a good-faith effort to comply. The change starting with the 2021 tax reporting year means that employers can face steep penalties for mistakes on their forms.

IRS Code requires employers who are obligated under the Affordable Care Act to offer their employees health insurance benefits to also file these forms annually. But since employers were required to first start filing these forms in 2018, the IRS has been lenient against those that make good-faith errors on the forms.

Typically, when the IRS identifies instances when an employer may be liable for employer shared-responsibility penalties based on information provided on the forms, the agency will send the employer a Letter 226J. These letters will identify an employee who may have received health insurance from their employer but is also receiving premium tax credits from a policy on an exchange.

To date, the IRS has allowed ALEs to ask for corrections on their filed forms, or to reduce the penalty without imposing reporting error penalties as well. That comes to an end this year when employers file their 2021 forms.

Issues to bear in mind

Here are a few issues businesses need to be aware of:

  • Starting this year, the IRS will no longer offer good-faith relief from penalties for incomplete or incorrect forms.
  • For the 2021 reporting year, these penalties are $280 per form that must be furnished to employees and $280 per form filed with the IRS.
  • According to reports, the IRS is especially focused on employers who may not be satisfying ACA requirements that all health plans they offer their staff must be “affordable,” which means costing no more than 9.83% of the employee’s household income for the 2021 tax year
  • Thanks to the American Rescue Plan Act, more Americans qualified for premium tax credits on ACA exchanges and the act drastically increased those tax credits to the point where some people were paying $1 a month for coverage. Employers could face reporting problems if any of their staff dropped their employer coverage and got coverage on an exchange.

Important dates

Jan. 31, 2022: Deadline for furnishing 1095-C forms to employees.

Feb. 28, 2022: Deadline to file paper 1094-C and 1095-C forms with the IRS (only for employers with fewer than 250 employees).

March 31, 2022: Deadline to file forms electronically with the IRS.

"unvaccinated
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Employers Mull Higher Health Plan Cost-Sharing for Unvaccinated Staff

by Inoventive Solutions
August 24, 2021

Some employers are considering a new incentive for their workers to get vaccinated against COVID-19: Charging them higher health insurance premiums if they don’t.

A recent brief from consulting firm Mercer reported that employers are looking at surcharging the health insurance premiums for employees who refuse vaccination for reasons other than disability or sincere religious belief. Many employers apply similar surcharges for employees who use tobacco.

The news comes as the Delta variant of the coronavirus that causes COVID-19 has sent infection rates soaring, with reports indicating that most new cases are occurring in people who have not been inoculated.

Employers may choose this option for a simple reason: The large costs of hospital stays and treatments for COVID-19 patients. When health plans incur large claim costs, they must either accept lower profits or make up the difference by spreading the costs among plan participants. Charging higher premiums penalizes vaccinated and unvaccinated employees alike.

The U.S. Equal Employment Opportunity Commission has said that it is permissible for employers to require workers to be vaccinated. However, many employers have been hesitant to take that step, fearing negative employee reactions, waves of resignations and bad publicity.

Freedom of choice

Surcharging insurance premiums for unvaccinated workers may be an appealing alternative for some employers. Rather than ordering employees to get vaccinated, they would leave them free to choose.

Those who would rather bear higher costs as a consequence of refusing a vaccine would be free to make that choice. In turn, vaccinated employees would not have to subsidize the health care costs of colleagues who make riskier decisions.

A Mercer spokesperson has estimated that any surcharges would be in the range of $500 to $1,300 per year.

Extra costs like that might induce reluctant workers to get the shots. If unvaccinated employees decide to get vaccinated in order to avoid a surcharge, the workplace should be safer and more productive. Absenteeism due to illness can negatively impact productivity.

The takeaway

Employers need to consider the following before implementing surcharges:

  • The EEOC has provided guidelines for employers wishing to offer vaccine incentives. Employers should stay within those guidelines.
  • Are the incentives necessary? They might not be in areas or workplaces where vaccination rates are already high.
  • The line between “encouraging” and “coercing” employees to get vaccinated is not well-defined. Employers should avoid imposing surcharges that could be viewed as coercive.
  • Some employees have pre-existing health conditions that make the vaccinations unsafe. Others seriously practice religions that forbid their use. Federal law requires employers to accommodate these workers.
"Affordable
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Trimming Hours to Avoid Employer Mandate Can Land You in Hot Water

by Inoventive Solutions
February 9, 2021

Ever since the Affordable Care Act was enacted, critics of the law have said that employers would cut staff or reduce workers’ hours to avoid coming under the employer mandate requiring them to provide coverage for their staff.

But employers that decided to go that route could find themselves in a costly legal trap thanks to precedent-setting case that has been cited often by judges when confronted with challenges. 

Workers at Dave & Buster’s, a restaurant chain, in July 2015 filed a lawsuit in the Southern District of New York alleging that the national restaurant chain reduced their hours to keep them from attaining full-time status for the purpose of avoiding the requirement to offer them health coverage under the ACA’s employer mandate.

In February 2016, the federal judge in the case, in declining the employer’s motion to dismiss the case, cited its likely breach of the Employee Retirement Income Security Act (ERISA), which prohibits employers from interfering with a worker’s right to benefits.

This case is significant because many other employers have implemented similar strategies striving to limit work hours for certain groups of employees for the purpose of avoiding penalties under the ACA.

Some background

The ACA’s employer mandate generally requires large employers (those with 50 or more full-time workers or full-time equivalent employees) to offer affordable and minimum value health coverage to their full-time employees (employees who regularly work an average at least 30 hours per week).

Employers are not generally required to offer coverage to employees working less than 30 hours per week on average.

Since the employer mandate took effect, many employers have been moving employees to part-time status to avoid triggering penalties under the employer mandate. 

Why the case is important

The Dave & Buster’s employees alleged that the company violated ERISA by cutting their hours. They cited Section 510 of ERISA, which prohibits employers from discriminating against any participant or beneficiary for exercising a right under ERISA or an ERISA benefit plan. 

The workers alleged that by reducing employees’ hours to keep them below the 30-hour weekly average to qualify as a full-time employee, Dave & Buster’s interfered with the attainment of the affected employees’ right to be eligible for company health benefits.

Dave & Buster’s in October 2015 filed a motion to dismiss the case, but the Southern District of New York federal judge denied the motion in February 2016.

The law firm of McDermott Will & Emery in its blog highlighted the importance of the decision, stating, “The opinion focuses on ERISA Section 510 and holds that the plaintiff has a viable claim that reducing her work hours was done for the purpose of interfering with her right to benefits under the company health plan.

“Second, the opinion finds that the complaint successfully alleged the employer’s ‘unlawful purpose’ and intention to interfere with benefits, pointing to allegations that company representatives publicly stated that they were reducing the number of full-time employees to avoid ACA costs.” 

The law firm noted that the decision has given plaintiff’s attorneys a model for filing similar complaints when employers reduce hours to avoid their obligations under the ACA.

It also noted that if judges in other cases deny employers’ motions to dismiss cases, it will put the employer in a more difficult position because the employees’ attorneys will be able to take discovery and depositions, and to compel document production.

Any signs or proof of reducing hours to avoid their obligations under the ACA will make defending the case even more difficult, McDermott Will & Emery wrote.

If you have trimmed hours to avoid the employer mandate, or if you are contemplating doing so, it’s best that you first discuss these plans with your company lawyer.

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Changes for 2021 Summary of Benefits and Coverage

by Inoventive Solutions
January 26, 2021

There are new Summary of Benefits and Coverage notice requirements for health plans starting with the 2021 coverage year.

The requirements, released by the Department of Labor, have new model templates, new instructions and new information that affects the coverage examples that are required to be in SBC documents that employers with group health plans must distribute to their employees.

Under the Affordable Care Act, all non-grandfathered health plans are required to provide enrollees and prospective applicants an SBC, which is essentially a synopsis of the plan’s coverage and benefits. It must be produced in a specific format, contain specific information, and be written in a way that is easily understood.

Here are the changes that were made to the SBC template for plans that started on or after Jan. 1:

Coverage example

The coverage examples that appear on the last page of the document have been modified to reflect changes in the cost of medical services that occur over time due to inflation and other factors:

  • “Managing Joe’s Type 2 diabetes” (diabetes example): The total amount of expenses incurred for “Joe” has decreased.
  • “Mia’s simple fracture” (fracture example): The total amount of expenses incurred by “Mia,” who visited the emergency room for a simple fracture, has increased.
  • “Peg is having a baby” (maternity example): The costs incurred during “Peg’s” hospital stay have been changed to remove separate newborn charges. The deductible line of the example should now match “your deductible amount” (if applicable).

Minimum essential coverage

Under the entry for minimum essential coverage, the template has been revised to reflect the elimination of the individual mandate penalty, which was repealed effective Jan. 1, 2019.

The entry now indicates that individuals eligible for certain types of minimum essential coverage may not be eligible for a premium tax credit under the ACA marketplace.

Uniform glossary

The uniform glossary has been updated to remove references to the individual mandate penalty.

What to do

If you offer group health plans to your employees, you are a plan sponsor and thus required to distribute SBCs to staff who are eligible for coverage during open enrollment. The SBC must also be given to new hires within 90 days of hiring for mid-year enrollment. 

If you don’t have your latest SBC, you can contact us or your health insurer. The insurer is obligated to provide all covered employers with updated SBCs after the Department of Labor and the Department of Health and Human Services release changes to templates.

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Some Insurers Step Up Group Health Plan Assistance

by Inoventive Solutions
May 19, 2020

Some health insurers are helping business workers in group plans 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.

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