Insured Health Plans
Insured health plans are governed at the State level, thus certain guidance may be mandated by the State (e.g. 60-day extension of grace periods).
• Some States may require that employees who do lose coverage be given the opportunity for special enrollment in individual coverage whether through an exchange or not.
• Regardless of the State, many insurers have voluntarily adopted employer/member centric provisions. Always check with insurers for the latest update for a client or prospect insurer.
• Some States may require insurance companies to provide coverage to employees under group health plans, even if the employee would normally lose eligibility for coverage because of a reduction of employed hours.
Layoffs, Furloughs and Effects on Benefits
How does the health plan define eligibility? Continuation of benefits is contingent on whether employee is terminated or furloughed. Key point – the health plan defines who is eligible for the plan.
• What is a layoff? A layoff is a temporary separation from payroll.
• What is a furlough? A furlough is considered to be an alternative to layoff. When an employer furloughs its employees, it requires them to work fewer hours or to take a certain amount of unpaid time off.
Consider any additional definitions for reductions in force, furloughs and layoffs, and consider any additional policies regarding paid and unpaid leave of absences, phased retirement, and sabbatical programs.
• Some employers may mistakenly trip eligibility issues by furloughing people without consulting plan documents.
• Consideration should be given to non-medical benefits as it relates to reduction in hours.
• A reduction in hours is not necessarily a reduction in benefits.
Not all Section 125 Plan Documents and SPDs are created equal. Many of the upcoming changes resulting from employment status changes or other matters such as dependent care changes require an employer to give special attention to the language in these documents. Optional amendments will also likely be needed for CARES OTC action.
Legislation is outpacing guidance from insurance companies. When adopting new policies, especially those resulting from recent legislation, seek advice from legal counsel.
Whether health coverage continues is governed by the health plan/insurance contract:
• Be aware of federal, state and local leave law obligations, which might require continuation of health coverage.
• If health eligibility is lost, then COBRA (applicable to employers employing 20 or more employees) would apply.
• State continuation may apply to insurance contracts.
What happens to health benefits if hours are reduced?
• A reduction in hours resulting in no loss of coverage equals continued eligibility.
• Some plans provide for continued eligibility during leave of absence (governed by plan terms).
Some health plan eligibility mirrors ACA’s definition, making eligibility continue for a duration of stability period.
• If plan states eligibility is retained for duration of stability, then eligibility would be retained even in reduction of hours.
• Confirm how employee is to continue payment of premium during employment absence.
Amending the Benefit Plan
• Make certain amended change is made in accordance with plan terms and conditions.
• Make certain insurance contract(s) and related stop loss contract, if any, mirrors change.
• Communicate changes to participants via summary of material modification.
Employers of all sizes should be looking for new ways to communicate with employees, especially during open enrollment.
• Segment Your Audience based on things like locations, key demographics, tenure, job function, etc.
• Determine Topics to Be Covered such as changes to the benefit plan from last year, benefits terminology, key dates, etc.
• Tap Into Your Resources including carriers and vendors & internal marketing & communications teams.
• Utilize a Multi-Channel Communication Approach including options such as videos, webinars, benefits website/micro-page, interactive benefit guide, postcards, etc.
Other Benefit Plan Considerations
• Waiver of premium
• Short-and long-term disability plans
• Election changes
• Payment of health premium during leave (pay as you go, make up or prepay)
• Voluntary/ancillary benefit programs
• HSA considerations
• Federal tax filing due date extension likewise extends 2019 HSA contributions due date
• CARES take care of HSA / telemedicine conundrum
• Review eligibility standards in relevant plans and insurance contracts
• Loss of eligibility could entitle individual to conversion and/or portability