5 Things to Keep In Mind As You Evaluate Health and Welfare Plans during the COVID-19 PandemicApril 09, 2020
Our team has been fielding questions non-stop since early March about the impact of the COVID-19 pandemic as it relates to health and welfare plans. The government has introduced the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief and Economic Security Act (CARES Act) in recent weeks to help businesses of various sizes. Sterling Seacrest Partners wants to remind our clients and friends to think about 5 aspects of their health and welfare plans that need to be considered aside from FFCRA and CARES.
- Policy Updates: Make sure your policies reflect special leave, layoff, furlough and hours reduction as a result of COVID-19; these should definitely be approved by the stop loss and medical carrier as needed.
It is always a good idea to align your corporate policies with the carrier contractual requirements. Now, more than ever, outlining your business plan for needed staff reductions also requires getting buy-in from the carriers. While many employers want to keep furloughed employees on the plan, carrier documents have to reflect policy changes.
- It’s Not Just Medical: Know the implications of leave, layoff, furlough and hours reduction implications on coverages other than medical; i.e. if I am on a layoff, how long can I remain covered for disability coverage?
If you are changing your policy for one, you should look into the ramifications on the other coverages as well; if they don’t align, you need to make sure you clearly articulate how each coverage is affected.
- Pay Now or Pay Later: Understand the financial implications of delayed premium payments.
Carrier policies reflect a 30 day grace period. For instance, premiums for April 1st are likely billed in mid-March, with payment due on April 1st – though the premium will not be considered as late if it is paid by the end of the grace period. Currently, many carriers are extending their grace period – however, at some point, back premiums will need to be paid. It would be prudent to anticipate the need and the timing of bringing accounts current; it may be that carriers will allow an employer to have an extended grace period. In prior days, this was known as premium drag. It is important to remember if you change carriers, you will be faced with paying the new premium while owing the prior months, unless this is negotiated as part of the sale. Lastly, know if any premium is not paid, coverage can be terminated retroactively which will cause issues with any claims incurred after the termination date
- Changes of More Than 10%: Remember that if your group population drops by this much or more, the carrier can change rates. What impact would that have on your business?
Some carriers have waived this, others have not, so best to explore where your carriers stand. For the most part, this is a provision that appears in virtually every plan at issue and renewal; though it is very rarely implemented. That said, there is a level of uncertainty about costs and some carriers, depending on losses, may want to change rates.
- Spending Account Changes: Don’t overlook some of your more common plans like HSAs, FSAs and Dependent Care Accounts.
For instance, with more people having to comply with shelter in place orders, daycare may no longer be required (or available); this is a qualifying event allowing an employee to stop contributions. There are also special rules for FSAs – if the leave is unpaid, they may want to terminate their FSA or continue it with post tax contributions. If they stop contributing, there likely is a time limit to file claims incurred up to the termination date. And you should consider what happens with their FSA should they return to work.
We are living in extraordinarily uncertain times. The stances that our carrier partners are taking on policy issues is fluid. Should you have any questions, please know we are happy to assist in any way.