Carriers adapt workplace benefits to help employees affected by coronavirus

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Many companies have reduced hours, or laid off or furloughed their employees to mitigate the loss of income amid the coronavirus pandemic. This does not only affect employees’ paychecks, but also their insurance benefits. A large majority of carriers are making exceptions to their usual method of determining benefit eligibility in order to extend coverage for employees affected by COVID-19, a new LIMRA survey finds.

More than 7 in 10 U.S. employees obtain some type of insurance benefits through the workplace, according to LIMRA research. To date, over 20 million Americans have lost their jobs either temporarily or permanently due to the coronavirus pandemic — potentially disrupting critical insurance coverage they need.

“This is having a huge impact on the source of financial coverage for a lot of people,” says Kimberly Landry, assistant research director of workplace benefits research at LIMRA. “We have a situation where lots of people are not being able to work right now due to forced closures of non-essential businesses, which puts them at risk of losing their coverage.”

In response to these layoffs and furloughs, 42% of insurance carriers are choosing to automatically continue 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, according to the survey. More than one third of workplace benefit carriers are also adjusting their benefit reinstatement rules to make it easier for employees impacted by COVID-19 to regain coverage. Similarly, more than one third of carriers are extending the timeframe in which employees are allowed to elect and/or pay to continue their coverage if they have separated from their employer.

Workplace benefit carriers are making a lot of exceptions to their normal rules to try to help employers and employees maintain their coverage and help their customers, Landry says.

“Under normal circumstances, to be eligible for workplace coverage, you usually need to be an active employee, but suddenly, we have a circumstance where a lot of people aren't, for a reason that's completely out of their control,” she says. “No one really saw this coming and no one really had a plan for how to respond to it. So everyone is kind of making it up as they go, but the industry is really stepping up in a lot of ways to make things easier for employers in the midst of all this disruption.”

Almost all participating companies in the survey are offering premium 60-day grace periods, on average, to workers who are unable to pay their premiums due to COVID-19. Carriers also say they plan to reassess and extend these timeframes as needed while the pandemic unfolds. Forty percent of carriers indicate they intend to collect the back premium through payroll deduction at a later time.

“There are definitely downsides to [collecting the premiums] because you're disrupting revenue streams that the carrier is used to having,” Landry says. “But it's important to keep in mind that offering flexibility now is going to help carriers retain those customers instead of losing them. So in the long term, it's probably a smart business decision, in addition to just being the right thing to do.”

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