The Impact of Furloughs on Employee Benefits — Namely

Summary

Namely blog post, The Impact of Furloughs on Employee Benefits, from its Benefits Advisors team. It defines a furlough as continued employment with reduced scheduled hours or a period of unpaid leave, generally not considered termination, with employees likely still eligible for unemployment. It states that Aetna, Anthem, Cigna and UHC released guidance letting furloughed employees on "Fully Insured" contracts stay on benefit plans if premiums are paid in full. End dates listed are July 31, 2020 for Aetna, May 31, 2020 for Anthem and for Cigna, and none provided by UHC. After the period ends, employees who have not returned to full-time status would be eligible to elect COBRA.

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The Impact of Furloughs on Employee Benefits

COVID-19 and the subsequent changes to how we conduct business have drastically changed the world of work for people around the globe.

These changes include daily updates and adjustments to how employers offer healthcare—not to mention the need to make difficult financial decisions to mitigate negative impacts on their business and employees.

Over the last week, our Benefits Advisors team has received a number of questions specific to the furloughing of employees and the rules the carriers have in place to guide the decision. While furloughs have not been uncommon in certain industries such as construction and the trades, it has not been a common business practice for the vast majority of companies as a whole.

What exactly is a furlough?

A furlough essentially continues employment but reduces scheduled hours or requires a period of unpaid leave. For example, you may reduce hours to 15 per week for a specific period of time to reduce costs, or you might place everyone on a four-week unpaid leave. Generally, this is not considered termination; however, employees would likely still be eligible for unemployment.

What do I need to know about furloughs and insurance now, in light of Coronavirus?

In the first half of this week, the 4 major insurance carriers—Aetna, Anthem, Cigna, and UHC—released guidance on how they will be handling the eligibility of furloughed employees—specifically the defined period of time they will allow employees to remain on benefits plans if premiums payments are made in full.

To provide some direction we wanted to release the latest guidance provided by the big four medical insurers:

There has been uniformity in that all of the carriers have agreed to extend furloughed employees on “Fully Insured” contracts for a determined amount of time assuming all premium payments are made, but as you will see below the timeline itself varies by carrier.

“Self Insured” clients would be responsible for making their own determination, with the same premium requirements applying for the determined amount of time.

The end date of the furloughed employee’s eligibility period is as follows.

- Aetna: July 31, 2020
- Anthem: May 31, 2020
- Cigna: May 31, 2020
- UHC: Furloughed employees temporarily covered, no end date provided in their guidance.

At the end of this eligibility period, if an employee has not changed their status back to full-time employment, then employees would be eligible to elect COBRA for coverage.

Our Namely Benefits Advisors are here to help you through these times. If you have questions on employee furloughs, how your carrier is handling them, or any other benefits related questions specific to how COVID-19 is affecting your benefits offering, we’ve got your back.

Have a question that wasn’t answered? Email us at ask@namely.com and we’ll continue to share Q&As and relevant blog posts as this crisis unfolds.

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