I honestly never truly expected to see this day come. Hoping against hope two weeks ago, I spent many hours on calls with my benefits advisors, health insurance reps, and every HR resource I could find, to no avail. But apparently, since then, even big bad for-profit health insurance corporations have recognized that forcing millions of furloughed Americans into losing their group health insurance is maybe a bad idea.
Here’s the issue — let’s say you run a small business and you want to start a group insurance plan for your staff. Group plans tend to be less expensive, give you more for your money, and allow access to a wider network of health providers. (Don’t get me started on why all plans aren’t group plans, or why discrimination against self-employed or single-owner businesses is allowable.) But here’s the trick: they require you to have at least one non-owner on the plan. And the second hurdle: with a group plan they require employees to work at least 20-30 hours per week to qualify for coverage (depending on the plan). You’d think the employer would get to choose the number of hours, but no — the for-profit health insurance company does. (Again: do not get me started.)
Enter the COVID-19 crisis. Suddenly small business owners are having to lay off or furlough their staff left-and-right. Hopefully they’ll be able to hire them back when PPP funds, grants or loans come through, but in the meantime, they’re on unemployment. So this means:
1) Employees who have been furloughed or laid off don’t have health insurance unless they can afford to reimburse the employer via COBRA. Which they can’t. Because they just lost their job.
2) The employer may be generous enough to pay for the health insurance for the employee in the meantime, at least to the extent they were previously contributing to it if not more, but they’re not technically allowed to do this if the employee is no longer working 20-30 hours per week (30 hours for BCBS). Some small businesses were doing it anyway and hoping insurance companies were turning a blind eye; or they were technically putting folks on COBRA but not requiring employees to pay for it, booking it instead as an “advance” to be paid back when the business could hire them back.
3) Lastly — and this part stung the most: remember I said earlier that a business owner had to have at least one non-owner in order to have a group plan? Well, what happens if you have to lay off all your employees? The group plan would be terminated and now the owner and their family aren’t even covered anymore. (This is so messed up.)
So you can imagine my shock and thrill when I received the email below last night! Blue Cross Blue Shield of Illinois is actually relaxing the eligibility requirements for currently-enrolled group members, at least through April 30th: this includes staff who are laid off, are on a leave of absence, are furloughed, or are working fewer hours. The relief will last at least through April 30th.
They are also opening up a special enrollment period for staff who had previously declined coverage to be able to get on the company health insurance plan now, or for covered employees to add dependents. This is extremely helpful for staff who may have been covered under a spouse who just lost their job. However, these folks don’t get the same flexibility I mentioned above (which is totally ridiculous, but whatever — I don’t write these rules; if it were up to me we’d all be on a single-payer system).
The take-away: PLEASE DO NOT FLIP THE SWITCH TO COBRA YET FOR YOUR COVERED EMPLOYEES, REGARDLESS OF THEIR CURRENT EMPLOYMENT STATUS. They will remain covered, hopefully up through when the PPP or other funds come to fruition and you can hire them back. If you need to be reimbursed by your employees for their portion of insurance, consider working with them on a case-by-case basis to see who is best able to afford it. Make sure to treat them fairly, but also understand that some have more means than others. For those whose hours are reduced, work with them to make sure they have sufficient pay in their paycheck to have their contribution portion withheld as usual.
And if you are a furloughed employee in danger of losing your coverage, contact your employer to negotiate an extension of benefits at your prior contribution amount — many are willing to make exceptions to reward staff loyalty. Check out this 1-minute video on how to maintain your insurance benefits.
The full text of the email I received from BCBS is here:
Special Enrollment Period and Resources for Group Members Losing Coverage
We are committed to standing with our customers and members in this changing environment. As part of that commitment, we want to let you know about some of the options that may be available to you and several different ways we can help group members who may need coverage support due to COVID-19.
Eligibility Requirements
We have relaxed the eligibility requirements for currently enrolled/covered group members.
- From now through April 30, employers can maintain employees who were enrolled on their plans as of March 20, regardless of the eligibility definition stated in their plan or the BPA.
- This includes reduced work hours, furlough, leave of absence or layoffs.
- Groups do not need to do anything. No paperwork or email is needed, as we will accept current and accurate eligibility files.
- This flexibility does NOT apply to those who are newly electing coverage via the special enrollment period (see below).
Special Enrollment Period
We are also offering groups an optional special enrollment period from March 30 to April 30. This would apply to eligible employees and their dependents who previously declined coverage and now want to enroll, or currently enrolled employees who wish to add an eligible spouse or dependent to their existing coverage.
- Applicable enrollment changes must be received on or before Friday, May 1.
- Effective date of coverage will be the group’s standard coverage effective date/billing date – for most groups this will be April 1.
- This enrollment event will be for medical/pharmacy and dental coverage only.
- Employers should notify their account representative if they plan to use this special enrollment option and use the standard eligibility process to add employees.
Other Coverage Options
If you have employees losing coverage through your group health plan, those employees may have several options for alternative coverage.
Federal COBRA: Eligible employers with 20 or more employees must offer coverage under federal COBRA. Employees losing coverage due to a qualifying event, which can include job loss or a reduction in hours, may have the opportunity to enroll in COBRA coverage to continue their current group health plan.
Individual coverage:
Marketplace plans – Any individual can enroll in a Marketplace plan, and some may qualify for financial assistance, depending on their income. Employees can view their benefit plan options at Selectbcbsil.com.
Medicaid plans – Eligibility for Medicaid depends on income and other state requirements. Employees can view their benefit plan options at bcbsil.com/bcchp.
Additional Resources
We have created materials to help you communicate these options to employees:
- An email template you can use to explain their coverage options
- A flier that can be printed or shared electronically
We are here to help our customers and our members during this difficult time. Please don’t hesitate to reach out to your account representative with any questions.
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. This allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.