Category Archives: COVID-19

Importance of Insurance Premiums During COVID-19

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health insurance are you covered

During these unprecedented times, business owners and professionals are becoming increasingly concerned about cash flow. No entity or individual is immune to the economic disruption caused by the COVID-19 crisis. Today we bring you some of our thoughts on what’s happening on the insurance side of this pandemic.

Current State of Health Insurance

To date, we haven’t seen much from insurance companies in terms of extending payments and/or granting relief. Some carriers like Kaiser have announced their offering of extended grace periods for employer groups. Then there are some life insurers who have issued no-lapse statements while Blue Shield has agreed to grant employers some relief on their April premiums. There are also many carriers who haven’t released any statements to address this issue.

Insurance companies depend on premium revenues to support their actuarial assumptions and reserves. They don’t have systems in place to accommodate a mass change in premiums – even if such programs existed, they aren’t anticipated to abate any premiums, but rather simply extend them.

With this in mind, it is now more critical than ever to have some level of coverage in place for your health insurance, life insurance, and/or disability insurance.

We realize this is easier said than done for many. Employers are currently looking at their April billing and wondering to themselves, “Where is the relief for this payment? What do I do?”

From our experience, insurance companies are not likely to forgive any payments. Deferring only adds a larger amount to any subsequent obligation to pay future premiums.

While auto and equipment leasing are extending payments, some landlords providing flexibility on rent, and some utility companies are granting relief on tenants’ payments, insurance companies generally lag when it comes to consumer-centric thinking.

What Business Owners Should Do

CorpStrat believes in taking a pragmatic approach, in that the essence of insurance is that it must be in good standing in times like this when one’s coverage is needed the most.

If you are a business owner, make sure to explore the SBA loan resources and apply for opportunities that will best help you preserve your benefits packages.

Some other tips from CorpStrat:

  • Try your best to keep all insurance payments as current as possible
  • Work with your broker to ask if your carrier has any “unpublished” considerations and contact us for guidance on any issue

We hope you found this helpful during these challenging, uncertain times. Contact the CorpStrat team if you need guidance on organizing your insurance premiums.

COVID-19 and Your Health Insurance

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Health Insurance and COVID-19

Every business is struggling with how to retain their employees and also how to treat their health insurance.

What we have outlined below oversimplifies it, but is intended to give you a general sense of how insurance companies are addressing the most pressing concerns around the COVID-19 outbreak we have been experiencing the past month.

Are carriers granting premium extensions or extending grace periods for employee benefit plans?

Not yet and we are not anticipating. Insurance companies are seeing unprecedented usage (claims) and have not announced any formal extension of ordinary 30-day grace periods. Some carriers are suggesting employers write and request individual consideration. Keeping employees covered, even those furloughed, is critical for everyone. With the forthcoming Paycheck Protection Program (PPP), companies will likely be able to get forgivable loans (which will include 8 weeks of payroll INCLUDING health insurance), so with the availability of these loans and capital, employers should be able to remit premiums.

Patients who are hospitalized are consuming hundreds of thousands, if not millions of dollars of healthcare expenses. Unlike a building, where unpaid rent won’t weaken the structure or integrity of the building itself, loss of premium revenue atop massive reduction in revenues could potentially undermine the stability of insurers. Pay your health insurance premiums at all costs – these insurance companies just might be part of saving our lives.

Will carriers allow employees who are NOT actively at work, FMLA (Families First), those who drop below full-time status, or are otherwise furloughed, to remain on the health insurance plan?

For the most part, yes! Each carrier has announced a relaxed “actively at work” provision allowing employees who are otherwise not working to remain under plans for some period. Of course, employers should be addressing with their staff their intent and providing proper notice for any layoffs or leaves and complying with the Families First Act.

If employees are laid off and later hired, will the new hire waiting period be waived?

In general, most carriers will allow employers to adapt their policies to accommodate this unprecedented time. Here is what each has already declared:

  • Aetna – Yes, through July 31, 2020
  • Anthem – Yes, if rehired by May 31, 2020
  • Blue Shield – Yes, if rehired within 6 months
  • CIGNA – Unknown
  • Kaiser – Will allow each client to define their waiting period
  • United Healthcare – Yes

Will the carriers allow mid-year benefit changes at the employer level? At the employee level?

While this seems appealing, adapting a change in benefits during a period of chaos and where communication with eligible participants might be hard, is not recommended. That being said, here is what each major carrier is saying they will allow:

  • Aetna – Yes, by July 31, 2020
  • Anthem – Unknown
  • Blue Shield – Yes, a one-time, mid-year exception
  • CIGNA – Unknown
  • Kaiser – Must be made by May 31, 2020
  • United Healthcare – Yes, a one-time, mid-year exception

Are carriers offering a Special Open Enrollment period for employees who previously waived the coverage to join the plan?

For the most part, yes. This creates a dilemma for employers who may be seeking to minimize participant enrollment and the outlay associated with each employee on the plan. However, for someone who wants to open their enrollment, here is what each major carrier is allowing:

  • Aetna – Not at this time
  • Anthem – Special enrollment window through April 3, 2020
  • Blue Shield – Special enrollment window
  • CIGNA – Unknown
  • Kaiser – Special enrollment window through April 3, 2020
  • United Healthcare -Special enrollment window through April 6, 2020

Are carriers waiving the co-pay for Telemedicine or any other employee responsibilities for deductibles and/or co-insurance?

Universally YES. In fact, this period will spark the growth of telemedicine as a faster, more cost-effective and immediate way for people to receive healthcare advise and guidance.

  • Aetna – Waiving cost share for telemedicine and cost share for COVID-19
  • Anthem – Waive cost share for telemedicine
  • Blue Shield – Waiving cost share for telemedicine
  • CIGNA – Waiving cost share for telemedicine and cost share for COVID-19
  • Kaiser – Waiving cost share for telemedicine
  • UnitedHealthcare – Waiving cost share for telemedicine

Please keep in mind that everything is subject to change in a moment, and small/large group pools may dictate exactly what, when, and how things will happen. Reach out to your dedicated account executive at CorpStrat for guidance.

Loan Programs Employers Need to Know About During COVID-19

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signing a small business loan form

Several loan programs are going to be available for employers and details are highlighted below and in the links to our website. This update includes information about three employer loan and relief programs, in order of priority:

  1. Payroll Protection Program
  2. Economic Injury Disaster Loan (EIDL)
  3. Payroll Retention Credit

The big item is the Payroll Protection Program, which is probably the most immediate of the items.

Call your bank now and tell them you intend to apply. Time is of the essence here as the initial money will run out, although it is quite possible Phase IV of the Congressional COVID-19 response will expand the funding beyond $350 billion.

These loans will be administered by SBA-recognized banks and possibly include other non-SBA banks. It is a Section 7(a) SBA program. Our feedback from bankers is that it might be two or more weeks before the process can get going, but some anticipate forms for applications to be produced in the next day or two.

  1. You will need to do some calculations. The maximum loan is $10 million or 2.5 times your monthly payroll and some other costs.
    1. Several calculations might be required but, basically, determine your average monthly payroll for the 12 months preceding the date in which the loan is made.
    2. That means you calculate the payroll costs from the prior year
    3. Payroll costs can include health insurance and some retirement plan contributions. Independent contractors you pay would also qualify.
  2. The loans will not need to be personally guaranteed and will not require collateral.
  3. There are several things you can pull together now.
    1. Average monthly payroll.
    2. Number of Full-Time Equivalents during that same period.
    3. Estimate the percentage of your normal operations functioning now.
    4. Some idea of how much you might be requesting
    5. Financial statements as recent as you might have.
    6. Links or copies of your latest filed tax returns.
    7. Payroll Tax Returns for the last several quarters.
    8. Forms 1099 MISC for independent contractors you may be claiming as included in the loan amount calculations.
  4. Don’t forget about the required certification that your business needs this money because of the current health crisis and the uncertainty that puts on the business’s ability to pay its employees and continue to function normally.
  5. Some or all of the loan amount will be forgiven, depending on how you spend that loan. these include 8 weeks of payroll immediately following the loan closure but employee retention is critical.
    1. A long list of expenditures exists that, when documented, will permit the business that loan forgiveness.

The second thing to prepare for is the EIDL, which stands for Economic Injury Disaster Loan.

  1. Provisions exist for an EIDL Grant of $10,000, which is a request for an emergency advance if you are applying for an EIDL loan. Some notes to consider:
    1. You must be an eligible entity.
    2. If used for expenses like payroll, rent, supply chain costs, and certain other expenses, the payback is not necessary.
    3. Any PPP loan would be reduced by this advance.
  2. The EIDL loans may be granted up to $2 million.
  3. They are more difficult to get and may take longer.
  4. The amounts advanced are likely to be recourse and backed up by personal guarantees of each of any 20% owners.
  5. These loans will be collateralized.
  6. In addition to the items necessary for applying for this loan:
    1. Itemize your liabilities (they can be grouped for now).
    2. Prepare yourself to submit personal financial statement details. You might refer to your latest bank form for your most recent loan and update it.
    3. Include your monthly sales report.
    4. Prepare some projection of what you expected in revenue and expenses. Do one for before the health crisis and one after. This is not required but might smooth the acceptance process.
    5. There will be forms and other items to fill out and sign. We or your advisors can help guide you on this.

The Payroll Retention Credit is also available, but it is the third thing to consider now.

This benefit is available where you can document operation suspension or severe reduction.

  1. It is a refundable credit against your employment taxes and is refundable.
  2. It cannot be claimed if you have a forgivable SBA loan. The forgivable loan probably works better.
  3. We recommend that you focus on this after you prepare for items 1 (PPP) and 2 (EIDL).

Need assistance to start applying for these loan programs? Contact CorpStrat today and we’ll walk you through the process.

The Families First Coronavirus Response Act Explained

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A breakdown of the families first coronavirus response act

HR 6201, the “Families First Coronavirus Response Act”, has been passed by the House and the Senate and signed by the President. There were some additional changes made by the House prior to the Senate vote that are incorporated in the information below.

There are three key sections of the bill of concern to employers:

  1. Emergency Family Leave Expansion Act
  2. Emergency Paid Sick Leave Act
  3. Tax Credits for Paid Sick and Paid Family and Medical Leave

Download our PDF below for the full details and regulations of these three sections.

View Full PDF

We will continue to provide regular updates on these very important issues as we learn more.

Webinar: Coronavirus and the Workplace

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webinar coronavirus and the workplace

COVID-19 Update: We have partnered with Zywave for a webinar that provides answers for employers during these uncertain times. Hosted by our attorneys, listen in as they review the latest news about the coronavirus outbreak and what employers need to know going forward.

  • Present best practices for addressing the risks of communicable illness and disruption at work
  • Discuss federal and state legislative efforts to provide relief to workers affected by COVID-19
  • Review agency guidance on how COVID-19 affects existing workplace laws
Watch Webinar Here