We received some great information from Ron Bruchet, President of GHB Insurance in Lacey, WA, regarding options for group medical insurance when employers are forced to reduce staff due to COVID-19. Ron explains the difference between Furlough and Leave of Absence, and how it may impact your staff.
- Furlough = Leave of Absence which allows employees to return to their jobs after a period of time
- Layoff = permanent dismissal of employees from their jobs because of budgetary constraints or work shortage
If you are considering reducing your staff and want to keep them covered on the group medical plan, you may want to consider a Furlough instead of a Layoff. Most carriers have a 90-day Leave of Absence policy within their contract as long as the Leave of Absence was approved/initiated by the employer and the employer continues to pay the premium.
Here is a link to a sample Furlough letter that can be used - https://ghbinsurance.com/sample-covid-19-furlough-letter-2/
In addition, there are two programs available through the Washington State Employment Security Department:
Shared Work - https://esd.wa.gov/SharedWork
- Employees hours are being reduced by 50% or less
- Employees receives their paycheck from their employer for reduced hours worked, and then they receive a portion of unemployment as well.
- Employers are able to retain skilled workers while reducing cost
- Employers are required to maintain the employees' health insurance during this period. This can be done by using the Leave of Absence policy but only up to the period of time allowed under the carrier contract.
- Employers can request standby for employees with a probable return-to-work date within eight weeks (56 days) of the date of the request.
- Employees will not be required to "look for work" during this period.
- Employers should request standby using the "Request for Separation Information" form sent when a worker has applied for unemployment benefits.
- Employers are required to maintain the employees' health insurance for the eight weeks (56 days). This can be done using the Leave of Absence policy.
If you are considering terminating your group health insurance altogether, please contact your insurance provider about the Special Election Period (SEP) for enrolling in individual medical plans.