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The Financial Impact of COVID-19 On Self-Funded Employer-Sponsored Group Health Plans

Jeff Griffin

Employers are understandably confused when it comes to trying to predict how the coronavirus epidemic will impact their group health plans. Utilization is way down for preventive, elective, and non-emergent services, while expenses directly relating to the testing and treatment of COVID-19 are way up.

Employers aren't the only ones who are perplexed; many employee benefits experts are also in disagreement as to how all this will play out. Willis Towers Watson estimates that employer health care costs might increase by 4 to 7 percent for calendar year 2020, while Gallagher is predicting just the opposite, suggesting that a 15% decrease in medical expenses is possible. Others, as you'll read about later, are suggesting the potential for a staggering 40 percent increase in premiums next year. 

Employers, most notably those with self-funded group health plans, must be mindful of these wide swings in predictions. Regardless of which way things play out, they need to take careful steps to ensure the financial viability of their health plans during this crisis.

So how can employers forecast and prepare for these shifts in cost? It's especially difficult because the impacts of this pandemic are highly dependent on the geographic, demographic, and economic risks which impact every employer quite differently.

Here are some steps self-funded employers should take, along with some predictions on what might happen to various cost-drivers of medical plans.

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Topics: Cost Containment, Legislation, self-funding, COVID-19

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Suggestions for Reopening a Business After the Coronavirus Shutdown

Jeff Griffin

Americans are suffering from "cabin fever." That's how both New York Governor Andrew Cuomo and President Trump described the American psyche this past weekend, with much of the country growing weary of spending so much time at home. President Trump went even further when he sent out Tweets encouraging citizens of three states to push for more immediate reopenings than planned.

Governors of those states, Minnesota, Michigan, and Virginia, were left confused, having been told just days earlier by the President that the decision to reopen would be left up to them, though just days prior they were told the opposite by the President, who claimed the decision to reopen the country rested solely with him.

Governors are understandably feeling a bit whipsawed by this flip-flopping. Still, it's fair to say that there isn't a governor across the country who isn't eager to ease restrictions that have crippled state economies. The vast majority of Governors, however, are balancing their decisions to reopen with local public health concerns and the White House's very own Guidelines for Opening Up America.

Reopening Means Renewed Opportunities for The Virus to Spread

American workers are also anxious to get back to work, and business owners are desperate to see the wheels of commerce turn again. But the fact of the matter is this - businesses are going to reopen before there is widespread testing for COVID-19, much less general availability of antibody testing, which will indicate if an employee was previously infected and has now mounted an immune response to the disease.

This is to say nothing of the 12-to-18 month roadmap to developing an actual vaccine for the virus, nor the manpower required to do meaningful contact tracking. This means that the coronavirus will have renewed opportunities to spread as workers return to the job.

Without Formal Guidance, Businesses Are Essentially Winging It

Without common and well-defined safety procedures for reopening, businesses are implementing ad hoc procedures with vastly mixed results and constant changes. OSHA is stressing that its guidance isn't regulation, but rather advisory.

Many frustrated business leaders are looking to "essential businesses" that never shut down for guidance, while others are looking for inspiration from companies in overseas markets where the curve of the pandemic subsided weeks ago.

So what should employers do to prepare for reopening? What actions can they take to make workplaces safe? What steps can they take to test workers and keep them healthy?

Here are some suggestions;

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Topics: Legislation, COVID-19, Reopening For Business

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Leaves of Absence: Do Employers Need to Provide Health Insurance During These Times?

Jeff Griffin

Employees who take qualifying leaves of absence are provided multiple protections by way of the Family and Medical Leave Act (FMLA), the Uniformed Services Employment and Reemployment Act (USERRA), and many state laws.

The most well-known protection is the guarantee of the same or an equivalent job when employees return to work, but there are also other protections. For example, many of these laws stipulate employers’ obligations regarding health insurance during employees’ qualifying leaves of absence.

The following is a breakdown of FMLA, USERRA, and some general state laws with regards to employer-provided health insurance coverage.

FMLA and Health Insurance

In order to meet the requirements for an FMLA-qualifying leave of absence, employees must meet four criteria.

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Topics: Compliance, Qualifying Life Events, FMLA, USERRA

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New Coronavirus Layoffs Predicted to Hit Sectors Once Deemed Safe

Jeff Griffin

With funds reportedly running dry overnight in the $350 billion Paycheck Protection Program, it was with great trepidation that I read an article in the Wall Street Journal this morning suggesting that a second round of coronavirus-related layoffs is already underway, and that very few industries will be spared this time around.

This prediction was further bolstered when the Labor Department announced, just a few hours ago, that 5.24 million more weekly jobless claims were filed last week, exceeding the 5 million expected from most economists. This brings total unemployment claims to just over 22 million, virtually wiping out ten years of spectacular U.S job growth in less than a month. 

It would be an understatement to say that that the damage to the U.S labor market has been profound. And economists say there's more to come. But there's also been considerable discussion recently about markets "opening back up", perhaps as early as the end of this month.

So which industries are next to be hit, can this be avoided, and how long might it take for things to bounce back once we return to what is sure to be a "new normal"?

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Topics: Legislation, COVID-19, Reopening For Business

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Struggling Employers Are Conflicted; Unemployment Benefits vs. Paycheck Protection

Jeff Griffin

Many employers hit hard by COVID-19 are wondering if they should cut payroll expenses through furloughs and layoffs. These temporary actions quickly reduce payroll expenses, while providing affected employees with access to the greatly enhanced unemployment benefits now available, thanks to the CARES Act.

Most furloughed and temporarily laid-off employees can also maintain their health benefits while collecting these unemployment benefits. However, the extent can vary based on medical carrier contracts with employers, and variations in state laws.

Just this morning, a piece in the Wall Street Journal discussed how more and more employers are going this route, though many are doing so on a voluntary basis since these richer unemployment benefits help some workers more than others. (In some cases, which we'll address a bit later, certain employees can actually make more on unemployment, at least for the moment.)

Complicating an employer's decision to pare back payroll expense in this way is another provision in the CARES Act called the Paycheck Protection Program (PPP). This program, which I covered extensively in my last blog post, is designed to encourage employers to maintain staff by providing forgivable loans to employers who resist cutting their workforce.

The PPP has already proven to be so popular that Congress is already moving to approve additional funding for the program. Congress has thus far approved $350 billion in potentially forgivable small-business loans, but early demand suggests the program may run dry. Treasury Secretary Steven Mnuchin confirmed in a tweet yesterday afternoon that his department will ask for an additional $250 billion for the small business program.

Which of these options is better for your employees, and which option is better for you as an employer? A lot depends on additional operating expenses incurred by an employer, employee income, duration of benefits, accessibility of each relief program, and the long-term impact of both decisions. And of course this dilemma is predicated on an employer not planning on ceasing operations altogether.  

Let's take a look at each option in greater detail.

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Topics: Legislation, COVID-19, Reopening For Business

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Three COVID-19 Financial Relief Programs For Small Business

Jeff Griffin

While we've fielded thousands of questions these past few weeks about the COVID-19 pandemic, the vast majority of inquiries most recently have been about emergency financing relief for small business.

Here is what we know about three financial relief programs, each made possible by the CARES Act recently signed into law; 

  • CARES Paycheck Protection Program (PPP)
  • CARES Business Debt Relief Program
  • CARES Economic Injury Disaster Loans (EIDL) & Emergency Economic Injury Grants (EEIG)

As a reminder, we update both of our COVID-19 Download Resource Centers daily with regulatory briefs, legislative summaries, newsletters, flyers, and posters for you to use as you see fit.

Make sure to bookmark this resource area for ease of reference later.


What is the Paycheck Protection Program?

The PPP is a program designed to minimize layoffs during the coronavirus pandemic. The PPP provides businesses with fewer than 500 employees with 100 percent federally-guaranteed loans, which may be forgiven, if borrowers maintain their payroll during this pandemic.

Must a PPP loan be paid back?

No, providing an employer maintains their payroll, the loan will be forgiven. We'll address the amount of loan forgiveness available later in this article.

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Topics: Cost Containment, Legislation, COVID

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Employer Impact; The $2 Trillion COVID-19 Stimulus Package

Jeff Griffin

To say that the Coronavirus (COVID-19) pandemic has put a significant strain on every aspect of daily life around the world would be an understatement. As the spread of the disease shows no sign of slowing down, there remains steadily increasing concern in this country, not only about the health of our citizens, but also our economy, which is now in tatters, through no fault of its own.

In response, on Friday, the United States Congress passed a $2 trillion package to provide a jolt to our economy, reeling from the deadly virus. This is the third aid package from Congress and is it designed to keep businesses and individuals afloat during an unprecedented freeze on the majority of American life.

This will most likely not be the last stimulus package Congress will have to enact. This is especially true given that President Trump, just yesterday, extended his administration's social-distancing guidelines through the end of April, as the peak death-rate from the virus is expected to hit in two weeks. (The death toll from COVID-19 past 2,000 over the weekend.)

Most economists are in agreement that last Friday's $2 trillion package isn't a stimulus plan at all, but rather a relief package. Senate Majority Leader Mitch McConnell (R-KY) described the legislation this way; "No economic policy can fully end the hardship, so long as the public health requires that we put so much of our commerce on ice. This isn't a stimulus package. It is emergency relief. Emergency relief. That's what this is."

All Americans would do well to understand the provisions of this latest stimulus/relief package, as it will offer direct relief to businesses and individuals alike. Here are the details.

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Topics: Cost Containment, Legislation, COVID-19

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The History of Medicine and Organized Healthcare in America

Jeff Griffin

The American history of medicine and organized healthcare is quite a bit different than that of most other first world countries.

While the Civil war propelled the progress of American medicine much faster than what would have probably transpired without it, our staunch belief in capitalism has prevented us from developing the kind of national healthcare the United Kingdom, France, and Canada have used for decades.

As a result, we have our own unique system that has evolved drastically over the past century into something that is both loved and hated by its citizens.

Whichever end of the spectrum you lean toward, there’s no doubt about it: the history of medicine and organized healthcare in America is a long and winding road. How we've gotten to where we are today is quite a story, so let’s dive in...

The History of Medicine and Organized Healthcare: From the 1700’s to Now

The 1700’s: Colonial Times

Medicine was fairly rudimentary for the first few generations of colonists who landed in the new world, primarily because very few upper-class physicians emigrated to the colonies. Women played a major role in administering care in these early days, most especially when it came to childbirth.

Mortality in those early days was extremely high, most notably for infants and small children. Malaria was particularly brutal, as was diphtheria and yellow fever. Most of the sick were treated with folk remedies, though smallpox inoculation was introduced earn-on (long before it was embraced in Europe.) In these early days, there was virtually no government regulation or attention paid to public health.

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Topics: Employee Benefits

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Senate Majority Leader Sets Midnight Deadline for Third Stimulus Package

Jeff Griffin


“As frightening as yesterday’s unemployment numbers were, it’s merely a preview of how bad things are going to get.” That’s a quote from today’s Wall Street Journal, and it’s probably an understatement.

With businesses all around us temporarily shutting down, and some outright going out-of-business, the U.S. economy is headed off a cliff, into uncharted territory, and our leaders know it.

With Senators on both sides of the isle disagreeing over how best to help individual Americans during the coronavirus pandemic, they are at least unified in the pressing need to get something more done - and as fast as possible.

If met, tonight’s midnight deadline, declared just an hour ago by Senate Majority Leader Mitch McConnell, would make it possible for the legislation to be drafted at breakneck speed over the weekend. This would allow Senators to vote as early as Monday on what is sure to be a wide-ranging stimulus package which is likely to top $1 trillion.

Here's what they are considering.

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Topics: Legislation

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Senate Reverses Course, Agrees to Pass Coronavirus Relief Bill For Small Business

Jeff Griffin


Note: Since publishing this post (as seen below), the FFCRA legislation has been revised. While it's been billed as a "technical correction" by Democratic leaders, the changes are substantial. The new measure will still provide two weeks of paid sick leave to workers affected by the pandemic, but the next 10 weeks paid leave will be limited to only those workers caring for a child whose school or day care has been shut down. (Workers who had been in quarantine, or caring for a family member affected by the crisis, will not be eligible for the additional 10 week of paid leave.)

In a press conference just a few hours ago, Senate Majority Leader Mitch McConnell (R-Ky.) announced that the Senate will, in fact, pass the Families First Coronavirus Response Act (FFCRA) which was passed by the U.S. House of Representatives over the weekend.

Senators had been critical of the House legislation, describing it as a “non-comprehensive bill” that simply doesn’t do enough to help small business. Earlier today Senator McConnell went so far to say that the the Senate would not pass the bill unless it included “significant and bold new steps”.

Realizing that changes to the bill would result in the measure having to go back to the House for approval, the Senate reversed course this afternoon, anxious to show the country bipartisanship in the face of a global pandemic.

"A number of my members think there were considerable shortcomings in the House bill. My counsel to them is to gag and vote for it anyway," McConnell said.

McConnell then pledged not to adjourn the Senate until passing the House bill, as well as a third stimulus package, which is expected to top $850 billion and focus on small business and industry.

Here are the details of the "phase two" package the Senate looks to pass as early as this evening.

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Topics: Prescription Drugs

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