Top Questions from Small Businesses about COVID-19

Small Business Owner

For the last 3 years our local and national benchmarking survey has asked employers about their top priority regard the design and objectives of their benefit programs. “Attracting and Retaining Employees” has been 1st, with “Cost” coming in at a close 2nd.  This was a direct result of a strong economy and a very tight labor market with record low unemployment. Unfortunately, with the recent worldwide developments surrounding the Coronavirus outbreak and the subsequent ripple effects on businesses, employment, revenues and the unstable financial markets, “Cost” has become a paramount issue, literally, overnight. While it is certainly not a revelation that “Cost” has always been a major issue around corporate benefit programs, especially the benefit programs of small businesses, we think it is important to explore some more timely, current day issues that have been specifically created by the COVID-19 pandemic rippling through the local and national economy.

Is my company eligible for Small Business Loans?

There is a good chance the answer is “Yes”! Late last week the United States Federal Government passed the CARES Act and as part of that legislation, $349 billion was made available for small businesses (under 500 employees) to obtain loans for, among other things, covering business expenses including payroll and benefits expenses. Additionally, if certain criteria are met, the loans can be completely forgiven. To determine whether your business qualifies for this program, check with your financial institution or another SBA approved lender.

Is my medical premium going to go up because of the Coronavirus outbreak?

There is a good chance the answer is “Yes”.  There is no doubt that the strain on the insurers and the health care system brought on by the COVID-19 outbreak are going to lead to higher premiums in the future. Almost all insurers have announced that they are covering COVID-19 testing AND treatment at 100% with no member cost sharing. While the testing is relatively inexpensive, treatment could range from a few hundred dollars for mild cases to a few hundred thousand dollars for the most severe cases. The old axiom that nothing is truly free will certainly apply here as well. In a fully insured environment, this additional expense will be added back into community rates or fully insured renewals in some form or fashion. In a self-funded plan, this will result in higher costs than originally forecasted. While we don’t yet know the full impact to premiums, expect some type of adverse impact when it comes to your next medical renewal.

Do I have to offer Paid Sick Leave and Paid Family Leave to my employees?

There is a good chance the answer is “Yes”. In addition to the CARES Act, the Federal Government also recently passed the Families First Coronavirus Response Act which provides for job-protected paid sick and paid or expanded family leave for many employees. This law goes into effect on April 1, 2020 and expires on December 31, 2020. Generally speaking, employees of private sector employers with fewer than 500 employees, and certain public sector employers, are eligible for up to two weeks of fully or partially paid sick leave for COVID-19 related reasons and an additional 10 weeks of partially paid expanded family and medical leave to care for their child whose school or place of care is closed due to COVID-19 related reasons. For many groups under 50 this provides a requirement of compliance with the Family Medical Leave Act (FMLA) which wouldn’t otherwise apply to them.

Does my Business Interruption policy cover COVID-19 related disruptions?

There is a good chance the answer is “No”. This question is heavy on the minds of many companies after realizing that business interruption coverage likely does not cover pandemics or infectious disease. There is a lot of talk in Washington DC around the development of a federally backed program to cover some of the losses, but that could be months away. We recommend that you keep detailed records of business losses and expenses related to the Coronavirus outbreak should a future program come to fruition.

I am concerned about the wellbeing of my employees. What resources may be available to help them?

Given the potential economic and personal situations of many people, stress, anxiety, and mental wellbeing is definitely a concern. Routines have been disrupted, schools have been shut down, kids can’t play with their friends and work-life balance has a whole new meaning. First, a healthy level of patience and understanding with your employees is paramount. Try to “Get in the shoes” of your employees. If employees are now working remotely, keep in mind that home offices are also doubling as schools, activity centers and kennels. Communicate to them that there are resources available. First, many carriers have made their Employee Assistance Programs available and free to all members. EAP’s are an effective and confidential way to help with mental health and other issues employees may be facing. Most of the medical carriers have also eliminated cost sharing for virtual mental health visits, increasing access to mental health provided via smart phones and tablets. There are also financial wellness resources that are attached to retirement plan providers. If employees are concerned about financial issues, promoting the availability of free financial wellness services can help. Finally, if there is a minor medical issue, medical carriers have also eliminated the cost sharing for Telemedicine visits. This effort is to lower the barriers to care while also encouraging people to avoid overtaxed medical facilities for non-emergency situations. Simply letting your employees know that these resources are available and, in many cases, free, shows that you continue to be concerned about their wellbeing in a time of uncertainty.

I am approaching the point where I must furlough or lay off some of my employees. Is there a difference?

Yes. There is a difference between furloughed employees and laid off employees. Furloughs are typically intended to be a short-term reduction in force whereas a lay off is intended to be longer term and potentially permanent. The good news is that almost every carrier, medical or ancillary, has allowed companies to extend benefits for furloughed OR laid off employees if premiums continue to be paid. If you are unsure whether or not your carrier have extended the coverage provisions, check out our COVID-19 information site at Extending coverage for your employees who are furloughed or laid off is a terrific gesture that will help them stay at ease that they have the coverage they need during this difficult time. This also reduces the chances of a gap in coverage or waiting period once they return to work. Finally, if the layoff is expected to be more permanent, don’t forget the COBRA Continuation Rights of the employees and their qualified beneficiaries; plus Pennsylvania has mini-COBRA for groups with less than 20 employees, so remember to be compliant in this area as well.

If the current economic situation continues, I may not be able to keep all the benefit programs I currently have. What should I do?

We recommend that you start by checking to see if the carriers have relaxed premium grace periods allowing you to keep the benefits in place for an extended period until you can afford to pay the premiums. Then spend some time ranking the benefits by total expenditure. How much does your medical insurance cost annually versus the vision plan? Once you have reviewed the annual cost, rank in order of importance to your employees. Perhaps they value their Short- or Long-Term Disability more than the Life insurance or the Dental more than the Vision. Begin to pare back the benefit offerings based on how much the employees value the benefits. We also have clients that have scaled back program like student loan reimbursement or retirement contributions in order to reduce expenditures. This also send a message to the employees that, while you need to cut cost, you are trying to maintain what is important to them.

Will I get my good employees back?

There is a good chance the answer is “Hopefully”. This is a question that has certainly crossed the mind of many employers. Numerous companies have furloughed or laid off employees they would have rather kept, but business circumstances have not allowed that to happen. Our best advice is to begin to assemble a “Post Coronavirus plan” that involves regular and proactive communication to both current and furloughed employees. Let them know how the company is making it through the pandemic and the expected plans for ramping back up operations once the pandemic subsides. Overall, let them know you are concerned about them whether or not they are part of your company’s plans once things are up and running again.

This situation is evolving every day and is a situation that the vast majority of us have never experienced in our lifetime. Henderson Brothers has been there to help and advise for the last 126 years just as we are here to help today. If you have a question that was not addressed here, please contact one of the Experts at Henderson Brothers.

Stay safe and stay healthy!

Please note that the information contained in this posting is designed to provide general awareness in regard to the subject matter covered. It is not provided as legal, medical, or tax advice, nor is it intended to address all concerns in your workplace or for public health. No representation is made as to the sufficiency for your specific company’s needs. This post should be reviewed by your legal counsel or tax consultant before use.