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How Furloughs are Impacting Employee Benefits

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The world of work has drastically changed over the last few weeks due to the coronavirus pandemic. As of now, the future is still very unclear for employers and employees and countless questions remain. Some of these questions center around the decision to either layoff or furlough employees, and how these decisions impact employee benefits. 

Until recently, most businesses were relatively unfamiliar with furloughing the majority of their staff. But now that more and more employers are being forced to make financially tough decisions, questions about furloughs are becoming more commonplace. 

What is a furlough?

A furlough is a leave of absence without pay for a finite period of time. It can be mandatory or voluntary. Workers are furloughed as a way for a business to save money without permanently losing employees. For example, an employer may reduce weekly hours by 20% for a specific time period or place all staff members on a mandatory four-week unpaid leave policy. 

What furloughs mean for employee benefits

The four major insurance carriers in the United States - Aetna, Anthem, Cigna, and UHC - released statements on how they will handle benefit eligibility for furloughed employees. You can read their full statements here.

They specifically mentioned the defined time period they will allow employees to remain on benefit plans if premium payments are made in full.

The big four carriers mentioned above all agreed to extend benefit coverage to furloughed employees on “fully insured” contracts for a determined amount of time assuming that all premium payments are made. “Self insured” clients will have to make their own determination with the same premium requirements applying for the determined amount of time.

  • Aetna: July 31, 2020

  • Anthem: May 31, 2020

  • Cigna: May 31, 2020

  • UHC: Furloughed employees are temporarily covered, as no end date has yet to be provided in their guidance.

If at the end of this eligibility period an employee has not changed their status back to full-time employment, they are then eligible to elect COBRA for benefits coverage.

Dominion is here to help. We’ve put together a COVID-19 resource center that we’re constantly updating to help navigate these difficult times.


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