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COVID-19: Layoff and Furlough Benefit Implications

There is a lot of conflicting information relating to layoffs and furloughs and how they affect employee benefits at a time when legitimate fears about these issues are at an all-time high. Long-standing state and federal laws and regulations are in place, as well as IRS and state tax implications. At the same time, there are new regulations recently adopted, and in some cases passed into law, specific to the current COVID-19 pandemic.

Unfortunately, legal briefs developed and released by law firms and think tanks can lead to a change in what we thought were hard and fast rules. Insurance carriers, looking to their state regulators for clear direction, are forced to make assumptions based on previous decisions the regulators have made with similar situations. But different Carriers have different assumptions and therefore are creating different rules!

This has left employers, and employees, dazed and confused about exactly what decision they should make regarding premium payments, disability claims, Family Leave requirements, layoffs, furloughs and terminations.

We recommend contacting your KBM Management Account Executive to review any and all decisions that will impact, or trigger, an employee benefit. We can advise you based on the benefits of your plan, the specific insurance carrier you have in place, and any new Family Leave or disability enhancements that will benefit your employees.

Most insurance carriers have temporarily changed their policies towards grace periods, late payments and plan terminations resulting from non-payment. We highly recommend reaching out to the carrier first if you are experiencing financial hardship, rather than simply paying late, or not at all. However, if a payment is not made on time, it will still need to be accounted for in the future. “Premium Holidays” are not being offered by any insurance carriers we know of.

If you have questions about your benefits plan, COVID-19 related or others, please contact us immediately. We are here and look forward to helping you and your employees.

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