Employers who are faced with difficult decisions on reductions in their workforce need to consider group health coverage issues. Are employees on furlough, a leave of absence, or working reduced hours eligible for continued group health coverage for themselves and their families?
The terms of a particular group health plan and insurance policy will determine these coverage questions. If hours of work drop below a certain number per week, it is possible that group health coverage will be lost. If so, the employer must issue any required notice of continuation coverage under COBRA or applicable state law so that employees can elect to continue coverage at their own expense.
Employers should consult with their group health insurers, third party administrators and other professional advisors about coverage availability for those active employees who will necessarily incur reduced work hours or be placed on a leave or furlough. Also bear in mind that it may be possible to amend a group health plan to clarify any ambiguities and even to change the plan requirements for coverage eligibility. Sponsors of self-funded health plans will want to clear any such changes with their stop-loss insurer.