How are you serving businesses and the larger community?
While the insurance brokerage industry works with companies every day, one thing is certain: in our business, it’s often that we engage them on their worst days. COVID-19 has placed tremendous pressure on many of the privately held businesses our team consults — especially small to middle-size businesses.
Because of the extraordinary changes to the compliance landscape, our team created an online “knowledge trust” where business leaders and HR professionals can access in-depth COVID-19 guidance. There, our Employee Benefits Practice Leader Cooper Johnson, along with our compliance attorney, wellness nurse and others, provide critical insights companies need to navigate this event.
Property & Casualty leaders Kurt Close and Allen Baker position our safety, claims and professional liability experts to assist businesses through their insurance challenges. For instance, we’re working with insurers to relax payment terms and reduce premiums for idle assets where permissible by law.
Additionally, as a member of the EBSCO family of businesses, we’re proud that our Alabama sister companies PRADCO and Vulcan Industries have converted production lines to make hand sanitizer and protective masks and shields.
Where do you see businesses requiring the most assistance now?
New regulations, including the FFCRA and CARES Act, are complex. Just last week, the Department of Labor issued 125 pages of FFCRA guidance and added new Q&As (there are now 79).
Companies need guidance to implement required leave and medical coverage. In addition, some employers must shut down and furlough or terminate employees, impacting benefits eligibility, ACA compliance and other legal requirements.
Companies are concerned about their business insurance coverage and exclusions and how to avoid missteps. All indications are that the hardening insurance market will continue despite COVID-19, as carriers compensate for lost revenue due to companies closing and declining investment income to pay for losses.
What is the FFCRA and how do employers determine if its requirements apply?
The Families First Coronavirus Response Act includes leave provisions, tax credits and a notice requirement. These apply to private employers with fewer than 500 employees (and some public entities) for leave taken April 1 to Dec. 31, 2020.
You must know employee headcount on the date the requested leave begins. If you have 500+ employees on one date and are exempt, but later lay off employees and fall to under 500, you may be subject to FFCRA. Joint employer and integrated employer tests apply, so carefully review all regulations and guidance.
Businesses with under 50 employees who meet exemption criteria may deny leave to an employee unable to work who must care for a child due to school or childcare closures.
On a separate note, health plans, regardless of employer size, must cover COVID-19 testing and related items and services.
How do employers calculate hours and rate of pay under the FFCRA?
Essentially, full-time employees can receive up to 80 hours of leave. (There are different, complex rules for part-time employees). Employees who take leave to care for themselves receive 100 percent of their regular pay, while leave to care for others is reduced to two-thirds, limited to daily and aggregate dollar maximums.
Qualifying employees may receive 10 additional weeks if unable to work due to caring for a child whose school or childcare provider is closed. The FFCRA 12-week total is added to regular FMLA leave and limits an employee to a combined 12 weeks in a 12-month period.
Leave pay is based on the higher of the employee’s average regular rate or minimum wage. Regular rates reflect an average over multiple workweeks, weighted by the number of hours worked. Special rules apply for employees receiving commissions, tips and piece rates.
What COVID-19 coverage must employer health plans, including self-insured plans, provide?
FFCRA requires plans to cover COVID-19 testing with no cost-sharing, pre-authorization or other medical management limitations. The CARES Act expanded the FFCRA mandate to apply to COVID-19 tests, in addition to those approved by the FDA.
A plan must cover diagnostic services (and items) provided during an office visit, telehealth consultation, urgent care center or an emergency room visit that results in diagnostic testing.
Plans must pay out-of-network healthcare providers the cash price for the testing as posted on their website, unless the plan negotiates a lower price.
How are business insurance policies responding to the loss of revenue?
While every policy is different, in general, business interruption (BI) is not triggered. In the case of COVID-19, there is neither a physical loss nor is COVID-19 a covered peril. Businesses (and plaintiff’s bar) are questioning whether the definition of “contamination” meets the test of physical damage. Courts might ultimately determine whether to apply exceptionally broad interpretations to stated policy language.
What is an example of a specific business insurance inquiry you’ve received?
A residential real estate management firm with properties providing recreational amenities (children’s playgrounds, green areas) wanted to reduce possible infection liabilities.
We suggested they clearly communicate with residents and put highly visible signage throughout the surrounding subject areas. Isolated spots, such as playground equipment, sandboxes or basketball courts, were restricted from access with physical barriers.
While it’s almost impossible to enforce restrictions to recreational or green areas open to the public, assertive communication would be expected of any “reasonable and prudent” person to minimize the risk.
What can Alabama businesses do to help themselves?
As mentioned, insurers are considering relaxing payment terms and businesses should seek premium reductions immediately for idle or disposed assets. Also, seek professional guidance in order to take full advantage of the stimulus resources and tax relief offered through the SBA and federal and state governments.
A crisis always highlights the need for long-term planning, thoughtful contingency planning and the right partnerships with key consultants (legal, accounting, banking and risk management).
Paul Barber is president of Valent Group, a subsidiary of EBSCO Industries, providing business insurance and employer benefit consulting. Experience our COVID-19 Knowledge Trust at http://www.valentgroup.com/covid19resources.
