This piece was compiled based on common questions we have received from clients, official insurance company statements and information available online to all. Make sure to reach out to your broker or insurance company for specific advice for your situation, as plan designs and official response measures may differ greatly between companies and insurers.
Canadian businesses will be forced to make some difficult decisions in the coming weeks due to the effects of lockdown from COVID-19. While the Trudeau government has stepped up their aid efforts both for businesses and their employees amid the pandemic, many still have been forced to shut their doors and lay off employees for the foreseeable future. This begs the question – what happens with the employees’ benefits?
While the past month has been challenging, the resolve shown by Canadians has been truly inspiring. At Next Benefits, we are proud to say our clients are dedicated business owners who feel a duty to look after their employees like family – our mandate is to help them do so however possible.
While each business situation is unique, our common goal when giving advice to clients over the next several months is to formulate a plan to reduce or defer cost to help cash flow while ensuring continuity of the insurance contract. This way, companies can weather the storm and employees can be reinstated to benefits seamlessly, without new underwriting or restrictions.
A good starting point for any owner or HR professional are the official statements released by Manulife, Sun Life, Canada Life and Greenshield. The majority of benefit plans in Canada are underwritten by one of these four insurance companies (if you are covered by another insurer or Third Party Administrator, it is very likely they have released a similar statement that can be found on their website).
Additionally, the Canadian Government has put forth a number of initiatives to help businesses and their employees weather the storm for the next few months. Visit the government websites below for details on eligibility and how to apply.
Tip: Log in to your CRA My Account for an expedited application and direct deposit payment.
Guided by the insurance company statements, we will address a few of the most common questions we have been receiving from clients recently.
Does my plan cover COVID 19?
Invariably management will receive this question from employees as they are planning for the worst case scenario. While there is no special coverage for an employee who is infected by COVID-19, you can expect that the terms that originally existed in your contract that pertain to any illness will be upheld by the insurance company.
There are two main benefit categories that we predict an employee may call on in the case of a COVID-19 infection:
Extended Health Care
Extended Health Care is the most common component of a benefits plan in Canada. Should an employee fall ill and require a hospital stay, the good news is 100% coverage for ambulance, hospital and certain medical equipment that is not covered by government health care would be expected on a basic plan. Combined with our comprehensive government healthcare coverage, it is likely that you will have a reassuring message for employees worried about out of pocket costs relating to an infection.
Both Short Term and Long Term Disability are less common components of an employee benefits plan in Canada, thus it is important to double check your employee booklet or reach out to your broker or insurer to know if and exactly how you are covered for this benefit.
Disability benefits would cover up to 66.6% of an employee’s wage in the case of a hospitalization or mandatory quarantine due to an infection of COVID-19 – which often acts as a “top-up” to Employment Insurance. The prevailing evidence shows that most people would recover within a period covered by Short Term Disability timeline, however ongoing complications that keep an employee away from work longer can be considered for Long Term Disability.
Unlike Extended Health Care, Disability benefits must be applied for and approved by the insurance company in order to start collecting payments.
What if I cannot afford the premiums? What if we have to lay off employees or shut our doors?
This is the primary concern of management for most of the clients we have heard from. Thankfully, insurance companies have made some special provisions to help businesses protect their cash flow through the next few uncertain months.
30 – 60 day Plan Freeze
The exact terms have varied between a number of our insurance company contacts, but in general most are willing to work out a temporary hold on the plan for the duration of shutdown. In the case of a plan freeze, premiums stop and all claims will be halted as well.
If your plan contract is up for renewal in the summer, it is likely you will be able to defer this for several months as well.
You can expect that your administrators will be flexible with the next several months’ payment arrangement if it means retaining a valued client. Make sure to reach out to your broker or account manager to see what they recommend based on your situation.
If you will be laying off employees but would like to keep their coverage in place, we have generally seen that the insurance company will allow them to stay on the plan for three additional months while laid off with no changes. I would expect that this clause will be updated in the case of an extended lockdown.
If the discussion turns towards terminating the plan entirely, it is worthwhile to consider a 60 day freeze with a note to reassess with your broker and insurer when this time is up. This allows for the option of a seamless reinstatement in the best case scenario and a possibility of extending the freeze at that time if reinstatement seems feasible in the future.
In the case that a portion of employees will be laid off indefinitely, and terminated from the plan, it is important to remember that they can be reinstated to the plan within 6 months if they are hired back.
For all parties involved, communication is the key.
From your broker and insurance companies’ perspective, we are here to help however possible. If you candidly communicate your situation you can be sure that everyone will be working on your behalf to arrive at an arrangement that suits your needs.
From your employees’ perspective, any prior notice on changing the benefits will allow them valuable time to plan, research and know where they stand in the best and worst case scenario.
Wishing everyone the best, we are in this together.
The Next Benefits Team