Coronavirus (COVID-19 / 2019-NCOV)
& Your Insurance Coverage

As a trusted and valued partner to so many small businesses around the country, we are asked about the economic impact of the current Coronavirus pandemic and potential for insurance claims. Here is our overview and recommendations with respect to loss of business income as it relates to Business Owner’s Policies (BOP), Business Overhead Expense (BOE) disability insurance, and Worker’s Compensation insurance.

Our interpretation of the typical dental/medical BOP is that there is NOT coverage currently included to cover the loss of business income due to a pandemic, virus, flu. The Dental/Medical BOP policy does not provide loss to business income due to certain risks like a pandemic, acts of war, or nuclear radiation. Even more common risks such as flood, earth movement, rot, mold, or wear and tear to name a few are found in the list of specifically excluded perils on the common BOP policy.

Yes, you have loss of business income coverage on your BOP. The coverage is standard in the industry and really doesn’t deviate from company to company and includes an actual loss of income up to 12 months. The only exception is a few carriers also offer a per diem benefit, e.g. $5,000/day.

Again, the loss of business income coverage only applies to certain types of events/triggers. That coverage is unlimited and paid at “actual loss sustained” for up to 12 months. The coverage is only triggered when your office is damaged beyond use by a covered peril named on the policy and will only be paid during the term of the restoration of the damaged premises. Common perils covered by the BOP policy are fire, windstorm, water damage (excluding rising flood waters as mentioned), hail, burglary/theft, vandalism and damage caused by a vehicle or aircraft to name a few.

Civil authority is also a covered peril however, the language in the standard office policy is as follows;

“when access to your "scheduled premises” is specifically prohibited by order of a civil authority as the direct result of a Covered Cause of Loss to property in the immediate area of your "scheduled premises".”

A virus without “covered cause” of loss of property, would not trigger coverage.

The policy also contains a secondary form of business income coverage related to an interruption in utilities services. There is no requirement of any direct physical damage to your office but the loss of utility needs to still be related to a covered peril. That coverage is commonly limited to $25,000 (but can be increased for additional premium) and coverage is triggered when the loss of a utility service has prevented the practice from operating for more than 24 hours. The most common utilities services interruption claim is downed power lines due to a wind or ice (storm).


Many office owners also have purchased this protection however this coverage is triggered by a physical disability, not due to a government office shut down. This policy pays a monthly benefit to reimburse fixed office expenses, rent/mortgages, business loan, office salaries, telephone, utilities, insurance, etc. This type of coverage would NOT provide benefit due to a loss in business income due to a pandemic. Let us know if you would like to review this coverage.


Worker’s Comp coverage provides benefit for medical and loss of income due to injury or illness caused at work. Each instance would be investigated case by case as usual. The nature of the injured workers occupation generally has to put them at increased risk for it to be compensable.


What if any insurance might provide income benefits to my employees if we have to close our office due to COVID-19?

Unemployment benefits may be due in the event a person either is let go or if their hours are significantly reduced. At this time a voluntary reduction due to the COVID-19 risk would not trigger a benefit. However, there is legislation being presented that could provide some benefit if the employee decides not to work. If the employer shuts down and either furloughs or significantly reduces hours of the employee, then there would be Unemployment Benefits.

Workers Compensation would provide loss of income benefit in the event your employee was injured or sick at work or due to work. If they decide not to work or if you shut down due to recommendation or mandates, this does not constitute an injury or an illness and therefore its probable there would NOT be a Work Comp benefit. If an employee contracted an illness at work, most likely there would be Work Comp Benefits.

If my business is closed and I cannot go to work, do I qualify for disability benefits?

If you cannot work due to a personal injury or illness, then you may qualify to receive benefits. Please contact our office for additional detail if you think you may qualify. If you cannot work solely due to your place of employment being closed, this will not qualify an individual to receive disability benefits.


Is loss of income due to the coronavirus covered by any of my disability insurance plans?

Disability insurance pays a benefit in the event that the insured is unable to work in their occupation as a result of their own illness or injury. Loss of income due to patient concerns regarding coronavirus or preventive office closure will not trigger a benefit from a disability policy. Generally, if an individual is capable of physically working in their profession, they will not qualify for benefits. In the event a person was diagnosed with COVID-19 and was unable to work and this continued through the waiting period they could be eligible for a disability benefit from their Individual Disability Income, Business Overhead, Business Loan, Group Long Term or Short-Term disability.

Does my Business Overhead Expense (BOE) disability plan cover income lost due to the coronavirus?

Though BOE is tied to the expenses of a business, qualification for benefit is still related to the ability of the insured business owner to work in their business. The trigger for benefits is the inability to work in your occupation due to injury or illness. Many of the BOE policies in the industry have a 30 day - 90 day waiting period. Usually there is no benefit due or paid during this waiting period.

If I contract the coronavirus, will I receive long-term disability income benefits?

Long-term disability benefits will begin to pay out after the elimination period has been satisfied. For many policies, this is 90 days, but some policies will differ. Many who contract the coronavirus will recover before satisfying the elimination period and will not be eligible to receive long-term disability benefit. If you have questions as to the specifics with your policy, please contact our office.

If I contract the coronavirus, will I receive short-term disability benefits?

Most of our Doctor clients do not have Short Term disability unless they have purchased an additional Group STD plan. Your employees may have coverage provided from your Workers Comp policy if they were sick or hurt at work. If you or they are sick or injured outside of work then there probably is no coverage.

If our business is closed and I cannot go to work, do I qualify for disability benefits?

If you cannot work due to a personal injury or illness, then you may qualify to receive benefits. Please contact our office for additional detail if you think you may qualify. If you cannot work solely due to your place of employment being closed, this will not qualify an individual to receive disability benefits.

Short-term disability claims, quarantines, and COVID-19

We've received questions about how we define short-term disability with regards to the Coronavirus and related quarantines. Carriers will promptly pay all valid short-term disability claims from eligible insureds who experience a loss of income because they are unable to work due to serious illness, including Coronavirus. Here are some examples...

If the insured has tested positive for COVID-19 and...is quarantined by a medical professional and unable to work. The insuredMay be considered toally or partially disabled during the period of medically required quarantine, pending review of medical information.

If the insured has tested positive for COVID-19 and...is quarantined by their employer or self-quarantines. The Insured is generally NOT considered disabled.

If the insured has tested positive for COVID-19 and...is unable to perform the duties of their job due to sickness. The insured is generally considered disabled if the insured meets all other contractual requirements.


If your employees are not working at the end of the month then you will have these options:

1. Continuing their coverage and paying your portion. This would require you to collect your employees portion from them by requesting it, waiting until your next payroll to retrieve their portion, have their portion taken out of checks throughout the remainder of the year or the company could take on 100% of the cost for the time the employee is out of work.

2. Terminating the employee and offer them Continuation/Cobra

i. If you have less than 20 employees terminated employees could be eligible for State Continuation. They would have needed to be covered under the plan for the previous 6 months and your group medical plan would have to remain in force.

ii. If you have over 20 employees terminated employees are eligible for Federal COBRA coverage.

iii. Both of these options allow the employee to continue coverage at the full cost for up to 18 months.

iv. State Exchange - The employee could go to the state exchange and apply for coverage. They may be eligible for a Federal Subsidy or Medicaid. The state has also opened an special enrollment period for individuals that do not currently have coverage and need to be covered, this will run from March 20th through April 3rd with an effective date of April 1st. While setting up the account, the employee will be asked if they need or have someone assisting them with enrollment. If they assign “Professional Financial Specialists Inc.” during the registration process we will be able to help with the selection of plans!

What are your Employers deciding with regard to continuing Benefits for Staff?

It is currently a tough time for everybody. Employers and employees alike are facing total shut down and being out of work, no revenue and no paychecks. The best situation for all would be if the employer could continue the coverage for the employees, some of the carriers are offering payment deferral. The majority of our clients are out of work until April 14th, that being said, March premiums have already been paid, so there would be a 2 week period in April to be covered prior to everyone returning to work. Our recommendation at this time is to keep the policies in force and all employees covered. Should the mandatory shutdown be extended we can reevaluate at that time.

Level Funded Plan Considerations

Level funded plans are federally regulated, therefore State Continuation is NOT AVAILABLE. If you have less than 20 employees your plan is not eligible for COBRA. Therefore if you terminate your employee they will not have the option to continue coverage. If you would like to continue their eligibility you should consider Furloughing your employees instead of terminating.

Will my carrier allow us to postpone premium payments and how do I get this started?

United Healthcare - will allow you to defer premium payments with notification. Notification can be emailed to Jake Casareto at jake_casareto@uhc.com, please include your policy number and group name and please copy us with your message groupbenefits@pfsi.net

Anthem - not postponing premiums at this time.

Humana - Protecting groups until 5/15, nothing is needed for this. They are recommending groups set up a payment plan. If groups want to just pay what they can, they can set up payment plan with Humana billing gbsmallgroupbilling@humana.com and please copy us with your request groupbenefits@pfsi.net

Kaiser - working with groups directly, if you need to postpone payments please call 866-868-7220 and let them know what is going on, Kaiser billing will inform collections team and that team will do outreach to the client.

Aetna - working with clients to postpone payments, you will need to contact 800-936-2603 and request to speak with your biller.

Cigna - not postponing premiums at this time.

What is the difference between Layoff and Furlough?

Furlough

A furlough continues employment, but reduces scheduled hours or requires a period of unpaid leave. The thought process is that having all employees incur a bit of hardship is better than some losing their jobs completely. For example, a company may reduce hours to 20 per week for a period of time as a cost-saving measure, or they may place everyone on a two-week unpaid leave. This is typically not considered termination; however, you may still need to provide certain notices to employees about the change in the relationship, and they would likely still be eligible for unemployment.

If the entire company won't be furloughed, but only certain employees, it is important to be able to show that staff selection is not being done for a discriminatory reason. You'll want to document the non-discriminatory business reasons that support the decision to furlough certain employees and not others, such as those that perform essential services.

Layoff

A layoff involves terminating employment during a period when no work is available. This may be temporary or permanent. If you close down completely, but you intend to reopen in the relatively near future or have an expected reopening date—at which time you will rehire an employee, or all employees—this would be considered a temporary layoff. Temporary layoffs are appropriate for relatively short-term slowdowns or closures. A layoff is generally considered permanent if there are no plans to rehire the employee or employees because the slowdown or closure is expected to be lengthy or permanent.

If I want to keep coverage on my employees would I do a layoff or furlough?

Technically a layoff means they are terminated and no longer your employees and not eligible for benefits except through State Continuation or COBRA for those over 20 employees. If you wanted to continue offering the coverage as their employer you would want to do a furlough.

Unemployment

Unemployment will be available for an employee if they are terminated or furloughed. Colorado Unemployment and COVID-19- https://www.colorado.gov/pacific/cdle/information-and-resources-coronavirus

Billing and Employee Portion

If you terminate your employees and they would like to elect to continue their coverage, the carrier will not bill the employee directly. The employer will still get the group bill and the employee will have to pay the employer for their portion OCC the premium.


I definitely understand the concern and wish/hope there is coverage. We have asked all of our carriers, they all say "they will evaluate each claim on an individual basis" due to the likelihood that the facts of the circumstance might be slightly different. Obviously, there is a lot of speculation on the issue and I suppose, depending on the scope of the crisis, there could ultimately be different interpretations that arise. As always, PFSI will advocate for and work to provide solutions that benefit our clients, their employees, and our communities. Going forward, as events occur we will keep our clients informed of any advice or changes with respect to coverage and claims.

Thanks again for your trust and please feel free to contact us for any specific questions or coverage concerns you may have.

Sincerely,

Regan Turner
Certified Financial Planner™
Regan@pfsi.net