Clarification: Currently, no business continuity insurance policies provide coverage for business disruptions due to pandemics, said Greg LaMair, president and CEO of LMC Insurance & Risk Management. An earlier version of this article incorrectly stated that businesses could add pandemic coverage to their policies.
Most Iowa companies will likely discover that their business continuity insurance policies won’t cover losses in revenue from the current coronavirus pandemic. Nevertheless, filing a claim is still the best course of action, advises Rick DeBartolo, senior vice president of LMC Insurance & Risk Management in West Des Moines.
“Fires and natural disasters are pretty clear-cut, but pandemics are generally excluded,” DeBartolo said. “You can enhance [your insurance policy] for that kind of coverage, and I’m sure that more people in the future will think about that. But when a client calls, we tell them: ‘File the claim and let them give you the answer.’ Especially because the federal government may come in and provide some coverage for that.”
The federal government last week enacted emergency legislation — the Families First Coronavirus Response Act — that created a federal paid sick leave requirement for coronavirus needs and expanded the Family and Medical Leave Act for purposes of child care during a public health emergency.
LMC recently became part of a national brokerage team that has enabled it to offer broader resources to its clients amid the coronavirus pandemic.
Effective Feb. 1, LMC joined AssuredPartners Inc., a Florida-based national brokerage made up of leading independent property-casualty and employee benefits brokerage firms. LMC’s 290 employees remain under the operational leadership of LMC’s president and CEO, Greg LaMair.
Founded in 2011, AssuredPartners has grown to become one of the largest brokers in the nation with offices in 38 states and two countries.
AssuredPartners has set up a COVID-19 Resources Page, which LMC has been providing to its clients, DeBartolo said. The resources include question-answer pages that address many common insurance, benefits and HR-related questions that have arisen during this crisis.
“I’m glad [AssuredPartners] did this, because we’ve just been bombarded with questions,” he said.
Among the issues that large, self-funded employers in Iowa are now addressing is whether they will follow suit in enacting the same coverage that Wellmark and other insurers have authorized, including temporarily reimbursing health care providers for telehealth services at the same rate as office visits.
“My guess is that every employer [that is self-funded] is going to do it,” DeBartolo said. “Last week we reached out to every one of our self-funded employers; I don’t think I have heard of any employer that did anything different.”
AssuredPartners is also developing an impact model for employer health plans that companies will be able to use to estimate how their annual claims and benefit costs will be affected by the unprecedented crisis.
“If we start seeing lots of people hospitalized, that gets expensive pretty quick for self-funded employers,” DeBartolo said. A coronavirus hospitalization could easily come in at between $20,000 and $30,000 in medical costs — yet not be high enough to get picked up by a policy’s stop-loss provisions. “That’s a lot more exposure than what they may normally see in a year for claims,” he said.
State regulators are also providing guidance. The National Association of Insurance Commissioners recently released a new issue brief specifically to help people understand those potential impacts on health, travel, life, business interruption, event cancellation, workers’ compensation, general business liability, and directors and officers insurance, as well as annuities. The NAIC advises: “As with all insurance policies, consumers should review their policy documents and seek guidance from their agent/broker or local department of insurance.”
An overview of the Families First Coronavirus Response Act
The Families First Coronavirus Response Act, signed by President Donald Trump on March 18, created a federal paid sick leave requirement for coronavirus needs and expanded the Family and Medical Leave Act (FMLA) for purposes of child care during a public health emergency.
Effective April 2, the new provisions are applicable to private employers with fewer than 500 employees (full-time and part-time), as well as some governmental employees.
According to an analysis by national insurance brokerage AssuredPartners Inc., which includes LMC Insurance & Risk Management in West Des Moines: “We can expect to see regulations from the [U.S. Department of Labor] in this area, but most experts agree that the expansion for FMLA, for these express purposes, will be on a control-group basis, so very large employers, with more than 500 employees within the control group, will be exempt. Although, many are indicating that they expect to create and implement similar plans on a voluntary basis.”
The act’s emergency paid sick time provisions include up to two weeks of emergency paid sick time for various COVID-19-related events when an employee is unable to work (or telework) because:
– They are experiencing symptoms of COVID-19 and seeking a medical diagnosis.
– They are subject to a federal, state or local government quarantine or isolation due to COVID-19.
– They have been told by a health care provider that they should self-quarantine due to experiencing symptoms of COVID-19.
– They are assisting an individual who is subject to a governmental quarantine or self-quarantine because of COVID-19.
– They are caring for a son or daughter if his or her school or child care provider is unavailable because of COVID-19 considerations.
– They are experiencing any other substantially similar condition specified by the secretary of health and human services.
Part-time employees are also eligible for emergency paid sick time and are paid at their regular rate of pay for the average number of hours per day that the employee was scheduled to work during a two-week period.
The Emergency FMLA Expansion Act provisions include:
– The Family Medical Leave Act (FMLA) is amended to provide up to 12 workweeks of public health emergency leave (PHEL) for instances in which an employee is unable to work (or telework) due to the need for leave to care for a minor child (under the age of 18) of such employee if the school or place of care has been closed, or the child care provider is unavailable, due to a public health emergency.
While FMLA generally applies to employers with at least 50 employees, all employers with fewer than 500 employees must provide PHEL. Employers with fewer than 50 employees may be exempt if they can demonstrate that granting such leave would “jeopardize the viability of the business as a going concern.”
Since Trump issued a proclamation that the COVID-19 outbreak is a national emergency, all employees who have been actively working for at least 30 days (regardless of hours worked) are eligible for PHEL. (Standard FMLA-like tenure, hours worked, etc., do not apply in this limited capacity.)