By Pension and Benefits Editorial Staff
Due to the COVID-19 pandemic, employers have made changes to their workforce, according to a recent report from the International Foundation of Employee Benefit Plans (IFEBP). The Employee Benefits in a COVID-19 World: April 2020 Survey Report found that 31 percent have temporarily furloughed workers, 29 percent have reduced worker hours, and 21 percent have laid off workers. Through all this, employers are handling health care benefits for furloughed employees in a variety of ways:
- 7 percent are providing employee health care coverage through COBRA, with the worker paying the full cost;
- 38 percent are continuing health care coverage for the entire period, with the cost shared as usual between worker and employer;
- 23 percent are continuing health care coverage for the entire period, with the employer paying the full cost;
- 25 percent are continuing health care coverage for a limited time, with the cost shared as usual between worker and employer; and
- 7 percent are continuing health care coverage for a limited time, with the employer paying the full cost.
For employers that have laid off workers, the majority (61 percent) are offering health care coverage to laid-off employees through COBRA, with workers paying the full cost.
Health benefits changes. The IFEBP survey found changes to mental health benefits, telehealth, and prescription drug plans due to the pandemic. To help employees with their mental health, 12 percent of employers have added telepsychiatry, which allows employees to access mental health services virtually. Additionally, 9 percent of employers have reduced or eliminated cost sharing for mental health benefits, and 6 percent have relaxed or eliminated eligibility requirements.
Under prescription drug plans, 35 percent of employers have extended the time allowed under prior authorization periods for prescription drugs, 29 percent have increased quantity limits, and 13 percent have waived prior authorization requirements.
To help workers receive medical care while reducing their risk of exposure, nearly all employers are offering telehealth services. Prior to the pandemic, IFEBP found that 88 percent of employers had telehealth services in place. Since then, an additional 10 percent of employers have implemented or are considering implementing telehealth. To encourage the use of these services, 49 percent of employers have reduced or eliminated telehealth cost sharing.
Retirement plans. For organizations that provide matching contributions to their employees’ retirement plan, 2 percent have reduced the matching contribution and 8 percent have suspended it. An additional 18 percent report that they have not yet made changes but are considering it for the future, and 9 percent say it is too early to tell what changes they will make.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act allows employers to make changes to their defined contribution (DC) retirement plans (such as 401(k) plans) to help workers financially affected by the crisis. The survey found that 63 percent of employers are allowing workers to take new special COVID-19–related early distributions from their DC accounts. These distributions are not subject to the 10 percent early withdrawal penalty or the 20 percent mandatory tax withholding. To provide further relief, 60 percent of employers are allowing workers up to three years to pay back their early distributions, if the worker would like to do so.
Employers are also implementing changes for DC plan loans, IFEBP found. Nearly half of employers (48 percent) have temporarily increased DC plan loan amounts to a maximum of 100 percent of the vested balance or $100,000, whichever is less (up from the previous maximum of 50 percent or $50,000).
Currently, 15 percent of employers have seen an increase in the number of employees who have taken hardship withdrawals from their DC plans, and 12 percent report an increase in employees taking DC plan loans. Many employers report that it is too early to tell.
Interested in submitting an article?
Submit your information to us today!Learn More