COVID-19 & Insurance

FAMILIES FIRST CORONAVIRUS RESPONSE ACT BECOMES LAW

Here are two important parts of the law that may affect your and your employees:

EMERGENCY SICK LEAVE

Covered employers with fewer than 500 employees will have to provide employees unable to work or telework due to reasons related to COVID-19 with two weeks of paid sick-leave related to coronavirus. Specifically, this leave must be made available to employees required to self-isolate based on the advice of a doctor or ordered into quarantine. It can also be used to get COVID-19 diagnostic testing and care, to take care of a child whose school or childcare arrangement closes due to coronavirus precautions, or for related illness as defined under future regulations.

The sick leave required by the new law must be in addition to any sick leave the employer already provides. This leave does not carry over to 2021, but employers cannot force anyone to take this leave instead of other accrued leave, so any individual qualifying will likely wish to use their emergency paid sick leave first.

The good news for employers is that they will not be required to bear the cost of this leave. Instead, these amounts are reimbursable through a 100% refundable tax credit against each employer’s portion of Social Security taxes, which can be claimed quarterly. If the amount of the tax credit exceeds the employer’s aggregate Social Security tax liability for the quarter, the excess may be refunded directly to the employer.

***Two key exceptions worth noting here. First, employers of health care providers or emergency responders can opt-out of these rules. Second, the Department of Labor is authorized to issue emergency regulations to exempt individual companies with fewer than 50 employees from this requirement, if compliance with it would “jeopardize the viability of the business as an ongoing concern.”

EXPANSION OF THE FAMILY MEDICAL LEAVE ACT

The new law also expands the Family Medical Leave Act (FMLA) with respect to employers with fewer than 500 employees by adding a new qualifying event for any employee who has been employed for at least 30 days.

Specifically, FMLA will apply if an employee is unable to work or telework due to a need to care for a child(ren) under age 18 who cannot attend school or childcare due to coronavirus-related closures. In addition to providing 12 weeks of protected FMLA leave for these individuals, the law also provides for a portion of that leave to be paid.

Health Insurance:

It’s important to note that, each medical carrier (Fully Insured plans) has waived the cost share for COVID-19 testing and diagnosis.  This means that ALL enrolled members can receive testing, at no cost.  Treatment of the virus will be the same as treatment for any illness, under the stipulations of your plan. 

The Maryland Health Connection will be opening an “Emergency Enrollment Period,” for any individuals who are not currently covered by a health insurance plan.  

Any Maryland residents, who do not currently have health coverage, will now have the ability to purchase an individual policy, via the Maryland Health Connection.

This enrollment period will be available from March 16th – April 15th. 

How to enroll: 

Visit MarylandHealthConnection.gov or download the free “Enroll MHC” mobile app. When enrolling, consumers should request or select “Coronavirus Emergency Special Enrollment Period.”

The online application is available daily from 6 a.m. to 11 p.m.

Free consumer assistance is available by calling 855-642-8572 weekdays from 8 a.m. to 6 p.m. Deaf and hard of hearing may use Relay. 

Disability:

Can quarantined employees apply for disability?

Claimants would not satisfy the definition of disability in the applicable plan solely due to being quarantined. If the claimant develops COVID-19 or some other qualifying sickness while quarantined, the claim would be reviewed per the requirements of the plan. If the claimant develops COVID-19 or even some other qualifying sickness while quarantined, and it meets the definition of disability within the policy, benefits would be reviewed for payment.

Please note that there are some state laws that cover quarantine or other public health related emergencies, such as Maine, Minnesota, South Carolina, Oregon.

Business Interruption/Income Insurance

“If I have to shut down, do I have coverage for that?” 

Short answer: Every policy is different. 

The first question to ask yourself is, “Did my building sustain physical damage?”  Which in the case of a government mandated shutdown, the answer is no.

Long answer: Here’s some details about it, if you want to understand standard insurance language:

Many businesses have Business Income Coverage. In order for this to be “triggered” and paid out, there must be damage caused by “direct physical loss”.

If the government mandates a shutdown of your business, there no direct physical loss to your building.  The policy would not be triggered and paid out. Here is a sample of a policy states it is only covering damages from a direct physical loss:  

A. COVERAGE

We will pay for:
– The actual loss of Business Income you sustain due to the necessary “suspension” of your “operations” during the “period of restoration”, and
– The actual Extra Expense you incur during the “period of restoration”:

caused by direct physical loss or damage to property at premises which are described in the Declarations and for which a Business Income and Extra Expense Limit of Insurance is shown in the Declarations. The loss or damage must be causes by or the result from a Covered Cause of Loss. With respect to loss or damage to personal property in the open or personal property in a vehicle, the described premises include the area within 1,000 feet of the site at which the described premises are located.

Now, under additional coverage, there is Civil Authority. This provides coverage if access to the area immediately surrounding the damaged property is prohibited by civil authority.  A perfect example of this was the Boston Marathon bombings.  There were businesses nearby, who were not physically damaged, but they couldn’t operate for a period of time, the government told them they had to shut down.  But since there was physical damage to a nearby building, which was caused by a covered cause of loss, this business income insurance was triggered, thus paid out.

In layman’s terms, the only way Civil Authority pays out is if a building around you has been physically damaged and the government says you can’t access your building. Here is a sample of policy explaining Civil Authority coverage:

c. Civil Authority

(1) When a Covered Cause of Loss causes damage to property other than property at the described premises, we will pay for the actual loss of Business Income you sustain and the actual Extra Expense you incur causes by action of civil authority that prohibits access to the described premises, provided that both of the following apply:

(a) Access to the area immediately surrounding the damaged property is prohibited by civil authority as a result of the damage, and the described premises are within that area but are not more than 100 miles from the damaged property; and

(b) The action of civil authority is taken in response to dangerous physical conditions resulting from the damage or continuation of the Covered Cause of Loss that caused the damage, or the action taken to enable a civil authority to have unimpeded access to the damaged property.

(2) Civil Authority Coverage for Business Income will begin 72 hours after the time of the first action of civil authority that prohibits access to the described premises and will apply for a period of up to thirty consecutive days from the date on which such coverage began.

(3) Civil Authority Coverage for Extra Expense will begin immediately after the time of the first action of civil authority that prohibits access to the described premises and will end:

(a) Thirty consecutive days after the date of that action; or

(b) When your Civil Authority Coverage for Business Income ends:

Whichever is later.

During the week of March 9th, I had reached out to several insurance carriers to ask for guidance on coverage. By in large, here’s the political, non-answer, answer I got back:

“We are in continuous discussions with our product and legal teams to deliver a unified message to our business partners and their clients.

The entire insurance industry has been evaluating the current policy forms (inclusions and exclusions) to determine the best course of action in the event of a loss.

As information becomes available I will immediately share it with you.  This is a top priority and all of our available resources are examining the situation to provide you with valuable information.”

Disclaimer – The only people that can deny an insurance claim is the insurance claim adjuster, not a broker, like myself.  Several insurance carriers told me coverages, liability, and damages will need a thorough case-by-case review.   

FOR IMMEDIATE RELEASE:
3/18/2020
Maryland Insurance Administration Advisory on Business Interruption Insurance
​BALTIMORE – The Maryland Insurance Administration is receiving a high volume of inquiries about Business Interruption insurance.Business Interruption coverage is typically triggered under a commercial insurance policy when a covered risk / peril causes physical damage to the insured premises resulting in the need to shut down business operations.  For example, if a fire damages a business and the business cannot operate during repairs, business interruption coverage would be available subject to the terms and limits in the policy.Most policies require a waiting period of 24 to 72 hours before coverage begins and coverage continues for the reasonable period of time to restore the property and reopen, subject to the coverage limit of liability.  Some commercial policies provide Business Interruption coverage when a business is shut down due to an Order by a civil authority.  However, the policy still typically requires a physical loss from a covered peril as the underlying cause of the business shut down to apply.All insurance policies have exclusions of coverage for risks that are too great to be underwritten at an affordable price.  For example, commercial and personal property insurance policies typically contain specific exclusions for loss or damage caused by war, nuclear action and radiation.  The potential loss costs from such perils are so extreme that providing coverage would jeopardize the financial solvency of property insurers. Global pandemics like COVID-19 usually fall into this category. However, policies can be different. We recommend that businesses review their policies and reach out to their insurance professionals with any questions.The Maryland Insurance Administration would like to reassure Maryland businesses that we are closely monitoring insurance issues related to COVID-19. Our core mission is making sure insurance companies treat customers fairly and follow the provisions in their policy and applicable state laws. We are monitoring relief activity efforts aimed at assisting individuals and businesses at the local, state and federal levels.  As information regarding relief programs becomes available, it will be posted on our website:  www.insurance.maryland.gov.

Worker’s Compensation:

Regarding Workers’ Compensation: For exposure to coronavirus to be compensable, the exposure must both arise out of the workers’ employment and be in the course and scope of their employment when the exposure took place. Simply being exposed to the coronavirus while at work will generally not satisfy the two-pronged compensability test in most jurisdictions; there must be an employment risk inherent to the exposure (e.g. a research scientist working with the virus).

Disclaimer – The only people that can deny an insurance claim is the insurance claim adjuster, not a broker, like myself.  Several insurance carriers told me coverages, liability, and damages will need a thorough case-by-case review.   

HR Support:

Coronavirus (COVID-19) is an emerging challenge across the world for employers. We’ve gathered some materials to help you stay on top of employee concerns. Check here frequently for updates.

From the CDC:

In response to the COVID-19 outbreak, the U.S. Centers for Disease Control and Prevention (CDC) has issued:

The CDC has also created the following posters for download:

Keep up to date on CDC guidance for specific industries, latest updates, and resources on the Coronavirus Disease 2019 (COVID-19) main page.

DOL Materials

The U.S. Department of Labor (DOL) has created a resource page for workers and employers. The DOL’s Wage and Hour Division created a website dedicated to COVID-19 or other public health emergencies and the Family and Medical Leave Act.

EEOC Materials

While not specifically related to COVID-19, the U.S. Equal Employment Opportunity Commission (EEOC) has previously issued guidance entitled Pandemic Preparedness in the Workplace and the Americans with Disabilities Act.

HHS Materials

In response to COVID-19, the Office of Civil Rights for the U.S. Department of Health and Human Services (HHS) issued a bulletin regarding HIPAA Privacy and COVID-19.

OSHA Materials

The U.S. Occupational Safety and Health Administration (OSHA) has created a COVID-19 website for workers and employers that addresses the disease and provides guidance and other resources for preventing exposure to and infection with the virus.

Topics covered include:

*Insurance Force will remain open and fully operational during the current COVID 19 crisis.  There will be no disruption in the services that we provide.  The office is currently open and each employee has access to work remotely if needed.*