Mid-Year Health Changes Allowed Due to Coronavirus 2020
The Coronavirus 2020 pandemic has created economic upheaval throughout the United States. One of the consequences of this is that it has left many employees in a quandary about the insurance plans they signed up for at the end of last year. Some employees are finding themselves in a high-priced healthcare plan that they are now struggling to afford because of furloughs or temporary pay cuts, while others may find themselves unable to get the medical care they may need. Typically, they would be locked into their previous choices but this year, things have changed.
In an unprecedented move, the IRS is giving employers a one-time chance to allow employees to make changes to their healthcare plans and flexible spending accounts outside of the open enrollment period.
What the Changes Mean
While normally, employees cannot make changes to their health coverage outside of open enrollment unless they are going through a life-changing experience, such as:
- Birth of a child
Under the new ruling, with their employer’s permission, employees may now make changes to their healthcare plans due to difficulties caused by the coronavirus pandemic. This means that employees are permitted to sign up for insurance if they currently do not have a healthcare plan or drop out of their current plan if they have a more affordable or more suitable option. They can also add family members to their plan. The new ruling also extends carryovers until the end of 2020.
The new IRS guidance also allows easing of healthcare FSAs (Flexible Spending Accounts) and dependent-care accounts. This is especially important for employees who are having to reevaluate how this money is used during the coronavirus pandemic. On both ends of the spectrum, some workers are having to postpone non-essential procedures, while others need to spend extra money on medical treatment for the virus. Additionally, parents can reallocate the money from dependent-care accounts that would have been used for after school or summer camps, which have been canceled due to COVID-19. However, employers are not obliged to offer these options. Employers who wish to allow their workforce more flexibility must opt into the program.
Good News for Employees
Ultimately, it’s down to the employer to decide whether they want to permit these changes and if they do, it will require some extra paperwork, but employers who wish to give their employees more flexibility during this difficult time will see that it is worthwhile making these changes.
Meanwhile, employees are welcoming this change, particularly those who have been hard hit by the economic uncertainly that COVID-19 has caused. However, it is important that they understand that they will be unable to make any changes until the next open enrollment unless their employer opts in to the new guidance.
Only the following changes may be made to healthcare insurance plans:
- Employees make choose a plan for medical and prescription coverage if they did not enroll in a plan in 2019.
- Employees may change their current healthcare plan from self-coverage to include family members.
- Employees may revoke their current plan for medical and prescription coverage providing that their employer signs the required documentation stating that they have opted in to the new guidelines.
Changes will come into effect on the first of the month after the changes have been made. They will remain effective until December 31, 2020. Employees will not be able to make changes from one health plan to another. They will also not be able to make changes to AD&D coverage or dental plans.
Even employers who chose to opt in to the new guidelines do not have to allow all the changes. They can select which of the new elections to offer their employees. Employers may also choose to limit health insurance changes to ones that would improve employee’s health coverage.
Although the new guidance is optional for employers, many will want to participate so that employees can revoke their current healthcare plan or enroll in a new one. Employers who wish to find out more about the changes or who wish to obtain advice about the necessary paperwork can consult with Zupnick and Associates insurance brokers based in New York City.