6 legal and compliance considerations during benefits coverage interruptions

Paine College employees were without benefits for two months while the higher education institution hashed out details with their health care benefits provider. The lapse started at the beginning of May and left staff without medical, dental or vision benefits. This situation highlights the need for clear policies on handling a benefits coverage interruption.

The following are six of the biggest considerations that HR and benefits professionals should keep in mind when dealing with long-term interruptions in coverage.

1. Follow regulations

The Affordable Care Act (ACA) applies to businesses with over 50 full-time workers. Some health care tax credits are available to smaller brands to help cover some of the costs associated with providing coverage. Employers who fail to provide coverage to most of their employees could be penalized and owe fines.

2. Notify employees immediately

Section 1512 of the ACA indicates employers have to inform staff of coverage options available through the Exchange. A third-party service can also send the notice as long as people receive the information.

Although you have time to get things in order, it is wise to inform workers immediately. Keep them updated on the steps the company is taking to resolve any lapse in coverage and the backup plan if negotiations with the provider completely break down.

3. Keep data secure

With so many brands taking on remote employees, you must remember data privacy regulations. If any of your employees are European Union (EU) members or live in California, you could be subject to privacy laws such as the GDPR or CCPA. Even if no one on the payroll is an EU or California resident, it’s wise to follow practices to ensure you are ready if you hire one.

During a service interruption, you must still keep information private and respect workers’ personal details. It’s on you to make sure your employees’ health information is secure. Ensuring security is particularly important as the number of health data breaches continues to skyrocket, rising from more than 40 million Americans who suffered a health data breach in 2019 to more than 130 million affected individuals in 2023. It’s also your responsibility to ensure any provider you end up going with has top-notch security.

4. Understand COBRA

Staff with a lapse in health care coverage may be able to tap into COBRA in the interim. The biggest drawback to COBRA is the expense. However, if the organization typically pays the insurance provider a fee for each worker, you can offer a credit to help offset the cost.

Talk to your provider about whether employees qualify until you agree on regular coverage. Plan ahead by determining the costs and circumstances that qualify your workers for temporary coverage. A benefit of continuing is keeping the same doctors and level of coverage during interruptions.

5. Retain employees

Around 20% of people will voluntarily leave their jobs this year. Combined with the labor shortage many are battling, finding ways to keep workers happy can improve retention. The last thing you want is to lose top talent because of a temporary coverage issue.

While you must follow policies and government regulations, you can step outside the box for better solutions. Paine College turned to fundraising and budgeting to fix the problem they faced with rising insurance costs. Look for creative ways to solve your problem that fall within the guidelines of the ACA.

6. Be transparent & diligent

Intent does matter when it comes to providing your staff with workable coverage. Your first step should be to keep detailed records of negotiations. Pay attention to deadlines where you need to renew coverage so you can begin discussions early and avoid a lapse in the first place.

Keep your staff informed about how human resources is fixing the problem — they want to know there is an end in sight. You can offer details on how to apply for coverage on the government health marketplace at healthcare.gov.

Related: Open enrollment recap: What’s on the minds of workers?

Review compliance frequently

HR should review benefits more than once a year when the policy comes up for renewal. Ideally, benefits professionals keep an eye on what is best for their employees year-round. They should contact the insurance company with any concerns or to find out how to get a medical bill covered.

Consultants must know what the current regulations are and follow any changes in the law. Various bills impact the ACA as they are passed and can change requirements. Keep careful records and track of what your enterprise must do to comply and offer reasonable benefits to workers you want to keep.