Finding health plan coverage for workers furloughed during pandemic

Because of the sudden and dramatic slowdown of the global economy caused by COVID-19, many employers have had to make difficult decisions about their workforce. In addition to layoffs, some have reduced employees' scheduled hours or completely furloughed workers. Terminations of course result in the loss of health plan coverage and generally entitle the individuals to continuation coverage under COBRA. Furloughed employees, however, present other challenges. In particular, can you allow furloughed workers to remain eligible for coverage under your health plan? Here are several important issues to consider.

Large employers: Is a stability period at issue?

The Affordable Care Act (ACA) requires employers with 50 or more full-time equivalent employees to offer qualifying and affordable coverage to 95 percent of their full-time workforce or be subject to its employer mandate penalty. A full-time employee is one who works at least 30 hours per week or 130 hours per month. Because the hours for some employees vary, employers may measure full-time status for them in one of two ways.

Under a monthly measurement method, you review the hours an employee works on a monthly basis to determine if she has worked 30 hours per week or 130 hours per month. Employees who drop below this full-time threshold, including through furlough, will lose coverage after the month in which the hours are reduced below 30.