Businesses continue to be more and more impacted by the coronavirus. This is certainly true for our dentists. As business services are limited or even shut down, many customers are asking if business interruption coverage will or will not apply.
Do Business Interruption Policies Apply to the COVID-19 Pandemic?
We have reviewed many insurance policies, and sadly, the vast majority of policies do not cover business interruption caused by a pandemic. This is primarily due to the lack of physical damage to the property resulting from the pandemic. A second problem is a standard exclusion in many forms for losses caused by a virus or bacteria.
All this being said, if you are suffering a loss of business income and wish to turn in a claim, we would recommend that you do so. Once we see the specific reason behind a possible denial of coverage, we can see if there is another possible course of action to attempt triggering coverage. We will report to you that as of now, the many claims we have filed on behalf of our clients have resulted in denials.
You should also be aware that there is a possibility of a some sort of a government backstop for losses due to business interruption. We are monitoring this and are hopeful that a solution is developed, approved and deployed.
Please note that whether you file a claim or choose not to do so, keep thorough records of your loss. This documentation will be needed if you decide to file a claim and may also be needed if indeed the government lands on a solution.
If You Have Small Group Health Insurance and Must Lay Off Staff or Reduce Their Hours, Here’s What You Should Consider.
If you have a small group health plan and are reducing hours to part time (less than 30 per week is generally consider part time) and you’re not laying off staff covered on your plan, you have some flexibility on how to handle this—at least for the next 30-45 days. You could pay the premium for April just as you do now for the group, not deduct it from employees’ wages, and let impacted staff know you will collect the premium you fronted over the remainder of the year, when they move back to full-time status. This would offset the impact, and the practice would recover fronted costs. This might make the most sense: employees can keep their health insurance in place and receive a paycheck that’s reduced, but not consumed, by the health premium. Canceling health insurance during a health crisis is not a good option, and this would provide some certainty at least until May 1.
If you are laying off or moving staff to part-time status, they can continue their health coverage for up to 9 months (for practices with 20 or less employees, and 18 months for employers with over 20 employees—this is COBRA) if they pay [you] the practice. We recommend the practice gets the payment before the bill, in the event the former employee decides not to pay after the first of the month. The employer can no longer do mid-month termination because of the Texas Law SB 51. This means if you do terminate him or her before the first of the month or submit the state continuation form, the employer is responsible for the premium for the whole month.
If you are laying off staff that has coverage, and they are declining, use the same state continuation form as proof it was offered, and then notify the insurance company (or agent) about the coverage cancellation before the first of the month.
This is a developing situation, and there will be additional information and updates that might change your options which we are continuing to monitor so please keep checking back for updates.