what does rising unemployment mean for health insurance?
Uncertainty consumed Hawaii’s health insurance industry in the weeks after the Sept. 11 terrorist attacks. Tourism workers who had been laid off or had their hours cut back faced the possibility of having to pay health insurance premiums previously covered by employers. Insurance agencies scrambled to come up with programs to ease members’ transitions to new jobs, while trying to forecast the impact these layoffs would have on their own companies.
“No one can really predict what’s going to happen,” Kaiser Permanente spokeswoman Jan Kagehiro says. In the week before the Sept. 11 attacks, 5,467 people – including 457 tourism workers – filed for unemployment benefits, according to the state Department of Business Economic Development and Tourism. By the end of the first week in November, that number had more than doubled, with 11,597 people filing for unemployment, 2,940 of which had worked in the visitor industry.
Velina Haines, human resources vice president for Aston Hotels and Resorts, says the company decided to cut back some employees’ hours to avoid layoffs. Affected employees may have filed for partial unemployment benefits, while others elected to take vacation time.
“If they’ve no longer become eligible for benefits, we’re making sure they’re aware they have COBRA (consilidated omnibus Budget Reconciliation Act) rights,” Haines says, referring to the federal law that provides for the maintenance of health coverage for individuals no longer eligible for benefits because of termination, layoff or a cutback in hours. Under COBRA, workers would be responsible for paying the monthly premiums previously covered by employers, as well as up to an additional 2 percent administrative fee.
Bill Brown, senior vice president for human resources and planning at Outrigger Hotels and Resorts, says the company picked up the health insurance costs for the more than 80 employees who were either laid off or had their hours cut back.
“We’re continuing at least three months of medical plan coverage for those (laid-off) people,” Brown says. “We’re paying for it entirely. Even if employees paid a small amount for the premium, we’re picking up those costs.”
Workers who’ve had their hours cut back or participate in work-sharing – where employees take vacation days to avoid more layoffs – have had all of their health insurance benefits continued, Brown says.
“We’re also not counting the lack of hours against their accrual of vacation and sick-leave benefits for the next year,” he says. “They’re going to get full credit for a year’s work even though they haven’t worked the full actual number of hours.”
HMSA introduced a plan in October to maintain coverage for workers laid off between Sept. 11 and Jan. 1, 2001.
HMSA covers 50 percent of monthly dues for these members for up to three months. During that period, members could also have their dependent children covered at no cost. The agency, which has 630,000 members, estimates that this program will save affected families $15 million.
“The member-protection program was put in place by the HMSA board to help those people who are losing coverage and encourage them to get on to coverage so there’s no lapse in coverage for their families,” says HMSA senior vice president Cliff Cisco. Cisco estimates that about 900 people had enrolled in the program by the first week of November.
Kaiser Permanente, which had 225,000 members at the end of September, introduced in November a more modest, six-month program to accommodate laid-off workers.
Monthly premiums for the Personal Advantage Conversion Gap Plan are $101.03 for an individual subscriber, $202.06 for a subscriber with one dependent and $303.09 for a subscriber with two or more dependents.
As of early November, neither HMSA nor Kaiser could report any dropoffs in the number of policyholders. Both Cisco and Kagehiro say they don’t expect to see a downturn in enrollment until early this year.
“Some employers have provided either extended healthcare coverage or employees have elected to go on COBRA, so they still have coverage,” Kagehiro says. “Those coverages do have a limit, though, so we were thinking about reviewing the situation again in January, when we may start to see a clearer picture of what might happen.”