For Immediate Release
May 11, 2020

New Survey Examines the Pandemic's Impact on Workplace Health Care Offerings and Retirement Savings Choices


Brookfield, Wisconsin—
The coronavirus has brought major changes to the workplace, including shifts to workers' health care and retirement benefits. A report released today by the International Foundation of Employee Benefit Plans examines what employers are doing and what employees can expect as organizations adapt to the pandemic.

"The coronavirus is a challenge unlike any most employers have faced," said Julie Stich, CEBS, vice president of content at the International Foundation. "Workplaces had to quickly make changes to ensure not only the health and well-being of their workforce but also the financial stability and long-term success of their organization."

Health Care Benefit Changes Due to COVID-19

Prescription Drug Plans Are Changing to Reduce Barriers
As a result of the pandemic, 35% of employers have extended the time allowed under prior authorization periods for prescription drugs, 29% have increased quantity limits and 13% have waived prior authorization requirements.

Mental Health Benefits Are Increasing
Recognizing that employee mental health during this time is a serious concern, 12% of employers have added telepsychiatry, which allows employees to access mental health services virtually. Additionally, 9% of employers have reduced or eliminated cost sharing for mental health benefits, and 6% have relaxed or eliminated eligibility requirements.

Nearly All Employers Are Offering Telehealth Services
To help workers receive medical care while reducing their risk of exposure, nearly all employers are offering telehealth services. Prior to the pandemic, 88% of employers had telehealth services in place. Since then, an additional 10% of employers have implemented or are considering implementing telehealth. To encourage the use of these services, nearly half of employers (49%) have reduced or eliminated telehealth cost sharing.

Retirement Plan Changes Due to COVID-19

Some Employers Have Reduced or Suspended Matching Contributions
For organizations that provide matching contributions to their employees' retirement plan, 2% have reduced the matching contribution and 8% have suspended it. An additional 18% report that they have not yet made changes but are considering it for the future, and 9% say it is too early to tell what changes they will make.

Employers Are Implementing DC Plan Changes as Permitted by the CARES Act
The Coronavirus Aid, Relief, and Economic Security (CARES) Act allows employers to make changes to their defined contribution (DC) retirement plans (such as 401(k) plans) to help workers financially affected by the crisis.

More than half of employers (63%) are allowing workers to take new special COVID-19–related early distributions from their DC accounts. These distrubtions are not subject to the 10% early withdrawal penalty or the 20% mandatory tax withholding. To provide further relief, 60% of employers are allowing workers up to three years to pay back their early distributions, if the worker would like to do so.

Employers are also implementing changes for DC plan loans. Nearly half of employers (48%) have temporarily increased DC plan loan amounts to a maximum of 100% of the vested balance or $100,000, whichever is less (up from the previous maximum of 50% or $50,000). Additionally, many employers (61%) are allowing workers to delay, for up to one year, making payments on retirement account loans that originally required payment March 27–December 31, 2020.

"For employers, the decision to adopt the new special early distribution isn't an easy one to make," said Stich. "Retirement savings accounts are just that—The money is meant for retirement. Taking money out now, especially in a volatile market, jeopardizes future retirement security. However, these retirement plan changes may well be a lifeline for Americans who are facing financial hardship due to COVID-19. Employers should educate their employees about the potential impact of early distributions, so employees can make an informed choice."

Currently, 15% of employers have seen an increase in the number of employees who have taken hardship withdrawals from their DC plans, and 12% report an increase in employees taking DC plan loans. Many employers report that it is too early to tell.

Staffing Changes Due to COVID-19

A Significant Number of Employers Have Furloughed or Laid Off Workers
Due to the pandemic, employers across a wide range of industries have made difficult changes to their workforce. The report found that 31% of employers have temporarily furloughed workers, 29% have reduced worker hours, and 21% have laid off workers or reduced their workforce. Looking ahead, many employers are considering future changes—13% are considering furloughs, 14% reduced worker hours and 18% layoffs.

Just under half of employers (44%) have implemented a temporary hiring freeze for their organization.

Health Care Benefits for Furloughed and Laid-Off Workers Varies by Employer
Employers are handling health care benefits for furloughed employees in a variety of ways.

  • 7% are providing employee health care coverage through COBRA, with the worker paying the full cost.
  • 38% are continuing health care coverage for the entire period, with the cost shared as usual between worker and employer.
  • 23% are continuing health care coverage for the entire period, with the employer paying the full cost.
  • 25% are continuing health care coverage for a limited time, with the cost shared as usual between worker and employer.
  • 7% are continuing health care coverage for a limited time, with the employer paying the full cost.

For employers that have laid off workers, the majority (61%) are offering health care coverage to laid-off employees through COBRA, with workers paying the full cost.

Employee Benefits in a COVID-19 World: April 2020 Survey Report

"The COVID-19 pandemic has brought difficult discussions to the door of company leaders.  During this crisis, employers are making thoughtful decisions, doing their best to keep in mind their employees' well-being and their company's sustainability," said Stich. "As more time passes, we'll all gain a better understanding of the long-term impact of this pandemic on American workforces."

For more information and to access Employee Benefits in a COVID-19 World: April 2020 Survey Report, visit www.ifebp.org/covid19survey.

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The International Foundation of Employee Benefit Plans is the premier educational organization dedicated to providing the diverse employee benefits community with objective, solution-oriented education, research and information to ensure the health and financial security of plan beneficiaries worldwide. The Foundation has more than 31,500 multiemployer, corporate and public sector members representing over 25 million lives. For additional information, visit www.ifebp.org


Contact:
PR@ifebp.org