Opinion: Government shutdown’s impact on insurance, benefits

Lynne Haggerman

As of late November, federal employment-related agencies have officially reopened following the government shutdown, and furloughed employees have returned to work. While operations have resumed, the agencies are now facing significant backlogs created during the shutdown period. Investigations, hearings, audits, case processing and customer service functions that had been paused are now being reactivated, but delays should be expected as the workforce works through the accumulated caseload.

During the shutdown, insurance and benefits agencies across the federal government were operating with sharply reduced capacity. The shutdown stemmed largely from stalled negotiations over federal funding, with health policy emerging as the central issue. Although federal activity slowed, employer compliance obligations did not. Many statutory deadlines continued uninterrupted, and certain filings remained active even when agencies were furloughed. Understanding how the shutdown affected the EEOC, IRS, DOL, HHS, and related agencies is essential for minimizing legal and operational risk in companies.

EEOC: Limited operations but full deadlines
The Equal Employment Opportunity Commission experienced one of the most severe impacts, with 93% of the workforce furloughed under its contingency plan. All nonessential functions, including investigations, mediations, hearings, outreach programs, and responses to public inquiries, were suspended. Freedom of Information Act requests were not processed, and the EEOC did not file new lawsuits, except where courts have denied stays in ongoing matters.

Despite this shutdown, statutory deadlines remained fully in effect. Individuals still had 180 or 300 days to file discrimination charges, and the Office of Field Programs continued operating with a very small staff to ensure deadlines were not missed. Likewise, individuals who received a Notice of Right to Sue before the shutdown were still able to file their lawsuits within the required 90-day window. This resulted in a growing backlog with increased activity from state agencies that remained fully operational. During the shutdown, the EEOC did not clarify how employer response deadlines would be handled, so organizations still needed to meet existing deadlines or formally request extensions through the respondent portal.

IRS: Major furloughs but work continues
The IRS furloughed nearly half its workforce, including large portions of technology and human resource personnel. Some layoffs were temporarily blocked by a federal court. Despite these reductions, IRS leadership recalled key attorneys to continue drafting priority regulatory guidance, including regulations associated with the “One Big Beautiful Bill.” Preparations for the upcoming tax filing season also continued.

DOL: Enforcement mostly paused
Approximately 90% of Department of Labor staff were furloughed, significantly slowing enforcement and regulatory work. Employee Benefits Security Administration was operating at only 25% capacity. Certain time-sensitive initiatives, including tri-agency fertility FAQs and No Surprises Act enforcement, continued because they were funded through separate appropriations.

HHS: Mixed disruptions
The Department of Health and Human Services furloughed 32,000 employees while retaining 47,000 during the shutdown. The Centers for Medicare and Medicaid Services paused most policy development and rulemaking, but continued operating Medicare, Medicaid, the Children’s Health Insurance Program and the Affordable Care Act marketplace activities. CMS recalled some furloughed workers during the shutdown to support open enrollment. Layoffs affecting Health and Human Services divisions were challenged in court.

SEC and PBGC
The Securities and Exchange Commission furloughed nearly all staff, which halted rulemaking, reviews and routine oversight. Electronic filings remained active, but no associates were available to process submissions, setting the stage for significant backlogs. By contrast, the Pension Benefit Guarantee Corp. remained fully operational because it relies on trust-fund financing rather than annual appropriations. Premium filings, investigations, litigation and benefit-related processing remained uninterrupted.

Despite federal insurance and benefits agencies operating with sharply reduced capacity during the shutdown, company obligations remained unchanged. Statutory deadlines continued, filings were still required and backlogs grew.

Lynne Haggerman holds a master of science in industrial organizational psychology and is president/owner of Lynne Haggerman & Associates LLC, specializing in management training, retained search, outplacement and human resource consulting. She can be reached at lynne@lynnehaggerman.com.