With all businesses, your workforce evolves as time goes by. The Plan Administrator is responsible for keeping your benefits plan up-to-date, to ensure your employees receive their full benefits coverage and the correct premiums are being paid.
Employee benefit plan administrators are often different in every business. Administration may be handled by the owner, accountant, office manager, or human resources professional. Whatever your role, it’s important your records regarding your employees and their dependents are current and insurers are notified of all changes.
Here are some tips to help you keep your benefits plan on track and to ensure you are maximizing value and reducing potential liability:
Are all eligible employees enrolled on the plan? Are you adding them to the plan promptly to avoid late application penalties? If your plan allows refusals, you should obtain a signed refusal form to reduce your potential liability if the employee subsequently tries to make a claim.
You have 31 days (grace period) after new employees complete their waiting period to submit their enrolment forms. If forms are sent after the grace period, new employees will be considered “late applicants” by the insurer. This means new employees and their dependents will be required to submit proof of good health and risk being declined for all benefits. If coverage is approved, there is a dental restriction in the first 12 months of usually $150-$250, depending on your insurer.
Addition or Removal of Dependents
You need to be aware of “Life” events that occur in your employee’s personal lives, such as marriage or having a baby, since these events impact their benefits coverage. All new family members need to be added to the benefits plan within 31 days or they will be considered “late applicants”.
Some employees may choose to “waive” coverage for extended health and dental benefits because their spouse has coverage. Oftentimes, these employees refuse all coverage and they assume they do not need to complete an enrolment form. This is not the case – they still need to complete an enrolment form to enroll in the mandatory catastrophic benefits such as Life, AD&D, Critical Illness and Long Term Disability. Furthermore, this will ensure they are not “late applicants” if the spouse were to lose coverage in the future.
The removal of spouses and dependents should be communicated to your insurer immediately as well. If a marriage ends or dependent children graduate school or have a birthday making them ineligible as dependents, your insurer needs to be advised to make the change in status and terminate coverage.
Have all terminated employees been removed from the plan? Most insurers will only backdate employee terminations a couple of months and you won’t receive full credit to the effective date of a termination date if you are not timely. Are you aware you should have the benefits portion of a severance package pre-approved by the insurer before offering it to an employee?
The Life, AD&D, Short-Term Disability and Long-Term Disability benefits are typically based on an employee’s salary. Are all reported incomes up to date? Have all eligible employees applied for amounts above the non-evidence maximums? This ensures the employee is properly insured in the event of death or disability and reduces employer liability.
If one of your employees becomes disabled, it is important to submit the claim on a timely basis, and ensure the information provided is complete and as detailed as possible. There are three main components to filing a Long Term Disability claim – the employee statement, the employer statement, and the attending physician’s statement.
Unfortunately, if the claim is not filed in a timely fashion, within the required time limits set forth in your policy, the waiver of premium and disability benefits can be denied under the late-notice provision.
Keeping your benefits plan up to date is important in order to ensure your employees and their dependents receive their full coverage and you do not incur additional premiums unnecessarily.
For more information, please reach out to a member of your Arbutus Financial team.