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Wendy Matton

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You’ve Implemented A Benefits Plan, Now What?

Congratulations, you made an exciting leap to offer employee benefits as part of your compensation! This is a great way to recruit and retain top talent and foster a culture of wellness. Each of your employees are unique and as their lifestyles change, some will get married, have children or move positions/employment classifications within your organizations. All of these changes can affect their benefits plan and it’s important that HR and administrators be notified of these, so they can update the benefits provider accordingly.

Why Is It Important To Keep Your Benefits Provider Updated As Changes Occur?

Within the benefits industry, there are deadlines for updating your provider on employee life changes that will impact their benefits plan. Whether it’s enrolling a new hire onto your plan or updating a current employee’s marital status after getting married, these changes carry narrow deadlines that must be complied with in order to guarantee coverage as stated in your employment contract.

It is your responsibility to meet the insurers’ required timeframes. Typically, this window is 30 days for a new hire from completion of their probation period or from the change to of employment status to full-time. When it comes to family changes such as getting married, becoming common-law or welcoming a new baby, it’s usually 30-60 days depending on the carrier. Such an omission on your part or theirs, can turn into a myriad of issues including causing them to be classified as a “late entrant”. 

Late entrant status means the new applicant is subject to medical questions and could subsequently be excluded from, or have restricted coverage. Or in the worst case, a late entrant can be declined outright if there is a medical history to support it. This is catastrophic to the employee, especially if there is a pre-existing condition, and they were offered benefits as part of their compensation. The benefits offer could have even been a key driver for why that employee opted to accept the offer to join your organization. For HR and administrators, ensuring that your team doesn’t hit late entrant status – if they are declined coverage, there can be many legal ramifications that can follow.

Why Is It Important To Understand & Enforce The Insurers Participation Requirements?

First and foremost, understanding the participation requirements will help to protect your organization and your employees, and ensure that all staff get the coverage that they are promised.

There are two different scenarios where a staff member could submit a waiver or opt out of coverage. The most common being a spousal waiver in which an employee who cost shares could opt out of the health and dental options only by providing proof of alternate group coverage (likely through a spouse). Since they are only opting out of the health & dental portion of the benefits, they would not be considered a late entrant in the event that their spouse was to lose benefits – as long as they notified their HR or administrator within 30 days of the loss of coverage.

In the second scenario, your employee waives coverage and opts out of the plan completely (not just the health and dental option). In this case, it’s pertinent to ensure they understand that if the spouse loses coverage and they opt to try to enroll back into your plan, they will be treated as a ‘late entrant” (defined above) in the future. This can be averted if you have mandatory participation as part of your policies and procedures manual.  In both cases, you could also communicate the ability to coordinate the benefits to get the most optimal coverage for their family.

One last note to leave you with. Participation requirements outline the mandatory minimum number of employees that must be enrolled on the plan. When making exceptions like the complete waiver scenario above (again, not recommended), your organization can fall below the insurer’s participation requirements which could have negative ramifications on your plan.  In fact, plans have imploded for this very reason. Depending on the size of your firm or if you have staff contributing to the plan, are the main factors in determining your participation requirement. Typically, for full-time employees it can be 75% for larger firms and 100% for smaller firms.

As an HR specialist or administrator, it’s important to dive deep into the requirements and deadlines associated with your plan and if you are ever in doubt, it’s always best to give your benefits specialist a call to confirm. They’re there to help.

Wendy Matton

Wendy has nearly 40 years of experience in the financial services sector. She began in banking and moved on to Bay St. trading in fixed income, currency and commodities, to management. The next phase was spent in sales and advisory roles as an independent financial and insurance advisor. She has spent the last 15 years as a consultant in the employee benefits industry. Wendy enjoys going on gal-pal road trips with her daughter visiting theatres and B&Bs across Ontario. When not hosting a “Scuff ‘n’ Scoff” with her hubby and musical friends, her most treasured moments are outdoors, back in the hills of Newfoundland on a ski-doo or on a pristine lake with her dad, in a canoe.
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