A new employee benefits plan brings new opportunities. A new plan can improve employee compensation, as well as an employer’s standing as an employer of choice. A plan change can reduce costs for the employer, and often improves the value of the plan offering to employees. New plan set up and enrolment can be a complicated and time consuming process. Doing it right the first time can ensure accuracy and save time in the long run.
Whether a new plan or a change of carrier, the set up and enrolment process is vital and, while it is the Advisor and carrier’s job to make it as smooth as possible, it does require a time commitment from both employees and the employer.
- Timing: Employers may want to get at their savings quickly by setting up the new plan as soon as possible. Industry standard is 30+ days. Insurers require a minimum of 30 days’ notice to terminate an existing plan. Allowing any less time can be a false economy. It takes 30 days or more to collect data and enrolment forms; review the contract; inform employees; create and deliver new drug cards and booklet wording; and cancel the existing plan.
- Enrolment forms: Gathering accurate and legible enrolment information on each eligible employee is vital to a positive claiming experience – whether it is to avoid spelling errors on drug cards or to be certain of beneficiary identification in case of death. Employees should be aware of which family members qualify as dependents – whether they are coordinating coverage with a spouse’s plan or waiving health and dental coverage. A common error that can have serious consequences is the assumption that if you have spousal coverage, you waive all coverage including life and disability. These benefits are still mandatory and, if not properly enrolled, could lead to a denied claim.
- Evidence of health: Life and disability benefits will offer a limited amount of coverage without requiring the employees to complete health questionnaires and, possibly, submit more health details before being approved. These limits are called Non Evidence Maximums (NEMs). The bigger the group, the higher the NEMs, as the risk to the insurer is reduced by volume. In plan transfers, the previous Health Evidence is generally accepted by the new insurer to levels approved by the previous insurer. If this is not the case or if employees qualify for more coverage, they must complete the questionnaire. The employer could be liable for the excess, in the case of a life or disability claim. Employees need to understand that if they are declined for the full coverage due to a health issue, the coverage amount up to the NEM is still available.
- The Insurer(s): Insurers do not like to begin set up on their end until all contracts and enrolments are received. There is too much room for error when done piecemeal. Once they have a full enrolment package they can usually turn everything around in about two weeks or less, barring any questions or concerns. One big issue is when the number of employees quoted differs significantly from the number enrolled, and a difference of 25% or more often results in the need to re-quote. An explanation is always required. If additional enrollees were qualified to be included on the original quote and were not on the previous carrier’s billings, red flags are raised and these employees may have to submit health evidence. Once everything has been processed and all is in line, the insurer will issue drug cards and booklet wording (mostly electronic, these days). Employees will be encouraged to sign up for employee access on the insurer’s website, and claiming may begin once the plan is effective. It is important that employees and their families are fully aware of the change. Often declines occur when claims are submitted to the previous carrier by mistake.
- Communication. It is good practice to give employees advance notice that there will be a plan change; when and why. They should be told how long they will have to submit claims to the current carrier and that they need to inform their families. Once the plan has been set up, it would be a good opportunity for the Advisor and/or the insurer to do a brief (one hour) employee meeting to orient them to the new plan. Some like to do it during the enrolment period instead, as then questions regarding enrolment completion can be answered. Either way can be effective.
A smooth, planned and unhurried enrolment process can save grief and even liability problems in the future. Accuracy, completion and communication are key. Whether you are an employer or Advisor please contact ASSOCIUM Benefits for the right plan, and the best service and advice.
ASSOCIUM Benefits is a very unique employee group benefits provider, focused on supporting benefits advisors and their employer clients. We provide Brokers and Plan Sponsors with a range of solutions from traditional group benefits to more customized, cost and tax effective employee compensation. Let’s connect to find out how we can help.