Benefits Policy Provisions
Issue # 83
December 15, 2008
Insurance policies are contracts, which means they have certain conditions and limitations that are binding on the parties involved. When reviewing these contracts as they relate to employee benefits like health, dental, vision, etc., you need to be aware of certain provisions that can be troublesome from a risk management standpoint, not to mention quite costly to the organization. Here are a few of the areas to pay attention to:
Eligibility
It is important to understand who is eligible to enroll in your plan, and what is required to maintain coverage. Eligibility involves meeting a waiting period requirement, and working an established minimum number of hours per week.
Coverage Effective Date
Once the eligibility requirements are met, the policy will state when coverage begins. This is usually the first of the month following the first day of employment or meeting the eligibility requirements.
Coverage Termination
Based upon meeting the eligibility requirements, including minimum number of hours worked, coverage will automatically cease at a point in time when those requirements are not met, usually at the end of the month in which the employee no longer meets the requirements.
Disability Provisions
Some policies allow coverage to automatically continue up to a limited period of time when there is a disability that reduces the employees working hours, and therefore affect eligibility requirements. Even these policies have conditions that require notification from the employer immediately in order to preserve coverage. Other policies are silent on the matter, and therefore consider coverage terminated when the minimum required number of hours worked are no longer achieved.
Leave of Absence Provisions
Similar to disability provisions, some policies allow coverage to automatically continue up to a limited period of time when there is a disability that reduces the employees working hours, and therefore affect eligibility requirements. Even these policies have conditions that require notification from the employer immediately in order to preserve coverage. Other policies are silent on the matter, and therefore consider coverage terminated when the minimum required number of hours worked are no longer achieved.
FMLA & COBRA
Usually the employer is required to conform to the minimum requirements of these laws in order to maintain coverage for employees who have experienced qualifying events. This includes sending out proper certifications and election notices in the time frames required by these laws.
Finally, your employee handbook should be reviewed to be certain that disability and personal leaves of absence match the requirement of the insurance policies. Misunderstandings and inadequate administration can lead to situations where there is no coverage, resulting in the employer becoming the insurance company.
Kempkey Insurance Services goes beyond insurance by designing and implementing risk management programs for growth oriented businesses. We help our clients maximize the value of their insurance dollars and minimize their potential for unwanted surprises. Ed Kempkey can be contacted at (888) 536-7539 extension 2188, or at ed@kempkey.com.