Ready, set, go: a refresher for administrators
Calling all administrators of health benefits plans: here’s a handy checklist to help your health benefits plan run smoothly—and prevent crises.
First, the golden rule: reach out to plan members at least once a year. The main call to action: remind them to update their plans if needed, for example due to the birth of a child. Often, all employees need is a one-page communiqué, an email or a lunch-and-learn to remind them to update their files.
“At the end of the day, a little diligence up front can prevent a world of trouble later—for both employees and employers,” says Bill Zolis, Senior Employee Benefits Consultant for Penmore Benefits in Concord, Ontario.
Acknowledging that many plan administrators “wear a million hats,” Zolis emphasizes that they can lean on their benefits advisor as a resource to ensure they’re administering the plan as efficiently as possible. Their advisor can also arrange for training on how to use their insurance carrier’s administrator system, he adds.
Here are seven more key tasks on the administrator’s checklist:
Promote life and disability insurance. Zolis is a big believer in encouraging plan members to sign up for life and disability insurance. “Those things should be 100 per cent mandatory,” he says. Time and again he has witnessed the fallout—including lawsuits—of a member’s spouse filing a claim for a non-existent policy. If a member insists they do not need this coverage—for example, because they have it under their spouse’s plan—get confirmation in writing that they understand what they’re waiving. “You might also consider asking for the spouse’s signature,” suggests Zolis.
Educate and advise about the NEM. When discussing group life, disability, or critical illness insurance, educate employees about the non-evidence maximum (NEM)—the amount of insurance that insurers issue to employees without medical evidence. Advise employees whose incomes make them eligible for coverage that exceeds the NEM that they can apply for additional coverage to avoid being underinsured in the event they make a claim. If they don’t qualify medically, they’ll still retain the NEM, highlighting one of the value points of group benefits.
Amp up contact during the registration window. For new hires, the registration window for employee benefits is usually up to 31 days from the employee’s eligibility date. Employees who fail to register within that time may be sorely disappointed if they apply later. “They’re now considered a late applicant, and the insurer will require a medical. If they’re sick or have a chronic condition, they’ll get declined,” says Zolis. To lessen the risk of this situation, raise awareness of the registration window as soon as employees are hired and repeatedly remind them to register as soon as they’re eligible.
Remind them about updates due to life events. Many plan members assume that their plan automatically updates somehow when they get married, have a baby or get divorced. Proactively educating employees that they need to make these changes themselves in their plan—within 30 days of the life event—can save a lot of grief down the road.
Pay special attention to beneficiaries. Strongly encourage employees to name beneficiaries at the time of enrollment, and regularly ask if beneficiaries need to be updated. Zolis recalls one client who had selected his sister as a beneficiary—and did not change it when he got married 20 years later. When the employee passed away, his wife was left with no life insurance.
As well, underage children who are named as beneficiaries need to have a trustee who will manage those funds for them. “Plan members who designate an underage child or children as their beneficiaries also need to understand that doing so could result in their life insurance being paid into a trust and held until the child or children reach the age of majority,” says Zolis.
Keep salaries up to date. Since life and disability insurance is paid out based on earnings, be sure to document changes in employees’ salaries right away to ensure payouts are accurate in the event of a sudden death or disability. “We have a case right now where the administrator herself suddenly passed away, and she hadn’t updated her own salary. This is a preventable situation that’s really hard on surviving family members,” says Zolis.
Maintain liability coverage. It’s important for plan administrators to have administrator liability coverage, available as a rider to the employer’s commercial policy, to protect them against lawsuits.
Brought to you by Benefits Alliance. Read the full article here.