Submitting employee benefit enrollment forms on time is important for plan administrators and employees.
We know that juggling business priorities can be difficult. However, missing enrollment deadlines to add new employees, spouses and infants on your employee benefits plan can pose a legal risk.
Late enrollment means the new addition is now classified as a late applicant.
If you enrol an employee after his/her eligible date (with no health evidence), the insurance company may not provide coverage. Insurance providers can be quite inflexible, so it’s important plan administrators know their responsibilities.
Here’s a real-life example:
An employee submitted an enrollment form 7-months after her eligibility date. It was missing the health evidence form and was therefore returned. The employee resubmitted correctly, but then died while the application awaited approval. The insurer denied the claim for life insurance. The employee’s spouse subsequently sued the employer and won.
There are many plan liabilities that could lead to lawsuits. Attention to detail and proper documentation are critical in your interactions with employes to avoid putting your company at risk.
Plan Sponsors can take these steps to mitigate risk:
- Ensure your plan administrator has a clearly defined process for adding new employees/dependants onto the plan.
- Have a clear policy whereby Plan participation is mandatory and a condition of employment.
- However, if a new employee desires to waive ALL (and only all) coverage, ensure they sign a carefully worded waiver.
In the event there might be a late applicant situation, please seek your broker to assist you with the process.
Did you know?
ENCOMPASS services clients throughout the Okanagan Valley and the Lower Mainland?