10 Common Mistakes to Avoid as a Group Benefits Plan Administrator
The below article from BBD has been edited to apply to most Plan Administrators from other Insurance Carriers as well.
Being the Plan Administrator of a group employee benefits plan is a big job with a lot of responsibility — and a lot to remember.
Here are 10 of the most common Plan Administrator mistakes (and how to avoid them):
#1. Terminating Employees from the Plan Due to Spousal Coverage
Employees on your plan may also have group insurance coverage through a spouse or partner. Employers with an alternate plan may seek to remove themselves from your plan, citing overlapping coverage. However, only the Extended Health Care (EHC) or Dental Insurance benefits can be waived due to alternate coverage. All other coverage should remain in place for each employee.
It’s worth noting that having access to two benefits plans isn’t a bad thing! Employees with alternate coverage through their spouse can still benefit from having dual coverage by coordinating their benefits plans to work together.
#2. Not Listing Dependents to the Employee’s Plan Due to Spousal Coverage
On the flip side, some employees may not add their spouse to the plan because their spouse has alternate coverage. Even if an employee has waived their Extended Health or Dental coverage for their dependents, it is important to have all eligible dependents listed. If an employee loses their alternate coverage, dependents can be easily reinstated.
If an enrollment form arrives at your desk and an employee has not listed their spouse as a dependent, you’ll want to go back to them and advise them of the above.
#3. Enrolling Employees as Late Applicants
When an employee reaches their eligibility date (effective date on the plan after their waiting period), they have 31 days to enroll in your plan before becoming a late applicant. Late applicants may need to submit medical evidence to qualify for benefits or back-pay premiums.
Allowing employees to miss this crucial 31-day window could negatively impact their coverage or lead to a denial of coverage. When an employee becomes eligible, make sure you get them on the path to enrollment right away and that you’re following up to remind them to submit. Lastly, make sure you tell employees about the consequences of enrolling as a late applicant.
Tip: Utilize online enrollment to increase employee participation and make it easier and more convenient for employees to enroll. Online Enrollment is available in your log in for Plan Admin access.
#4. Leaving Terminated Employees Active on the Plan
Whenever an employee leaves the organization (one way or the other) it is important to remove them from the plan as soon as they are no longer eligible for benefits.
Otherwise, employees no longer working at your company may be able to continue to use the benefits plan. Furthermore, any co-pays (cost-sharing) the employee was previously paying from payroll deductions won’t be happening since they’ve left your organization. This means that employers who normally only pay a portion of the premiums (with the employee paying their share from payroll) will be on the hook for 100% of the premiums, costing them even more money.
Tip: Plan Administrators can process employee terminations quickly and easily through your online benefits administration platform.
#5. Trustees Not Listed for Underage Beneficiaries
When employees enroll in their benefits plan, they may need to name a beneficiary(ies) to receive select benefits payouts. Employees can name anyone to be a beneficiary (spouses and partners are common) but must name a trustee for beneficiaries under the age of 18. Minors are unable to access these funds until they reach the age of majority, so a trustee must be appointed to manage the funds in the meantime.
Keep an eye out for employees naming their children as beneficiaries and remember to check that they’ve also designated a trustee. Not doing so could bring complications if it comes time to pay minor beneficiaries without named trustees.
#6. Entering Eligibility Date vs. Hire Date
In many cases, employers have specified a waiting period that employees must meet before they become eligible for benefits. Contest secret phrase: mistakes happen. The day that the waiting period ends is known as the eligibility date, or effective date, while the hire date is when the employee was hired. Most Insurer’s systems will automatically attach any applicable waiting period to the hire date entered in the system.
For example, if an employee was hired January 1st with a 3-month waiting period, their eligibility date would be April 1st. However, if the hire date (January 1st) was mistakenly entered as the eligibility date (April 1st), then the Insurer’s system may add the three month waiting period, resulting in an eligibility date of August 1st.
Not only does this cause confusion for the employee it may also affect their coverage if they end up as a late applicant. Late applicants may be subject to certain coverage restrictions, have to back-pay premiums, or have to submit medical evidence.
#7. Adding Ineligible Common-Law Spouses
Individuals must have been continuously cohabitating for at least one full year to be considered common-law. Employees whose living situations do not meet this criteria should not designate a spouse as common-law.
Be sure to remind employees enrolling about the requirements for common-law. Set a note in your calendar to remind you to follow up if and when the relationship does become common-law. Likewise, ensuring that your employee knows to inform you of any changes to their marital status (or other information) is a good way to help keep information accurate.
#8. Not Reviewing Employee Information Regularly
Employee information changes frequently and Plan Administrators need to ensure that they’re keeping information up to date. Employee information on file is what is used to pay claims or issue benefits payouts. If salaries aren’t updated or beneficiaries aren’t changed as requested, problems can arise.
Some of the most frequent changes to employee information include salary, beneficiaries, legal names, addresses, and dependents. Encourage employees to update their information whenever things change, while you take care of any employment information such as salary.
#9. Not Submitting Student Confirmation Forms
Dependent children are eligible for benefits through your plan up until their 21st birthday. Afterwards, they may continue to remain on the plan up until the age of 25, provided they are enrolled full-time in a post-secondary institution.
Prior to each new school year, employees will be required to submit a Student Confirmation Form. It’s generally a simple form indicating that their dependent child is enrolled full-time in a post-secondary institution. If confirmation of enrollment is not received, the dependent child may be removed from the plan.
Plan Administrators will be informed when a Student Confirmation Form is necessary. Ensure you remind the employee(s) to complete it in order to have their child remain on the plan.
#10. Not Using the Most Up to Date Form
Insurers occasionally update their forms with important changes and conditions, improvements and quality of life changes, or new fields. It’s important to double-check you’re using the most up to date forms to ensure all information is captured and reflects accurate information.
So if you’re the type to save forms to your desktop, consider redownloading the forms every once in a while. Better yet, always grab the latest forms from your Insurer. In our case, Plan Administrators can download the most recent versions of forms directly from your online access.