Employee benefits administration is complex—one oversight can have a major impact on your bottom line. This article outlines some of the common problem areas and will help you avoid potentially costly mistakes.
As an employer, what should I be aware of?
Non-Evidence Maximum (NEM):
Life and disability benefits are capped at a non-evidence maximum (N.E.M), which is essentially how much coverage each employee is guaranteed without having to fill out a medical questionnaire. If someone’s earnings allow for an increase above the NEM, they’ll receive a letter guiding them on the process to apply for increased coverage.
It is important that you keep a record of your employee’s decision should they decide not to proceed with an increase. It is also good practice to remind employees, at least annually, to apply for any eligible increase.
31 Day Rules:
Personal information needs to be kept up-to-date with your carrier. If an employee has undergone a recent life change (marriage, entered into a common-law relationship, had a newborn baby) they must apply to enrol the new dependents within 31 days of the event. Otherwise, they will be considered a late applicant, requiring a medical application which may result in limitations on coverage or have the coverage be declined.
Make sure to also keep your employee’s salary up-to-date. Most life, AD&D, and disability coverages are based upon individual earnings. If an employee’s salary is not up to date, the employer may be liable to cover any shortfall in their coverages at the time of a claim.
Out of Country Max:
Your company’s benefits package likely includes emergency travel coverage for example, sixty days of continuous out of country travel. Upon returning to Canada for a 24-hours, the sixty day period resets back to day one. Travel coverage is specific to emergency services, including any consultations, treatment, or medical procedures required as the result of said emergency. Advise your employees that when they are travelling to always do so with both their provincial medical card and insurance carrier benefits card.
If an employee is in need of emergency services while out of the country, they should contact the travel number located on the digital benefits card and the insurance carrier will begin the claim process on the employee’s behalf. Furthermore, the insurance provider can provide recommendations of a hospital or healthcare services nearest to the member and assist with overcoming language barriers to ensure they receive proper treatment. Prior to travelling, note that pre-existing conditions may be limited by the 90-day stability clause.
Waiving Coverage vs Opting Out
Most benefits plans require mandatory participation for all eligible employees. Those who have existing coverage under a spouse’s plan have the option to waive health and/or dental participation. The 31 day rule applies for re-enrolment should this alternative coverage be lost or terminated.
It is crucial that plan administrators do not allow employees to opt out of all benefits when health and dental coverage is available through a spouse's plan. Employees with alternative health and dental coverage should still be enrolled for life and disability benefits because failing to do so limits the employee's options should their other coverage be lost in the future, which may put the employer at financial risk for any future life or disability claims.
Continuation of Benefits on Termination, Mat Leave, etc.
Employees on any protected leave such as maternity and parental leave must be allowed to continue benefits in situations where the benefit premiums or contributions are 100% employer paid. If there is a cost sharing arrangement, it is the employee’s decision whether they remain on the benefits plan and pay their portion of the monthly premiums. We recommend that employees with cost sharing arrangements retain benefits while on maternity leave as the chance of disability is increased while child bearing. If members choose to opt out of benefits while on leave it is all or nothing, they cannot pick and choose certain benefits.
When an employee is terminated from the benefits plan for any reason, they have the ability to convert coverage to a personal plan without going through a medical application. However, they must apply soon after their termination, typically, 30 days for Life insurance and 90 days for Health and Dental. This can be extremely valuable to an individual or any dependents who have pre-existing health conditions.
Group insurance plans allow for dependent children’s participation up to age 25 if they are registered as a full-time student. Additional steps may be needed for children studying abroad. Disabled dependents requiring care taking will likely be covered regardless of age.
Premium Cost Sharing Rules
Group insurance contracts require employers to contribute at least 50% of the total premiums. If the cost of the plan is to be split between the employer and the employee, the split must be the same for all employees of the same benefit class. Otherwise, the employer is open to claims of discrimination. When cost sharing arrangements are in place, it is generally beneficial for the employee to pay premiums associated with the taxable benefits. Your advisor can assist you in determining the tax status of the various benefits which can vary by province.
It’s important that you are aware of the different rules and regulations that are involved in the employee benefits process. As an employer or manager you don’t want a lack of technical understanding to hurt your company or your employees. However, there is a lot of technical information with employee benefits that is difficult to understand and sort through. That’s why it’s important to have regular communication with your employee benefits advisor to minimize liabilities and help your plan run smoothly.