If you’re responsible for overseeing the operation of your company’s employee benefits plan, you’re probably familiar with the administrative guidelines established by your insurance provider. Waiting period for new hires and the reporting of major life changes to employees and their families are among a variety of plan specific topics you’ll find embedded in your policy’s contract wording.
The truth is some activities are easier to commit to memory because of the frequency in which they’re applied or simply because they explicitly form the terms of your coverage.
This blog explores a few benefits-related policies and procedures that you won’t typically find in your contract or employee booklet. The circumstances in which they need to be applied may surface less frequently in your day-to-day than some of the topics mentioned above, but that doesn’t diminish their importance as they relate to your role as a benefits plan administrator.
Terminating coverage during long-term absences
Speaking from experience, there’s some uncertainty surrounding what to do with an employee’s benefits when they’re in the midst of an extended non-protected leave of absence such as one related to illness or injury. Protected leaves, such as maternity or parental leave, generally require the continuation of benefits coverage. You can familiarize yourself with protected leaves of absence by exploring the provincial employment standards that apply to you online. In B.C., they can be found here.
Employers are often unsure about what course of action they should take when dealing with the employee benefits of an employee who is on an extended absence related to injury or illness. Questions regarding whether to keep an employee enrolled or terminate their coverage are common.
Under ideal circumstances, an employee experiencing a disability-related absence would take advantage of the support provided by their benefits plan and eventually return to being a productive member in their workplace. But that’s not always possible. Some absences may not have a realistic return to work date and the employment contract may be considered “frustrated”, which means the contract, due to unforeseen events and with neither party at fault, cannot be fulfilled.
To prepare for this specific set of circumstances, your organization should develop written policies to address how long you’re expected to continue offering benefits to individuals on indefinite disability leave. Of course, the circumstances of each case are different and will require legal consultation but it is possible to define policy which describes the course of action when an employee is on claim whether recovery occurs or not.
In cases where an indefinite absence represents uncharted territory, employers may initially take an open-ended approach and put off making any decisions. The issue with this course of action is that it can form a precedent that can serve to limit future actions.
Terminating coverage of an employee on indefinite leave comes with a variety of moral, financial, and legal implications including human rights legislation. When drafting policy, it is best to consult with experts.
Here are a couple extra pieces of wisdom to keep in mind: An employee’s long-term disability benefits (if on claim) will continue to be paid while the employee remains disabled even when benefits are terminated. Also, most LTD and Group Life Insurance plans include waiver of premium provisions that put LTD and life insurance premiums on hold while a claimant is actively receiving disability benefits.
Consequences of benefits fraud
You have a benefits plan in place to keep your employees healthy and provide financial security for them when the unexpected occurs. But benefits fraud might be raising your insurance premiums.
We discussed three different types of benefits fraud last year in Understanding and Preventing Employee Benefits Fraud. They include:
- Benefits Abuse
- Entitlement and Justification
- Large Scale Fraud
Most Canadians underestimate the consequences of health and dental benefits fraud. Here, education is the key to helping your employees to understand the nature and consequences. It is estimated that hundreds of millions of healthcare dollars are lost to fraud. This means higher costs for everyone, including your organization.
Mitigate fraud in your organization by helping employees understand their plan and how to manage it properly. Make sure they verify that the claims that they’re making are correct. It’s also best practice to have them acknowledge that they understand that benefits fraud is a crime that carries consequences. Make sure you update your codes of conduct and employee contracts to include the ramifications of benefits fraud.
Informing employees of conversion privileges
The ability to conserve and/or transfer certain coverages upon termination of employment offers peace of mind to employees, offering them access to an element of financial security regardless of their employment status. These options tend to be particularly attractive for:
- Individuals collecting long-term disability
In most cases, your group benefits provider will provide an explanation of available conversion options in the plan’s employee booklet. With that said, most employees probably won’t invest the time needed to become an expert in all elements of their program.
You can help by informing them of these privileges at important milestones throughout their journey as an employee. Have a discussion with your advisor about what conversion options exist within your plan and what coverages can be sourced through other service providers. When it’s time for an employee’s coverage to end (retirement or otherwise), have a conversion checklist prepared with important contact information.
Most conversion and/or transfer options are limited time offers that need to be exercised within a short period of time after their benefits coverage ends. The end of an employee/employer relationship can be a challenging time for some – especially when it comes to individuals or families with ongoing medical expenses. Providing easy to understand access to these specific resources can simplify matters during their transition and remove uncertainty relating to their coverage. In addition, a well-defined process will protect your firm from potential liabilities associated with failing to inform an employee of their conversion privileges.
Giving thought to these specific cases and putting a plan in place will serve to better inform all parties of the important roles employers and employees play in maintaining the ongoing sustainability of their benefits plan. The development of sound, written benefits policies will also serve to enhance the reputation of your firm and help protect it from unnecessary liabilities and costs.