The plan sponsor of an employee benefits plan is responsible for ensuring that all eligible employees are enrolled in the benefits plan on time. Employers or plan administrators who are not diligent in their enrolment procedures could jeopardize an employee’s coverage.
Most employee benefit plans require all new, full-time staff to serve a waiting period before they are eligible for their employee benefits. The waiting period is commonly three months but can also be six months, twelve months or an alternative time frame. Depending on the employee benefits policy, an employee is eligible for coverage on the first day or first of the month following their waiting period. The insurer must receive a completed employee application within thirty-one days of the eligibility date or the employee will be considered a late entrant.
Late entrants are required to complete a medical questionnaire for themselves and their dependents that require coverage. Their coverage is subject to approval by the insurance company before coverage can be granted. Contingent on the findings, the employee and/or their dependents could be declined coverage, or certain benefits. Even if the late entrant and their dependent are approved, dental benefits for late entrants are typically limited in the first twelve months of coverage.
Business owners have many responsibilities, and it’s easy to lose track of time when it comes to benefits administration and other tasks, especially after the benefits have been in force for a while.
We always suggest to our clients that they complete and submit employee enrolment applications when new employees are hired. Should the employee not work out before their waiting period is up, the employer can simply remove them from the plan and will not be charged. If everything goes as planned, the employee’s coverage will commence at the end of their waiting period and the employer won’t have to remember to enrol them on time later.
A bigger issue is that a late entrant could be declined coverage at the fault of the individual responsible for enrolling them which opens the employer for liability. This makes employee enrolment of the utmost importance. Ensuring that employers have a system in place for seamless enrollment will help you avoid future issues and headaches.
The late entrant rule also applies to employees who are already insured. Changes in marital status, addition of dependents, child birth, common-law status, or a spouse losing duplicate coverage must be reported to the insurer within in 60 days of the change. If an employee misses this deadline, any request for these changes will need to be medically reviewed and approved by the insurance company in the same manner as mention previously.
We provide our clients with a checklist to ensure they are aware of the complicated rules involved with an employee benefits plan to help simplify everything. Employers should always bring these rules to the attention of their employees in writing before an issue arises.