What you need to know
At least once a week we get the following questions:
My employee is claiming disability / or I have laid off an employee, can I remove benefits?
First off, always ask us in those situations. Communication is key and the answer may change depending on the situation, the contract rules with your insurer and /or recent cases.
For layoffs and disabilities, the general idea is you should keep people on benefit and continue to cover the same percent of premiums as you would normally. You can opt to cover more. You should not try for less or to allow an employee to decline benefits at any time. Of course there are rules, time limitations, and exceptions. Typically;
- Layoffs can be up to 3 – 4 months and dependent on the rules in your insurance contract.
- Disabilities can be up to 2 years, to age 65 or to frustration of contract. Whichever comes first.
Always ask us at the time of the incident and keep us looped in.
When someone is disabled, send them their application for short-term or Ei disability coverage. Complete and submit your portions right away. Touch base with us for the most recent forms. Ensure they know to inform you if they are accepted or declined. (You cannot ask why and they do not need to tell you)
My advice in these situations; you should cover the whole premium. You do not want a situation where an employee tries to get removed from your benefit program due to reduced income levels.
In my role as an advisor I work in two capacities:
- As an advisor for our clients.
- As a paid per hour independent consultant for companies who are not our clients.
In the latter capacity, we have seen cases where an employee was removed or given the chance to opt out of coverage and was then disabled. In one case, the family went to the employer to start the claim as the employee could not speak for themself. When they found out the employee was permitted to opt out, they sued the employer. In the end they settled. The cost to the employer was $2.6mil. I have seen others.
Things to keep in mind:
- Courts often side with the employee who has been injured, even if you have great records, processes and clear documents.
- 95+% of cases settle. The employer loses.
- The risk to your company is in the $millions.
- Always check with an HR specialist or employment lawyer before offering or telling your employee anything.
- Even if you got a letter from a lawyer and do not go to trial, the stress, legal costs and time costs likely far exceed the amount of premium you may have saved.
I hope this information is helpful, even if it is not what you want to hear. Our goal is to protect your company. Better safe than sorry.
As always, please let us know if you have any questions.
Note: Even if you have rules & policies in place, legal actions may still be taken against you. These should help minimize that possibility and hopefully improve your outcome.
