PROTECTING YOUR BENEFIT PLAN

A condition of employment

We have seen it all. Businesses try to manage their benefit plan how they want. Unfortunately there are rules. If businesses don’t follow the rules, they add liability. At Naviguide, we only work with clients who will make their benefit plan 100% mandatory enrolment for eligible employees. Employees (EEs) who have benefits from a spouse need to be listed on the plan. They can waive or coordinate their health and / or dental as per standard insurance rules.

Mandatory enrollment is rarely enforced by brokers. These brokers have not seen the lawsuits and the risk this practice brings to everyone involved. Mandatory enrollment has many benefits.

1. It helps with avoiding a late applicant situation. If an enrollment comes in late, the insurer assumes the employee is applying due to a recent change in health.
2. If the employee who declined coverage changes their mind and wants on the plan, they must complete an evidence of insurability questionnaire. This includes all members of their family. The insurer can refuse to cover them and some coverages may reduced if offered.
3. The issue I think most important is mandatory enrollment reduces your liability. If an employee is allowed to waive full benefits and then gets ill or injured and then wants on the plan, as stated above, they may not be accepted by the insurer. Since you allowed it, even if the insurer provided you with a waiver document, you may still get a letter from a lawyer. This often results in legal fees and a lot of stress. Often waiver letters do not hold up in court. These cases usually settle which means the employer loses. The risk to you is in the $millions. The largest case I have personally seen was a large Calgary based employer. They settled at $2.6 million. They had a very clear waiver letter and that failed them.
   1. 1. Yes, you can sue your broker or insurer for bad advice. You may win. You will end up with years of legal costs and stress and time away from growing and running your company.
4. If only employees who claim more than they pay are on the plan, the premiums will continue to go up at such a rate the plan will eventually fail. (This is called Anti-Selection)
5. With non-mandatory plans, Insurers still have a minimum limit of participation. On average, the range is 75 – 85% participation. If a company has 28 EE’s they can allow 7 to opt-out. How do you tell the 8th EE he has to be on the plan when the other 7 don’t?

At Naviguide, to alleviate the above issues, we recommend enrollment in benefits be deemed a condition of employment, written into your benefit policy and all employee contracts.

We look forward to connecting. Please let us know if you have any questions.