AVOIDING LATE APPLICANTS ON YOUR GROUP INSURANCE PLAN
Posted at 10 months ago in blog by M Lederman
When an employee wants to join your company group insurance plan the insurer will require they do so within 31 days of becoming eligible. The reason being that if everyone was allowed to join when ever they chose, they would likely only join when they had a significant claim to process. This hurts the insurer as they will take in less premium money and pay out more in claims. It also hurts the company because the inflated claims versus premiums paid ratio will lead to higher premium rates in subsequent years.
When exactly an employee becomes eligible depends on the date they were hired and any applicable waiting period to enroll. Since this is decided at the company level, it is different for everyone.
So what happens when an employee enrolls after the 31 day grace period?
This employee has two options:
- They can pay the premiums back to the date that they were eligible to join. This way the net premium versus claims ratio will be the same as if they joined the plan on the correct day.
- If they don’t want to pay the additional premiums all at once, they can join the plan when they choose as long as they fill out the Late Applicant form and are approved to join based on the answers. This is at the discretion of the insurer.
The Late Applicant form is a list of questions that assess the current health of the applicant to see if they are likely joining just to submit a large claim. They will ask several questions about the applicants medical history and about any recent visits to the doctor.
If the applicant is approved they will be on a mandatory reduced dental benefit schedule for the next year. This is because it is difficult to assess whether the applicant will submit a large dental claim based on the results of a health questionnaire.
It is important to note that the same rule applies for an employee’s dependants. Should an employee get married or have a new child they will have to enroll within 31 days in order to avoid alte applicant status.
It is important to have procedures in place from a Human Resources perspective in your company, and to keep the lines of communication open with your benefits provider to keep them fully updated on changes to the employees’ situation.