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Before we take a look at what late applicants are and how to avoid them, it is easier to understand if you know why the concept exists in the first place.
For most benefit plans, insurance carriers abide by a 31-day rule that requires employees and their dependents enrol for group benefits no later than 31 days of becoming eligible for coverage.
If this is not the case and employees were given the option to join your benefits plan whenever it suited them, they would likely only join when they needed to submit a claim. Not only would this be a risk to the insurance company, but the cost of your group plan would skyrocket as the ratio of claims costs to premiums paid would become very out of balance.
So, what happens if an employee needs to be enrolled, add a dependent, or make a coverage change after the 31-day window closes? They become classified as a late applicant. This does not mean that the enrolment or the change is no longer possible, but it does mean at the least:
a) Evidence of Insurability (additional paperwork, doctor's visits or medical testing) may be required, and
b) The insurance company may deny the request for coverage.
If the carrier denies coverage, there is little recourse for the employee. They will not be insured with your group plan and will be excluded from this part of their compensation package. This could open up your organization to various liabilities, so being on top of your benefits administration should be high on your priority list.
In order to mitigate the risk of late applicants, consider taking these steps:
- Enrol all new employees at their hire date - this reduces the risk that you will forget their enrolment later on, and the carrier will apply the plan designated probation period
- Create (and stick to) a clearly defined process for adding new employees/dependents to your plan.
- Make enrolment in your group benefit plan a mandatory condition of employment
- Have employees sign a carefully worded waiver if they are eligible but decide to decline to enrol in your group plan
Remember those timelines! For employees, their eligibility window closes 31 days from the end of a waiting period and for dependents, it's 31 days from the life-change or event: 31 days from birth, marriage, cohabitation anniversary, etc.
If you think you have a late applicant case or if you have any questions about eligibility or timeframes, contact us and one of our benefits support specialists will be happy to help!