It is inevitable that in some point in time, schools, cities and counties will have to switch life/disability insurance carriers in order to get better rates, a better plan design or improved customer service. To ensure that no employee falls through the cracks during the transition, here are two important considerations to keep in mind.
Matching Benefits – Is it an exact match to your old plan, to the way you administer benefits and to your contracts?
Ask your agent to carefully review your policy/quote or do it yourself. Determine if there are any differences between the old vs. new plan, no matter how subtle. Is it truly an exact match? A carrier’s standard definition of a benefit may be slightly different than your current policy. Those slight changes can mean a claim will get paid or not get paid. It’s like calling a house blue – is it baby blue or sky blue? Similar definitions are NOT the same definition. Review the entire policy for discrepancies but pay particular close attention to pre-existing condition exclusions, disability limitations, leave of absence language and life reduction schedules.
Reading the fine print is your best way to ensure that your new policy exactly matches the required benefits of your prior plan, the way you administer benefits and your employment contracts/agreements. Any deviation could mean the difference between your employee being covered or denied. Avoid the liability by insuring that your insurance contracts are compliant with your union and employment contracts.
Identify Employees Who Are Not Actively at Work
When transitioning to a new carrier, make sure that you identify all of your employees who are not actively at work and have a complete list handy. Actively at work means an employee that is able to perform all their regular job duties and meet eligibility requirements. Employees that are not actively at work may include those who are out on disability insurance benefit, out on leave/sabbatical or waiver of premium. Employers should check with the in-force carrier to ensure that these employees are covered and will continue to be covered under this carrier.
Some insurance carriers require employers to complete an actively at work statement, which lists their non-active employees. The statement includes information such as employee’s name, last day worked, return to work expected date and reason for absence. Employers find this statement useful to keep track of which carrier will cover these employees after the transition and to ensure that no one falls through the cracks.
If an employee is omitted on the statement during the transition phase, it could lead to a potential sticky situation where both carriers decline to cover an employee.
For more information on ancillary benefits or changing insurance carriers, contact your NIS Representative.