Health Spending Accounts For Canadians Explained
A Health Spending Account (HSA), also known as a Health Care Spending Account (HCSA) or Health...
By Cindy Danielson
July 28, 2022
Group Insurance has lots of rules and things to remember. The employer's Plan Administrator is an employee's best resource. An important contractual rule is that employees need to enroll into their group benefits plan within 31 days of eligibility to avoid becoming a Late Applicant. This blog explains what Late Applicant status is, including how and why you will want to avoid it.
Before we jump into what a Late Applicant is, let's explain why it exists in the first place!
Insurance companies need to ensure that employees (and their dependents) aren't just enrolling into their plan when they need coverage. This requires that insurance premiums cover all employees (no matter their health situation) to balance the overall cost of the plan. Employees that are lower claimants help balance the overall cost of higher claiming employees. While this may seem unfair to the healthy people, a change in health can happen at any time - even if you are 'healthy as a horse'. Insurance provides protection for the future you can't predict.
If employees only enrolled when they want or need coverage, then claims will skyrocket and so will premium costs which will hit our wallets and risk the long-term sustainability of the plan for employers and employees. It's predicted that in 2022, Employer-provided benefits will increase 7% so spreading costs across all employees and implementing cost saving strategies is critical to maintaining the benefits we value and enjoy.
Employees (and dependents) that enroll into their group benefits plan after 31 days from their eligibility date is classified as a Late Applicant and will be required to provide Evidence if Insurability. 😱
For the lucky employees that do enroll into their plan within the first 31 days of their eligibility date, they will NOT be required to provide Evidence if Insurability (see more about this below). 😊
The Eligibility Date, also known as the Benefits Effective Date, is when benefits start and employees can submit claims through the plan and be reimbursed for incurred expenses.
Here are some scenarios to better explain this important date:
This is the part you want to avoid as it's a risk and a hassle...
Late applicants will be required to provide Evidence of Insurability (requirements vary by insurer but may include medical questionnaires, blood tests, Physician reports, etc.) before they can enroll into the plan (the hassle) and there is no guarantee the application will be approved (the risk).
Coverage will not take effect until all required medical information is submitted to the insurer, reviewed, and written approval is received from the underwriters with an effective date of coverage determined by the insurer (not the original eligibility date). These approvals may be subject to limitations of coverage or a denial of certain coverage. If coverage is declined, the employee will receive a written notice/confidential letter with a detailed reason for the decline.
Depending on the circumstance, an employer may be able to back-pay the premiums they would have otherwise paid if the employee enrolled on time. If back-payment is permitted by the Insurer, then Late Applicant status does not apply and the employee will not need to provide Evidence of Insurability. Employers should check with their Benefits Advisor and Insurer to understand the rules and restrictions with doing this.
Even if you intend to waive health and dental benefits (because you don't think you need them or you have coverage through your spouse's plan - see Coordination of Benefits), you still need to enroll within the first 31 days of eligibility and select 'Waive' in the appropriate sections of the enrollment form. If you don't enroll/waive coverage, then the Late Applicant status still applies.
Important Note: Educate yourself on all the pro's, con's and considerations of waiving or 'opting-out' of health and dental benefits before making a decision you may regret. Read our blog: What Does 'Opting-Out' of Employee Benefits Mean to You?
It is the responsibility of the company's Plan Administrator to enroll employees (and their dependents) on time to avoid late applicant status. However, it is also the responsibility of the employee to notify the Plan Administrator of any life changes (marriage, birth, adoption, etc.) Everyone needs to do their part to minimize the risk.
Avoid the risk (and hassle) of becoming a late applicant and simply enroll into the group insurance plan within 31 days of eligibility - you'll be happy you did!
This insurance stuff can be confusing so when in doubt, speak with your company's Plan Administrator or contact your insurance company. If your group insurance plan is with Simply Benefits, speak with our Support Team and they can answer your questions.
Disclaimer: Please note that the information provided, while authoritative, is not guaranteed for accuracy and legality. If you are a Simply Benefits plan member, you can look up more information on your specific plan coverage under the “Plan Coverage” section on your account or Benefits Booklet, or speak to your Plan Administrator for more information.
Simply Benefits is a Third Party Payor (TPP) that provides Employee Health Benefits 100% digitally through our Canadian Advisor partners. Our all-in-one digital solution provides three portals that enable Benefits Advisors to digitally manage all client plans online, Employers to efficiently administer employee coverage, and Employees to view, update and use their benefits 24/7 via desktop or smartphone app.
We help ENGAGE Employees Anytime, Anywhere, SIMPLIFY the Benefits Experience, and EVOLVE an Advisors’ Benefits Business.
Connect with us at simplybenefits.ca or on LinkedIn, Twitter, Facebook, Instagram, and YouTube.
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