Does your company have the liability protection you need for your Group Benefit?

Below you’ll find crucial best practices, your guide to good governance.

Coverage Options:  New hires will have four coverage options when they are enrolled in the plan providing it is a non-mandatory plan.
·       Single coverage is for members without dependents.
·       Family coverage is for members with a spouse or children or both.
·       Waiver coverage is only applicable for members who have a spouse or common-law partner and are covered for health and dental insurance under their spouse’s plan. When a member selects this option, they will select family coverage and elect to waive coverage for health or dental or both. The employee will still be an active group member because they will maintain coverage for the pooled benefits which include life insurance, dependent life insurance, accidental death and dismemberment, and long-term disability. By maintaining the pooled benefits, the member and their dependents reserve the right to add health and dental coverage later without completing medical evidence.
·       Refusal: If a member refuses all benefits including the pooled benefits, the member and his or her dependents will not be eligible to join the plan later without completing medical evidence. This means the insurer reserves the right to refuse coverage if there are pre-existing conditions. If a member refuses benefits, it is imperative that you have them and their spouse complete a refusal form. As a best practice, you should not allow employees to refuse benefits because there is legal precedent that the organization can be held liable.

Late Applicants: Once an employee has completed your company’s probationary period, if applicable, they enter the eligibility period, which is typically 30 days. The employee must opt into the group benefits plan during this time to join seamlessly. If they wait until after the eligibility period to opt into the plan, they are considered a late applicant. It is best practice to add a new employee immediately upon hire to avoid the employee becoming a late applicant. Your plan sponsor site will automatically register the probationary period.
Late applicants may face the following implications:

  • Denial of coverage.
  • Proof of insurability requirements and premium adjustments.
  • Reduced insurance maximums (for example, a significant reduction in dental maximums during the first 12 months).

The eligibility period is applicable to employees, along with their family members. Those with family coverage must add new family members (including marriage, cohabitation, and birth of a new child) within 30 days.  Employers are responsible for informing their staff of the eligibility period to avoid being liable for any of the above implications.
Salary Updates: It is imperative to keep salary information updated with the insurance provider. If a member were to make a claim for long term disability or life insurance and their salary did not reflect their current income, they could receive a reduced benefit amount. If the fault lies with your company, you could be liable for the difference in coverage the employee receives versus what they should receive.  It is best practice to update salaries or hourly rates at the time the income change occurs.
Non-evidence maximums: The non-evidence maximum is the highest amount of life insurance, accidental death, and long-term disability coverage an insurance carrier will provide an employee without asking them to provide medical evidence.  If an employee’s income justifies a coverage amount that exceeds the non-evidence maximum, the member will need to complete a health questionnaire and submit this to the insurance provider for approval. Excess coverage could be declined due to medical history.  

  •  It is the employer’s responsibility to inform the employee if they are eligible for more coverage. If you do not have record of communicating this to the employee, the organization could be held liable for the difference between the benefit the employee receives versus what their income warrants.
  • We recommend informing employees in writing annually at renewal time or when a salary increase occurs.
  • The non-evidence maximum can be found in your benefit booklet and your renewal documents. The value can change on a year over year basis based on the size of the group.

Termination and extension of benefits:  When employment is terminated regardless of why or who initiated the termination, employers have an obligation to notify the terminated employee of the option to convert their life insurance and health and dental benefits to a personal plan. If you did not inform an employee of their conversion options and they died without life insurance coverage, the organization could be liable for the life insurance coverage that was in force under the benefits plan. We recommend informing employees in writing to provide proof of communication for the organization. 
Payroll deductions, taxable and non-taxable benefits: Chart included in PDF. Please request. 
Answering Questions: Leave most employee questions for the C2 Group Benefits Team. If a representative at your company is providing information to employees that is incorrect, they could make the company liable for the misinformation.

If you would like to learn more or have any questions, feel free to contact me at As a Group Benefits Advisor I’m here to ensure your benefits work for you.