Benefits Basics for Employers: Understanding Plan Administration
Sponsoring an employee benefits plan for your company is an important step towards attracting and retaining employees. You’ve decided who’s going to provide your benefits, and what your benefits plan consists of, and important logistical questions like when your plan will start.
Now you have to prepare to administer the plan. “Administer the plan” basically means ensuring that employees are set up properly on the plan so that if they need to use their coverage they can.
Let’s talk about the basics of plan administration.
The Key Players in an Employee Benefits Plan
An employee benefits plan has two key players (other than the employees themselves!). Both are tasked with working together to maintain and deliver the plan to employees.
Employee Health Benefits Provider
The group benefits provider is the organization who provides your employee benefits plan. This may be an insurance company directly, or it may be an organization like GroupHEALTH who works with insurers and other suppliers to provide the plan to companies like yours.
Plan Administrator at Your Company
You need to appoint a “Plan Administrator”. The Plan Administrator at your company is the person or team within your own company that looks after the day to day upkeep of your employee benefits plan. They bridge the gap between the Employee Benefits Provider and the Plan Members.
What A Plan Administrator Does
Your company’s Plan Administrator has a number of responsibilities.
Maintain Employee Records
Your Plan Administrator’s most important responsibility is to maintain accurate employee records. This means ensuring there is a record created for each person on the employee benefits plan. The record includes important information like birthdates, addresses, spouses and dependents. When there are changes to employee records, the Plan Administrator must ensure they are completed fully and correctly by the Plan Member. Then they must be reported to the Group Benefits Provider. Employee records are typically maintained in an electronic database. The database is accessed by the Group Benefits Provider and the Plan Administrator.
Report Enrolments and Terminations
The Plan Administrator is responsible for updating the electronic database when an employee becomes eligible for the employee benefit plan (eg. a new employee is hired). They’re also responsible for updating the records to reflect that a person is no longer eligible for the employee benefit plan. For most insurers, this information must be reported within 31 days.
Identify and Manage the Waiver of Premium
In certain circumstances, a Plan Member can apply for a “waiver of premium” whereby the insured will continue to have coverage, but your company or employee will not have to pay the premiums. An example could be when a Plan Member becomes completely disabled. The Plan Administrator must identify those that are eligible to apply for Waiver of Premium. Why pay premiums if you don’t have to? It’s also important to report when someone is no longer eligible. Insurance companies have strict deadlines whereby they must be notified in order to be granted “Waiver of Premium.”
Distribute Benefits Handbooks
The Plan Administrator is also responsible for distributing benefits handbooks to Plan Members. This means either distributing a hard copy or making the handbooks available to Plan Members electronically.
Provide Claim Forms and Guidance
Your employees will need an in house “expert” to go to with questions about the Benefit Plan. Your Plan Administrator will fulfill this duty by providing information and guidance about the benefits plan. They’ll also provide claim forms or access to electronic claim forms.
Review and Pay Billing Statements
Your Plan Administrator will also be responsible for reviewing monthly billing statements. They will contact the Group Benefits Provider if there are any inaccuracies. They will also ensure that premium payments are being made.
As with any insurance, employee benefits require documentation in order to provide coverage. Employees must fully complete and sign enrolment cards (on paper or electronically) and this information must be stored by the Plan Administrator. It’s also important that other legal documents (eg. beneficiary designation) be securely stored so they are available in the case of a claim.
Importance of Fulfilling Responsibilities
The insurance industry as a whole requires careful documentation. It also operates with strict deadlines. Employee benefits plans and health insurance are no different: if the Plan Administrator doesn’t do their part, there can be significant consequences. This is especially true when it relates to employee records, reporting timelines and documentation.
Take a life insurance claim, for example. If the Plan Administrator does not have proper documentation there can be significant delays in payment. Or worse yet – the payment may end up going to the Plan Member’s estate, rather than their designated beneficiary.
Another example could be with new employee enrolment. If an eligible employee doesn’t promptly enrol, they may have to provide additional medical evidence or documentation before they can join the plan, or if they try to use their benefits at a healthcare provider, they may be denied, and they’ll be forced to pay out-of-pocket.
Keeping and maintaining clear, accurate records is important. This will ensure your company and your employees are getting the most out of your plan. GroupHEALTH recommends that Plan Administrators do an audit of their employee information twice a year. This will help to ensure records are accurate.
Plan Administration Doesn’t Have to Be Difficult
With the right system, the right training and the right support, Plan Administration doesn’t have to be difficult. GroupHEALTH has a user-friendly, online administration platform (WEBS online) that was developed to make the job of the Plan Administrator easy. It has prompts, alarms, triggers and reminders to help the Plan Administrator keep the most accurate records.
At GroupHEALTH, we know all about delivering the best group insurance plans for small businesses. We provide training and support to ensure your Plan Administrator has the help they need when they need it. You’ve got this!
Good Advice is Key
Plan Administration doesn’t have to be scary or difficult. Are you looking for a better Plan Administration experience? Review your options with one of our licensed advisors on the phone or in-person or contact us for a comparison quote.