Are All Benefits Mandatory? – Where There’s Smoke, There’s Fire!

Mar 17, 2015

A clear corporate policy is the hallmark of all exceptional companies and this extends to the group benefits they offer to their employees. But what’s that got to do with smoke? Hold your fire extinguishers – we’ll get to that!

Employers may think it’s a great idea to offer benefits to employees in order to properly protect them from life’s potential risks (death or disability, high health claims, major dental work). A properly designed plan significantly reduces the exposure of employees to these mishaps but naturally, not all employees (and employers) want to pay the premium costs associated with these plans.

In fact, human nature may suggest that the ideal time to buy a fire insurance policy is when you ‘smell the smoke’! Unfortunately, that’s not the way it works and insurers would truly be out of business if they allowed this to happen. Therefore, proper coverage must be in place and paid for ahead of time, in order to adequately safeguard potential problems.

But what would happen if you let your employees opt out of a group benefits plan? The insurance industry is aware that some employees do have coverage elsewhere (spousal, retiree, or multiple-employer arranged plans) and may not need the full coverage offered in a benefit package. For example, some employees have spousal coverage for extended health and dental benefits. They now have the choice to opt out or take dual coverage (coordination of benefits) of the two benefits. After all, why pay premiums for coverage you already have?

However, life and disability coverage are not normally offered through alternative plans. So what would happen if an employee opted out of these benefits? One long term disability claim can be well over $1,000,000 and who can afford that? Well, if there’s no smoke, you might be fine. But if you get just a whiff, it is likely too late for coverage and this creates a potentially large problem for the employee and probably a liability quagmire for the employer.

At TRG Group Benefits, our consultants work with the employer to reduce liability and provide proper protection for their employees. Talk to us before you smell the smoke!

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