The Importance of Excellent Employee Benefit Administration

Apr 29, 2013

There are many considerations with benefit plans. At TRG we feel that there are 4 critical areas that need to be considered and well managed to ensure excellent benefits plan management:

• Expenses…minimize these
• Claims…control them
• Communication… enhance it
• Administration…ensure competency and consistency

Administration is a key part of best practices plan management. Without excellent administration an employer can be at substantial risk of liability. Liability can arise from a number of areas, a few which are as follows:

• Enrolment – ensuring all eligible employees are enrolled and conversely ensuring those not eligible are not on the plan

• Non-evidence maximums (NEMs) – we see this time and time again…employees that are vastly underinsured because their salaries exceed the NEMs for life insurance and long-term disability. Insurance companies will provide a maximum amount of coverage for these two benefits without employees having to provide medical information. For coverage above this limit often the first and only step is for the employee to complete a health form which will allows them, after proving satisfactory health, additional coverage.

• Proper communication of the timing and benefit options available for terminating employees – conversion of life insurance and other benefits is provided within a specific time period.

• What to provide in the way of continuation of benefits coverage for employees that become disabled.

Proper administration can save both time and money. Time in not having to deal with delicate or legal issues that should have been addressed beforehand and money in not have to pay for legal representation if suit is brought against the employer. These two items are the additional costs of poor benefits plan management – ones that do not come directly from the actual plan itself.

It is suggested that annually a checklist be completed checking off all the important areas of administration with the focus to protect against all potential areas of liability and to ensure smooth day to day plan administration.

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