As a Plan Administrator, it is important to understand the difference between a Mandatory and Non-Mandatory plan and how it affects your group benefits plan.
A mandatory plan requires 100% participation from members and their eligible dependents; no member or eligible dependent is able to waive coverage.
- If your plan has mandatory participation, GroupHEALTH has more flexibility when it comes to processing enrollments or changes that were reported late, or fixing Plan Administrator errors or oversights.
- If an application is not received within the timeline set out by the insurer (most insurers use 31 days), coverage can usually still be enacted within 12 months provided back premiums are paid.
- Having this flexibility within the first 12 months avoids the need to have late enrollments submit Evidence of Insurability (which means coverage is subject to approval from the insurer).
A non-mandatory plan must have a certain level of participation in order to remain in effect. If you do not meet these contractual minimums your plan will be terminated.
- With non-mandatory plans, if an administrative error is made or an enrollment/change is submitted outside the timeline set out by the insurer (most insurers use 31 days), the insurer will not correct the error or accept the change without Evidence of Insurability
- The insurer has the right to refuse coverage upon reviewing Evidence of Insurability
Potential Liability with a Non-Mandatory Plan
If you allow a member to refuse coverage and that member later incurs large expenses or losses that would have been covered by the benefits plan, they may try to hold you, the employer, liable.
If you encounter a member who wants to refuse coverage, the best response is that the plan is a condition of employment (mandatory).
If you choose to make your plan non-mandatory, you have a legal obligation to inform members of the basic details of the benefits coverage available to them, the timelines for applying and the consequences of applying late.
We suggest that you follow a process to limit potential liability by requiring members to read and sign off on a form outlining the consequences of refusing coverage.
To proceed with a non-mandatory plan:
- Plan Sponsor must complete and sign “Non-Mandatory Benefit Plan Sign-Off” form
- Members must complete a “Complete Waiver of Benefit Coverage” form
- Forward completed forms to GroupHEALTH Benefit Solutions
- Retain a copy of the form for your records