What are Employee Benefits Participation Requirements?

When an employer implements an employee benefits plan, they will need to confirm or deny the percentage of eligible employees who are required to be enrolled in the employee benefits plan.

Participation in the benefits plan is often mandatory and this is especially true for small companies. Most insurers require a large number of participants before they will offer an employee benefits plan that allows some of the employees to opt out.

Factors that affect group insurance eligibility and coverage

1. Total Waivers

When an employee wishes to and allowed to opt out of the employee benefits plan , they will be required to acknowledge this request. The Total Waiver form confirms the employee is aware of the benefits coverage that was available to them, and that they are choosing to opt out of that coverage. 

2. Late Applicants and Anti-Selection

Employees must be enrolled in the benefits plan within 30 days of the date they are offered the benefit plans from their employers. If they do not, the employee becomes a late applicant, which has certain implications. These include back-paying premiums, or the possibility that the employee must submit evidence of insurability prior to the coverage taking effect. In the latter case, an employee could be refused coverage altogether depending on their medical history. 

This is important to reference when communicating employee benefits participation requirements because employers and employees often confuse non-mandatory participation with anti-selection. Anti-selection is when an employee does not want employee benefits until they need to make a claim. When an employee in this position attempts to enroll in the benefits plan, the late applicant process helps mitigate the risk to the benefits plan that anti-selection creates. And this is another reason why Total Waivers are required.

3. Waiving Health and Dental Benefits

The difference between Total Waiver and waiving extended health and dental benefit is that the coverage is not based on benefits participation requirements set out in the group insurance contract but is changed on alternate coverage. By coordinating all benefits offered, employees can get more support when it comes to covering co-insurance and going beyond annual maximums.

4. Benefits Participation

Implementing benefits participation requirements means that a certain number of plan members are guaranteed to be paying premiums. This means the plan will be sustainable, and the insurance company will be able to cover the claims that are submitted. 

5. Possible Employer Liability

If an eligible employee was supposed to be enrolled and have coverage for specific situations or events, then they must have it. When a health damaging event occurs, the employer is liable to pay the benefit to the employee that the insurance company would have paid. This risk is also possible with late applicants.