Group insurance plan administrators play a crucial role in the effectiveness of employee benefits schemes, bearing significant responsibilities and potential liabilities. It’s vital to have a deep understanding of this role to excel as a plan administrator.

This guide covers everything required to become an exemplary plan administrator.

Understanding the Role of a Plan Administrator

A plan administrator, appointed by the employer, oversees the employee benefit plans, handling a broad spectrum of duties and serving as the primary contact for employees seeking information or assistance.

Working in tandem with the insurer, plan administrators ensure the smooth operation of the plan, managing daily administrative tasks related to employees and their dependents. This includes updating employee records, enrolling or removing employees from the plan, and acting as the key liaison between the insurer and the employer, providing critical administrative support.

Navigating Plan Administrator Liabilities

Although not legal advisors, it’s important to acknowledge the liabilities associated with being a plan administrator, for both the individual and the organization. Implementing a clear and robust system to manage these responsibilities is crucial to mitigate potential risks. Examples of oversight include failing to enroll new employees timely, leading to a loss of coverage, or not informing employees about available additional coverage.

Additionally, Plan Administrator Liability Coverage (PALC) can be added to a business’s general insurance to protect against common administrative errors, often at minimal cost.

Core Duties and Responsibilities

1. Updating Employee Information

Keeping employee information up-to-date is one of the most important day-to-day responsibilities of a Plan Administrator. Commonly updated information includes:

  • Beneficiary changes
  • Marital status
  • Name, address change
  • Adding or removing dependents
    …and more!

Insurers will rely on this information for a variety of purposes, with one of the most important being benefits payout. Some benefits payments are based on salary, so if salary is not kept up-to-date, benefits paid may be less than what they should be.

2. Adding and Removing Employees from the Plan

Processing employee enrollments and terminations is an ongoing process, and it is the responsibility of the Plan Administrator to keep the list of employees on the plan up to date.

Adding employees — when employees reach their eligibility date, they should complete their enrollment within 31 days to avoid becoming a late applicant. Late applicants may be required to submit medical evidence or back-pay premiums, or have their coverage affected or denied entirely.

Removing employees — terminated employees must be promptly removed from the plan to avoid issues with continued claims and eligibility. Otherwise, your Insurer won’t know to stop covering them until they’re removed from the plan!

3. Offering Coverage Options

Whenever an employee loses their group insurance coverage, Plan Administrators are required to advise them of their conversion options to continue certain coverages on an individual basis.

4. Providing Support and Resources

Plan Administrators are often an employee’s go-to contact for questions about their benefits plan. As such, providing support and resources to employees is crucial.

5. Handling Billing and Payments:

Plan Administrators are generally the go-to person handling the payments due to the Insurer. Administrators handle the processing of premium payments, which may involve various payment methods such as funds transfer, invoice, or online payments. They ensure that payments are accurately recorded and allocated to the appropriate accounts.

6. Your Group Insurance Renewal

Lastly, Plan Administrators will be involved in the annual group insurance renewal, if applicable (not all plans have an annual renewal, though most do). You’ll work closely with your Advisor and the Insurer during this time, while the Insurer re-evaluates your rates based on factors such as demographics and claims experience.

Your group insurance Advisor will contact you regarding your renewal. However, there are certain steps you should take ahead of time to prepare yourself and your organization for a renewal. For a detailed understanding of these responsibilities and to access resources, refer to the comprehensive guides and support materials provided by Wellbytes.