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Additional Risks of Providing Employee Benefits for Those Not Actively at Work Additional Risks of Providing Employee Benefits for Those Not Actively at Work

Additional Risks of Providing Employee Benefits for Those Not Actively at Work

Many employers believe they are helping out their employees by keeping them on the employer’s benefits plans after the employee is no longer working. While this practice is often appreciated by the employee, it may also be placing the employer and employee at considerable additional financial risk.

Most fully insured group benefits (medical, dental, vision and life and disability) have an actively at work clause for continued eligibility. Generally, an employee who is not working can remain on the company’s benefit plan for up to three months to coincide with the Family Medical Leave Act (FMLA). However, the time period can vary depending on the carriers.

For self-insured plans, it is even more critical to confirm the time period when benefits coverage will lapse if an employee is not actively at work. In some cases, if the employee is on a self-insured plan beyond the time period listed in the plan documents, then the stop-loss may not cover any claims. It is becoming more common for stop-loss companies to request payroll records and confirm if an employee is actively at work before paying large claims. Employers and employees need to know that stop-loss companies can deny claims if the employee was not actively at work.
Action Items
  1. Employers should establish a clear policy on how long an employee can remain on the company’s benefits plans if they are not actively at work. 
  2. Include an actively at work policy in the Employee Handbook.
  3. Review plan documents to confirm how long an employee can remain on each type of benefit plan. After this time period, COBRA should be offered for medical, dental and vision and a conversion form for life insurance. 
  4. Provide detailed communications to employees taking a leave of absence or disability.

For more information, please contact Gary Blachman or the Employee Benefits attorney with whom you most frequently work.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.
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