Benefits advisors see it all too often: team members receiving full benefits, including health and dental, for years when they are on disability or other leaves of absence because plan sponsors didn’t realize they needed a separate policy on the continuation of benefits.
“Most think they have a policy that’s written into their benefits contract,” says Jared Cox, Partner, Practice Focus, Benefits and Pension, Cox Financial Group in Lethbridge, Alberta, a member firm of Benefits Alliance. “But it isn’t—they need to create their own policy.”
Without such a policy in place, plan sponsors run the risk of providing coverage that extends well beyond usual durations of leave. “What if you have a 25-year-old that’s on long-term disability (LTD) and you didn’t have a policy, and they’re still on the plan four years later,” says Cox. “It’s a very challenging process figuring out how to best address that, by supporting the team member but also limiting liability.”
As well, a continuation-of-benefits policy for health and dental benefits communicates your commitment to plan members’ health during maternity, parental or disability leaves. “It is a duty of care to offer continued benefits and all employers should have a policy,” says Cox.
Plan sponsors can work with their benefits advisor to draw up a clear, straightforward policy that addresses the continuation of health, dental and disability benefits during each type of leave. Many advisors have templates that help speed up the process, says Cox.
Communicating the policies ahead of a leave is critical. “You want to outline if there is a cost-share arrangement, what the cost is, how payments are made and what will happen if the team member is not paying their share,” says Cox.
He also urges plan sponsors to keep all documentation in cases when a plan member must be terminated from the plan. “You don’t want a human-rights complaint,” he says.
Keeping it clear—and fair
Typically, an employer’s continuation-of-benefits policy aligns with the province’s Workers’ Compensation Board requirements, says Cox. “Of course, if plan members stop paying their share, or they don’t want to be on it, you have the ability to not continue to fund it for them, legislation permitting,” he says.
Plan sponsors can choose to waive plan members’ premiums during a leave, but they need to have a clear policy for all types of leave, whether it’s a maternity leave or a disability leave. And sponsors need to be consistent within classes of employment, and clear if policies differ between classes. “All employees in the ‘office staff’ class must be treated the same, just as all employees in ‘management’ class must be treated the same. And between classes, for example, senior managers could be exempted from paying premiums,” says Cox.
In the case of maternity leaves, the continuation-of-benefits policy can vary based on the company’s philosophy and culture—or size, says Cox. Many smaller organizations offer health and dental benefits for the statutory period of leave, with the plan member covering 100 per cent of the premium costs. Larger companies often offer a cost-sharing arrangement or fully cover the premiums—and sometimes cover disability during the leave as well.
“This is where it’s really important to have that documentation and policy, because if someone becomes disabled when they’re off on maternity leave and they’ve only had continued health and dental benefits, there’s no coverage for the disability,” says Cox.
In situations where plan sponsors offer full benefits in a co-pay scenario, it’s a good idea to raise members’ awareness of the value of this coverage. Cox says many members going on maternity leave don’t want to pay for disability benefits at a time when their income has dropped dramatically—but if an illness or injury were to occur, the lack of coverage could be catastrophic. “That risk needs to be communicated,” he says.
Once a plan sponsor has drafted a continuation-of-benefits policy with the help of their benefits advisor, they should run it by their legal team to ensure it complies with employment standards, recommends Cox.