The Early Bird Catches the Worm—Impacts of Late Applicant Status

When it comes to enrolling members in a group benefits plan, it’s beneficial to encourage members to enroll within 31 days and ensure they truly understand how they will be impacted if they don’t.

Although specifics differ by insurer and by plan, for most group benefit plans, participation is mandatory. That means all members who qualify for coverage must be enrolled within 31 days of becoming eligible (have met all eligibility criteria and satisfied any applicable waiting period) with only a few exceptions:

  • Optional benefits (e.g., Optional Life, Optional Accidental Death & Dismemberment, Optional Critical Illness)
  • Health Care or Dental Care where the member has comparable coverage elsewhere (e.g., spousal or parental plan).

What’s a Late Applicant?

A late applicant is a member who:

  1. Does not enroll into the plan or waives coverage within 31 days of eligibility.
  2. Chooses to waive Optional, Health or Dental Care coverage at enrolment and later wants to add it without having experienced a qualifying life event (e.g., marriage, birth of child, loss of comparable coverage).

What’s the Impact of a Late Applicant?

A Late Applicant loses out on one of the key advantages of group benefits—the ability to obtain coverage without having to supply evidence of good health—therefore, putting themselves at risk for possible declined coverage.

Although a Late Applicant can still apply for coverage, they must provide proof of good health. That means completing and submitting a medical history and status questionnaire for review and assessment by the insurer’s underwriters. If they would like to add dependant coverage, they must do the same for each dependant. This means that the employee and any eligible dependants would need to complete a Statement of Health to qualify for all benefits, except Dental Care*. The possible outcomes of that application are one of two: coverage approved or coverage declined.

*Rather than having to show proof of good oral health for Dental Care, as it’s medically difficult to underwrite, an insurer will generally approve coverage for a Late Applicant, but with restrictions for the first 12 to 24 months of coverage. Common restrictions (vary by insurer/plan) include caps on all reimbursements set at minimal levels such as $150, and/or the exclusion of any coverage for higher cost coverages such as Major Services and/or Orthodontics.

Why Should You Care?

Although it’s ultimately the member’s responsibility, it is good practice to inform your members of the potential future impact of either refusing coverage (optional, health or dental care) or not completing the application process on time (all benefits).

This practice ensures that members don’t miss out on an opportunity to obtain insurance coverage otherwise available to them without the risk of being limited or declined, and leaves you with the peace of mind that your members have been given the opportunity to make a fully educated decision on their coverage and future risk.

For more information on dependant coverage for your specific group benefits plan, please contact your Benefits Consultant or the author of this article, Sarah Sanderson, Group Benefits Consultant at 1-888-509-7797.