Avoiding the headache of Late Applicants on your benefits plan

When a new employee wants to join your company benefits plan the insurer will require they do so within 31 days of becoming eligible. The reason being that if everyone could join when ever they chose, they would likely only join when they had a significant claim to process. This hurts the insurer as they will take in less premium money and pay out more in claims. It also hurts the company because the inflated claims to premiums paid ratio will lead to higher rates at renewal.

An employee becomes eligible on the date they were hired, plus any applicable waiting period the company has imposed.

What happens when an employee enrolls after the 31-day grace period? They become a late applicant.

This employee has two options:

  1. They can pay the premiums back to the date that they were eligible to join. This way the net premium versus claims ratio will be the same as if they joined the plan on the correct day.
  2. If they don’t want to pay the additional premiums all at once, they must fill out the Late Applicant form and hope they are approved to join based on their answers. This is at the discretion of the insurer.

The Late Applicant form is a health questionnaire that assesses the likelihood this new applicant is joining in order to submit a large claim. They will ask several questions about the applicant’s medical history and about any recent visits to the doctor.

If the applicant is approved they will be on a mandatory reduced dental benefit schedule for the next year. This is because it is difficult to assess whether the applicant will submit a large dental claim based on the results of a health questionnaire.

It is important to note that the same rule applies for an employee’s dependants. Should an employee get married or have a new child they will have to update their dependent information within 31 days in order to avoid late applicant status.

It is important to have procedures in place from a Human Resources perspective in your company, and to keep the lines of communication open with your benefits provider to keep them fully updated on changes to the employees’ situation.

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