Health Wellness ProgramHealth and Wellness Programs and Wellness Program Consulting

It might be easier than you think to eliminate a major reason staff members sue.

How? Well, roughly 75 percent of employee lawsuits happen because of accidental disconnects between an business’s internal policies and procedures, and what’s written in the plan documents.

Here are two areas where some the costliest errors lurk, and three steps your fim can take to catch and correct the mistakes before you’re ever sued.

1. Policy/coverage discrepancies

Many firms’ written benefits policies and plan documents are like siblings who start to drift apart as they grow up.

In the benefits realm, nevertheless, the plan sponsor has the “parental” power – and legal responsibility – to be certain written policies and plan documents remain close as they grow and change.

As a routine practice, firms should be sure changes in their benefits policies are also written into the formal plan documents, as reported by benefits attorney William Wright.

If push comes to shove in court, any inconsistency with plan documents can prove fatal for the company. Example – Upper-level management passes a new rule that staff members must work 30 hours a week to be eligible for the health plan.

Benefits and HR then write the new coverage policy into employees’ benefits  handbooks and hold meetings with staff to explain the change.

Now suppose an worker drops to part-time status. Are you legally protected when the worker challenges the loss of benefits?

Not necessarily. for the policy in  the handbook to stand up in court, the plan documents must also say there’s a 30-hour-a-week eligibility requirement.

Same thing goes for disputes over run-out coverage.  Suppose it’s your firm’s policy to carry over coverage for a cancelled staff member during the COBRA election period, but the requirement was never written into the plan document.

A few weeks later, the employee has a major health claim.  The TPA denies it, saying coverage had expired. Reason –  the plan document says “active employees” are covered, but does not specify that the insurer pay claims until the end of the month.

The likely result –  the ex-employee sues, saying the organization is liable for the mistake.

2. Coordination of benefits

Watch out for cases where an employee’s claim could  be covered under two or more policies (e.g., your firm’s plan and one from a spouse’s employer).

Be certain there’s a clear-cut coordination-of-benefits policy in all of your plan documents. Ordinarily, if a plan contains no instructions for coordination of benefits, it’s expected to pay first. Two key areas to check –

1. Be certain there’s a statement that says only the amount actually paid by each plan are going to be charged against the maximum benefit, and

2. Make certain that the order of benefits determination spells out which plan compensates first for a covered child if the employee is divorced from his or her spouse.

In like fashion, when your firm offers domestic partner coverage, make sure there’s a coordination-of-benefits statement for dependent and non-dependent partners.

Three best practices

On an ongoing basis, you can cut your lawsuit risk by 75% when you –

• gather all materials related to specific plans into a binder, including renewal letters from vendors and materials distributed to employees

• perform a yearly self-audit, checking to see if plan-document wording matches your current policies, and

• pay special attention to keeping benefits descriptions up to date.

Reminder – When you don’t have a formal plan document, your contract with the provider legally serves as the “control document” for the plan. By law, all employees must’ve access to the plan document and be notified in writing of any alterations, including minor ones.

Nine of 10 HR managers polled by Colonial Life feel that workforce have at least a vague notion that benefits are a valuable part of working at a business.

Nonetheless, the same study found that only 21% of those companys believed their workers had a strong understanding of the workings of their own benefits.  and 5% believed that their workers didn’t know anything about their benefit choices.

Implication –  the greater emphasis placed on staff member education, the more likely staff understand the role of benefits in sum compensation.

Incorrect billing from health insurance carriers is more common than you may think.  The average plan sponsor can get overcharged by 5 percent a year, as reported by brokerage and consulting firm Corporate Synergies Group.

Like most organizations, insurance carriers rarely keep perfectly up-to-date records on their patrons.  As a result, plan sponsors often get charged for individuals  who shouldn’t be covered on the health plan. Here are two areas to watch –

Claims versus enrollment

It’s common to have cancelled workers still in the carrier’s claims eligibility system – even after they’ve been taken off your enrollment list.

Reason – Many carriers use separate computer systems for tracking enrollment and claims – and the two systems use different technologies that don’t “talk” to each another.

Carriers have no incentive to upgrade their systems, according to CSG president Eric Raymond, because doing so would cost the insurers money.

Leaving things as is, carriers simply charge patrons when they put through claims for ineligible workers and dependents.

That’s why an annual claims audit is a must –  That way, you won’t get charged fees for claims the carrier accidentally put through.

Even if your firm outsources the work (it’s a rather time-consuming task when performed in-house), you’ll generally see several percentage points of savings on your total healthcare costs.

Dependent eligibility

Poor carrier record-keeping also can be the cause for employees’ ineligible dependents not being taken off the enrollment files.

Few carriers have systems that automatically integrate with your Payroll department and your current enrollment forms (including the electronic “employee self-service” kind). Instead, data entry people  employed by the carriers input the information in the vendors’ system.

Human error by the carriers’ workforce costs plan sponsors another several percentage points. Solution –  annual dependent audits.

With the downturn in the economy, it seems like most businesses are shifting their focus when it comes to employee benefits and compensation.  The current situation is also very stressful on benefits managers.

In times like these, it’s vital for peers to share their concerns, experiences suggestions. A few weeks ago, HRBenefitsAlert.com ran a special report on calming employees’ 401(k) fears.

The reader comments revealed that many benefits pros were just as afraid as workers, and people ’s frustration led to some unfortunate carping back and forth between several readers.

The purpose of the comments section, apart from giving people  the opportunity to react to the story, is to provide a forum for benefits managers to interact.

It’s my hope that we can generate an exchange ideas that have (and have not) been working at readers’ companies during the current situation. Specifically –

• What are you doing to manage health benefits costs as budgets are either frozen or shrink?

• Have you noticed a dip in morale or productivity with all the doom-and-gloom in the news?

• How’s your corporation attempting to calm employees’ fears about salary freezes or layoffs, 401(k) losses, health cost shifting and other issues that get a lot of mainstream media focus?

• What are you saying to workforce to deliver the news they need to know but also keep morale high?

Thank you in advance for your willingness to share your specialistise and personal experiences. Everybody benefits in the long run.