Posted by admin | Posted in Employee Wellness, wellness program | Posted on 04-12-2010
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.