7 Factors that affect group insurance eligibility and coverage
By: Benefits by Design | Tuesday November 7, 2023Updated : Tuesday November 14, 2023
There are a number of elements that affect group insurance eligibility and coverage. Employee benefits were inherently created to provide equal coverage to employees. Yet even with the best intentions, there can be certain factors that cause slight differences in eligibility and coverage.
1. Company values and culture
The values, goals and aspirations of a company can have a direct effect on the type of benefits that a business will provide for its employees.
For example, if your goal is to provide financial security for unforeseen medical bills for your staff, you might consider providing a catastrophic coverage plan.
Whereas, if your goal is to attract and retain top talent, you’ll probably want to provide a robust and flexible employee benefits plan.
Employers that want to show their support for mental health and work-life balance might provide an employee assistance program (EAP), as well as a Lifestyle Spending Account (PSA) to promote hobbies, self-care and healthy lifestyle habits.
2. Waiting period
The group insurance eligibility date is directly affected by the waiting period for benefits. A common waiting period is 3-6 months. This helps ensure that employees have some level of commitment to the company prior to being enrolled in benefits. And hopefully it means the employee won’t rack up the benefits plan and then quit the job after six weeks.
The waiting period is not to be confused with the probationary period for determining employee fit. Different provinces have different mandatory probationary periods within which an employer is allowed to terminate an employee without cause. However, if an employee is still within their probationary period, and the waiting period has been satisfied, then they are eligible for benefits. Note: they must also meet all other eligibility criteria for benefits (such as hours worked per week).
3. Employee class
Depending on the company, there might be different classes or categories of employee. For example, there could be managers, full-time, and part-time employees. Or year round and seasonal employees. Or the class could be set up by employee tenure (under 2 years, over 2 years, over five years), or by role (nurses, doctors, technicians, pharmacists).
What this means is that each different class of employee could have different group insurance eligibility or coverage. The following are a few examples of how the differences could vary:
- Benefit line (one class has disability coverage, while the other does not)
- Waiting period
- Coinsurance amounts
- Annual maximums and frequency limits
- Spending account allocation amounts and frequency
- Weekly or monthly percentages of earnings for disability benefits.
- And more!
What is an Employee Class and Why is it Important to Know?
There are different prescription drug plans in each province. Which means that when insurers coordinate with the provincial plans, there can sometimes be a slight difference in group insurance elgibility and coverage. This is particularly true when it comes to the provinces that offer pharmacare. Not only does this affect the coverage for prescription drugs – high-cost drugs especially – but it also affects the cost of the benefits plan. Employers in non-pharmacare provinces pay more for stop loss coverage because the government programs do not offer as much assistance for prescription drugs.
What is Stop Loss and How Does It Keep Benefits Plans Sustainable?
There is also some compromise in coverage for remote communities. Mostly when it comes to access to care. But not only does the lack of access mean that some services or supplies may not be available, it can also raise the cost of care. Meaning that the $1,500 dental maximum won’t go as far in somewhere like Whitehorse as it would in Ottawa.
Generally, age should not be a factor in group insurance coverage. All eligible employees should be provided with the same benefits, regardless of how old they are. However, with employees working past the usual retirement age of 65, things are starting to change. Most life insurance and AD&D coverage has a reduction provision, whereby the benefit amount reduces by 50% at age 65, and then again at age 70. Most disability insurance coverage is not offered past age 65. And travel insurance for employees over age 70 is usually separated into its own class, since travel coverage for older employees is much more expensive.
What is Travel Insurance and What Do I Need to Know Before Travelling?
6. Family composition
As with age, gender usually does not affect the group insurance coverage. However, not all employees will be able to utilize all aspects of all benefits. For example, a young, single employee would probably not be interested in adoption services or IVF treatment benefits within the extended health benefit.
Benefits such as spending accounts can be slightly unequal as well. A family might get $2,000 allocated to their Health Care Spending Account (HCSA) but have six family members. While a single employee receives $1,000 for just themselves.
Lastly, families that have two working parents with benefits can coordinate them and receive more coverage. This is achieved by having the other plan pay any coinsurance amounts – one plan pays 80% for a massage, the other plan pays 20%. Or by covering amounts and/or supplies that are beyond the annual maximums or frequency limits of only one plan.
It’s important to remember that most benefit plans are designed to be equitable. But just because some benefits are not suited for everyone, doesn’t mean you should not consider offering them to provide diverse options for employees.
Employee Benefits to Build an Inclusive Workplace
7. Pre-existing medical conditions
The beauty of group insurance coverage is that individuals with a pre-existing condition can still be eligible for coverage. The exception is when the medical issue that caused the pre-existing condition occurred.
For example, if the pre-existing condition clause is 3 months prior, 12 months post (pre-ex 3/12), it means this: If the medical issues happened within 3 months of employment, and then there is a re-occurrence within 12 months, the employee is not eligible to make a claim. However, if it a brand-new medical issue, the pre-ex clause is not a factor in the claim.
Existing medical conditions can also come back to haunt employees when travelling. Travel insurance usually includes what is known as a stability clause. This means that the covered individual must be free of symptoms or medical issues related to any medical condition for a specified number of days prior to their departure.
Lastly, employees that apply to the benefits plan as late applicants may be required to submit health evidence to the insurer in order to approved for benefits. Having a pre-existing medical condition may be cause for the insurer to deny coverage.
Employee benefits provide coverage for employees of all types and at all stages of their life journey. And because of this, sometimes the group insurance eligibility or coverage may vary slightly. Therefore, it’s important to ensure that your employee benefits offer coverage for a range of medical issues and conditions, and provide assistance for preventative care, maintenance, and lifestyle benefits.