Quick Summary: With graduation and other age limits, young people currently covered by their parents’ health plans could lose their eligibility for dependent coverage under your company’s benefit plans. A gentle reminder to your employees, plus some helpful guidance, may be in order.
Loss of eligibility is one of the most forgotten—or ignored or misunderstood—provisions of any benefits plan. Some employees honestly overlook the fact they must notify the company when a dependent is no longer eligible for coverage. Others intentionally hope to squeeze out a bit more time without being noticed.
Remind Employees about Your Rules
Of course, there are multiple reasons a dependent can lose eligibility. Why not use graduation season as an opportunity to remind your workforce of the rules? Here are a few ways to approach the subject:
Repeat the rules. List the situations under which a dependent loses coverage (divorce, loss of student status, reaching the age limit, for example). Tell employees when that coverage will terminate (one termination point is at the end of the graduation month) and how/when they should inform the benefits department of the status change.
Explain COBRA. Employees may have heard of COBRA but may not know how it works. Give them brief details, including the fact that it is available only for a limited time and that they (or the dependent) must pay the full cost of the continuing health care coverage. You might want to give an example of what that full cost would be, as most workers don’t know the true price of their insurance. They just know their share. Your continuation-of-coverage letter will provide specifics when the time comes.
Encourage research into private insurance. Suggest that they look into options for private insurance well in advance of the date the dependent loses coverage. List factors they should consider:
• The dependent’s needs (coverage for a chronic condition or for routine exams and possible emergencies)
• Deductibles, copayments, and out-of-pocket maximums
• Covered services. Does the plan restrict or exclude any important services?
• Is there a network and are current providers in that network?
Point out the dangers of lapsed coverage. If there’s a pre-existing condition, waiting too long to secure new coverage could create a major problem.
Include any penalties. Don’t forget to mention any penalties that may be imposed if employees neglect to play by the rules.
Next Steps:
• Look for multiple ways to remind employees about all life status change requirements.
• Create a tip sheet that will help employees search for new coverage, and include factors to consider when selecting continuing medical insurance.
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