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March 18, 2014
Welcome to the March 18, 2014 edition of HR & Benefit News. After reading these articles, please let us know if you have any questions. Always feel free to send us your comments and questions for future publications.
Life and Disability Audit
A HUGE thanks to all of you who have helped us work through the Dearborn National EOI Audit process for voluntary group term life and disability coverages. We began this project late last year and have worked through four months of data (September — December) so far. To date, we have reviewed 397 records and found only a small percentage — just 16% — has needed some kind of correction. Some of the learning outcomes from this process have helped clarify policy interpretation, reasons for gaps in coverage, reporting expectations, and communication procedures in file transfers.
The following articles provide information we have learned and also suggestions for streamlining our processes.
Employment Date vs. Benefits Status Date
Improving the accuracy of certain data could significantly reduce the number of discrepancies being flagged for review. That means less work for you! We have found that many of the items on the monthly reports from Dearborn are not truly discrepancies at all, but because of the way the data looks when it is transferred from the institution to OEB, this is difficult to discern. Dearborn compares the 'Employment Date' that populates SGELIG to the 'Benefits Status Date' in SGELIG. When an employee has a change in status or a change in benefits eligibility, the 'Employment Date' and the 'Benefits Status Date' are often not updated. This creates what looks like a mismatch between new (or updated coverage) and relevant dates. Here are a couple of examples:
1. An employee is hired into a non-benefits eligible position on 12/1/2012. The employee moves into a benefits eligible position six months later — on 6/1/2013. The employee elects Life Insurance coverage at 3 times annual salary. This is acceptable as a newly benefits eligible employee; however, the institution enters the 'Employment Date' and the 'Benefits Status Date' in SGELIG as 12/1/2012. Therefore, SGELIG records look as if the employee was a late enrollee and should have enrolled back in December 2012. This member now shows up on the EOI Audit. 2. An employee has a change in status 2 years into his employment at a UT institution. When the employee has a qualified change in status event (e.g. marriage, newborn, etc.), he can add disability coverage (STD and/or LTD) without an EOI application. However, SGELIG records do not indicate an updated 'Benefits Status Date.' When we review the new LTD and STD coverage, there is no way to tell what may have caused a midyear election of STD and LTD for this employee. This member now shows up on the EOI Audit.
These two date fields have not been scrutinized this closely before. However, this review reemphasizes the importance of these fields. Correct dates help clarify enrollment status when an employee is newly benefits eligible or when a status change occurs. The following is an explanation of how these two date fields that are passed along to Dearborn help clarify when new elections do not require EOI and how using them correctly can keep records off the monthly EOI Audit report.
- The EM_DATE ("employment date") and the EM_STAT_D ("benefits status date") are different fields because there are two important pieces of information to be tracked.
- The typical employee becomes benefits-eligible on the first day hired. For that person, the two dates initially should be exactly the same.
- In other cases, sending the same date for both fields is a mistake. A common example requiring different dates is when an employee is originally hired into a non-benefits-eligible position and then at a later date is hired into a benefits-eligible position. In this situation, it is very important that EM_STAT_D reflects the date they become eligible for benefits — NOT the original hire date.
- The dates in these two fields cannot be audited by OEB. Without access to employment records, it is not possible to for OEB to determine whether the dates should be the same or different. The institution must send correct information for both dates. Incorrect dates require substantial time to be spent each month manually reviewing and establishing accurate eligibility status in order to respond to EOI questions from Dearborn National.
- It should also be noted that when there is a status change, such as when someone retires or transitions to benefits-eligible leave status, the benefits status date will need to change. If an event (such as marriage) permits mid-year changes to enrollment, the benefits eligibility status begin date should also change. The benefits eligibility status begin date is not intended to indicate only the initial eligibility begin date, but rather should be updated as needed to reflect the beginning date of the CURRENT specific status as it relates to eligibility for benefits.
- In particular, any process that always sets the benefits eligibility date to be the same as the hire date is a process that needs to be changed. Plan administrators and OEB need both pieces of information in order to establish and accurately track eligibility.
Retroactive Cancellations and Premium Reimbursements
As you know, OEB has been working directly with institution HR and Benefits Offices to identify and resolve Voluntary Group Term Life and Short and Long Term Disability coverage errors. For Employees and Retirees who were enrolled in Life or Disability coverage beginning September 1, 2013 or later without meeting applicable EOI requirements, the coverage must be retroactively cancelled because these individuals were not eligible to enroll in the coverage, and the premium paid for that coverage must be refunded to the member.For subscribers who have coverage retroactively cancelled because they did not meet the EOI requirements, providing the following information should be helpful:
- A reminder that they will have the opportunity to request the coverage again during the next annual enrollment period or upon a qualifying change in status, with EOI required for approval.
- Assurance that the premiums they have paid for the cancelled coverage will be refunded as quickly as possible, either through the Payroll office for Employees or through a direct refund to Retirees.
In order to process timely refunds for the affected Employees and Retirees, OEB and your institution offices will work together on the following steps:
- OEB will provide a premium billing credit (PBC) in an amount equal to the premium remitted for each coverage period in which Life and Disability coverage have been retroactively cancelledTo offset the out-of-pocket premiums paid by affected subscribers, the institution should process a 'negative payroll deduction' for each affected Employee and issue a refund to each affected Retiree.
- For UT SHARE Retirees, UT Benefits Billing should be contacted for processing a refund of premiums for the Plan Year 2013/2014 coverage periods and forward. UT Benefits Billing will verify the retroactive LIFE coverage termination and prepare a refund for premiums collected for cancelled coverage.
- These refunds will be posted to the Institution's UT SHARE Retiree Reporting supporting the funding net collections. Upon acceptance, these refunds will offset the OEB Premium Billing Credits accepted using an RCCB remittance code; thereby zeroing out the G/L Clearing Account used for Retiree Premium Remittance.
While the cancellation of coverage may be disappointing for those affected, the timely processing of refunds will help mitigate any concerns about the out-of-pocket expense incurred for coverage that has been cancelled due to lack of approved EOI. If your institution needs assistance with processing the necessary coverage changes and premium refunds, the staff at OEB will be available to assist in any way possible.
With the new EOI audit procedures that will now be in place on an ongoing basis, we believe we can significantly reduce these kinds of coverage errors by working with you to identify and correct gaps in the existing enrollment processes. We also believe that we will be able to catch future errors more quickly, reducing the administrative effort required to correct them. Having fewer errors and catching them more quickly should help to limit any confusion and disappointment on the part of Employees and Retirees who are affected by a coverage error.
For additional questions or clarification about handling premium reimbursement for coverage that has been retroactively cancelled due to an EOI issue, please contact the senior member of the OEB Finance team who regularly works with your institution, either Kim Caperton or Lisa Leong.