Five Common Mistakes with Small Business Health Insurance
One of the major pain points for small businesses is group health insurance plans. Day after day, small business owners or their administrators are forced to deal with employee issues and administrative problems that could easily be avoided. The Small Business Resource Group at GCG Financial has a long history of working with and being referred by groups just like yours. We have compiled this list of the five most common mistakes that are made while administering health insurance plans.
- Not Understanding Eligibility Requirements
Having a group health insurance plan for your business does NOT automatically mean every employee is eligible. The state you are in, the insurance company you are with, and sometimes your own policy, can all dictate the number of hours an employee must work to be considered eligible for coverage. Typically, employees are expected to work thirty hours each week, and then satisfy the waiting period before they are eligible to participate in the health insurance plan.
Before promising an employee the opportunity to be covered by the health insurance plan, a group administrator should be absolutely sure that the employee will work the hours necessary to allow their participation.
SITUATION TO AVOID – Imagine an employee who is only working twenty hours each week has been told that they will have health insurance coverage. The employee fills out paperwork and assumes that the coverage is in force. Then the employee has an expensive treatment done at a hospital, only to find out that the administrator was mistaken that part-time employees are NOT eligible for coverage. A complete understanding of the eligibility requirements can help to avoid any problems.
- Understanding and Communicating the Waiting Period
Oftentimes the practice administrator of the small group health insurance plan will not remember or know the waiting period – which inevitably will lead to mistakes and problems. The waiting period is the number of consecutive days an employee must work in order to meet the definition of eligibility before they can be added to the health insurance plan. The waiting period is set on the insurance carrier paperwork that establishes the health insurance program. The group is free to choose almost any waiting period that it deems appropriate for its unique circumstances. The key to avoiding waiting period problems is to make certain that the newly hired employee knows exactly how long they have to work before they can be enrolled in the health insurance.
HELPFUL HINT – Make sure that your waiting period coincides with how long it typically takes to know if an employee is going to stick. If your waiting period is too short, then you may enroll and have to administer COBRA/State Continuation for folks who end up not working for your company. Conversely, if your waiting period is too long you may have trouble attracting quality employees who have pressing health insurance needs.
- Incomplete or Untimely Paperwork
Administering a small group health insurance plan is often more work than it seems. One of the most daunting elements of good administration is the timely submission of paperwork. Paperwork is necessary when employees are added, terminated, or making changes to coverage.
Two common issues with paperwork are:
- Employees not completely filling out the paperwork and signing it. It is very important to communicate to employees that they must include all of their information on the application in order for the application to be data entered properly and to prevent any complications with the applications being processed. Group administrators must make sure they are completely up to date on the insurance carrier paperwork.
- Employee paperwork needs to be submitted in a timely manner. It is a safe bet that all paperwork should be in no later than the effective date of the change. Most carriers allow some type of grace period for the submission of paperwork but that is not a guarantee. That being said, it is good practice to submit paperwork IMMEDIATELY – the earlier the better.
PAPERWORK ALERT – When it comes to COBRA or State Continuation of benefits, eligibility information must be sent out WITHIN 14 DAYS OF THE EMPLOYEE’S TERMINATION DATE.
- Failure to Reconcile Carrier Bills
Insurance companies don’t always get it right. The problem is that when they get it wrong, the Small Business owner is left to deal with the consequences. If employees are left on the bill beyond termination, then the practice is still paying premium for employees that are no longer there. If the employee never appears on the bill, then odds are that the employee does not have coverage in force. If a claim is filed, problems will ensue. Reconciling your carrier bill is the quickest and easiest way to make sure an employee has been properly removed or added to your bill.
Review your bill each and every month to ensure all covered individuals are listed on the bill and all terminations have been removed from the bill. Don’t make the assumption that the insurance company has done everything correctly.
KEY TO SUCCESS – Inspect what you expect!
- Waiting Too Long to Seek Assistance
Insurance companies are certainly not perfect when it comes to claims adjudication. People in general can be very emotional when it comes to their health and their access to healthcare. The mixture of these two things – mistakes and emotions – can lead to some volatile situations.
Every time an insured person accesses healthcare and files a claim with the insurance company, an “Explanation of Benefits” (EOB) document is generated by the insurance company and sent to the insured. The EOB lists the date of service, the cost, the negotiated discount, the deductible accounting, and the amount (if any) that the patient is responsible for. When the health insurance machine is working properly, the EOB will match any bills sent by the doctor or hospital.
If an insured patient is receiving bills that do not match the EOB sent from the insurance company, it is important to take action IMMEDIATELY. Oftentimes the error is easily correctable. When the employee does not reconcile the bills with the EOB’s and disregards bills and collection notices, the situation is exasperated. It is critically important for employees to understand their coverage and manage their own healthcare bills. The insurance company and the broker responsible for the plan will always offer assistance if the situation gets out of hand, but it is best to not let it get that far.
The good news is that all five of these mistakes can be avoided by refreshing your knowledge and understanding of some basic requirements and deadlines. Taking a more proactive approach to carrier bills, claims, and provider bills will also help to reduce the problematic issues that arise from your group health insurance. It is also a good idea to provide employee education – outside of open enrollment – to improve the employees’ understanding of their coverage and the steps they can take to reduce problems.
BEST PRACTICE – Discrepancies regarding the application of benefits MUST BE BROUGHT TO THE ATTENTION OF THE INSURANCE CARRIER WITHIN 90 DAYS.
For assistance with these or any other problems with your insurance, please contact: