Mandatory Contracts and Non Mandatory Group Benefits

March 15, 2022
Posted by: Deepak Jotwani, B.Comm, SME - Director - Wescan Insurance Brokers Inc.
Category: Group Benefits

Mandatory Contracts require 100% Participation of all eligible employees who are actively at work and satisfying the hourly requirements outlined in the booklet. Non Mandatory requires either 75% or 85% of all eligible employees. The plan administrator in this case is responsible for ensuring that 75% or 85% of all eligible employees are on the plan at all times.

This also means that when an employee is hired, and the participation is either 75% or 85%, and they choose to refuse benefits, they refuse all benefits. The employee cannot pick and choose what benefits they want. It is all or nothing.

The employee can waive health and dental if they have a spouse who is covered under a plan through their employer, he/she would then take the Pooled Benefits (Life, Accidental Death and Dismemberment, Dependent Life (if common-law or married) Disability, Critical Illness (if employer has taken this option). In fact if the member waives the health and dental, it is mandatory that they take all other benefits.

Even though your contract may state non mandatory, meaning it is only required for 75% or 85% of all eligible employees working 20 hours a week, it is important to explain to the employee why they should be on the plan.

Example

You have an employee who you have just recently hired and your policy has a three month waiting period to enroll the employee. This employee is adamant that they do not want coverage at all. In this situation you can have this person fill out a refusal of all benefits form, with dates and signatures of both parties involved for the personnel file. They have now agreed that they do not want to be part of the plan. If down the road, the member then states they want to be a part of the plan, they then fill out a detailed medical form. This is called the late applicant process. If single they answer medical questions about them, if married or common-law they answer medical question about themselves, their spouse and any dependent children. Once they send this in to the medical underwriting department, a couple of things might happen.

The employee gets approved, but because they are a late applicant they are subject to basic dental of $250 for one full year from the date of approval, but are put on the plan for all other benefits.
The employee gets declined all together – this means they are not approved for any benefits for themselves or family members when they need the plan the most.

To summarize, is that so many employees indicate that they do not need the benefits plan because they feel healthy and that nothing serious will happen to them. What they need to understand is that the vast majority of people who have become sick or disabled have felt healthy at one point or another in their life.

Mandatory Contracts and Non Mandatory Group Benefits Contracts

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