How to Turn a Non-Mandatory Benefits Plan into a Mandatory Plan – Part 2

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In this second part of a two-part series, Barb Feldman looks at how employers can make the switch from a voluntary to a mandatory benefits plan. Read part one here.

So how can an employer effectively transition from a voluntary to a mandatory benefits plan? Whether the plan was originally voluntary by choice or if an employer has inadvertently violated the contract’s minimum enrolment level and wants to fix it, the first thing to do is open the enrolment, to give everybody the opportunity to join without having to fill out a medical questionnaire, says Zoltan Barszo, president of Accurate Design Benefits & Insurance Agencies. Employees may decide to opt out of various provisions of a flex-plan legitimately, he notes.

If the insurer’s contract acknowledges that a certain number of employees will not be joining the plan, those who want to join later may then be required to provide medical evidence or evidence of insurability.

“And you need proper waivers or forfeitures signed by those who do not want to participate,” he says. Barszo recommends asking employees who opt out to consult their own lawyers as well.

Employers can take a “grandfathered” approach, says Mike McClenahan, CEO of Benefits by Design, stipulating mandatory enrolment only for new hires as a condition of employment. Or they can insist that everybody enroll, “but that has potential risks,” he says. A previously opted-out employee might construe now-mandatory contributions as constructive dismissal or a material change of work environment, observes Barzso. “Benefits consultants can pose the question, but shouldn’t be offering answers,” he says. “Only the employer’s lawyers should do that.”

In all cases, rather than just insisting on enrolment, an employer should help staff, including those who are currently participating, to understand and appreciate the real value of their benefits program. When programs risk being terminated by the insurer because they’re falling below the minimum contractual requirement, peer pressure is sometimes an extremely effective tool, suggests McClenahan. “‘We either all get on board with this program or unfortunately there’s going to be no benefits program for anybody’—often that’s enough to get everybody—grumbling—to all join in.”

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