It's difficult to patch holes in a city street, but drivers can't just choose another city to drive in. Likewise, it's difficult to make up for a bad start to a voluntary benefit program - many competitors are ready to step in and offer their own products and services to an unhappy employer. This month we will consider some of the potholes that can cause an employer to be unhappy with a voluntary plan, and some measures you can take to avoid them.
Different pay schedules within the employer results in incorrect deductions: Nothing frustrates an employer more than payroll deductions that are not properly communicated at enrollment, or are not properly coordinated with payroll schedules. Items to verify before enrollment, and to double-check as deductions start, include:
- Verification of the employer's payroll schedules.
- Verification that deductions match payroll schedules (beware of employers with a biweekly payroll but feature no deductions from the third paycheck of a month; the pay schedule is biweekly but the deductions must be calculated as semi-monthly).
- While it is a given that some cases, like school systems, will have complex pay schedules, many businesses have varied schedules - never take anything for granted.
- Create a coordinated schedule of enrollment dates, deduction start dates, and coverage effective dates for each payroll schedule
Too many voluntary benefit products enrolled at once: Like the Internet, employees have a "bandwidth." There is a tendency to try to roll out a voluntary benefit "menu" featuring a broad range of products. This can make sense over time, but if too many products are piled onto employees at once they may feel there is too little time to think about the offer. As a result, virtually none of the voluntary benefits receive the attention they deserve. We suggest thinking through the priority of various options, and creating a multi-year rollout plan to build voluntary success and promote each product in a way that allows employees to understand their needs and how the product answers them.
New hire enrollment plan is not well defined: There is not a single method that's best for all employers. An annual open enrollment is most common when enrollment of benefits is through in-person methods. Annual open enrollment is often coordinated with, and may help fund, the annual enrollment of the employer's core benefits. For large employers where a significant number of new employees are hired each month, ongoing monthly new hire enrollment campaigns make sense. In this case, new hires are generally enrolled in conjunction with core benefits.
What can go wrong? First, all parties need a clear understanding of open enrollment timing. If newly hired employees miss their opportunity, they may be disqualified later due to the insurance company's late entrant underwriting. If the annual open enrollment is used, the employer should understand how to communicate this to new hires so they know when they can enroll and have at least basic information about each product. Communication of eligibility rules for each voluntary product needs to be precise. For example, it's not unusual for disability income protection insurance to have a stricter requirement on the number of hours worked than voluntary life insurance products.
While the road to voluntary success has many potential trouble spots, careful planning and effective communication with the employer will allow you to avoid the potholes dotting the streetscape.
