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Thanks But No Thanks: Risks of Non-Mandatory Participation in your Benefit Plan

As a business owner or plan administrator, you’ll likely come across an employee from time to time who does not want to enroll in the benefit plan.

Some of the reasons for which an employee may not want to participate in a benefits plan include the following:

  • They may have to pay part of the premiums (e.g. long term disability premiums)

  • They are already covered by their spouse’s plan

However, a key requirement of group insurance programs stipulates that there must be 100% participation. So what happens when an employee just doesn’t want to join? How can you protect yourself?

Condition of employment: Many plan sponsors simply state that benefits are a condition of employment and that all employees who are eligible must participate. The employee can waive health and dental coverage if they have another plan through a spouse.

Communicate the importance: Employees likely don’t understand that if they decline to participate within 30 days of their eligibility to participate, they and their dependents would be considered late applicants. That means that everyone in their family would have to answer health questions and that coverage could be declined, dental benefits would be severely reduced in the first year.

If all else fails, sign a waiver: Ask us for a copy of a waiver letter. The letter requires the employee to acknowledge that they know what benefits are being offered and that they understand that they will have to answer health questions if they decide to participate in the plan in the future. The employee’s original signature could be required in the event of a death, disability, or other claim where the employee denies refusing to participate in the plan.


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