Rates, market shopping, plan design, new products, and more, all get ample conversation time, but for reasons I may never understand, plan administration, specifically in the benefit plan space, is like the Rodney Dangerfield of financial services…it never gets any respect.

We ask a lot of plan administrators, especially in small to medium sized businesses, where there isn’t a dedicated team looking after benefits. In addition to the nuance and importance of benefit plan related items, admins have dozens of other things that cross their desk every day and they’re all “top priorities.” Our role as an advisor is critical to ensure our clients understand the importance of administration, and how it can impact their business and their people. Here are some common contingencies we discuss and plan for:

• What happens where an employee dies prematurely, and the administrator can’t find an original copy of the original enrolment form or recent change form?
• What happens when an eligible employee is allowed to opt out of all coverage, including LTD, and they get sick or injured?
• What happens when earnings aren’t updated with the disability carrier, and someone makes a claim?
• What happens when an employee is terminated, is sick or uninsurable, and weren’t notified of life conversion options?
• What is the impact of not applying for group disability when someone is on a WCB claim?

These are all scenarios where, if not planned for, can carry a very high financial and reputational cost for employers and advisors. Unlike making a retroactive concession on smaller transactional claims like vision or dental claims, when the above situations arise it’s like hitting a golf ball… once it leaves your club, you don’t have much control anymore, and there are no mulligans. Given our increasingly litigious environment, the outcome could end up being determined by the courts. (Fun fact: I once hit a BMW with a golf ball… I’d like to have a do-over on that one.)

Why is plan administration ignored?

• It may not be ignored by the admin… it just may not be understood.
• If an advisor isn’t specialized, they may not understand the importance themselves, so they aren’t educating the client.
• Too much focus on selling a product or low price, as opposed to selling guidance.
• Lack of processes that outline expectations.
• Neglect.

What are some best practices?

• Adhere to a set of rules to ensure correct admin practices. For example, we create an annual Plan Administrator Playbook for our clients as a guide.
• Regardless of what the insurer contract says, enroll 100% of eligible employees on your plan.
• Engage with a human resources professional to structure a handbook of policies and procedures.
• Set participation and cost sharing expectations with new hires right away.
• Have new hires added to the insurer system right away. Most systems track the waiting period, so this helps avoid late applicants.
• Talk to your P&C advisor about plan administrator liability insurance. Given that this is a thing, would suggest the importance of plan administration.

What are the outcomes for businesses?

• Smoother operation of your benefit plan.
• Less probability of litigation.
• Plan may perform better financially.
• Per employee cost of the plan may reduce.
• Peace of mind.

Don’t let what’s trivial become critical

Plan administration is just one thing on a long list of items that a good advisor can help with to create successful benefit and retirement plan experiences for businesses.

As a client who’s on the outside looking in, it can be hard to know what a good advisor looks like. With any professional service, credentials are a good place to start, and a solid credential in the group benefit and retirement space is the Certified Employee Benefit Specialist (CEBS) designation that’s issued by the IFEBP in cooperation with Dalhousie University. That said, there are also very solid advisors that congregate in benefit-specific groups and associations such as Canadian Group Insurance Brokers (CGIB) and Benefits Alliance. As a rule of thumb, have a heightened level of skepticism for advisors that are “experts” in too many things.