Unreasonable, but customary: Can you read your benefits booklet?

Have you ever looked at your benefit plan documents? I mean r-e-e-eally looked at them? Are they straightforward? Do you understand them? Could anybody understand them? Appropriate benefit plan communications are an inexpensive way to increase employee engagement and employee appreciation of the benefit plan. Vague, incomplete, discriminatory and even incorrect wording result in employee dissatisfaction with the benefit plan and can escalate into legal challenges in the right environment.

Plan communications are made increasingly complex when, as with most plans/carriers, not all information is included in a single document. Many employers have an insurer contract, an employee booklet (or booklets, if there are multiple classes of coverage) and a benefit summary. While printed booklets are to be available to employees, some employers are putting them on company intranets, where they may not be available outside the office. Employees can access the insurer contract on request; however, by the time they request it, irreparable damage may have already been done to that employment relationship.

“Clear concise communication contributes to employee satisfaction with the plan and helps avoid misunderstanding about coverage.” Lizann Reitmeier, Health Practice Leader, Toronto

In this day of electronic communication, booklets are generally available to employees through the insurer website, subject to verification with IDs and passwords. The insurer site may also contain a summary of benefits so employees can find quick answers to common questions. Quick answers, though, may not be in the best interest of either employee or employer.

Consider these examples of wording from employee booklets.

We recently reviewed a booklet that include wording that states “You are eligible to become insured immediately or on a date specified by the employer for the employee.” This wording gave me the shivers. This seems to leave the door wide-open for discrimination. “Jack, you get coverage on your date of hire. Jill, we will start your benefits in six months. Welcome to the company.”

Not everything is so blatant. Some plan provisions seem quite clear. Such as: “The maximum coverage for orthotics is $500”. We have a client whose employee booklet says that. The coinsurance on the coverage is 85%, so, in event of a claim of say $625, wouldn’t you expect reimbursement of $500? Not so quick. The insurer reimbursed $382.50 for this claim. When pressed, they provided the following explanation:

The reasonable and customary charge for this item is $450.00. We allowed $450.00 and there is the 15% copay:-

  • Allowed amount – $450.00
  • 15% Copay – $67.50
  • Amount paid is $382.50  

Is this okay? Is this the intent of the coverage? When we do a deep dive and check the wording in a few places, we can see that this is completely “explained” with wording such as “reasonable and customary”, and “medically necessary”. Are orthotics ever actually “medically necessary”? Now that I think about it, to the best of my knowledge, few of the practitioners’ charges I have claimed over my history of benefits coverage would actually be considered “medically necessary”. These services make our everyday aches and pains more tolerable, and may spare us from a couple of Advil, but “medically necessary” seems like jargon designed to allow insurers to reject claims.

As for “reasonable and customary”: Would the average person know what that means or how much it is when they are considering orthotics or a chiropractic visit? I am currently shopping for some home renovations. With every conversation I have I get more confused. My head fills with questions like “Is that reasonable?” and “How much will the next company charge?” Ultimately, my home renovations will cost thousands, so my research is worth every minute invested; should getting a massage require the same research? Do plan sponsors expect plan members to shop diligently for services and supplies that are eligible under the plan, or do they accept that people will do their best to find services that are quality, but modest, that are convenient to obtain, or that come from a provider referred by their physician?

Medical plans are quite detailed in employee booklets and most plan members access this coverage, so they are familiar with the “quirks” of the plan. But what about Long Term Disability coverage? The booklet says right here that if I am sick and can’t do my job, I will get 66.67% of my earnings. Then, a few paragraphs (or pages) later, the booklet says my income will be limited to 85% of my pre-disability earnings. Would an employee understand the impact of that limitation? Surprisingly, there are booklets out there that actually tell plan members that, if their LTD benefit is taxable, it will be limited to 85% of their gross pre-disability earnings and, if their LTD benefit is non-taxable it will be limited to 85% of their net pre-disability earnings. Have I lost you yet? If the insurance company who wrote the book, and who will pay the benefit, doesn’t know if the benefit is taxable or non-taxable, how will employees?

Clear concise communication of your benefit plan is important. It contributes to employee satisfaction with the plan and helps avoid misunderstanding about coverage. As we move further and further into a world of brief, electronic communication, the traditional booklet holds little appeal for employees. Given the examples above, you can understand why. At the same time, people are more reluctant to call a carrier and waste time on hold waiting for an answer to an obvious question – after all, the benefit summary says orthotics are covered to a maximum of $500.

The details of benefit plan coverage are important. Strangely, while benefits may not be a consideration when a person changes jobs, the communication of the plan is crucial. Misunderstandings under the benefit plan can lead dissatisfaction and even to litigation.

Take a look at your benefit booklet. If you find your attention wandering or if you keep waking up when your head hits your desk, call me. We’d love to review it with you.

 

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