Benefits Blast

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ISSUE 3

This month's issue is about ERRORS AND OMISSIONS

OOPS!

What happens if you forget to add an employee to the Health Insurance when they are eligible?

This month we would like to talk about an important product that ISN'T an Employee Benefit product, but greatly affects what you do. Employee Benefits Errors & Omissions (E&O) Liability is an endorsement that you can add to your Commercial General Liability policy that will cover you in the event that errors or omissions occur in the administration of your Employee Benefits Programs.

The BEST PART is it's NOT that expensive!
The premium for this important endorsement is very reasonable. Premiums are approximately $10.00 per Employee per Year for limits of $1,000,000. There will usually be a Minimum Premium that applies of $250 or so, depending on your Insurance Company, and often a $1,000 Deductible will apply.

There are many opportunities for honest mistakes and clerical errors in the course of administering your Employee Benefits program. Here are some examples:

• Failure to add and Employee and Family when their eligibility period has been fulfilled. This can lead to an uncovered claim if not discovered in time. It can lead to the employee having to fill out a medical questionnaire as a "Late Enrollee" with the possibility of being declined for medical reasons.
  
• Failure to notify a terminating Employee of their COBRA rights.
  
• Failure to notify an Employee of their Group Life Insurance conversion rights.
• Providing Employee with the wrong plan description.
  

One example of an E&O Claim involved a small business owner trying to recruit a promising new executive and assuring them that their Health Insurance would start the first of the month after starting work. The owner forgot that they have a 90 day waiting period. After having worked six weeks, the new executive's son had to have an emergency Appendectomy, and it was not covered as his coverage was not effective yet. Fortunately, Employee Benefits E&O Liability coverage was in place at the time, and the claim was paid.

Check with your General Liability agent to make sure that you have this endorsement on your policy!

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