Navigating Employees’ Benefits Questions and Challenges: A Guide for Employers and HR Professionals

Administering employee benefits often comes with its share of questions and challenges — especially when coming out of the open enrollment window, as many employers are or soon will be. Whether employees forget to enroll, make mistakes making elections, or seek exceptions to plan rules, HR professionals need to approach these situations methodically and consistently.  

It’s common throughout the year — but especially around the turn of a calendar year — for employees to approach the HR team or plan administrator with some sort of question along the lines of “Can I do this or that?” To which the answer often is, “Well, I’m not sure…let’s ask our benefits advisor.” Which is what we’re here for!

However, sometimes the best way to address common and consistent questions is to answer them before they arise. Accordingly, here are the strategies we offer employers and HR teams for handling common benefits questions, balancing employee satisfaction with compliance and organizational policies.

Start with the Basics: Reference Your Plan Documents

The first course of action for any benefits-related query should be to consult the company’s employee handbook or summary plan description (SPD). These documents outline the rules and procedures for benefits administration and are your best tools for ensuring consistency and compliance.

However, not every situation will be addressed explicitly in these documents, leaving room for interpretation or exceptions. This brings up two important and attendant points:  

1. Be sure to review your plan documents and familiarize yourself with what’s in them, and  
2. Make sure these documents clearly communicate what you want them to, and let governance and compliance be your guides in doing so.
   

Common Enrollment Issues and How to Handle Them

Missed Open Enrollment Deadlines

Employees who miss the open enrollment window often realize their mistake when they need coverage. In these cases:

• Confirm if a qualifying life event (e.g., marriage, birth of a child, etc.) might allow mid-year enrollment.
• If no such event applies, inform the employee the next opportunity to enroll will be during the next open enrollment period.
• Maintain consistency: bending the rules for one employee can lead to expectations for exceptions across the board.

Enrollment Errors

Sometimes errors occur, such as an employee completing most of the enrollment process but failing to click “Submit” before exiting the screen. When such errors result in denied coverage, employers may have some flexibility:

• Verify whether it was a system error or employee oversight. The former is easier to correct than the latter, as the latter might fall under the scrutiny of whether exceptions can be made.
• Correct genuine mistakes promptly, while documenting the incident to prevent future occurrences.
• Clearly communicate the importance of double-checking submissions with employees during open enrollment.

Exceptions and How to Handle Them

Occasionally, employees may request exceptions to coverage rules. Examples include:

• Adding a domestic partner who does not meet eligibility criteria.
• Requesting coverage for non-covered treatments or medications.

In these cases:

• It is important to check with the carrier or vendor to ensure any exception aligns with their stated regulations or policy language. For example, certain carriers require minimum work hours for benefits eligibility or have specific limitations on coverage exceptions.
• Assess whether the request conflicts with state or federal regulations.
• Consider the precedent: Granting an exception for one employee means you must grant the same exception for others in similar circumstances.

Mid-Year Changes: What Qualifies?

Employees often wonder if a qualifying life event allows them to make broader changes to their benefits, like switching plans or increasing voluntary life insurance. Employers should:

• Specify in the SPD what benefit changes are allowed in the case of a qualifying event.
• Clarify that cafeteria plan rules may restrict flexibility. For example, changes to an FSA election typically require strict adherence to IRS guidelines, as there are tax implications for both the employer and employee in such scenarios.  

A common question arises when an employee believed they were electing to participate in an HSA but really elected to participate in the FSA. There are, of course, very different tax implications relative to participating in one or the other, so handling requests must be made with care, so as not to jeopardize the tax-exempt status of portions of the plan. Avoiding such cafeteria plan violations is essential to maintaining the tax-advantaged status of the entire plan.

Beyond Enrollment: Claims and Disability Questions

Claims Exceptions

Employees might request coverage for non-standard items, such as weight-loss drugs not covered by the plan. Before making exceptions:

• Review carrier policies and legal regulations, as noted above.
• Avoid setting a precedent that could obligate the company to provide similar coverage for others.

Disability Claims

Employers managing in-house, short-term disability plans may face challenges verifying claims. Since these determinations can be complex, consider:

• Outsourcing disability claims administration to a qualified advisor.
• Maintaining impartiality and protecting the company from liability by documenting and adhering to consistent guidelines.

Proactive Measures: Annual Policy Reviews

To prevent ambiguity and ensure compliance, employers should conduct annual reviews of their benefits policies and plan documents. This review should:

• Reflect carrier changes and updates to state and federal regulations.
• Incorporate lessons learned from exceptions or common questions arising throughout the plan year.

Working with benefits advisors during this process ensures updates are thorough and compliant.

The Fine Line Between Exceptions and Policy

When handling unique employee requests, it’s critical to differentiate between correcting errors and granting exceptions. Correcting errors maintains the integrity of the plan and plan status, while exceptions can open the door to new and unwelcome precedents being set. After granting the same exception more than once, consider updating your policy to reflect this as the new standard available to all (even if you don’t actively go out of your way to promote it as such).

By following these steps and leveraging the expertise of benefits advisors, employers can create a fair, consistent —and most important of all — compliant benefits experience for their workforce.  

For support with reviewing or updating your benefits policies, consult a trusted advisor to ensure your organization stays ahead of potential challenges.