Supplemental Insurance

catherinetnc · November 2004

Our company offered AFLAC last year. The AFLAC rep tells our HR person that she (HR Person)has to get every employee at our plant to sign a document indicating whether they want AFLAC or not this year.

Couple of questions: 1- Since sup insurance is a benefit under Section 125, I guess I see the necessity of proving that all employees were offered coverage via the signature. However, doesn't AFLAC have some obligation to obtain those signatures themselves, and not tie up our HR dept?

Also, apparently our company only offers AFLAC in a few of our branches. It seems that to comply with Section 125 it would have to be offered to employees at all US branches, not just a few. Anyone know the answer?

I am very tempted to tell AFLAC to take a hike as I am not sure what value they offer the regular guy - gives folks the warm fuzzies to have it. (Fear is a good motivator to spend money) But maybe they'd be better off saving their money.

Thanks for any advice!
Catherine

irenesmsaclaims · November 2004

Any enrollment should be done by the AFLAC agent, not the HR department. In fact, in general, a non-licensed person cannot take an application for insurance. As far as the waivers are concerned, this looks like they are just trying to expand the enrollment ($$ commissions) by connecting with all employees rather than just those enrolled already. The waiver for the supplemental coverage is not connected to the negative/positive enrollment for the Section 125 plan, which would involve FSA, dependent care and premium only. There is no need to waive supplemental coverage, paid in full by the employee; if they already have it, there is a cancellation process if they want to discontinue. The agent is either deliberately misinforming you or is not knowledgeable about the administrative process. Either is a distinct possibility.

There is a long thread called AFLAC from some months ago you might want to look at, with lots of insight as to the value of this kind of coverage.

Rockie · December 2004

Hi Catherine!

We recently changed to AFLAC insurance from Colonial and the AFLAC agent came to all our sites to sign up interested employees. He also collected waivers to those who waived the coverage.

marc · December 2004

Based on Irene's feedback, we may be doing it wrong.

We did have Aflac in for initial enrollment and invite them to our annual renewal meeting (which they rarely attend), but for people wanting to enroll, we give them an Aflac provided summary, which the EE fills out.

We have them sign an "accept or decline" paragraph for each optional benefit so they don't come back later and say they were never offered the option.

We implemented the accept or decline statement after a couple of them came back saying they were not offered the option to enroll in one or more of the optional benefits. Now we prove it to them with their signature.

It helps protect us.

irenesmsaclaims · December 2004

Since insurance laws are state laws, it could be different, but traditionally, at least in my state, only agents can complete applications and ask the questions face-to-face (a purist approach). It could be different in Nevada. You may want to check with the Division of Insurance on that. The agents themselves may not know.

Getting waivers is probably a good idea, if you've experienced such problems. It's just not as critical as waivers for employer-sponsored (paid) benefits.

Don D · December 2004

This is just another example of why I've always resisted company decisions to allow AFLAC onsite. I have heard so many of these people guarantee that it will add no administrative burden to HR or Payroll, that they do all the work and it's painfree for the company. That is absolute hogwash, as this question shows. It is NOT required that employees waive these supplemental, add-on types of coverage. If you implement such a practice, as Marc did, you're just adding another piece of administrative work for somebody at the company. Another one here, another one there, passing out a few forms, collecting a few signatures, shuffling and mailing and faxing a few papers....first thing you know you'll be going to the bank and making the deposits for your lazy AFLAC agent.

marc · December 2004

Sure we could kick them out, but then we would not get that nice Christmas card - I think she missed last year though.

I know the notice is not required - but we had a couple of EEs swear they never heard about our optional dental insurance - just after they found they needed some major procedures. That was followed by some confusion and misunderstandings about our optional STD and LTD - it may be optional, but my orientation clerk wanted to cover her rear end and I thought it made sense.

It is not just AFLAC options we cover with the signature, it is all benefits, optional or otherwise. I look at the acknowledgement signatures in similar fashion as the EE's acknowledgement of receipt of the handbook.

Parabeagle · December 2004

"I have heard so many of these people guarantee that it will add no administrative burden to HR or Payroll, that they do all the work and it's painfree for the company..."

Amen to that! I was assured of the very same thing a year ago when we first offered AFLAC - boy, was I snowed! It was weeks before our payroll person would even talk to me (but at least she stopped boobytrapping my desk).

dynamite9551 · December 2004

catherine - i can only respond about AFLAC from a personal situation - although we have only about 30 employees it was easier to have AFLAC come in and schedule time with my employees vs. someone with a large-group of EE's. anyway....

i did take one of their accident policies - and when my husband was killed last year the $$ beneifit i received from this policy was what helped me pay my bills, and funeral expenses and set aside some emergency funds. we never think we're going to need this "extra" deduction - but I now am so thankful i had it!

so i can only caution yuo to keep your employees in mind when considering whether to offer the supplemental benefits at all.

good luck!

catherinetnc · December 2004

dynamite9551- I am so sorry for your loss- I am sure the policy was beneficial for you.

We decided not to offer AFLAC this year because the agent was creating too much work for us. Sounds like a lot of the variations depend on the agent involved.

Thanks for your comments-
Catherine

J Mack · December 2004

[font size="1" color="#FF0000"]LAST EDITED ON 12-06-04 AT 12:41PM (CST)[/font][br][br]Your experience with AFLAC is same as ours. For the same problems and frustrations you have encountered is exactly why we also dropped all individual supplemental insurance policies. Think about it...HR does all the record keeping and other work and they receive the check! Another problem that we continued to have was their Agents interrupting our employees during the day to discuss their personal insurance needs. It is not just an "AFLAC" issue, it is individual "supplemental insurance" in general. You may want to put up with this until your next open enrollment and cancel the program then.

Rockie · December 2004

Wow! I wish we were brave enough to discontinue all our individual supplemental policies. You are so right about the administration - especially the payroll deduction part. We recently switched from Colonial to AFLAC. We simplied our offerings greatly. Colonial had so many blasted riders attached to each policy, it was like having umpteen dozen different policies. Our employees were able to keep their Colonial coverage if they wished, but had to have it bank drafted out of their checking accounts. This was the only negative from the employees - some of them had the policies for so many years, it was not feasible for them to change coverage.

We are now down to offering only one short term disability, three levels of cancer policy, a hospital indemnity policy and that's it. Sure made the administration easier.

An agent will come to every new employee orientation to explain benefits to new people and sign up those who are interested.

nietra · December 2004

Our AFLAC rep was extremly push and insisted on badgering each employee individually.

Our Executive Director finally said enough is enough and threatend to pull our policy - he didn't back off but when we called to start the process of discontinuing they policy the District Manager pull the account from the bad rep and handled it himself. We haven't had a problem since, however, because of the reputation of the 1st rep no additional employees have signed on.

stilldazed · January 2005

We have AFLAC and have had good success so far. In fact, we changed from Colonial 1.5 years ago to AFLAC for because of some of the issues you describe as problems with AFLAC. It has also been well discussed in other threads that local agent representation of AFLAC products can make or break the relationship. My guess is that your problem is at the agent level. Ours was with Colonial, and it became too difficult to deal with. Sounds like you have someone who has realized the fortune to made from a captive audience and wants to take full advantage of it without an regard for the mess that approach will leave for you. That's what we had with a Colonial agent. It was as close to a nightmare for benefits administration as I could imagine--high pressured sales, HR department staff burdened with contacts, no employer access to apps or types of products being sold, no confirmations on policy enrollments/cancellations (payroll nightmare), no A/P assistance with invoicing (and products were coded on the invoices to keep us from know which products our employees had), premium overpayments refunded directly to employees w/o notice, suspended benefits payments w/o explanations to employees, and generally advertising to all employees that any problems they were having were the fault of our HR dept.

AFLAC does all AFLAC enrollments for us. Our agent sends an AFLAC rep to our benefits enrollments (annual open enrollment and periodic enrollments for new employees) to take care of their products, and the rep leaves copies of apps with us for our records, helps troubleshoot invoicing issues as needed, and accepts inquiries from employees who need AFLAC assistance.

LindaE · January 2005

We have excellent benefits, but management wanted to offer AFLAC as well. Everything depends on your agent. HR and payroll did a lot of our agent's work, which was very time consuming, and then she left for her native country with no notice! The biggest proglem we're having is AFLAC's refusal to cancel coverage and stop payroll deductions if the employee wants to drop coverage. Our employees are being told they may cancel only at a certain time each year, and if they don't cancel at that time, they must continue coverage and payments for an additional year. I don't do benefits administration or have AFLAC - have any of you experienced this? A lot of the guys want to drop the coverage but are told they can't. And they are mad...

irenesmsaclaims · January 2005

This does not sound right to me. These coverages are not group insurance, and do not have the same enrollment/termination restrictions commonly associated with group insurance. I would suggest that you read the contract (policy) provided to one of your employees and see if this is in it. I would be very surprised if it has these provisions. Then, I would contact the Division of Insurance in your state. Agents are not allowed to misrepresent the contracts they sell. I know of no individual insurance, life, health or disability that cannot be cancelled whenever the policyholder desires.

mwild31 · January 2005

[font size="1" color="#FF0000"]LAST EDITED ON 01-07-05 AT 07:29PM (CST)[/font][br][br]Actually, it is a part of the contract the ee signs with AFLAC:

"On or after the first day of the plan year, I cannot change or revoke this Salary Redirection Agreement with respect to pre-tax premiums before the next anniversary date of the plan unless a "change in family status" occurs (as defined by the Internal Revenue Code), and the change is caused by and consistent with the "change in family status". I understand that I cannot revoke any pre-tax election based on a Right to Examine Provision as may be contained in any insurance plan or policy issued to me."

"Execution of this Salary Redirection Agreement does not begin coverage under the component benefit plans or policies. The terms and conditions and actual coverage effective date of the underlying coverage will be determined under the separate benefit plans or insurance policies. Prior to the anniversary date each year, I will be offered the opportunity to add, drop or change coverage for the following plan year. If I do not complete and return a new Salary Redirection Agreement form at that time, benefit plans or policies currently in effect will continue."

Each of these statements on the AFLAC contract requires the ee to initial that they have read and understand them.

I told my rep this: "Middle of every January (annual sign-up is February 1st), you can come in for a brown bag lunch. I'll put out some flyers letting our folks know you'll be there & if they show up & are interested, then we'll do what we need to do in payroll. After that, when I do an insurance orientation (for folks that have completed the 90-day period) I'll give them a copy of the AFLAC information & if they're interested, I'll give you a call. Take it or leave it." She took it. She's also a friend of a friend of mine. My insight is that AFLAC reps don't usually have some fancy office downtown - they are usually independent contractors - just like the Mary Kay reps. Their quota's are set by higher-ups - divisional reps. If you don't like one rep - there are usually a bunch of others that are only too happy to take their place (if you're a gal, just ask yourself how many Mary Kay or Avon or Tupperware or Candle party people you know & each time if you ask a friend of yours, they'll more than likely have a different contact).

irenesmsaclaims · January 2005

I am corrected, I wasn't connecting it to the cafeteria plan and salary reduction agreement; however, it seems to me that it should go with the Section 125 plan, and not the insuror's rules as to the timing of the annual enrollment period.

LindaE · January 2005

Thanks, everyone. I found out that our benefits administrator put a note in the field guys' paychecks advising them of the chance to enroll in or cancel coverage. Problem is, I never saw it, so it wasn't translated. I'll read the policy and make sure these notes get translated in the future. Thanks again for your help!

Supplemental Insurance

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