Continuation - the least understood benefit of group insurance?

01-04-2021
<span id="hs_cos_wrapper_name" class="hs_cos_wrapper hs_cos_wrapper_meta_field hs_cos_wrapper_type_text" style="" data-hs-cos-general-type="meta_field" data-hs-cos-type="text" >Continuation - the least understood benefit of group insurance?</span>

Group insurance often has a hugely important feature that is really poorly understood.  It is called a Continuation Option.  Let's look at it from the perspectives of the employer, the employee, and the insurer. Finally, we'll look at some recent improvements in our Sentro platform that make handling continuation properly less painful for everyone.

What is a continuation option?

When you are covered by an employer-paid group insurance scheme, that's great, as long as you remain in employment.  

But when you decide to change jobs, you will no longer be covered by that group insurance scheme. Fortunately, many group insurance schemes offer a 'continuation option'.

The 'continuation option' means that the person who has left their job can apply to the insurer to have their insurance coverage continue as an individual. The person is responsible for paying for the coverage themselves. There is usually a set time limit after a person leaves employment for them to apply to have their coverage continued.  

In many countries, insurers must offer a continuation option as a feature of their group insurance schemes.  In the USA, COBRA legislation outlines when group health insurers must offer continuation. In other jurisdictions, similar continuation or portability options may be mandated.

But even when not required by regulation, most group insurers offer a continuation option as a feature of their group plans. Why? It is usually in their interests to try and maintain a relationship with a customer they already know.

This all sounds pretty good right?  But continuation in group schemes is something that is rarely handled well. To learn why that is, it is helpful to look at it from the perspectives of the various parties involved - the employee, the employer, and the group insurer.

The employee perspective

Why should a departing employee care about a group insurance continuation option?  A very important one - maintaining a relationship with an existing insurer is often simpler than starting a new relationship with a new insurer. As a member of their group scheme transitioning to an individual policy, the insurer may offer benefits like recognition of continuous coverage, waiving medical examinations, or acceptance of existing medical conditions, as part of their continuation service.   Starting afresh with a new insurer means that these benefits may not be offered.  So investigating whether a continuation option is worthwhile is usually worth a look.

So why isn't continuation exercised more often by departing employees?

In many situations, the first and only time they look at their employer-paid group insurance information is on their first day of employment. It will be one of the countless things new employees get shown as part of new employee onboarding.  For many, it is promptly forgotten. Or if they do look at it, it will be with a view to what their coverage and benefit limits are - they won't spend much time understanding what their options might be when they leave employment.

Fast forward to the day when the person leaves their job.  If they leave voluntarily, they usually won't be spending a lot of time thinking about what they are leaving behind - they'll be more focused on 'what's next?'.  If they have an exceptional employer, they may get an exit interview, but chances are low that the interviewer will point out things like an insurance continuation option to the leaving employee.  

If in the less happy case of the employee leaving involuntarily due to redundancy or restructure, the chances are higher that the employer will point out exit support they will make available.  But again, this tends to focus on redundancy payouts and job-seeking support, with less attention paid to the nuances of group insurance continuation options.

The burden for exercising continuation options lies mainly with the employee - but they are often poorly informed or poorly motivated to act on it.

The employer perspective

When a person leaves employment, it triggers a lot of activity for the employer. The first priority will be recruiting and replacing the departing employee, then ensuring a smooth handover of responsibilities.  In practice this rarely happens smoothly, so there is a lot of scrambling to temporarily cover roles. When the person actually leaves, the employer responsibility is naturally quite focused on their obligations - processing the final pay, retrieving company property, securing access and so forth.  Explaining to the departing employee their rights to possibly exercise an insurance continuation option will often be well down the list of to-dos - if it is on the list at all. 

The employer will have already met their obligation on employee onboarding time - explaining that the employee has cover, providing the policy information (which will include text about any continuation options).  So at the point of employee departure, an employer could believe that at that point, the action burden is now on the leaving employee, not on them as an employer.

The group insurer perspective

You would think that the group insurer would be the most motivated party to ensure that a departing employee considers the opportunity to apply for continuation of a policy as an individual. However, the design of most group insurer's business processes means that the opportunity is lost before they are even aware of it!  Here's why.

Many group insurers only process information from an employer once a year - at plan renewal time. Let's say that happens in December.  Let's also say that their continuation option can only be exercised within 45 days of the person leaving a job.

Now let's imagine one of the employees left in July.  The employee would have had until mid-August to exercise their continuation option. But the insurer doesn't even know that the employee has left the company until December!

The insurer will make right with the employer, and process a credit for the employee who left. But any chance the insurer might have had to be proactive and actually reach out to the departed employee during the continuation period is well and truly gone.

At Sentro we believe that annual processing of plan member information at renewal time is quite arcane industry practice.  We favour 'continuous enrollment' - adding and removing plan members continuously though the year, and also letting plan members adjust their cover options more frequently. Sentro allows group insurers adopt this method of continuous processing, confident in the knowledge that billing proration and policy management changes are handled smoothly. 

If the group insurer knows closer to the time of actual employee departure that the employee has actually left, they may be able to better inform the person of the continuation options they have while they still exist!

Sentro - making continuation easier to manage for group insurers

 We've recently added new capabilities to Sentro Hub. These features help the group insurer manage the transition of a plan member onto an individual plan much more efficiently.

Individual policy renewal dates 

Sentro now supports policy renewal intervals at the individual member level.  In group schemes, these renewal dates are aligned to the overall group policy. But when an individual transitions to a self-funded individual scheme, they can have their own unique policy renewal cycle.

So now, an insurer can relocate a plan member onto an individual scheme much more simply and easily. The plan member's base information is preserved through the process, making the transition process less error-prone and more capable of being automated.

Voluntary payments

Sentro already supports the ability of a plan member to make voluntary contributions to their group plans. Applied to continuation, this means the person can continue to use their existing payment details, or amend to new payment details.

Data-driven workflows

Sentro's cloud-native, API-centric platform makes it easier for insurers to use automation and workflow technology to initiate the continuation conversation with the departing employee. 

Making it better for working people

Improving how continuation options are understood and handled is better for everyone.  The insurer, the employer, and most importantly, the insured person. Please talk to us about how Sentro can help your continuation performance!