Blog by: Jeanne Hines, SPHR
There’s a growing trend among aging workers to continue working past what we normally think of as “retirement” age. Some people stay in the workforce simply because they love to work. Others are staying because they have not been able to save enough to retire.
While older workers are staying in the workforce, they are also generally continuing coverage in their employee benefits packages, including life insurance coverage. Most traditional group life insurance plans are written to begin reducing benefits at or around age 65, by as much as 25% or more. They may reduce again at a later time. The reduction applies to those policies considered to be “Basic” policies, which are typically provided by the employer for all employees, as opposed to policies that are optional and paid by employees. If you’re unsure what the policy states, you may contact your agent, broker or account manager for additional clarification.
Minnesota Statute 181.81, Sub. 1 (c) requires employers to provide notification when, “an employee’s employment related health and welfare benefits or insurance coverages are diminished or eliminated by virtue of the employee attaining a certain age…” Notification is required in addition to the information contained in the Summary Plan Description.
The statute describes the timeframe in which the notification must be delivered as follows, “…the employer shall notify the employee of the changes at least 90 but not more than 120 days prior to the effective date of the change.” The “effective date” referenced is the person’s birth date, so notification should be calculated from that time. Since the reduction in benefits may occur again as the person ages, notification needs to be provided each time benefits are reduced.
Written notification of the change in benefits may be provided via a letter to the employee that includes a description of the changes, whether there are any conversion rights and, if so, how to access them and to whom to direct questions.
With the trend toward people working longer and living healthier lives, perhaps the reduction practice will change too. Until that time, please be certain to keep your senior workers informed.
This information is provided for general guidance only. Consult your legal advisor for specific requirements and guidance.