Group Life lose of benefit

[Guest jleavitt4]

A group member becomes disabled. The employer assures the employee that all group health and life benefits will continue thoughout long term disablility.

The employee and employer continue to make premium payments to the carrier and all written communications with the "ee" indicates coverage is in place.

Mean while, after a year, the group life carrier is changed to a new carrier. "Living" benefits are eventually claimed from the new carrier. The claim is denied citing a provision in the company SPD that the employee must be working 30 hours or more per week. The work requirment is satisfied with the old carrier, not the new one.

Employer made a mistake in not informing the new carrier that several disabled employees were on the old plan and had been promissed continous coverage.

Meanwhile the "er" files for chapter 11 and the assests are sold to a competitor.

Who is responsible to pay this claim. 1. New carrier that is receiving premiums 2. Old carrier if the back premiums are paid 3. Agents errors and ommisions policy for not notifing the new carrier of the disabled employees 4. The "er" who is now bankrupt???

[KIP KRAUS]

If the prior group life plan had a disability waiver of premium provision the affected employee should file a claim for waiver of premium with the prior carrier.

[mroberts]

Kip is correct. The new carrier is not going to be at all responsible since the employee did not meet the actively at work requirement and because they were not informed about any disabled employees prior to the effective date. Can you still go back to the old carrier and file the waiver claim? (Of course, we're assuming you have the waiver of premium provision, which is standard.) Unfortunately, carriers only allow a few month window and if an employee does not file within that time frame, his or her request can be denied.

As far as whether the last two parties are responsible, it depends. If the broker was supposed to ensure this employee was to be transfered to the new plan, it's not inconceivable that it could be an E&O claim. And if the employer failed to provide the employee with the necessary forms for waiver of premium, the employer could be responsible. To what degree, a court would have to determine.