Problem: A financial loss is sustained because insurance premiums continue to be paid on an employee who had been terminated.  In this case, the insurer was not notified of the termination and thus insurance premiums continue to be paid.

Solutions: There are 3 ways to prevent or manage this type of financial loss from occurring:

1. Prevention

Technology: Human Resource Information System (HRIS).  These software systems provide a single point of contact to onboard and terminate employees so that all necessary vendors are made aware of changes in real time.  Quality insurance brokers will provide this type of software as a value added resource to their clients.

Collaboration: Broker Processes Termination.  The HRIS sends a notification to the insurance broker.  The broker processes the termination with the insurers and initiates the COBRA process.

2. Quality Assurance

An implemented process to review invoices on a monthly basis to make sure that HR & Accounting communicate with each other to verify that employees have terminated from the insurance plans in a timely manner.

3. If All Else Fails…

Should your measures fail to prevent this unexpected cost, the final option is to request the insurer to back date the termination.  This is best done through someone who has the most influence with the insurer: a broker.  The broker will ask you to collect information such as proof that the employee has obtained new coverage elsewhere.  Then, an exception will be requested with the insurer to back date the termination based on the information submitted.