In January 2006, Texas enacted Senate Bill 51 (SB 51), a law stating employee benefit terminations may occur only in the same month that they are reported. Under SB 51, an employee's coverage cannot be retroactively terminated. That individual's premium must be paid through the end of the month in which the insurance company is notified of the cancellation.
Example: A Texas employee terms with the employer on September 28, 2011. The employer notifies Nextep and/or the insurance carrier on October 10. The employee's date of coverage termination will be October 31. Under the SB 51 requirements, the employer is responsible for premium payment for the entire month of October, in which the employer notified the carrier.
While Oklahoma and other states do not have specific legislation that address the timely termination of benefits, it is still a very important matter to be aware of. In all states, the failure to notify Nextep immediately of an employee separation could not only result in the overpayment of benefit premiums, but it will delay the timely notification of COBRA or other benefit continuation rights to the separated employee.
To safeguard your company from paying an extra month's premiums, it is crucial to notify Nextep immediately of any employee terminations. For assistance with this and other benefits-related questions, please contact Nextep's Benefits Department.