Most of the time employees earn a full salary in a month and pay a full premium linked to that salary and its corresponding benefits. In some instances though, there are exceptions that require clarification, for example:
• People joining or leaving during a calendar month
• Maternity leave
• Fluctuating salaries (wage or commission earners)
In order for full cover to be in place (for a month or part thereof) the insurers require a full premium and in order to avoid fluctuating cover amounts, these premiums should be based on a stable risk salary. The expectation in the above examples is, therefore, as follows:
The member should appear on the monthly member data schedule in full (salary and premium) in the first month that they start at a company and up until and including the last month that they are employed, regardless of which day in the month their employment began. This will ensure they enjoy cover from their first day of employment until their last.
Any member on maternity leave should remain on the schedule and pay a full premium during their maternity leave to ensure their granted cover remains in place. Removing a member from the data during maternity leave creates a break in cover and may see the members granted cover falling away.
In the case of fluctuating salaries, the insurer requires a stable risk salary that premiums and cover should be linked to. The rule here is that there should be a standard method of calculating that risk salary across all members whose salaries fluctuate and it should obviously be in line with the average earnings of members in a way that can be supported at claims stage.
Should you have any further questions in this regard, or other examples that you would like clarity on, then please don’t hesitate to get hold of us or your TSA Associate. An easy reference, printable list of the team contacts can be found here.
Thank you and regards,
The TSA Team