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Change of Plans?

Then tell your employees about it.

You've shopped, you've compared, you've made your decision--now it's time to tell your employees that you're changing health insurance carriers. What's the best way to do it? Let the new carrier help you, advises Peter J. Marathas Jr., an attorney with Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC, a law firm in Boston that focuses on employee benefits.

"The insurance company will have an information packet for you to distribute to employees," he says. Include a memo explaining the reason for the change. Helping employees understand the logic behind a decision that greatly affects them is sound management.

The best time to tell your employees is 30 to 60 days before the open enrollment period begins, Marathas says. That gives employees ample time to deal with the impact of the change, but not so much time that they forget about the deadline.

Marathas notes that the Employee Retirement Income Security Act requires you to distribute a summary of material modification within 60 days of the date the change is adopted-not in advance of the change. Though you aren't legally required to provide advance notice, doing so promotes good employee relations. If you have ex-employees with coverage through COBRA, be sure they also receive notice of changes. Says Marathas, "COBRAs have the same rights as active employees."

Jacquelyn Lynn is a freelance business writer in Orlando, Florida.

This story appears in the April 2003 issue of Entrepreneur. Subscribe »