What Does the Effective Date Mean?
Why is the Effective Date Important?
The effective date for a policy is important because it indicates when an individual is covered by their plan, which can save them hundreds if not thousands of dollars, depending on the service that they need.
For example, if a person has just been hired by an organization and elects to participate in the employer-sponsored benefits, including a healthcare plan, they need to be aware of the effective date for their insurance coverage policy. If the coverage doesn’t begin immediately—and starts either on the first of the month after 30 or 60 days of employment—they would need to utilize alternative forms of temporary insurance until the coverage kicks in, if they need to utilize healthcare services.
Who Sets the Effective Date?
The effective date is determined by employers and is typically set either 30 or 60 days after an employee elects coverage, if not immediately.