Ancillary benefits such as life and critical illness often include an age reduction schedule provision that reduces an individual’s amount of coverage when they reach a certain age such as 65 or 70. Maxwell automates age reduction so HR administrators don’t need to manually adjust an employee’s enrollment to reflect the correct coverage amounts and costs.
In this article:
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Note for clients of the Maxwell + Sun Life solution: You will not need to set this up, as the Maxwell team will implement your portal (and all its configurations) on your behalf. |
Here’s how you’ll set up age reduction on the product’s configuration in Tempo.
- Select when age reduction occurs:
- Enter the minimum benefit reduction amount (if there is one). This is the lowest dollar value the coverage amount is allowed to go when the reduction is applied.
- Enter how the benefit amount should be rounded and the corresponding rounding number. The rounding number is the nearest number that the coverage amount should be rounded to (example: 1,000).
- If spousal coverage is included in the plan, you’ll indicate if age reduction should also apply to the spouse and if so, what age it should be based on.
- If age reduction does apply to the spouse, you’ll also set the spouse’s minimum benefit reduction amount (if there is one) and the rounding properties.
- If age reduction does apply to the spouse, you’ll also set the spouse’s minimum benefit reduction amount (if there is one) and the rounding properties.
How age reduction is reflected in Maxwell
Benefit reduces on DOB, end of birthday month, or end of calendar year
For these schedules, an individual’s existing enrollment in Maxwell will be automatically updated in Maxwell on the day that they hit the applicable date.
Example:
- Employee is enrolled in a voluntary life insurance plan that reduces coverage by 35% at age 65.
- The age reduction is set up to take place on the employee’s date of birth, which is 3/5/54.
- The employee turns 65 on 3/5/2019 and a new enrollment is automatically created with 3/5/2019 as the effective date. Note: the past benefit enrollment will maintain the original coverage amount before the age reduction took place.
If the employee is enrolling in benefits on Maxwell for the first time and they do not have any existing enrollments, the reduction will take place once the HR administrator ends the event.
Example:
- An employee who is 68 years old is hired on 4/1/2019.
- The employee is offered a voluntary life insurance plan that reduces coverage by 35% at age 65.
- When shopping, the employee will see a coverage amount and associated cost for the voluntary life insurance plan that has not yet been age reduced.
- Once the employee is done shopping and the HR administrator ends the new hire event and the election is automatically processed, the enrollment will automatically age reduce. This timing is important because it means the employee might have a different coverage amount or cost than they saw when they selected the plan. Please note that we are working to improve this experience and hope to release an update in early 2020!
- Note: the original benefit amount selected by the employee will not be maintained in the system in this case, so you may want to make note of it or run a Pending Elections report before ending the event.
Benefit reduces on plan anniversary
If the benefit is scheduled to reduce on plan anniversary, the individual’s enrollment will be updated in Maxwell when the HR administrator ends the open enrollment and all the elections are automatically processed. This timing is important because it means the employee might have a different coverage amount or cost than they saw when they selected the plan. Please note that we are working to improve this experience and hope to release an update in early 2020!
Example:
- Employee is enrolled in a voluntary life insurance plan (effective 1/1/2019 - 12/31/2019) that reduces coverage by 35% at age 65.
- The age reduction is set up to take place at plan anniversary.
- The employee turns 65 on 3/5/2019.
- When the employee shops for benefits during open enrollment for 1/1/2020 effective plans, they will see their current coverage amount and costs, and not the age-reduced amount.
- When the HR administrator ends the open enrollment and all the elections are automatically processed, the age reduction will be applied to the enrollment.
Age reduction changes will happen automatically in the system and you will not be notified. If you’d like to know if any age reductions have taken place, we recommend running a Change Report.