# Common invoice issues and evidence of insurability. Why premiums can be billed for coverage that was never approved.

Source: https://ethosbenefits.com/insights/evidence-of-insurability-invoice-issues
Type: Insight
Topic: Benefits strategy and administration
Author: Donovan Ryckis, Founder and CEO
Reviewed by: Patrick Ansara, Partner and Director of Client Operations
Publisher: Ethos Benefits
Published: 2024-03-29
Last updated: 2026-11-03
Cite as: "Common invoice issues and evidence of insurability," Ethos Benefits, https://ethosbenefits.com/insights/evidence-of-insurability-invoice-issues, updated 2026-11-03.

**Summary:** How evidence of insurability (EOI) for life and disability coverage causes invoice errors and denied claims, and how employers can audit and fix the process.

## Key takeaways

- Evidence of insurability (EOI) is the health questionnaire a carrier requires before it approves life or disability coverage above the guaranteed issue amount, or a late or larger-than-allowed election.
- When payroll deducts premiums for an elected amount the carrier never approved, the employee may believe they are covered until a claim is denied.
- Courts have held insurers and employers responsible in some of these cases, including Salyers v. MetLife (9th Cir. 2017) and Silva v. MetLife (8th Cir. 2014).
- The fix is administrative. Deduct only the guaranteed issue amount until EOI is approved, track every pending EOI to a decision, and reconcile deductions to the carrier invoice.

I often speak with employers who say open enrollment went well, but they have nagging invoice issues afterward. If benefit amounts on the carrier invoice look wrong, or employee deductions don't match what the carrier bills, an evidence of insurability (EOI) problem is often the cause. Left alone, it can do more than throw off a reconciliation. It can leave an employee's family without the life insurance they thought they had.

## What is evidence of insurability?

Evidence of insurability, sometimes called a statement of health, is the health information a carrier requires before it approves certain coverage. It applies mostly to group life and disability insurance, and some carriers apply it to other voluntary coverage as well.

The key number is the guaranteed issue amount: the coverage an eligible person can get without answering health questions. EOI is usually required when:

- an employee or spouse elects more than the guaranteed issue amount
- an employee enrolls late, after the initial eligibility window
- an employee increases coverage by more than the plan allows without EOI, often one level per year

For example, if guaranteed issue for supplemental life is $250,000 and an employee elects $300,000, the first $250,000 is covered and the extra $50,000 needs EOI. Until the carrier approves it, the employee has $250,000 of coverage.

## How does EOI cause invoice errors?

EOI causes invoice errors when systems treat the election as if it were the approval. The employee elects $300,000, the [benefits administration](https://ethosbenefits.com/benefits-101/employee-benefits-administration) system sends $300,000 to payroll, and payroll starts deducting premiums for $300,000. The EOI form is never completed, or it is completed and denied, and no one updates the deduction.

| Where it breaks | What happens | What the employee sees |
| --- | --- | --- |
| Enrollment system | The full elected amount is recorded instead of the guaranteed issue amount | The full amount on their benefits summary |
| Payroll | Premiums are deducted for coverage that is still pending | A deduction that matches their election |
| EOI follow-up | No one reminds the employee, or the carrier's request goes unanswered | Nothing, so they assume they are covered |
| Carrier invoice | The carrier bills only approved amounts, or bills the full amount in error | Nothing, but the invoice and payroll no longer match |
| Claim | The carrier pays only the approved amount and denies the rest | A denied claim, often after a death or disability |

The invoice mismatch is the early warning. It shows up months before a claim does.

## What have courts said about unapproved coverage?

Courts have held insurers responsible in some of these cases, and the facts are usually the same.

In *Salyers v. Metropolitan Life Insurance Co.* (9th Cir. 2017), a hospital employee's dependent life coverage was entered at the wrong amount, and premiums were deducted for $250,000 of spouse coverage that required a statement of health. No one asked for one. When her husband died, the insurer paid only $30,000. The Ninth Circuit held that the insurer had waived the EOI requirement by accepting premiums without asking for it, attributed the employer's knowledge and conduct to the insurer under agency law, and ordered judgment for the unpaid amount. The record also noted the employer's usual practice: enroll the employee at the maximum amount allowed without a statement of health and mark the rest pending until approval. That practice was not followed.

In *Silva v. Metropolitan Life Insurance Co.* (8th Cir. 2014), an employee enrolled late for $429,000 of supplemental life, and premiums came out of his paychecks for about six months before he died. The insurer denied the claim because no EOI was on file. An internal review found roughly 200 employees at the same company paying for coverage that had never been approved. The Eighth Circuit, with the Department of Labor appearing as amicus in support of the beneficiary, held that the beneficiary could pursue equitable relief under ERISA section 502(a)(3), including the full benefit, relying on the Supreme Court's decision in *CIGNA Corp. v. Amara*.

These decisions turned on their facts, and not every court rules for the beneficiary. The point for employers is that a lawsuit is a poor substitute for getting the deduction right.

## How should the benefits system handle EOI?

Your benefits administration system should follow the carrier's EOI rules, not just record elections.

- **Confirm** whether guaranteed issue applies only at initial eligibility or at every open enrollment.
- **Verify** that the system has the correct guaranteed issue amounts for employees and for spouses.
- **Deduct** premiums for the guaranteed issue amount, or the current approved amount, while EOI is pending.
- **Prompt** employees during enrollment to complete EOI, with a direct link or form.
- **Use** the same EOI language and instructions in every system employees see.
- **Set up** a file feed or regular report from the carrier so approvals and denials update the system.

## Who should follow up on a pending EOI?

A named person, at the employer or the broker, should own each pending EOI until it is decided, because technology alone won't close the loop.

- **Assign** who notifies employees about pending EOI, and through which channels.
- **Collect** copies of the carrier's own EOI letters so your messages match.
- **Decide** who leads if the carrier doesn't follow up: the employer or the broker.
- **Define** deadlines and what happens at each outcome, including EOI completed after the window closes.
- **Track** approvals and denials in one place, in the benefits administration system or a carrier report.
- **Update** the system and payroll on the day a decision arrives, and refund premiums taken for denied coverage.

Make sure the plan's documents and [summary plan description](https://ethosbenefits.com/benefits-101/summary-plan-description) explain when EOI is required and when coverage takes effect. ERISA requires the summary plan description to describe eligibility rules and the circumstances that can lead to a denial or loss of benefits.

## How do you audit EOI and invoices?

A short monthly or quarterly check catches most problems before a claim does.

1. Pull a list of every pending EOI from the carrier and from your benefits administration system, and compare them.
2. For each pending employee, confirm payroll is deducting for the approved amount only.
3. Reconcile payroll deductions to the carrier invoice by employee and by coverage amount.
4. Close out any EOI that has passed the carrier's deadline, notify the employee and correct the deduction.
5. Refund premiums taken for any coverage the carrier denied or never approved.

When you market your plans, ask each carrier how its EOI process works, what its technology supports and how it communicates with employees. Get its timeline and sample notices before you choose a carrier. Ethos Benefits reconciles carrier invoices against enrollment as part of its [billing and eligibility audits](https://ethosbenefits.com/services/audits) and [benefits administration](https://ethosbenefits.com/services/benefits-administration) work.

## Frequently asked questions

### What does evidence of insurability mean?

Evidence of insurability (EOI), sometimes called a statement of health, is the health information a carrier requires before it approves certain life or disability coverage. It usually applies to amounts above the guaranteed issue limit, late enrollments and increases beyond what the plan allows without it. Until the carrier approves it, the extra coverage is not in force.

### What is an evidence of insurability form?

An evidence of insurability form is the health questionnaire the carrier uses to decide whether to approve coverage that requires EOI. The employee, and a spouse electing coverage, completes it, often through a link in the enrollment system or a carrier portal. The carrier then sends an approval or denial, which should update payroll the same day.

### What is a guaranteed issue amount?

The guaranteed issue amount is the coverage an eligible employee or dependent can get without answering health questions. For example, if guaranteed issue for life insurance is $250,000 and an employee elects $300,000, the extra $50,000 needs EOI and approval from the carrier, and the employee has $250,000 of coverage until then.

### Does paying premiums mean the coverage is approved?

Not under most plan documents, which say coverage requiring EOI does not take effect until the carrier approves it. Courts have sometimes held insurers or employers responsible when premiums were collected for unapproved coverage, as in Salyers v. MetLife, but employers should not count on a lawsuit to fix an administrative error.

### How should payroll handle a pending EOI?

Deduct premiums for the guaranteed issue amount, or the employee's current approved amount, until the carrier approves the EOI. Update payroll and the benefits administration system the day an approval or denial arrives, and refund any premiums taken for coverage that was denied.

### What happens if evidence of insurability is denied?

The employee keeps the guaranteed issue amount or their current approved amount, and the carrier will not pay on the denied portion. The employer should notify the employee, update payroll and the benefits administration system the day the denial arrives, and refund any premiums already deducted for the denied coverage.

## Sources

1. [Salyers v. Metropolitan Life Insurance Co., No. 15-56371 (9th Cir. Sept. 20, 2017)](https://cdn.ca9.uscourts.gov/datastore/opinions/2017/09/20/15-56371.pdf), U.S. Court of Appeals for the Ninth Circuit
2. [Silva v. Metropolitan Life Insurance Co., No. 13-2233 (8th Cir. Aug. 7, 2014)](https://ecf.ca8.uscourts.gov/opndir/14/08/132233P.pdf), U.S. Court of Appeals for the Eighth Circuit
3. [CIGNA Corp. v. Amara, No. 09-804 (2011)](https://www.law.cornell.edu/supremecourt/text/09-804), Legal Information Institute, Cornell Law School
4. [29 U.S.C. 1132, Civil enforcement](https://www.law.cornell.edu/uscode/text/29/1132), Legal Information Institute, Cornell Law School
5. [29 CFR 2520.102-3, Contents of summary plan description](https://www.law.cornell.edu/cfr/text/29/2520.102-3), Legal Information Institute, Cornell Law School