health insurance q

[ishium 80439]

I have an employee who is single. I am paying 1/2 of his health insurance. (I know for a single employee it is customary for the company to cover the whole thing but it is what I can afford right now.) We talked and he wants to opt out because he has apparently found some alternative plan that he can get cheaper than the share he is paying now.

My question has to do with what I can see coming next because I have seen it before in other companies I worked for. When he opts out I think there is the potential that he is going to expect the premium I won't be paying for him anymore as an additional benefit payed directly to him. I could be gearing up for a fight that won't materialize but I'm just trying to arm myself. It is my opinion that those monies are used to fund this particular benefit if you choose to participate. If you opt out you are not entitled to those monies as an "extra".

So what do you think?

 

[Buck Parrish]

IMHO, I feel like the money you are paying for his insurance. This is money you we're spending on him any way. Why not give it to him.

 

[charlie b]

I have worked for one company that had a written policy to the effect that if you opted out of their coverage, the company would pay you directly the amount of their cost. I have worked for another company that would do no such thing, but that too was in writing. I liked the former policy better than the later, but I do not recall if I took advantage of it at the time. Whatever you decide, find a way to put it in writing. Even if all you do is put a handwritten memo on the wall of your office, you will at least have made your decision clear and fair to any potential future employee.

 

[iMuse97]

don't fight it too much if you've ever had the thought that I could pay him more but this insurance benefit costs too much. I've had a guy tell me that straight up, and when I found a better (cheaper and with comparable benefits) policy, he wouldn't pay me any more.

I don't work for him anymore, either. And its good for both of us, or at least for me.

What I'm saying is: try to see it from his perspective, especially if he's a good employee and worth the hassles that go with employing people, because he also has to think you're worth the hassles of working for someone, if he's to have a future with your company.

Don't get into a battle, go to him with an "offer" if you think that is appropriate.

 

[electricmanscott]

To me the answer is really how valuable is this guy to you. Figure that out and your question will answer itself.

 

[winnie]

If you choose to make your employee an offer, be sure to understand how his leaving your insurance policy will change the total cost of your corporate health insurance. Your total costs may only drop by a portion of the fee that is 'his' share. Even if you are only getting your ducks in a row in case he asks for the money, you should figure out how _your_ costs will change.

You also might consider funding a 'health savings account', where he gets the money but only for health purposes, and he uses this to buy his insurance and pay for other health care needs. Presumably the cheaper insurance that he is looking at has high deductibles or other high 'out of pocket' costs.

-Jon

 

[ishium 80439]

Wow, I'm not sure that was necessary, I'm only asking a question. For instance my wife works for a large corporation and she has opted out of her health plan but does not see any of that money back to her. I understand that working in this environment is different that is why I was asking for opinions. Most of which were appreciated.

 

[BryanMD]

My question... When he opts out I think there is the potential that he is going to expect the premium I won't be paying for him anymore as an additional benefit payed directly to him.

With a big company and a LOT of plan participants having one more (or not) doesn't usually affect anything. But for a small company having one more (or less) can mean a dramatic difference in the total cost of the plan; what benefits can be included... all sorts of things change. (This is one of the big issues wit HI reform if you've been living under a rock)

Anyway, the actual cost differences is what you need to quantify (check with your agent) before you can decide what you should do.

 

[nhfire77]

Offer an incentive program. give him half of it now and when he does XYZ he gets the other half. Show that you care about him developing new skills, or a certification, and pay him well.

 

[brian john]

imho, i feel like the money you are paying for his insurance. This is money you we're spending on him any way. Why not give it to him.

yep...............

 

[satcom]

Very funny! And to the OP, yes, pay him.

I hope the OP is a fortune 500 company with deep pockets, a small business is not in a position to offer felx benifits, contractors that offer health benifits understand all the rules, and know you can't drop an enrolled employee, without it changing the entire contract, and can cause the company big time liabilities, letting an employee drop out of a group plan, should that employee have any problems with the insurance he went with, the expenses could come back to your company, and your group insurance will cover the loss, but you company can still be charged. The insurance companies run some really great information sessions, that help small business understand the way group health benifits work, an intresting day. If he wants to pay him the difference, he will need to set up an approved health savings plan, then the employee can use it for health care, or cash out some of the money and pay the tax on it. Business is fun!

 

[ishium 80439]

According to my insurance agent letting him drop is not a problem (honestly though, I'm not sure I trust he is correct). I'm just trying to find out what the general consensus is. Right now I'm trying to figure out if there is a way that I can offer him $X only if it put in an HSA or something similiar. Don't know the particulars of making that happen but this is an evolving issue that I'm trying to find the best resolution for.

Thanks for the input so far.

 

[tyha]

I dont have the experience of an employee droping because our coverage is great and we cover the full cost of the employee and half of the family but if one of my guys dropped out I would in no way pay extra salary or whatever to that employee. Our insurance is a fixed cost and I could not justify paying an employee extra because he found a cheaper plan. I work with our agent alot and he works hard to get us good premiums and coverage. What happens when he decides the other insurance isn't any good and it just happens to be open enrollment and he decides to come back on. Do you reduce his salary?

 

[satcom]

According to my insurance agent letting him drop is not a problem. I'm just trying to find out what the general consensus is. Right now I'm trying to figure out if there is a way that I can offer him $X only if it put in an HSA or something similiar. Don't know the particulars of making that happen but this is an evolving issue that I'm trying to find the best resolution for.

Thanks for the input so far.

Yes, dropping him is not a problem for your agent, it may become your problem when you drop him, there are plenty of issues to consider, when you offer employees benifits of any kind, what has your accountant been advising you to do in this matter? A good CPA knows all the rules and can give you the best advice.

 

[everyja]

i'm not an employer but if the employer pays anything for health insurance, is that money non taxed. So why would you pay an employee extra for not taking the insurance. It would not be a write off then.

 

[drbond24]

I have an employee who is single. I am paying 1/2 of his health insurance. (I know for a single employee it is customary for the company to cover the whole thing but it is what I can afford right now.) We talked and he wants to opt out because he has apparently found some alternative plan that he can get cheaper than the share he is paying now.

My question has to do with what I can see coming next because I have seen it before in other companies I worked for. When he opts out I think there is the potential that he is going to expect the premium I won't be paying for him anymore as an additional benefit payed directly to him. I could be gearing up for a fight that won't materialize but I'm just trying to arm myself. It is my opinion that those monies are used to fund this particular benefit if you choose to participate. If you opt out you are not entitled to those monies as an "extra".

So what do you think?

My health insurance is paid partially by my employer, and the rest is deducted from my paycheck. When I get a paycheck, I see my gross pay and then I see the deductions for health insurance, life insurance, etc. If I cancelled my health insurance, that deduction would disappear meaning that the portion I was paying would now come to me in my net pay. However, the portion the company was paying was never mine anyway. I would not expect to get that.

What I'm saying is, the 1/2 that your employee is paying is his, but the 1/2 that you have been paying is yours. This guy is only going to save money if the new plan he has found is cheaper than half of the plan he has now. Doubtful.

 

[satcom]

My health insurance is paid partially by my employer, and the rest is deducted from my paycheck. When I get a paycheck, I see my gross pay and then I see the deductions for health insurance, life insurance, etc. If I cancelled my health insurance, that deduction would disappear meaning that the portion I was paying would now come to me in my net pay. However, the portion the company was paying was never mine anyway. I would not expect to get that.

What I'm saying is, the 1/2 that your employee is paying is his, but the 1/2 that you have been paying is yours. This guy is only going to save money if the new plan he has found is cheaper than half of the plan he has now. Doubtful.

Well explained! it would be nice if everyone understood the post as well as you have.

 

[ptonsparky]

I have an employee that I was paying his insurance. He wanted to drop it because wife got job with ins. OK. Gave him the money instead. Wife lost job. Now he needs ins again and it has gone up considerably. Not sure what we are going to do. I don't think he wants to take a cut in pay.

 

[bradleyelectric]

I have an employee that I was paying his insurance. He wanted to drop it because wife got job with ins. OK. Gave him the money instead. Wife lost job. Now he needs ins again and it has gone up considerably. Not sure what we are going to do. I don't think he wants to take a cut in pay.

That right there is the problem with dropping employees from an insurance policy and giving them the money. Health insurance is based on average age of those enrolled. If a younger employee drops off the policy and isn't averaged in at renewal the policy becomes more expensive just because he isn't averaged in. So it costs you more for everyone elses policy plus you paid the employee for doing it.

 

[ishium 80439]

FWIW I'm in the midst of trying to find a new agent and working this out w/ my CPA. I think my existing (soon to be ex) did not specialize in health and thought he could figure out along the way.

It seems that the first mumber of posts were all saying to give him the $ but this recent bunch is cautioning against it. I like the way drbond24 summarized it. Getting different insight into how to solve a problem is the reason I come here. Thanks.