Health Insurance Premiums Compensation

Jeffrey

Our health insurance is due for renewal in July and the rates are drastically increasing. Some employees are going to drop coverage with our company and pick up coverage with their spouse's company. We have been paying a portion of the employees premiums. As an employer can I still pay them the portion of the premium that the company was paying if the employee decides to drop coverage? Someone has told me that the law was you could not compensate if the employee opts not to take the coverage. This compensation would come as a pay raise or some type of bonus. Please reply soon. Thank you and God Bless, Jeff

Human Resources Manager

Granted, this was a few years ago, and the law could have changed, or the law could be different in your state; but, I worked for a company whose policy was that they would pay a percentage of your premium under their group policy, or they would give you an equivilent amount toward other health coverage, so long as you provided them with proof of coverage. The payment was considered a reimbursement, so there were no tax implications for the ee.

B_Jackson

In Micigan you can opt out of a plan under section 125, and receive an opt out bonus, provided the employee demonstrates that he/she has coverage. This can only be done during the enrollment unless a qualifying event occurs. This normally provides a win/win for the employer and the employee. The money is not deemed as payment for premiums, but as payment in lieu of.