Employee Contributions for Medical Coverage

funkysan

On April 1, 2003 we will begin to deduct employee contributions for medical coverage. This is the first time for this change. We have told employees they must come in to pay their contributions when then are off on medical leave. We pay bi-weekly and they are to pay on each payday. What is the best way to handle employees who fail to pay and than may not return to work after a period of time. I have been told they have a 30 day grace period and they never have to catch up while they are off. Someone could fail to make two payments, receive the benefit for a month and never return to work. Are there any laws I must be careful of regarding this issue?

LindaS

Why would they never have to "catch up"? The main issue is an employee is off on medical leave would obviously be FMLA. FMLA states that the employer cannot terminated an employee's coverage while they are out on qualifying leave as long as the employee continues to pay what normally would be their portion of the premium. We allow employees a 5-week grace period when they are off on FMLA leave. They are notified of this when the leave starts and if they fail to pay, they are notified that, without payment by them, they will be terminated from the plan effective XXX date. If payment is still not received, they are terminated. Do you offer any type of short-term disability? We do and give employees the option to have that deduction come out of their checks. 99.9% of the employees elect this option so their payments are kept current.

Leslie

We don't have short term disability, so if they don't pay, we bill. Then if they still don't pay, we either get it when they return, of if they don't return, we get if from a final paycheck. Sometimes we are still shorted, but we try.

funkysan

We pay bi-weekly. If for example the first payment is due 4/4/03 and the employee fails to make payment, they have by law 30 day grace period. The next payment is due 4/18/03 and they don't make that payment they will have 30 days from 4/18/03 to make that payment. If they make the 4/4/03 payment on 4/30/03 they only have to make one payment not two which would catch them upto date. I think they should have to make both payments but I was told they only have to make one. You said you have the payment taken from their short term coverage. We have short term coverage so is this an arrangement you have with your carrier? How did you go about setting this up?

LindaS

We are self-insured and, although the administration of this policy is done with our TPA, the checks are run through our payroll system. We get a report from the TPA telling us how much the check should be for and we run it. We get a written authorization from the employee regarding this deduction.

Min

I would suggest (STRONGLY) that you have them sign a payroll deduction and have it come out automatically each payday. Be careful, if you pay more than twice a month at all through out the year, you will only want it to come out twice per month, not three.
Our employees are responsible for dependent coverage payments and it is POLICY that if they cover spouse/child(ren) it comes out each month.
Mindy

HRPeg

We allow a 30 day grace period, you have to allow at least this amount, and this is spelled out in the FMLA paperwork that they have. If they fail to make their payments within the 30 day grace, then their insurance is canceled. Fortunately, I have never had that happen yet! I have had to get someone who did not return from FMLA pay for the employer portion of the insurance that they had while on FMLA.
make sure that they have all the proper paperwork with everything clearly documented and they know the consequences of failing to pay within the timeframe.

NaeNae55

Your grace period law must be a state law. Most insurance companies will give 30 days, but I have seen only 10. In any case, I would assume that your insurance is on a monthly basis, but you just withhold by paycheck. Therefore your employee has to pay the full amount for April by 4/30 as it is technically due 4/1. If you accept partial payment, then you have to look closely at the law, your plan document, and your insurer's policies. Many companies retro the cancel date and refund the partial payment.

We recently had an employee out on FMLA not pay their portion of the premium. They had paid part of Feb, and we did not term until late March with a retro term date of 2/16 (long story). We could only go back so far, so we ate part of the costs of Feb (we billed the employee but it is extremely unlikely that we will get the money) and made insurance term date 2/28.

I suggest you talk to your carrier or broker and get their advice. You may be assuming you have to do things which you really don't have to do. Also, following your carrier's policy is a good rule and takes the 'monkey' off your back.

Hope this helps.