Termination and medical plan costs
6274086
25 Posts
My question concerns terminated employees, our medical and dental contracts read that the coverage ends on the last day of the month in which the employee terminates. We have never asked an employee to pay forward the portion that they would have owed if working for the remainder of that month. Can we do this or can we deduct it from his vacation time payout? We have never asked for this before, can we start now? If we do ask and they don't pay, we still have to based on our contract with the provider.
Does anyone do this?
Comments
My company has the same policy of insurance ending the last day of the month in which the employee terminates. We do deduct the portion of the employee’s contribution to his/her health care cost. Because we spread the cost out over 26 pay periods you have to be careful not to deduct extra for a pay period that extends over two months. For example, pay for the last week and first week of a month. You would not want to charge the employee the health care portion for the first week if they are not covered.
That sounds overly complicated. We also have a bi-weekly pay schedule with 26 pay periods. Since federal taxes are based on the pay date, not the pay period, we charge premiums strictly on the date of pay. If the pay date is on Dec 2nd, and the pay period ended on Nov 25th, we are charging premiums for December on that check. An employee terminating on Nov 24th, would not be charged insurance premiums for the Dec 2nd pay date.
This keeps it very simple, no calculation for the portion of pay period in a month, just the per check premium payable in the month of coverage.
We pay weekly, so life is easy in terms of benefits premium deduction calculations.
We do charge remaining premium amounts on former employees' last paycheck. There may be state differences in your right to do this but I am not aware of any off the top of my head.