Different benefits for different employees
ktadros
8 Posts
We have 2 employees that the company is paying 100% of their benefits with no payroll deductions. The rest of the employees are on an 80/20 plan with a payroll deduction. I was not given an explaination as to why the 2 are exempt from the deduction, and neither employee is at an executive level. Is this legal? Also we do not offer benefits to everyone and I know you don't have to but typically it is based on part-time vs full time status or for some other reason. For one of our companies we only offer benefits to 2 employees who are supervisors but not exempt, is this always legal. I know things will have to change by 2014 but I want to make sure we doing things legally in the meantime.
Comments
Typically, the same benefits have to be offered to all the employees at a single location.
I'm not sure why employees would have a different deduction on the same plan. I have seen a pay increase to offset the standard deduction.
This is a really good answer from a colleague on another forum:
"The law absolutely does not say that if a benefit is offered to some employees it must be offered to all employees. It is 100% legal for the employer to have different classes of employees and offer different benefits to different classes. The only caveat is that these classes cannot be determined by a characteristic protected by law.
It is entirely legal for some benefits to be offered to full time but not part time employees; office workers but not shop employees; supervisor and up but not rank and file; employees in the corporate office but not in the field office; and similar designations. It would not be legal to offer a benefit to men but not women; to white employees but not hispanic employees; to Christians but not Jews, etc. It would also be illegal, once the eligible classes are established, to pick and choose among the members of a particular eligible class.
But there is nothing whatever illegal about establishing a class of "employees without insurance" and offering them a benefit that is not offered to employees with insurance.
And that answer is true in all 50 states. "
I've also seen companies that base the employee premium on a salary grade. So those that make more, pay a higher premium.
On further research, it appears that there is more flexibility under the law than I had thought. However, as a practical matter, it can be hard to play pick and choose. The insurer wants a lot of healthy gamblers both for revenue and to spread the risk out. So, although the insurer is unlikely to say "no," they may well say "no" under any partciular plan where it is not cost effective for them to offer the plan to small numbers. Or, in other words, it is legal but expensive to give special coverage to a small subset of employees of a small company.
The large, publicly traded company plans with which I am familliar do not have separate eligibility rules for people at least up to the VP level. What they do is offer everything to everybody and provide a benefit allowance separate from straight wages or salary. Anything above the allowance is a deduction from otherwise expected earnings. Naturally, the benefit allowance goes up with responsibility and/or tenure. So, if a customer contact center telephone service representative wants to get the executive package, he or she can get it if he or she earns enough above his or her benefit allowance to pay for it. For individuals who have other insurance at least as good as what their benefit allowance pays, they receive the allowance as pay. Although I have not worked at 50% of fortune 500 companies, I understand this is a popular approach both because it is provides equal choice to all employees and, because of the concerns in the paragraph above, it's probably cheapter to offer it that way.
Thanks for the correct info, HRforME. [Y]