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jeanine

Non-contributory plan: must all employees participate?

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An employer offers a group health plan that is non-contributory. Is it necessary that all otherwise eligible employees be covered or may they waive coverage? Is there a difference if it is an insured plan and the employer is paying the total costs of the premiums for those employees who want coverage?

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There have been a couple threads in the past that might help. The problem is that the healthy people are usually the ones who want to opt out of the plan, so you can run into some adverse selection allowing people to opt out. Also, if it is an insured plan, the carrier may specify that all eligible employees must participate, or at least specify a minimum participation percentage. I think that legally you can require participation and people who insist on opting out can simply find a new job.

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There's going to be a few variables here. Medical plans are treated a little bit differently than say a life or disability plan. First, how was your group rated by your medical carrier? Did it assume 100% participation? Check your policy out, if it does, then yes, every employee has to participate.

It is fairly common to have at least some employees opt out of group sponsored health plan even if the company pays the entire cost. Most of the time it's because the spouse has a better plan. If the carrier requires 100% participation, also check and see if an employee can waive coverage due to having coverage through his or her spouse's plan. Carriers usually do not look at this as a decline, so it shouldn't hurt the participation requirement.

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