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Heath Care Plan - Eligibility QUestion


Guest ebailey
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Guest ebailey

Can a self-insured health care plan reduce the hours for elibility from 30 -24 to ensure that a reduction in work across the board for a manufactuing plant does not change the health care for the employees? I would think that as long as the underwriter is ok with it - that there would be no problems.

Also - do we have to amend the plan? If the reduction in work to 24 hours a week is only temporary (2 months) - can the 30 hour requirement still be met since it is supposed to be "normally" work 30 hours? Can this be calcuated over a year or over the quarter to see if more often than not they work 30 hours a week? And since the Plan administrator is the company - can they chose to interpret the 30 hours normally worked to be calcualted over the year?

Any help would be appreciated.

thanks

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Can a self-insured health care plan reduce the hours for elibility from 30 -24 to ensure that a reduction in work across the board for a manufactuing plant does not change the health care for the employees? I would think that as long as the underwriter is ok with it - that there would be no problems.

Also - do we have to amend the plan? If the reduction in work to 24 hours a week is only temporary (2 months) - can the 30 hour requirement still be met since it is supposed to be "normally" work 30 hours? Can this be calcuated over a year or over the quarter to see if more often than not they work 30 hours a week? And since the Plan administrator is the company - can they chose to interpret the 30 hours normally worked to be calcualted over the year?

Any help would be appreciated.

thanks

The regulations do not specify a methodology for determining 'customary weekly employment'. Treas Reg §1.105-11©(2)(iii)©. If the plan document does, then the administrator would have to apply that methodology. If the plan document does not, then the plan administrator would have to develop a methodology and apply it uniformly.

24 hours is an acceptable hours threshold between part- and full-time. In fact, it is in the regulatory safe harbor for such, whereas 30 is not.

I do not know of anything in ERISA or the IRC that would prevent a plan amendment from dropping that hours requirement from 30 to 24, and then back up to 30, except that if the net uptake is to benefit HCEs disproportionately, it would probably be unwise even though there is not a series of amendments favoring HCEs corollary to the prohibition in 1.401a4-5.

John Simmons

johnsimmonslaw@gmail.com

Note to Readers: For you, I'm a stranger posting on a bulletin board. Posts here should not be given the same weight as personalized advice from a professional who knows or can learn all the facts of your situation.

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