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Employer's Discretionary Health Insurance Contrib.


Guest Stacey0413
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Guest Stacey0413

I recently began working for a company that contributes 33% of the premium for employee's health insurance. However, I've learned that in some cases (where the employer felt that the employee couldn't afford insurance and really needed it) they have paid more, sometimes as high as 100% of the premium. This practice is completely discretionary and based on need.

Aside from the obvious morale-crushing impact of others learning of some receiving more of a benefit than others, can anyone tell me if this violates ERISA in any way? While their hearts are in the right place, I feel that an employer can never know everyone's circumstance completely, and should someone's circumstance change (for the better or the worse), how would they know and would adjustments be made? It's just not prudent business practice in my opinion.

I will advise them of my thoughts, however right now I need to know if they are violating any laws or regulations by doing this.

Thanks.

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ERISA includes a requirement that the employer have a written plan document that describes the benefits provided, so that employees can know what they are and are not entitled to. It is not sufficient for the document to merely say the employer can pay whatever benefit the employer, in its discretion.

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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Guest taylorjeff

I've seen plenty of plan documents that explain what benefits are offered but don't detail employer contributions. I think it is because often there are varying contributions. But, unlike the scenario you present, there is usually some rhyme or reason to the variance: management level, hourly or union, different benefits at different locations, length of service, grandfathering, etc. Bottom line: There is plenty of allowable discrimination going on.

The question is: What about capricious discrimination or maybe something that is less well defined? Employer values one employee more due to experiance / past service and pays more towards insurance. Or conversely, employee may have insurance through spouse, so employer pays none at all (but may offer more wages). I mention these two because they are every day occurrences. I've not, to my knowledge, seen an employer pay more toward benefits (or wages) simply due to "need", but I'm sure it happens. But, barring unlawful discrimination (age, sex, race, etc) and Section 125/105 discrimination issues (which generally relate to limiting the tax deductibility of benefits if there is undue favor to highly compensated and/or key employees), the employer has a lot of leaway in how he compensates his employees.

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I found your posting to be somewhat upsetting to me, so please excuse me and my reply, but I feel I need to add my 2 cents.

Prior comments are correct about the flexibility that employers have with contributions. My issue is actually with you and your thoughts and possible actions. I have worked for an employer who did this and instead of the "obvious morale-crushing impact", it was the opposite. While I cannot speak for all of the 200 or so employees, many felt positive about this act of kindness and caring.

Secondly, you state that you just started working there and you intend to "advise them of my thoughts" on this matter. Really? Why? Your a relatively new employee, in an environment of high unemployment, and you want to rock the boat on something that sounds like it's none of your business!

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