ERISA and Employer Paid Health Premiums Help

[Guest HealthAgent]

I need a little help!.

I have a group health client (63 employees) where the employer currently pays 100% of the premiums for both Employee AND Dependent Health Coverage, They wish to continue this practice for all of their current employees however they do not wish to pay for benefit coverage for any future new employees, and they've asked me how they might effectively do this. The idea is to not reduce any benefit their current employees have while reducing their future cost exposure.

I can't think of any way they can effectively do what they want, but I can't find a statute that specifically precludes this type of "discrimination". Any ideas would be greatly appreciated.

[Guest Benefits Broker CO]

Is the group fully insured or self funded? If they're fully insured, I would expect that the carrier has a requirement regarding employer contribution, at least for employee coverage. Here in COlorado for example, most carriers require that the employer pay at least 50% of the employee-only rate.

I'm not aware of any statutes that preclude contributions of the type your client is suggesting. I have seen clients offer contribution toward both employee and dependent coverage based on years of service and as long as the differentiation is years of service ONLY, it should be allowed.

[Guest Sieve]

Under ERISA & the Code, discrimination with regard to insured health care is allowed. But, from what I can tell, discrimination in insured health plans is eliminated by Health Care Reform for plan years beginning after 9/23/2010 (specifically, the Code's self-insured non-discrimination rules will apply).

[Guest HealthAgent]

Is the group fully insured or self funded? If they're fully insured, I would expect that the carrier has a requirement regarding employer contribution, at least for employee coverage. Here in COlorado for example, most carriers require that the employer pay at least 50% of the employee-only rate.

I'm not aware of any statutes that preclude contributions of the type your client is suggesting. I have seen clients offer contribution toward both employee and dependent coverage based on years of service and as long as the differentiation is years of service ONLY, it should be allowed.

Thanks all for the responses. The Group is Fully Insured. I thought of the idea of establishing that employees with "x" amount of years receive dependent coverage s a perk. The problem is, 40% or so of their employees have only been with the company for two years or less. They've actually been growing in this economy! That means theoretically that they could only "protect" themselves from the additional dependent coverage costs for a period of two years given that they do not want to take away anyones existing benefits, and they want a permanent solution. See my predicament?

Thanks again for the response!

[MARYMM]

Is the group fully insured or self funded? If they're fully insured, I would expect that the carrier has a requirement regarding employer contribution, at least for employee coverage. Here in COlorado for example, most carriers require that the employer pay at least 50% of the employee-only rate.

I'm not aware of any statutes that preclude contributions of the type your client is suggesting. I have seen clients offer contribution toward both employee and dependent coverage based on years of service and as long as the differentiation is years of service ONLY, it should be allowed.

Thanks all for the responses. The Group is Fully Insured. I thought of the idea of establishing that employees with "x" amount of years receive dependent coverage s a perk. The problem is, 40% or so of their employees have only been with the company for two years or less. They've actually been growing in this economy! That means theoretically that they could only "protect" themselves from the additional dependent coverage costs for a period of two years given that they do not want to take away anyones existing benefits, and they want a permanent solution. See my predicament?

Thanks again for the response!

Why can't they just change their policy so that anyone hired after say 1/1/11 has to contribute the cost of the premium for dependent coverage? We did that many years ago at the law firm I where I worked at the time (which had an ERISA practice) and that worked well for us. We continued to pay 100% of the ee coverage and ee's paid 25% - 75% of dependent coverage depending on their employment class (staff or associate) and FT/PT status

We also specified that any current employee who did not have benefits with us who later wanted to enroll during open enrollment or due to a QA was also subject to this new policy.