Administrative Fee/Surcharge on Health Insurance Premiums

[Flight33]

Company is a partnership offering health insurance to partners. Plan is fully insured.

Can the company require the partners to pay more for their insurance than the insurance company is charging the partnership in premiums? For example, the insurance company sets a participant's premium at $100 a month, but the company charges the participant $105 a month and keeps the $5 for administrative costs.

This would be similar to the additional 2% employers can charge for COBRA premiums for administrative expenses -- but outside of the COBRA context. (Is the 2% surcharge under COBRA an exception to something that is not otherwise allowed, or is it a cap on administrative surcharges that are otherwise allowed?)

This situation involves partners in a partnership, but if there is any insight with respect to an employer-employee relationship, I'd be interested in hearing thought on that as well.

Thanks in advance.

[lvena]

What is the purpose of the additional charge?

Are all the participants owners?

[Flight33]

What is the purpose of the additional charge?

Are all the participants owners?

i believe all participants are owners (let me know if that makes a difference).

And I'm not certain what the additional charges are for, but I believe to cover admin expenses. (again, let me know if you think it makes a difference.)

[MARYMM]

Company is a partnership offering health insurance to partners. Plan is fully insured.

Can the company require the partners to pay more for their insurance than the insurance company is charging the partnership in premiums? For example, the insurance company sets a participant's premium at $100 a month, but the company charges the participant $105 a month and keeps the $5 for administrative costs.

This would be similar to the additional 2% employers can charge for COBRA premiums for administrative expenses -- but outside of the COBRA context. (Is the 2% surcharge under COBRA an exception to something that is not otherwise allowed, or is it a cap on administrative surcharges that are otherwise allowed?)

This situation involves partners in a partnership, but if there is any insight with respect to an employer-employee relationship, I'd be interested in hearing thought on that as well.

Thanks in advance.

I think that a partnership can allocate costs to partners any way the partners agree to.

The company does not "keep the $5 for administrative costs". If this is truly a partnership, they are reducing the firm's health insurance expense by that $5 which in turn increases the profits which are then allocated to the partners. Or if characterized as an admin fee, they are increasing revenues which are then allocated to the partners.

So what is the purpose of doing this ? Am I missing something here - asks someone who calculated partner distributions for a very large law firm for many years ?

[leevena]

What is the purpose of the additional charge?

Are all the participants owners?

i believe all participants are owners (let me know if that makes a difference).

And I'm not certain what the additional charges are for, but I believe to cover admin expenses. (again, let me know if you think it makes a difference.)

If all are owners, they are just taking money from one pocket and putting it into another pocket. Cannnot understand what the rational is for doing something like this.