Beemer Posted June 17, 2011 Share Posted June 17, 2011 A client wants to require their two employees to make pre-tax contributions for medical benefits. They don't want to give them a cash or deferral election, but they would have to take the payroll deduction. I don't believe this would count as a cafeteria plan because they couldn't take the cash, but can they require the pre-tax contribution from the employees? Thanks Link to comment Share on other sites More sharing options...
QDROphile Posted June 17, 2011 Share Posted June 17, 2011 The employer wants to cut wages and increase the employer contribution for medical benefits. Why does the employer want to dress it up differently, in a way that has an air of wrongness about it? Link to comment Share on other sites More sharing options...
Chaz Posted June 17, 2011 Share Posted June 17, 2011 Are you saying that the employees would not have a choice whether to take health insurance and that paying for benefits is a condition of employment? If so, you are correct that no cafeteria plan is necessary. This is permissible, but, as QDROphile alludes, it is not a common plan design. Link to comment Share on other sites More sharing options...
Beemer Posted June 17, 2011 Author Share Posted June 17, 2011 I think they just want the employees to pay for it. Link to comment Share on other sites More sharing options...
leevena Posted June 17, 2011 Share Posted June 17, 2011 A client wants to require their two employees to make pre-tax contributions for medical benefits. They don't want to give them a cash or deferral election, but they would have to take the payroll deduction. I don't believe this would count as a cafeteria plan because they couldn't take the cash, but can they require the pre-tax contribution from the employees?Thanks Employer cannot require employee to pay for anything. The employer can require premiums paid by the employee run their contributions through a POP. Link to comment Share on other sites More sharing options...
QDROphile Posted June 17, 2011 Share Posted June 17, 2011 If your only tool is a hammer, every problem looks like a nail. Link to comment Share on other sites More sharing options...
GBurns Posted June 18, 2011 Share Posted June 18, 2011 If it was a condition of initial employment, then a one time irreversible election might be allowed as done in Re Express Oil Change.. If, however, the existing employees are going to reduce their earnings, this would be electing a deferral which would require a POP Cafeteria Plan with a salary reduction agreement. They are giving up cash for deferral. I do not think that the law allows an employer to mandate that an employee pay for anything such as this. Isn't this similar to the individual mandate problem the White House is having with ACA? George D. Burns Cost Reduction Strategies Burns and Associates, Inc www.costreductionstrategies.com(under construction) www.employeebenefitsstrategies.com(under construction) Link to comment Share on other sites More sharing options...
Chaz Posted June 18, 2011 Share Posted June 18, 2011 I am not aware of any law that prevents an employer from requiring its employees to purchase health insurance as a condition of employment. In my view, a cafeteria plan is not required in this scenario because the employees are not given a choice between receiving health benefits and cash. Their only choice is between a job with health benefits and unemployment. This is not a comment as to the advisability of this scenario, just a comment on the law. I'm not seeing a connection between this and the individual mandate. Am I missing something? Link to comment Share on other sites More sharing options...
GBurns Posted June 18, 2011 Share Posted June 18, 2011 If these were potential employees and this was part of the job offer, I would agree, but, these are current employees who are already under agreed conditions. I would think that a condition of employment is ... This is how it will be done IF you take the job. To make the change afterwards is a change of conditions. To make the change afterwards and make it mandatory with no choice is different but still a change of conditions. To make the change afterwards and make it mandatory with the threat of termination is a whole different ball game. George D. Burns Cost Reduction Strategies Burns and Associates, Inc www.costreductionstrategies.com(under construction) www.employeebenefitsstrategies.com(under construction) Link to comment Share on other sites More sharing options...
Chaz Posted June 20, 2011 Share Posted June 20, 2011 In the case of at-will employment, which I assume is the case here, and in the absence of a contractual promise, which I assume is not the case here, an employer can change the conditions of employment at any time and for (most) any reason. The change is in consideration for employment going forward. Link to comment Share on other sites More sharing options...
Beemer Posted June 20, 2011 Author Share Posted June 20, 2011 It looks now like the employer is going to be comfortable implementing this. Thanks everyone for your input. Link to comment Share on other sites More sharing options...
Everett Moreland Posted June 20, 2011 Share Posted June 20, 2011 In many (most?) states this would violate the state's wage withholding law. These laws generally prohibit a payroll deduction not authorized by the employee in writing. The safer way to do this is, as QDROphile states, cut wages and increase the employer contribution for medical benefits. Link to comment Share on other sites More sharing options...
Chaz Posted June 20, 2011 Share Posted June 20, 2011 This is out of my area of expertise but couldn't the employer require the employees to sign an authorization (again, as a condition of employment)? Link to comment Share on other sites More sharing options...
leevena Posted June 20, 2011 Share Posted June 20, 2011 This is out of my area of expertise but couldn't the employer require the employees to sign an authorization (again, as a condition of employment)? No, no, and no! Link to comment Share on other sites More sharing options...
Chaz Posted June 20, 2011 Share Posted June 20, 2011 No, no, and no! Why not? (Assuming it's at-will employment.) Link to comment Share on other sites More sharing options...
leevena Posted June 20, 2011 Share Posted June 20, 2011 No, no, and no! Why not? (Assuming it's at-will employment.) at will has nothing to do with it. The employer could require participation and cost contribution if it's part of an employement contract only. If there is no contract, there can be no forced enrollment/payment. Link to comment Share on other sites More sharing options...
GBurns Posted June 20, 2011 Share Posted June 20, 2011 There has been no mention of a contract by the OP. All that is known is that the employer wants to make the change. George D. Burns Cost Reduction Strategies Burns and Associates, Inc www.costreductionstrategies.com(under construction) www.employeebenefitsstrategies.com(under construction) Link to comment Share on other sites More sharing options...
Chaz Posted June 20, 2011 Share Posted June 20, 2011 No, no, and no! Why not? (Assuming it's at-will employment.) If there is no contract, there can be no forced enrollment/payment. Again, I'm not sure why not. What law prohibits it? Link to comment Share on other sites More sharing options...
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