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Employer Contribution to Health Insurance Based on Marital Status


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Can my employer pay more for a co-workers health insurance, who is married, than for my health insurance as a single person?

My employer pays 100% of my health insurance, but they also pay 100% of my co-workers' family health insurance policy (which covers my co-worker, his spouse and his children).  We have the same job, with the same job title and responsibilities.  But I believe that since family policies are likely 3-5 times more expensive than a single policy my co-worker is receiving a larger dollar benefit based on the cost of his family policy vs my single policy.

Is this legal, or is it a discriminatory benefits policy based on marital or family status and not a bona fide job-related classification?

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1 hour ago, nlrln said:

Can my employer pay more for a co-workers health insurance, who is married, than for my health insurance as a single person?

My employer pays 100% of my health insurance, but they also pay 100% of my co-workers' family health insurance policy (which covers my co-worker, his spouse and his children).  We have the same job, with the same job title and responsibilities.  But I believe that since family policies are likely 3-5 times more expensive than a single policy my co-worker is receiving a larger dollar benefit based on the cost of his family policy vs my single policy.

Is this legal, or is it a discriminatory benefits policy based on marital or family status and not a bona fide job-related classification?

It is legal.  Why do you ask, what do you find discriminatory?

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We all know it's legal, but it's a fair observation don't you think?  Nirin is not the first one to observe this, as it has been going on for decades.  Employee A and Employee B do exactly the same work and they are led to believe that they get the same compensation, but in fact they don't.

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1 hour ago, jpod said:

We all know it's legal, but it's a fair observation don't you think?  Nirin is not the first one to observe this, as it has been going on for decades.  Employee A and Employee B do exactly the same work and they are led to believe that they get the same compensation, but in fact they don't.

If you receive your benefits info and it gives you your cost for single, dep., family, how in the world would anyone think they are getting the same compensation?

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Until they see that information, and not all employers provide it, how would they know about it?  In any event, I was only suggesting that it would not be unreasonable for one to see some unfairness in this.  

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8 hours ago, nlrln said:

Is this legal....? 

Not only is it legal, but unless there is a 125 plan it may be illegal to do it any other way! Remember employers are forbidden from asking marital status or family status. So if an employer offers family medical coverage a new employee that is single has no way of communicating the fact that they are single until after hired. A cafeteria plan can smooth the difference out equitably.

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5 hours ago, jpod said:

Until they see that information, and not all employers provide it, how would they know about it?  In any event, I was only suggesting that it would not be unreasonable for one to see some unfairness in this.  

I think it's pretty unreasonable.  The benefit is identical (100% of health ins to employee and spouse/children).   The fact that OP does not have a spouse or children to cover does not make the benefit unfair.  The employers cost for that benefit is an entirely separate issue.

 

 

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3 hours ago, Mike Preston said:

Not only is it legal, but unless there is a 125 plan it may be illegal to do it any other way! Remember employers are forbidden from asking marital status or family status. So if an employer offers family medical coverage a new employee that is single has no way of communicating the fact that they are single until after hired. A cafeteria plan can smooth the difference out equitably.

An employer can do it any way, no need to ask marital status when the employee selects coverage.   Remember, a married employee does not need to select family coverage, in fact many dual income couples will select single for one and single for the other.

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53 minutes ago, leevena said:

An employer can do it any way... 

 Not the way the Opie wants to do it. He wants to see his compensation a bit higher to recognize the fact that the medical expense is lower.

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15 hours ago, RatherBeGolfing said:

I think it's pretty unreasonable.  The benefit is identical (100% of health ins to employee and spouse/children).   The fact that OP does not have a spouse or children to cover does not make the benefit unfair.  The employers cost for that benefit is an entirely separate issue. 

 I guess it's in the eye of the beholder.  I have been married forever and enjoyed that benefit many years ago for several years, and I happen to think it's grossly unfair. 

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I agree, it's in the eye of the beholder.  If OP lost out on something because of the additional cost for co-worker, I would agree that it's at least arguably unfair.  But its not like the employer would pay their widget testers more if the benefit cost went down, that excess would go elsewhere.  So what the company pays for co-workers insurance does not harm OP.  OP could also cover spouse and children at 100% paid by the employer, so the benefit offered is identical.

Lets switch it to retirement benefits instead.  OP and CW both receive contributions to a pension plan.  Their benefit is identical, $1000 a month payable at age 65. OP is slightly younger than CW so the employer cost for CW is higher.  Is that unfair to OP?

I'll agree to disagree, but to me, employer cost and employee compensation are apples and oranges.

 

 

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23 minutes ago, RatherBeGolfing said:

I'll agree to disagree, but to me, employer cost and employee compensation are apples and oranges. 

Employee X has a child and Employer pays for child's college tuition.  Employee Y does not have a child, or his child is not going to college, so Employer doesn't pay anything extra.  Can you really distinguish that from the married/health insurance scenario?  If you can't, but you still think this is "apples and oranges," then you're right we'll have to agree to disagree.   

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50 minutes ago, leevena said:

All good points about fairness.  But keep in mind the OP is asking if it is legal.

Yes.  I just felt like starting a fight! 

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Fairness is a relevant topic, especially in areas touched by tax policy, where subsidies create economic distortions.  Distortions can be viewed as unfair to an individual or group or viewed as beneficial to the larger society, based on some notion of values of the political winners. The unfortunate history of subsidizing employer-provided health benefits is an issue that is a deeper level in the same mine shaft as this topic of employer subsidies of marriage and children.  There are more overt examples of subsidy or penalty of marriage and children. The institutions and culture  created by tax subsidy for employer-provided healthcare are now a big factors in the political arena in the debate about how best to make health care available and affordable.  It is a shame that the elements are not recognized for what they are so they can be objectively evaluated in instead of manipulated by emotional appeals. The fight did not start with jpod's observations.

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23 hours ago, jpod said:

Employee X has a child and Employer pays for child's college tuition.  Employee Y does not have a child, or his child is not going to college, so Employer doesn't pay anything extra.  Can you really distinguish that from the married/health insurance scenario?  If you can't, but you still think this is "apples and oranges," then you're right we'll have to agree to disagree.   

I think its distinguishable.  The spouse and children are tacked on to the employees coverage under a plan chosen by the employer where rates have been established.  I see that as different from "employer pays X's child's tuition".   

To me, the benefit is what is available to you, not what the company paid for it.  So in this instance, what is offered to OP is the same as what is offered to co-worker, 100% paid coverage for employee and spouse/children if applicable.  That is the benefit.  That it costs the employer more for co-worker is not unfair to OP because OP is not harmed by what the employer pays for co-workers coverage.  OP would also not benefit more if the employer decided to only cover employees.  The employer would probably put the "cost savings" to use somewhere else or maybe it would just end up in the pocket of the owner. 

What is up for debate is whether its fair for co-worker to be able to cover a spouse while OP couldn't opt to cover a non-married partner.  Co-worker could meet a spouse and get married on the spot and spouse would be eligible, while OP could have a 10 year partner that isn't covered.  I'm not arguing that the public policy itself is fair.

 

 

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1 hour ago, RatherBeGolfing said:

I think its distinguishable.  The spouse and children are tacked on to the employees coverage under a plan chosen by the employer where rates have been established.  I see that as different from "employer pays X's child's tuition".   

To me, the benefit is what is available to you, not what the company paid for it.  So in this instance, what is offered to OP is the same as what is offered to co-worker, 100% paid coverage for employee and spouse/children if applicable.  That is the benefit.  That it costs the employer more for co-worker is not unfair to OP because OP is not harmed by what the employer pays for co-workers coverage.  OP would also not benefit more if the employer decided to only cover employees.  The employer would probably put the "cost savings" to use somewhere else or maybe it would just end up in the pocket of the owner. 

What is up for debate is whether its fair for co-worker to be able to cover a spouse while OP couldn't opt to cover a non-married partner.  Co-worker could meet a spouse and get married on the spot and spouse would be eligible, while OP could have a 10 year partner that isn't covered.  I'm not arguing that the public policy itself is fair.

Good point until the end when you state “what is up for debate”, because the question asked was if the policy is legal.

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It's certainly traditional and widespread, and we have all assumed it's legal. Similar policy choices are baked into social security as well, e.g. nonworking spouses get half of working spouse's soc sec while retired worker lives, then 100% after his/her death. Single and married worker paid same soc sec taxes, and so on.

I doubt whether you could mount a case based on fed or state employment discrimination laws, since these are based on sex, age, disability, etc., and although some of those are related to family formation, the relationship is only close enough for sociology, not law. You could try a constitutional challenge, but don't see much of a basis as atheists marry, have kids, etc. Equal protection clause not applicable for private plans, although a state or local government worker might try that. But as david rigby noted, you are not directly harmed, so may not have standing. (Yes, I understand that you could argue that if the employer could not subsidize families, would spread the money around, not pocket it, and you would get some, but that is probably too speculative to give you standing.)

While I admit it's close to paying someone more if they are married with nonworking spouse, and/or have children, which we would all find inappropriate, how finely do you want to chop this? Under ACA there are 5 age bands. How about 45? How about bringing back preexisting conditions? Underwriting for lifestyle choices?

It's called insurance for a reason, after all.

Final note: nlrln, what you describe is, in my experience, fairly rare these days. Most employers will require employees to pay family premiums, usually pre-tax through Section 125 plan.

Luke Bailey

Senior Counsel

Clark Hill PLC

214-651-4572 (O) | LBailey@clarkhill.com

2600 Dallas Parkway Suite 600

Frisco, TX 75034

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2 hours ago, Luke Bailey said:

Final note: nlrln, what you describe is, in my experience, fairly rare these days. Most employers will require employees to pay family premiums, usually pre-tax through Section 125 plan.

A former local competitor of ours covered both employees and families 100%, at least pre-ACA.  They were pretty generous with other benefits as well.  Their reasoning was pretty simple, take care of your employees and they will take care of you.  They had very little turnover until they got acquired by one of the national firms.  I don't think any of the employees were left after two years.

 

 

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