enrollment

[Guest sloneta]

Assume an employer has had a PPO and a POS option for his employees. Up until now, the POS participants had not had to pay anything toward premiums, but the PPO participants do. A premium only plan is in place for the deduction of premiums. If an employee did not elect PPO coverage, he was automatically defaulted into the POS coverage. Now, due to rising costs, the employer is going to have employees in the POS contribute a portion of the premiums on a pretax basis under the premium only plan. Must the employer allow the employees the opportunity to opt out of coverage under the health plan now that a premium is required from the employees under the POS? Can the employer require an employee to show proof of other coverage if he wants to opt-out, and if no proof is shown default him into the POS with a payroll deduction? Or, can the employer allow the employee to opt-out with no other coverage whatsoever?

State law requires that an employee's written consent be obtained before any type of payroll deduction can be taken. Do you think that ERISA would preempt this law, and if so, on what basis? How do you take a payroll deduction without written consent if the employee is defaulted into the coverage?

[Guest MGILL]

You raise a lot of important questions.

Putting all legal issues aside, I believe it would best serve your firm to run some sort of special "active" re-enrollment process.

By active I mean all employees are required to re-enroll. Those that do not would be defaulted to no medical coverage. My brokerage firm has done this numerous times for our clients by setting up a website for enrollment. Nothing complicated, just a simple form-based page with a few questions. End result is an e-mailed copy of each employees elections sent to the HR dept.

Michelle Gill

mgill@cshusa.com