Can the company force an employee to participate in its Group Term Lif

[Guest kdowney]

I have a question I am hoping the benefits experts out there can help me with. My company gives all of its full time employees Group Term Life Insurance at twice their annual salaries. This benefit is 100% employer paid for, with the GTL value added to their paychecks based on age and coverage amounts per the IRS. Recently, we hired an employee who, because of religious reasons, did not want to be enrolled in the GTL policy. He consulted with his spiritual advisor and determined he didn't want to sign any beneficiary paperwork, or be enrolled in the plan at all. One individual in HR had the employee write up a letter indicating he was waiving this benefit for personal reasons. The note was then put into his HR file. Last week, the Comp & Benefits Mgr indicated that he spoke with the insurance company when he became aware of the situation, and was told that the employee HAD to be enrolled in the plan, whether he wanted to or not. I am very uneasy about this since the employee made it clear that because of religious reasons he didn't want to participate. Now HR has decided to enroll him in the plan to comply with what the insurance company said, but not say anything to the employee. Has anyone else out there had to deal with this? Can someone shed light onto whether or not we can legally enroll this employee against his wishes? All comments/responses/insights are welcome!

[mroberts]

Insurance carriers always write basic life insurance with 100% participation assumed since the employer is paying for the benefit. If an employee did not want to be in the plan because he or she wanted the $5 or $10 per month the company is paying for the life insurance, that would not be allowed since the carrier is going to get adverse selection (the healthy employees will want the money while the unhealthy employees ones will keep the life insurance). However, since this employee does not want to be enrolled in the plan because of religious reasons and since this is only one employee, the insurance carrier should allow the exception. If you have less than 10 lives insured, that may cause a problem, but even then, I'm fairly certain something could be worked out.

[Sandra Pearce]

My take is that your plan is written as non-contributory, meaning that everyone who meets eligibility is whether or not "signed up" covered. This person has the benefit available and the company will pay the premium whether or not the employee ever signs anything. From the insurance companies perspective, based on the contract, they have a potential claim whether or not the person signs anything. However, with that said, I have always required insurance carriers to agree to allow employees to waive any benefit greater than 50,000 (since that benefit does have tax implications for the employee).

[papogi]

If it ends up that the coverage is mandatory (minimum participation rules apply, so the carrier may not want to open the door to any exceptions at all), perhaps the employee can sign the GTL benefits over to a charity or religious mission organization.

[mroberts]

The question isn't really dealing with the employee not wanting insurance because of the imputed income tax. It has to do with this person's religious affiliation. As Sandra indicated, the contract was written as non-contributory. Carriers will not usually allow for any employees not to take the coverage since 100% participation is assumed to calculate the rate. However, since this is a "special" circumstance, I would find it hard to imagine the carrier not letting the exception in this case. The carrier may want the empoyee to sign off on something indicating why he or she is waiving the coverage though.

[MGB]

The carrier may be restricted from providing less than 100% participation due to state insurance law. When they file their policy with the state, it may have been under the condition that the group plan is only sold on a 100% basis. The insurance company needs to state whether or not this is the case with this particular product.

If they go less than 100%, the state may require different reserving and pricing conditions, which could cause the insurance carrier to not allow it.