Containing Health Ins. Costs in Cafeteria Plan

[chris]

How can you cap an employer's cost for health ins. premium within a cafeteria plan? Is it just a matter of the the plan doc stating that e/er will pay $x toward premium for health insurance and e/ee can defer portion of pay for the balance assuming e/ee chooses the health ins. as an option?..... That way e/er, going forward, is only obligated for the $x amount...and any subsequent premium increase is on the e/ee??????

[KIP KRAUS]

As long as the premium increases come at the start of the plan year it makes sense to me.

If, for some freak reason, the premiums are increased during the plan year they must be substantial in order for them to be passed on the to the employees at that time.

[chris]

Similarly, can e/er contribute different amounts toward health ins. premium for different e/ee's? For example, premium attributable to 60 yr. old e/ee is 1,000/mo. and for 30 yr. old e/ee it is 150/mo. Can e/er tell 60 yr. old e/ee e/er will contribute 12,000/annual premium and tell the 30 yr. old e/ee that e/er will contribute 1,800/annual premium going forward? It would seem this would not work for a number of reasons.... discrimination issues, etc...? Bottom line is that e/er is looking for a way to contain health ins. costs going forward, including having e/ee's pay portion of premium.....

[mroberts]

You definitely do not want to determine health care contributions by age because of, as you pointed out, discrimation issues. You can have different contribution levels by union/non-union, exempt/non-exempt or salary/hourly though. There are various additional ways to cap costs. Shoot me an email and we can discuss this a little more.