Insurance Deductions From STD or LTD Payments

[PhilB]

Can an employer legally deduct insurance premiums from a disability check while the employee is out on STD or LTD? Is there a regulation someone can cite related to whether this is permissable or not? Thanks in advance for any replies.

[mroberts]

It depends on how the contract is written. For STD, an employer can set up a contract so that the insurance company pays the employer the disability benefit and the employer then pays the disabled employee through payroll. The employer then can go ahead and make any necessary deductions for medical insurance, dental insurance..... Remember, if someone is out on disability, they still have the responsibility of paying their share of premiums for any coverages they contribute to. Some employers require you to send in a monthly check while out on disability, some let you catch up when you come back and some could just deduct it from your benefit.

For LTD, I'm not aware of any insurance carrier that will send a disability check to the employer so it can continue to pay the employee through payroll. I suppose it's possible, but once the employer terminates the employee, this would have to stop and the ex-employee should receive the disability check directly from the carrier.

[KIP KRAUS]

What kind of premiums are you talking about?

[PhilB]

My Company self-funds and self administers our disability benefits. Our problem is mainly one of trying to avoid accruals of premiums due when a person on disability never comes back to work, or of having a large amount due that could never be reapaid in the same plan year. This would include employee contributions for medical, dental, vision, FSAs, etc.

[mroberts]

I don't see a problem deducting the necessary contributions in this scenario. Whenever you would normally terminate employees out on disability would be the breaking point. At this point, offer the ex-employees COBRA and be done with it.

[GBurns]

Your ability to make these deductions is going to be limited by your SPD, Plan Document and usual payroll practice.

Is acceleration of premium, excess deductions, multiple deductions etc even allowed? I looked at a similar plan and guess what?? Only the current deduction is allowed.

[PhilB]

Deductions are not addressed in our Plan Docs or SPDs, other than to state who contributes to the plans and whther the deduction is pre-tax. So it does not appear we would be limited in that sense.

[Cbholder3@yahoo.com]

I am on STD, My company has me paying for the medical insurance out of pocket and deducting it from my check as well. Is this legal?