Retro Term of Employee-Pd Insurance

[Guest Callan]

Employer has self-funded health insurance, premiums are paid by employer and employees (17%). Employer pays its share for each month on the 1st day of that month. Employee pays her share on 1st and 15th (deducted from paycheck). Employee terminated on the 10th, having already "paid for" 1st - 15th insurance for that month. Employer deducted insurance for 15th - 30th from her last paycheck so that employee had "paid for" the full month (her 17% at least). Employer terminates plan coverage as of date of termination so that employee has paid for something she will not receive (coverage from 10th to 30th). DOL has called and I am looking for any sort of legislative or administrative authority allowing the termination of coverage as of date of termination, even though employee ends up paying for more days in that month. Any direction would be much appreciated.

[GBurns]

As always the first place to start is with the SPD or explanation (employee handbook etc) that was given at time of enrollment, next the Plan Document to see if there is any conflict in information. What do these say?

[Guest bmaverick2]

You did not say anything about COBRA benefits being offered to employee. That may be why the DOL is calling.

[Sandra Pearce]

Although we pay on a bi-weekly cycle and not twice a month, we are always taking contributions/premiums from our employees after the fact and not in advance as you indicate your company does in your original statement. I would suggest that you actually verify your payroll practices regarding deductions? In other words for someone who is effective on January 1st are you actually deducting a premium for half a month on January 1st or is the first deduction really on the 15th, thus paying for the period January 1 - January 15? Just something to consider.

[KIP KRAUS]

I doubt you will find any legislation that prevents an employer from canceling insurance on the date of termination. That is a typical arrangement. As GBurns indicates the SPD should state when insurance cancels. I agree that the employee should not have to pay for coverage after it cancels. Refund the payment and save yourself some grief.

[oriecat]

I agree. If you are prorating the coverage for the month of the termination, then you should prorate the premium for that month as well.