Adding health coverage for retirees on 100% self-pay basis; need a document? Can it ever be terminated?

[Guest tws]

Employer wants to add optional benefit to its health plan extending coverage to retirees on a self pay basis. Retiree can elect to continue coverage under health plan by paying the entire monthly premium attributable to that coverage. Eligibility would be based on years of service (10) and age (55).

Any problems with this arrangement?

Is a plan document required?

Any problem with a subsequent termination of the program?

Thanks for your input.

[Sandra Pearce]

Anytime you add a benefit you take the risk of claims and expenses for the health plan rising. Even though the employer is going to allow the retirees to pay the premium for the coverage, the experience of the retirees will effect the group, fully-insured or self-insured. There is also the FAS 106 financial reporting liabilities to consider. An amendment to the plan would be required.

[Don Levit]

Sandra mentioned FAS 106 liability for the employer on a retiree full-pay premium. Why would the FAS rule be pertinent here, if the employer has no liability for premiums? Are you referring to liability for claims, in the event the plan is self insured?

Don Levit