Employer vs. Employee Match with Government Health & Welfare Funds

[Guest nsenja]

As a contract employee with a federal government agency, I am awareded an hourly dollar amount (known as Health & Welfare funds) that may be used toward the acquisition of group medical and dental insurance plans provided by the employer corporation. This is a set amount provided in addition to one's hourly wage.

The employer corporation also makes available a 401(k) option of elected contributions of up to 15% of one's gross salary. In addition, the policy states that the employer will match the first 5% of elected contribution - not to exceed 2.5% of the gross annual income.

However, no matching funds come from the employer, as they have defined the employer match as a "benefit" - further defining that H&W funds cover our benefits, and therefore must be used for the match.

Bottom line, it is mandatory for employees to provide the 2.5% employer match with their own H&W funds - of course, in addition to their elected contributions.

Is this approach appropriate?