Employer Contribution

[Guest moseelig]

At the beginning of the plan year, the employer gives each of his employees $450 per year to "shop" for benefits. Ten months into the plan year, the employer would like to stop employer contributions. Is this allowed? Aren't there some discrimination rules broken? If so, where can I find the rule?

[SLuskin]

First, what is the reason that the employer wants to stop the contributions? Second, what does the plan document say about terminating or modifying the plan? Also, if some of the benefits are for insurance plans, the carriers may require a certain percentage of employer contribution.

[Ron Snyder]

The employer may terminate the plan at any time. However, employees would still be entitled to be reimbursed to the extent of actual medical expenses incurred up to the date of termination, whether the employer has made all of the contributions or not.

[GBurns]

I do not see where the OP said that the Plan was being terminated. Only the employer contribution is.

It also does not say what sort of items the employer contribution is being used for. An employer contribution is not exclusively used for out of pocket medical expenses etc.

If the employer has promised $450 per year which monthly is $37.50 and the employee used this towards towards paying for Dental and Vision (or whatever), you would have a lapse of coverage for non payment of premium. While provider claims for treatment provided during the period for which premiums were paid, ongoing or continued treatment would be jeopardized. Additionally, there could be a serious problem if the Dental and Vision (or whatever) is a group plan quoted and provided based on an annual contract or high participation % (even 100%) of eligible employees.

It is not necessarily a simple matter, but more info is needed.