Excluding Employees from Coverage

[bzorc]

A client called who has a number of leased employees working for their company. They have excluded the leased employees from their insurance coverage for many years. However, they, in getting quotes to set up a 401(k) program, found that leased employees have to be covered under the plan. Now they are worried that they should have been offering insurance coverage to the leased employees as well.

I am not very versed in healthcare rules, so I thought I'd throw this out hear and see what opinions are. Thanks for any replies.

[QDROphile]

Not to distract you from considerations about correct health coverage, but the employer must have a lot of leased employees or other exclusions to require coverage under a 401(k) plan. I would explore that proposition a bit more if the employer does not want to cover the leased employees.

[leevena]

I agree with the QDROphile. Also, the first thing I would do is check the health plan documents for eligibility. If the plan is fully insured by a carrier, I doubt very much if these employees would even be eligible for coverage. If the group is self-funded, check the plan docs.

[GBurns]

What do you mean by "leased"? I find the term frequently misunderstood or misused. Employees under usual PEO arrangement are not the same as employees from places like Spherion and Kelly.

[Ron Snyder]

While I agree that the term "leased employee" is frequently misunderstood, I do not agree that there is any legal difference between Spherion and Kelly or any other PEO. If an employee is leased to an employer for more than 1 year (1000+ hours), he/she must be taken into account for purposes of benefit testing. This is just as true of Kelly/Spherion workers as of any other PEO.

[masteff]

Including them for testing purposes but excluding them from participation is different than having to include them for both purposes. I think that's the point behind distinguishing PEOs from other temporary worker situations.

It comes down to why the person(s) quoting the 401(k) felt the workers had to be included and whether they simply meant included for testing or for both testing and participation.

[Guest hubber4]

Can anyone explain benifit bridging my employer dropped coverage on my wife and 2 stepsons they say i didntsupply proper docs and enrollment is over if i quit with notice and get rehired within 62 days the handbook says i can bridge my eligibility to participate in benefits. Will i have to sign up for the benifits when i come back if so if i supply all the proper docs could i then get my coverage back. Thanks for any info. Hubber4-