Waiving health care benefits

[Guest donna stout]

Would like to know what others are offering,if anything, as an incentive for waiving health care benefits. What opinion do you have for offering money for someone to waive taking health care insurance?

[KIP KRAUS]

Donna:

We give our employees $150 per month as regular taxable income if they opt out of our medical plans. At the time we calculated this amount it represented about 35% of what the Company would pay for family coverage per month.

We require evidence that the employee is enrolled in some other group medical plan before we will pay the opt out money.

Typically, only married employees opt out, because the only place they can get group coverage is through their spouses employer's plan. That's not to say they couldn't be getting it from a part-time employer, but if they are we will let them opt out.

They could be getting it as a retired military person also, but not in our area.

[Kirk Maldonado]

I think that, unless you want to get into a fight with the HCFA, you should prohibit such payments to persons over age 65 (otherwise it is an impermissible incentive to opt out of the health plan and to take Medicare).

[KIP KRAUS]

Thanks Kirk, but we already knew that. We wouldn't allow that because we don't consider Medicare group medical coverage anyway. The efficient way Medicare works it's more like confusion coverage.

[Guest nac]

We're not nearly as generous as Kip's organization, but we offer a $25/month opt-out (taxable) for medical and $4/month for dental. We don't require proof of alternate coverage, but our opt-out credit is so small that that's not a problem. I belong to a small networking group of similar companies to mine, and they're all in about the same ballpark for their opt-out credits.

Another option is to look at your coordination of benefits provisions in your health plans. For 2001 we're going to non-duplication of coverage, which should be a great incentive for all our associates to take a look at their coverage and decide which - theirs or their spouse's - is the most cost-effective way to go.

[KJohnson]

Doesn't this raise constructive receipt issues for all employees?

http://benefitslink.com/boards/index.php?showtopic=1274

[Sheila K]

Like Kip's company, we provide $150/month to be deposited to the employee's 125 Plan. This gives them the opportunity to use their flexible spending account for unreimbursed medical or dependent care. It is a VERY popular plan!

[Guest jlcowden]

We suggest offering an incentive which is based on local norms; but not to exceed the savings expected includung; factoring in Coordination (nearly 100% of spousal claims and approx. 50% of dependent childrens claims are being paid under the spousal plan).

You must also consider that some of your opt outs were carrying single coverage......and many are your young and healthy who in reality use only 5% to 20% of the claim $.

This seems to translate to between $50 and $100 in our region ...I always try to keep the waive out modest and of course suggest proof, or at least, signed statement indicating other coverage is in place.

We also occasionally have clients who put all waive out $ into Flex Credit accounts (med. or dep. care).

Remember a waive out requires a 125 document or all EEs including those not taking the opt out have aincurred taxable income..I believe equal tp the waive out $.

[IRC401]

Not only does an opt-out program require a 125 plan, but amounts that could be paid in cash are compensation for purposes of section 415, which makes them compensation for purposes of HCE determinations and any other purpose for which the definition of compensation is tied to 415 compensation. It might also be wages for purposes of the wage and hour rules, but I will happily let someone else deal with that issue.

[Guest debr]

Can an employee (over 65) waive insurance coverage and go on Medicare and buy a Medicap policy on his on and still have his wife covered on our group insurance which we pay 75% of.

Thanks for any help.

[Mary C]

Debr -

whether or not you allow dependents to be covered without also covering the employee is a plan decision - should be in the spd. I'd be surprised if it were allowed since most all plans require the employee to be enrolled in order to get any dependent coverage.