Final premium deduction

oster

I have a employee who is leaving us this week. Today Hr called and said the health insurance lasts through the end of the month so the remaining premiums are going to be taken out of her check. Our company was recently bought out and the new owners do not pay any portion of the family plan. What they did was give those with the family plan only a raise to cover the $345.00 bi weekly deductions. The problem is she is not being given anything to cover the deductions they will now be making- the extra $345. for the last half or march. We poored over all the information provided to us about the plan and found no mention of the employee being responsible for any remaining premium after thier employment has ended ( the plan does state that it is valid till the end of the month). I have a HYSTERICAL employee who is basicly being left with no money on her final paycheck and the question how can they do this without ever informing me of this policy. HR said they have the right to not disclose this information but could this posibly be covered under ERISA? Please help!

Carol CA

I don't know about ERISA -- maybe someone else can help with that. You need to look at what makes sense, however. This employee is receiving the benefit of having the medical insurance through the end of the month. Someone has to pay for it. Technically, if it's the employee's responsibility to pay the full premium, she is on the hook for it, or she can possibly cancel the insurance if she doesn't want to pay for it.

On the other hand, if the company was in essence paying for the premium by giving everyone an increase, my suggestion would be you continue to help subsidize for the remainder of the month and not take the second half out of the employee's paycheck. Only take the first half out as she was given the "increase" to cover it.

Whichever way you decide to go -- technically holding the employee responsible or continuing to subsidize -- think carefully as you will be setting a precedent you will then need to follow.

CuriousG

Our company follows the same procedure your does, deducting any remaining employee contributions for the current month from an employee's final paycheck. The wording in our benefits materials and employee handbook also state that "health insurance will remain in force through the last day of the month in which you terminate employment." We do this because we are required to pay for insurance coverage a month in advance. However, we collect employee contributions as the month progresses. As a result we are always a month behind on the employee contributions to the plan. By keeping coverage in force through the end of the current month (the month already paid for) and collecting the remaining employee contributions it allows us to balance the books, to simplify administration of the billing, and simplify administration of COBRA compliance.

I believe that the wording used in your company's materials is sufficient for a reasonable person who is used to paying for their insurance to realize that they will have to make that contribution for the remainder of the month. However, as an HR Manager and communicator I realize that it is important that we "tell them what we mean." So we also state in all related materials that "...a deduction will be taken from your final paycheck to cover the cost of employee contributions to the health insurance plans for the remainder of the month in which you last work." We also include this in the payroll deduction authorization agreement employee's sign when they sign up for benefits.

I get the impression that the person who posted the original message in this string is not and HR person, but rather the immediate supervisor. Good for you that you are proactive enough to educate yourself on issues like these! Perhaps you should share this link with your HR department so they can be as well informed as you are?