Payroll Deduction for Benefits

smkrause

I am currently deducting the benefit premiums for suuplemental insurance programs in advance. We are on a biweekly payroll so the premiums are deducted almost 30 days prior to the company paying the benefit carrier. The company does not contribute any portion of the premium for these supplemental benefits.

Am I okay with the way the timing of the deduction? Any advice would be helpful. Thanks

scantey

Couple of questions: Did they actually pay for a month in advance before their coverage began? And do you notify them when they terminate that they are still covered for an additional 30 days?

smkrause

There coverage began December 1st and the first deduction was taken on payroll date Decmember 4th. I have not had a termination yet, however, I plan on treating it as I would the health insurance, that at termination I supply the employee with a notice of COBRA benefits and this also states that their coverage is paid up to a certain date.

Thanks

scantey

I am taking it that they had to make double payments at some point in order to pay for the full month in advance...if this is the case- you are fine- just make sure in their COBRA letter that you state they are covered for the full 30 days after they terminate. This is actually pretty common from what I have seen.

CuriousG

I guess I am a little confused. You say

>>coverage began December 1st and the first deduction was taken on payroll date Decmember 4th.

That sounds to me like you are collecting premiums contempory with the period of coverage. I assume you receive a billing around January 1st for the December 1 to December 31 coverage period. If so, I do not see any problem with your withholding practice.

You also state

>>at termination I supply the employee with a notice of COBRA benefits and this also states that their coverage is paid up to a certain date.

Are you sure these are COBRA covered benefits (Accidental Injury, Disability plans, etc...?) Some plans have continuation rights, that have nothing to do with COBRA, and you need to be sure to clearly diferentiate between the two. I would double check your Summary Plan descriptions and talk to your Carriers for these optional plans. If these are not COBRA plans, they may even have coverage continuation materials they want you to use.