Medical Ins. "Buy-Out" Plan

mrbill

Need help on this one...

The premium for a Family Medical Plan is $1,100 per month, high since we include retirees. The City pays 80% or $880 per month / $10,500 per year. The following is an outline for a "buy out" program.
1. EE must have Family Medical Coverage, at present, with the City.
2. Effective January 1, EE cancels with the City and enrolls under spouse's Family Medical Plan.
3. EE must present proof of coverage with spouse's plan.
4. Can only re-enroll on open enrollment date or qualifying event.
5. In consideration of the above, the City will compensate the EE $2,500 at the end of the year.

With this plan, the City would save $8,000 per EE per year.

Any recommendations, critiques ?

Thanks for your help.

System

It's a good plan. I've been trying to get one through for the third year now. No one loses. That covers all bases. My plan; however, would pay the employee quarterly. Good luck. Let us know if it goes through!

ritaanz

We also offer an incentive to employees who have access to spouse's insurance. We pay those who opt out weekly. When we hire a new person, they are offered the same type of package. Has worked well for us.

Until last year, the company paid 100% for medical coverage for the exempts and their dependents and 100% for non-exempts single coverge. Last year we started payroll deductions and asked the employees to share in the increasing costs. As the medical premiums continue to increase, the payroll deductions will also increase. My question is, when does a company stop offering an incentive to an individual to opt out? Wouldn't the employee's share of the cost be a deterrent?

HRCalico

I've never understood why proof of other insurance is necessary. It is our business what their coverage is, or if they have coverage? Or is it just our business that we aren't paying for them.

My last job at a poor non-profit paid a stipend that could be ran through a 125 or taxed and put on their check. In orientation, we said they could use it to purchase their own insurance or pay for medical expenses out of pocket.

We may have been way off, though.

irenesmsaclaims

HR Calico, the reason that companies want proof of other insurance/coverage is so that there is no misunderstanding in the event of a large claim, as to who is responsible for the expenses. It is the employer's business to protect itself because it could be liable for the expenses if there is any "problem" with waivers.

HRCalico

Is that if their insurance is self-funded? Or regardless?

irenesmsaclaims

The employer is the plan sponsor whether it's insured or self funded. If there is ambiguity as to enrollment/waiver, the chances of the employer being sued for a large claim are equal. The insurer could claim employer error in the process of enrollment if fully insured. If self-funded, then the employer is maybe more vulnerable. We all know that juries are more sympathetic to the poor injured/sick plaintiff, against the "big bad insurance companies" or plans.

Hunter1

Critiques? I've said it before and I'll say it again: Paying employees to go on someone else's plan just increases the cost of providing health insurance for ALL employers as a group. We're just bidding against each other to see who will provide the largest incentive to get on some one else's insurance.
If we're both paying $500/Single, $1000/F and we have a couple with the wife working for me, the husband working for you and they're both on their own plans, together, we, as employers are paying $1000/mo. Now, you offer $200/mo to the husband, and he comes on my plan. It now costs me $1000/mo, and you $200/mo. We are paying $1200/mo. to insure the same couple. Next year, I'm going to offer $300, and you'll have them both back and it'll cost us $1300/mo. Where does it end? Everyone just pay for their own employees!!!