insurance refunds

mkelly · January 2004

I have received a premium refund check from BlueCross BlueShield. According to the letter, it is our fiduciary responsibility to distribute 4.74% to each plan participant who pays into the medical insurance plan. Our health insurance is covered under our Sec 125 plan, so I will have to refund this money back through payroll to make sure the appropriate taxes are taken.

Here is my problem. My boss seems to think this money is all his and it is up to his discretion as to whether or not to refund to the employees. I've tried to explain the legal stuff to him, but he thinks I don't know what I'm talking about. As far as I'm concerned this is stealing and I will not be party to it. What I'm looking for is someone who understands the legal aspects more than I do? Can anyone help me. If I can't get him to do the right thing, I will have to quit my job. I won't work for someone who steals.

crawfod · January 2004

mkelly, I work for a City Government (Gallatin, TN) and also received a BC/BS refund. I am not at work right now so I do not have access to my letter, but as I recall it advised us we "may" have fiduciary responsibilities. It all depended upon ERISA laws, which most government employers are not totally bound by, at least in some areas.

I have sent an email to my fellow city HR directors asking how they plan on handling this, but with the holidays, no one has had the time to figure out what it means yet.

Even if it is up to the employer's discretion, I think it would be bad employee relations to keep the entire amount, assuming your employees have had some sharing of the premiums. We do pay 100% of the employee only premium, but those with dependents have paid a portion, and in my opinion deserve a cut of the refund.

My email address is [email]crawfod@bellsouth.net[/email], and if you would like to contact me, we can share info as it becomes more clear. Tomorrow I will ask our city attorney for his investigation and ruling. Hopefully you have a legal advisor that can help you also.

Pork · January 2004

MKELLY: 1st, if your medical coverage insurance is under your cafeteria plan, that would mean to me that no taxes has been taken out for the premium payment made to the insurance company for either the company share or the employee share of the medical premium. If you do anything with the money, why not apply it right back to the group policy to help reduce the cost to ees and company for this year. Why would the insurance company tell you to distribute the money at some x%, unless, they know they have been overpaid? Which could certainly happen in a self insured plan, in which case the company would have the greatest share of the premium overpayment. Our company premium for family coverage is over $900.00 per month and the ee's premium payment is $166.00 per month for a total premium of $1066.00. To refund an over payment you must know specificly the amount of premium refund and who possesses a % share of the refund. By applying the refund back to this years total, (estimated cost) we would be able to keep the premium payments for the ees at the same level, and the deductables were also kept at the same level for this year. This will be the third year for the same result.

Your boss is wrong, he does not have the right to all of the premium only the largest portion. If you do in fact refund, you will have to take out income tax on the amount refunded to each individual. What a mess, I recommend you apply the refund to the next premium and everyone benefit

PORK

POPEYE · January 2004

Pork - How would you refund the amount owed to those who had terminated during the year? They would have a portion of the refund due them and would not benefit from on-going reductions. Although it will be a little time consuming, we are going to refund (minus taxes) the appropriate amount to each EE.

marc · January 2004

And charge BC/BS some appropriate fee for putting you through this hassle. Did they screw up or is this just some sort of Christmas present? When you look at the enormity of the calculations it looks the whole refund could be eaten up by the costs associated with tracking down all the people who should get it.

POPEYE · January 2004

BC/BS is returning a % of premiums paid based on their claims to premium rating for last year. If you have a decent payroll system, it will only take a couple clicks of the mouse and a couple of keystrokes to create a check. The most time will be spent in creating 1099s for the terminated EEs.
We feel this is the only fair and equitable way to return what the employee has coming to them.

Pork · January 2004

We must always protect all members of the medical coverage group even those who have gone. Their refund would be based on their share of premiums paid toward the total cost and send it to them by registered/receipt return mailings. That is why one must do the math to figure out what a share is worth (in our case, by the week)then figure out how many weeks the departed participant paid in. Multiply that times the share value and you know what to send.

I have been through it and it can get messy!

PORK

insurance refunds

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