Incentive for not taking Medical Insurance in Mass

Gramdamn · June 2004

We have a self funded PPO medical plan at our company. My employer is toying with the idea of offering a monthly monetary incentive to all eligible employees for not taking the medical insurance. They will notify them of the risks; having to wait for open enrollment on their spouce's medical plan, pre-existing conditions, changing their minds after terminating their insurance, etc. Do you know if this is legal in Massachusetts? Do any of you do the same thing and how do you handle it? Thanks

Don D · June 2004

Our corporation just stopped this practice in January after years of paying $50 per month to the employee to 'opt out'. I suppose someone realized it was counter intuitive.

Gramdamn · June 2004

Our company is talking about offering $250.00/month if the employee is on individual and $500.00/month if on family.

deniseE · June 2004

My dad's school District offers a similar program, provided the ee has insurance elsewhere.

It saves the district a ton of money.

ritaanz · June 2004

Huh? What does that mean? Counter intuitive?

Don D · June 2004

Had a result that we wouldn't naturally expect that it would have. In other words, it is now viewed as giving people an incentive to not be protected by insurance thereby perhaps exposing them to a personal, financial calamity.

Dan · June 2004

We allow employees to opt out of medical insurance if they are covered by another plan. Employees receive $50 per paycheck for single coverage or $80 for family. Employees are not eligible for the medical opt out payment if they are covered by a spouse’s plan that also works for the company.

mdm · June 2004

We offer it. It's $130 per month for individual and family with proof of insurance through a spouse. You are eligible for the incentive when you are eligible for insurance. We pay it out quarterly.

TN HR · June 2004

My wife's employer does something interesting. They pay employees a monthly amount equal to the premium for medical coverage for employee only. If they enroll in the plan (ee only), then it's a break even to the ee, if not, they put that money in their pocket. Additional coverage (spouse, child, family, etc) is partially subsidized.

Gene

Kiwi · June 2004

We offer a monetary incentive for waiving health coverage as part of our cafeteria plan. They get $48/week for waiving health. They can use that $48/wk to reduce their cost for voluntary benefits (dental, vision, life, etc). They can elect to have it paid out as a lump sum at the end of the plan year, or they can send it to their 401k. If it goes to their 401k, it is eligible for the same company matching provisions as our % salary deferral to 401k. Most everyone sends it to 401k. It has worked quite well for us.

HRGirl · June 2004

We also have a self funded PPO plan and offer any employee not participating an additional weeks vacation. We do not require any proof of other insurance.

If an employee doesn't use that vacation, they can have it paid out at the end of any quarter, so if any employee opts out of insurance and they make a salary of $2000 a week...that's what they get. We don't regulate who can and can not get the extra week. We have so many husbands and wives working here, it would be too hard to keep track of (we are only a company of approximately 75 people but all employees are either friends or family. It makes for a very warm atmosphere.)

blw · June 2004

Dan - what do you mean you allow employees to opt out if they have other coverage? How do you force an employee to elect coverage?

While we don't pay employees who waive coverage, I think it is a morale builder of an idea.

Dan · June 2004

I was not clear. The employees can elect coverage or not. To receive the opt out credit (the $50 or $80) they must be covered under another plan. Being a government contractor, we pay well enough that we have never had someone not elect coverage when they do not other coverage.

Hunter1 · June 2004

I think I've been on this soapbox before, but here goes: If we think of ourselves as an 'employer group', paying incentives for our individual employees to opt out of our health insurance coverage is costing us more as a group than need be.

You employ the husband, I employ the wife. If they both accept coverage at their respective employers, let's say it costs each of us $200/mo. ($400 total) If you pay the husband $100/mo to opt out, he comes on my plan which is then family coverage, and it costs me at least $400, probably more, plus, as an employer group, it costs us $500. (my $400 plus your $100) You save $100/mo, but next month I'll design an incentive to put both of them on your plan, and you lose.

Let's all use spousal carveout - if the spouse has coverage available through their employer, he/she has to take it, and we all pay for our own employees. None of us pays more than we have to as a group.

Don D · June 2004

That's exactly what we do Hunter. The spouse has to offer proof of inability to obtain coverage where they work. If they do not take the coverage that is available to them where they work, it costs them a ton of money to join into ours with their spouse who is employed by us.

DeidreFR5 · June 2004

For those of you who offer this benefit, how is the amount treated for tax purposes?

HRGirl · June 2004

We treat it as a quarterly bonus, subject to regular everyday payroll taxes. That's it.

Bill ONeill · June 2004

In my past life, we had a buyout for an employee to opt out of the Family plan to join their spouses Family plan. We made a payment at the end of the Insurance year. (in reading this thread, the amount we paid was miniscule compared to what is presently being paid). One had to show us evidence of insurability with another plan to qualify. Would not make sense for a married couple (no dependents) since it would be cost wise for both to have their individual plans with their empoyer(s).

If anyone out there on this good earth has any suggestion on how to control health care costs, please pass them on.

smaces_twin · June 2004

[font size="1" color="#FF0000"]LAST EDITED ON 06-10-04 AT 04:01PM (CST)[/font][br][br]Get people healthy and out of the mind set that insurance is an entitlement. Turn them into health care consumers and make health care providers submit to the whims of the consumer. Once health care providers become affected by the invisible hand, cost will go down and quality will go up.

edit: Oh, how do you do that? Not sure yet, but I'm working on it.

Hunter1 · June 2004

Right On, Twin. You've hit the nail on the head. Lasik surgery and heart scans are two procedures which prove your theory. Lasik cost $2000/eye when it first became widely available, now it's advertised for under $400/eye because most insurance plans don't pay for it, so people became consumers. Heart scans are now being offered for as little as $49.50 in the Milwaukee area. Again, because most health plans don't cover them without symptoms, people pay for them on their own, and become consumers. Now, I'll be the first to admit that at $49.50, the local heart hospital is probably offering the scans as a 'loss leader', hoping for (planning on) some more expensive business, but, the free market works.

What other medical procedures have come down in price like that if they're covered by health insurance?

And, how do you get it to work? Have employees 'get some skin in the game', and get information to consumers so they can make informed choices.

psrcello · June 2004

We offer an opt-out plan under our hourly medical coverage, not because I believe in it, but because it was negotiated into the union contract (before my time!)

Employees who waive dependent coverage receive $75 per month, and they receive $100 per month if they waive full family coverage. We require written proof at the beginning of the plan year that the dependents or entire family have other health insurance coverage.

I'm all for teaching our employees to be wise consumers of health care. They received a HUGE eye-opener three years ago, when our plan switched from an HMO to a PPO, and they actually started seeing medical bills and percentage copays!

hrdir03nafcu · June 2004

I have a different perspective on this. We are a trade association in the DC Metro Area, employing 65 staff. This question was recently raised by 1 of our staff, who wanted to go on his wife's plan, and just take the amount of his monthly health premiums as additional income.

We said "No" to this-- the primary reason being that it would undermine our ability to offer health insurance to our entire employee group. (1) Allowing EEs to opt out reduces the size of our covered group, thus making us a less desirable group in the eyes of insurance companies, and reducing our ability to bargain for better premium rates. (2) Many (most?) companies offering group health plans require a certain minimum %age of staff be covered in order to offer the plan at all-- if enough staff opt out, we'd end up below the minimum %age.

While this is of much greater concern to small employers like us, I imagine it must be of some concern to most or all employers...?

Also, I have to agree with Don D. Offering cash-strapped EEs a cash incentive to opt out of the health plan amounts to incentivizing people to go without health coverage. In this super-litigious society, this reads to me like an engraved invitation to a lawsuit. We prefer to DICOURAGE our EEs from opting out of the plan, even if they have coverage available to them thru their spouse. (And, BTW, our monthly premium is more like $400 per EE!)

catlady · June 2004

We did this at the last place I worked. It worked out great and saved us lots of money. We gave the employee 10% of what the company saved for the year. It was put into a FSA account that could be used for other premiums or unreimbursed medical expenses. Because it was an FSA, we had them sign designating where they wanted the money allocated (URM or premiums) and certifying that they had other medical coverage.

Incentive for not taking Medical Insurance in Mass

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