Employee Contribution to Health Insurance

Betzi · December 2002

There is a small company with 10 employees that pays all employees health insurance premium up to $275 monthly for a single employee. If the rate this year is $290, what would be the best way to handle the employee contribution of this benefit (the $15)? Would employees pay the owner $15 monthly (or semi-annually or annually) up front for the covered year and then he just sends the total payment? Just wondered if anyone has had any dealings with this - seems like it could be an accounting nightmare!

Thank You!

ritaanz · December 2002

I am assuming that you are thinking of having the employees contribute to pay a portion of their medical insurance. We have a weekly payroll and our employees contribute 50% of the cost for dependent insurance. This is deducted from their paychecks each week and allocated to the medical benefit account. Works for us.

sonny · December 2002

We also have a automatic payroll deduction.

NaeNae55 · December 2002

If you try to withhold for the year you really are talking about an accounting nightmare. What if an employee leaves mid-year? Also, your employees might object to paying everything upfront. Standard practice is to allocate the premiums over your pay periods. We pay every 2 weeks (26 times per year) and deduct 1/2 of a month's premium the 1st and 2nd paydays. 2 times a year, when we have a 3rd payday in the month, we do not withhold insurance. Our payroll system is set up to automatically handle this.

I have worked for a company that withheld 1 month ahead since they sent the premium in by the 1st of the month of coverage. However, most of my employers have deducted the employee portion DURING the month of coverage.

Do you offer other employee paid benefits? If so, I would think the practice for those benefits and health insurance would be similar.

Good luck!

Min · January 2003

[font size="1" color="#FF0000"]LAST EDITED ON 01-02-03 AT 08:55AM (CST)[/font][p]Betzi-
We are a hospital in Washington and in September we asked that employees pay a very minor amount of their medical- so other employees have the option to drop coverage if they have it elsewhere-
anyhow, the way I did it was I set up a payroll deduction in the payroll system. Every month it comes out of payroll. Just be sure to let employees know ahead of time that you will be taking it out.
Mindy

I forgot to mention we take it out one month ahead- for example- January portion came out in December (we get paid one time per month)

jampc · January 2003

We also use a payroll deduction procedure for employee contributions to health insurance coverage. First time ever we have had to charge employees. Decreasing budgets and increasing health insurance costs. We have some 30 odd employees, so it should not be to difficult to implement a payroll deduction program. We also incorporated a cafeteria type plan "Premium Only Plan" so that employee contributions are paid with pre-tax $'s. Provides some consolation and relief to employees.

Employee Contribution to Health Insurance

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