Incentive to join Health Insurance of Spouse's Company

Gracie · September 2003

Does anyone of you offer incentive to have an employee take up health insurance offered by the company the spouse is working in?

Please advise if this is workable or whether it is ever frowned on? Thank you.

Don D · September 2003

Gracie: Our 'employee only' insurance is paid by the company. However, we do have a very tightly monitored program that discourages a SPOUSE from joining OUR policy IF the spouse has coverage available at his/her place of employment. In fact, the spouse who opts out of their own coverage but chooses ours is hit with a substantial premium for coverage. Effective January 2004 it's discontinued, but, we have been paying a $50 opt out payment to any employee who chooses not to enroll at all in our coverage. I can't figure why anyone would do that anyway. Employers do not want people on their insurance if they can keep them off of it. Pure and simple. Every enrollee is a liability in the sense that with self funded plans, the employer is paying every dollar of every claim and with other plans, the premium amounts are determined by claims experience.

Betty I_O · September 2003

We offer non-exempt employees the opportunity to receive a higher rate of pay if they elect not to participate in our benefit program. The compensation for employees who elect our "Wages without Benefits" program is 20% higher than their rate of pay would be if they enrolled in our benefit plans.

AnneLa · September 2003

We offer a "buy back" plan. If an employee is eligible for family coverage under through their spouse, we will pay them $2,400 per year, paid in arrears on a quarterly basis. If the person is eligible for individual coverage and has it elsewhere, we pay out $1,000 per year. It really does help us keep our costs down as much as possible. We do require proof of other coverage though.

RobS · September 2003

[font size="1" color="#FF0000"]LAST EDITED ON 09-18-03 AT 11:17AM (CST)[/font][p]Our company has been offering $100/month to employees who opt out of taking health insurance coverage here and instead take coverage under their spouse's insurance plan. This had been done for a number of years and was started as an effort to save the company some money in what it was paying out for benefits. But recently we had our policy manual/procedures/ and benefit plans reviewed by our attorney and were advised to stop this practice. We were told that this practice could lead to the health insurance coverage being considered as taxable income to the employees. The money offered in lieu of taking the coverage was being treated as taxable income to those who opted out of the company health insurance plan, so those who took the coverage would have to pay the taxes on the benefit received (the amount the company was paying monthly for the coverage for the employee).
After this year we will discontinue offereing the incentive to opt out of coverage.

I should add that our company doesn't have a section 125 plan. But apparently this problem we faced could be addressed by setting up a cash in lieu of section in the plan document.

Hunter1 · September 2003

As I've said before, and in answer to your question, I frown on it. As employers, are we going to get in a bidding war to see who can pay the most to have our employees on someone else's health plan? One of us is paying for the coverage, and the other is paying an additional stipend to keep them off of their plan. In general, I favor each employer paying for their own employee's health plan. If dependents (spouses, in particular) have the availability of coverage elsewhere, they should get it there.

marc · September 2003

We are a small employer and used to pay ees $3,600 per year to use for various types of benefits. We offered a group policy, it was expensive because we only had 1/2 of our staff taking it. We required evidence of a major health insurance policy. The allowance rose to $6,600 in my second year, solely due to rising health care costs. The following year health care again increased and instead of upping the allowance, we started covering a part of the company's group premium, including the dependent coverage. Not a great decision and many ees were up in arms about the whole situation. A new Exec Director came in and changed the whole policy. We now require ees to participate in our group policy, which we pay for. Dependent coverage and policy upgrades are paid by the ee. The allowance was eliminated. 1/2 went to the paycheck, the other 1/2 to the group policy.

Long story, but the bottom line for our small group was an eventual decrease in expenses because the astronomical health care cost increases have ceased because our group participation is large enough for some good cost quotes. This will not apply to the company's that already have large groups, but for the small ones, reducing group size may not be the way to go.

Incentive to join Health Insurance of Spouse's Company

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