Benefit Determination vs. Discrimination

Laurie1922 · October 2003

We have two employees who have had their status changed to Part Time. Both had FT Health Benefits. The company feels that they are now not eligible for the FT benefits which is a qualifying event for COBRA.
One of the employees states that the company handbook defines full time status as "an employee who works an average of 37 hours a week in a year". This employee is saying he worked over 37 hours this year and he should not loose the benefit. I believe that the employees qualifying year ends when his status changes, but I need to be sure of that. A FT employee must wait 6 months to be eligible for the plan. The employee says that he should be able to keep full time benefits for a period of 6 months. If this is true, than other PT status employees would have to have their hours reviewed over a 6 month period. The employee can continue coverage under COBRA. Who is right? How do I find out the answer? I always believed that if your status changes so does your eligibility. Please advise, as I need some help with this one.
I am with the hospitality industry. Hours are seasonal. Part Time employees have the opportunity to work extra hours that is their benefit. When labor is cut back, FT employees keep their benefit. If we let these 2 ee's keep their FT benefits, we have a situation with all the other PT ee's.

Don D · October 2003

It would be my understanding that when the ee's status changed and the hours reduced to a level that will not include benefits, then the ee loses benefits THEN, not at some point in the future. I would think that when you determined that their hours would be cut and you intend that their hours not re-escalate suddenly to full time, that is when the benefit is lost. People who change status lose benefits often. I've never heard of a situation where they retain benefits over a period of time, during which some calculation goes forward to see if the employer was right about them being part time. As you said, if that were the case, every part timer you hire would have benefits until the passage of 6 months so you could average out their hours to see if indeed they had worked part time. This is a totally backwards approach. The way I look at it, if the part timer's hours over some period of time DID average what you define as full time, then they can apply for the coverage upon open enrollment.

Laurie1922 · October 2003

Don - thank you for your reply. I did call the HRD and they told me that it doesn't matter what is in the handbook. What matters is the Document Plan Contract. Would you believe that when I asked for the Contract the Corporate Office said they didn't have one. So I have called BC for our Contract.
Now the Manager is saying he is not changing the employee's status. I was also informed that when the HRD investigates a claim for wrongful determination of benefits, they check the monthly invoices and then check all the ee's hours to find out if they are indeed eligible. So I am relaying all this information to the corporate office and documenting the date I informed them. I can't fight city hall. I just needed to hear from a professional that I was on the right HR page in this situation. The employee is upset with me, the Manager is upset, and the owner is going to have to set up some guidelines for all the properties to follow. Hospitality is not an easy industry to introduce HR policies and procedures for compliance. Thanks for your input. Laurie

Pearce · October 2003

If your eligibility for the health insurance actually reads the way you say it does (you have quoted wording from an employee handbook and not necessarily is that the same as the wording in your plan documents or contracts) then you would have to wait until someone worked an entire year to determine if they were eligible. This type of wording is not consistent with most contracts or policies. Usually you see wording such as "no less than 30 hours per week." Read the actual documents that define the eligibility for your health plan.

Laurie1922 · October 2003

Pearce,
You hit the nail dead center. That is what the HRD told me. So I have contacted BC to get a copy of our contract. I can't believe that the Accounting Manager of this ee would even question the benefit determination of this ee since he is only working 25 hours a week. The HRD told me that employers can't pick and choose who is and who isn't eligible. Now they are upset with me because I called the HRD. They said they would probably audit us. Do you think that is true. I thought you were able to call and get answers to these kind of questions. How else can companys show a reasonable effort is being made?
Thanks for your input and your time. Laurie

Don D · October 2003

Laurie: You have learned another valuable lesson in this exercise. When I call an agency, whether state, federal or local, I never identify myself by last name or company name unless I personally know the person I am talking with. There is just no reason to reduce it to that level and could haunt you, as you might now find out.

Laurie1922 · October 2003

Thanks Don! I found out that our hourly threshold is 20 hours. So we are pretty safe. We are going to check hours on all the employees to make sure.
I gave the franchise name (there are hundreds) so hopefully I am safe.
I will take your advice and not volunteer information again.
Laurie

Benefit Determination vs. Discrimination

Comments