Make employee's salary more since they don't need health ins

kmc · May 2006

We have a position open in our agency that we have a set salary for. The program manager has an applicant that does not need health insurance coverage and has asked if we could take that into consideration and increase the annual salary. She would be willing to sign a statement upon hiring to that effect. I need some feedback on this one.

awilliams · May 2006

Generally this is an accepted practice. In fact, many employers offer a certain amount "in lieu of insurance" to compensate employees who do not participate in the group plan. If the employee later elects to participate in the group plan they should be allowed to do so.

The only caveat is that once you offer this to one employee you should offer it to all employees (current and prospective). This way you cannot be sued for discrimination.

Anne Williams
Group Publisher Benefits & Books
M. Lee Smith Publishers, LLC

Whirlwind · May 2006

I would add to what Anne said that if you're going to have her sign a statement, you should consider making provision for what will happen should her personal circumstances change causing her to need health insurance.

HRCalico · May 2006

Our president does that with part-time people who are not eligible for insurance. I think what Whirlwind is saying is kind of like this: one EE asked to go up to full time at her review and get on our insurance. She had gotten a raise, and we said that if she went on insurance (which costs us $2/hour), her raise would be significantly less. She wanted both, we said NO. She took the insurance.

There has been much previous discussion on the board about paying a stipend to employees that do not take the insurance but they must provide proof of insurance. I haven't quite figured out how that is the company's business, but many require it.

Good luck.

E Wart · May 2006

I know you can (and people often ) do this. However, I personally don't agree with it. I look at insurance as a benefit. If the person doesn't elect it (need it for what ever reason) they loose this benefit. It is like if they get vacation/sick time that they don't take. Or even if they take the insurance, but never have claims. This also gets salaries all out of "whack" if you look at comparables for same jobs, etc.

I feel that if you want to use health care as salary compensation you should look at a "true cafeteria plan" where employees are given "X dollars to spend" for whatever benefit they want and if they don't take it, they get the $'s.
I agree about what are you going to do for other employee's who don't have insurance (whether or not they have told you they do or don't want it and negotiated their salary based on it.)

One other thing to look at is if employees' benefits are based on their salary (ie. life insurance or LTD) this person could get a higher benefit than others who took out insurance or who were not given this option.
Why not look at a cafeteria plan if you want to do this?
E Wart

Whirlwind · May 2006

E Wart, you've made some great points and I agree with all of them -- especially the point about getting salaries out of whack. I want the salary to strictly reflect the skill, effort, and responsibility factors of the job and the performance of the person in it.

I also wouldn't offer compensation in lieu of health insurance, but if I ever worked for an employer that insisted on it, I'd certainly pay attention to all the precautions in this thread. I'd also want to use the stipend method mentioned above so that it wouldn't be part of the base salary.

kmc · May 2006

Thanks for all the info. Several of these issues concerned me and having the manager see other HR opinions on the subject and some of the potential consequences.

amwkim · June 2006

What does your medical insurance contract say? It may require 100% participation. Check it carefully.

We offer employees $100 per month if they don't take our coverage. They have to sign a waiver and prove they have comparable coverage elsewhere. WE only have 3 people doing this.

Dutch2 · June 2006

If you should do this, check your current policy as to how and when they could be added to your plan. They don't want the coverage when it isnn't needed, but if something comes up... now they need coverage and now they will want in the plan. This should be clearly spelled out to anyone that decides not to participate in the plan.

kmc · August 2006

Just thought I would let you know that after reading all of your opinions, the manager decided not to make the exception. One month after this employee was hired, ee did not take coverage since they were covered by spouses insurance, spouse left them. So I would be dealing with the I didn't want insurance when I started but now I need it.

mwild31 · August 2006

Hi kmc

I'm so glad you followed up and let us know what happened! x:-)

If I had been posting then, I would have disagreed with some of the other posters. I don't think it's all that common for most employers to offer additional pay in lieu of benefits. In fact, in my career, I haven't seen it happen at all & would be curious as to any statistics that show it is a common practice. Benefits are just that - benefits. Someone's pay should be based on market conditions/skill pay/pay practices at a company, etc. & not "mixed" with benefit information. It creates a mess, in my opinion. Just my two cents... x:-)

Riva · September 2006

Glad to hear about the update. As a possible suggestion, you may want to consider offering employees who opted out of insurance a waiver credit. We offer those employees a $30/bi-weekly credit every pay period. Food for thought...

dynamite9551 · September 2006

i too agree that the salary not be amended because they don't need the insurance. that's great, but would you take away any increase given if their situation changed in 3 months and the employee informed you they now need the coverage? i don't think i'd like play this roulette game.

kmc · September 2006

I agree 100% with that. Especially the name of the game!

Make employee's salary more since they don't need health ins

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