Declining Health Insurance

RYoung · March 2007

We a have a couple of employees who have elected not to be covered under our medical and dental plans. They are covered by their spouse's plan. By them not taking our insurance, they save the us thousands of dollars each year.

Does anyone have a policy which recognizes this and, in substitution, provide alternate benefits such as a flat dollar amount, additional time off, etc?

stilldazed · March 2007

We allow folks to decline enrollment, but we do not offer any form of recognition for their decision. My recommendation would be to tread carefully. You can very easily get into offering the 'savings,' which becomes the 'carrot,' more folks choosing to received the 'carrot' by not enrollment, and having an adverse impact on your group's rates, which will cause a higher overall premium cost per person covered. The effect will be that healthy employees chose to take the award, unhealthy employees who need the insurance keep the insurance, your loss/run information changes to reflect more claims costs per premium costs, and your group's risk valuation goes up--not a good situation.

Best wishes.

E Wart · March 2007

I would be extra careful if you even think about "paying the employee what they "save the company" when they don't take the insurance. We have had employees ask about this. My response is that this is a benefit, just like vacation, holiday, etc is. If they don't take it, they "loose that benefit". This is their choice whether they need it or not.
My suggestion, is if you wish to "pay them what they save you" set up a true cafeteria plan and they will get some "money back'. Otherwise, how are you going to consider what to pay them (not just premium but what about all the claims you don't pay and how do you know how much the claims would be. Also, by having them enrolled, you could actually save money in your group plan (if they pay the premiums and don't use it, or if they bring down the age group etc.)
Just don't even go there. Don't consider opening up this door, unless you consider the true cafeteria plan. (I won't even go into that it would have to be offered to all employees and how many would "drop their coverage" if they were offered this.)
E Wart

Dutch2 · March 2007

I believe we are similar to EWart. Back when we had a fully funded outside health care policy, part of the plan agreement was that every eligible employee would be enrolled in the plan, no exceptions. This way United Health Care or Blue Cross made every cent they could from our group. Now that we are self insured we do not require every eligible employee to participate in the plan. But for those that do not, we do not offer them any form or compensation. We too look at this as any other benefit, take it or leave it. We also feel that is it part of our responsibility to provide health insurance for our ee's. If we allowed some to take the cash and run, that is exactly what they would do and they could end up with no coverage.
Good luck.

FunHRBanker · March 2007

On the flip side, we do offer our employees a cash benefit for not taking our medical insurance; however, they must be insured. We pay half of what we pay for single coverage to the employee on the last payroll in December (pro-rated based on number of hours worked and how many months they elected not to take our coverage). To be eligible, the employee must work at least 30 hours/week, be employed with us for at least 6 months, and an active employee as of 12/31. They must also provide proof of coverage.

Wildsporty · March 2007

A little different twist here. Our company treats it as a benefit, use it or lose it.

My husband's company will pay the extra amount it costs the spouse to have the insurance at his/her company up to the amount they would pay for the employee if he/she had insurance at his company.

In other words if his company paid 150.00 to have him on insurance and he went with his wife's company and it cost her 135.00 to have him on her insurance the company would pay the 135.00. If it cost nothing than the company would pay nothing.

Shirley

jmcaa · April 2007

Shirley,
How many ees do you have? and can you estimate how many you are paying to have insurance elsewhere?

Are you self-insured or fully? Did paying for other coverage have any effect on your rates/costs?

Thanks!

Beverlee · March 2007

We have just set up an FSA, partly for this reason. Tread carefully, but it is possible to save money. Our policy states that the waiving employee must "verify" equal or better health insurance coverage. Our benefit is 1/4 of what we pay for plan coverage. Our contract w/ our insurance company includes a statement that at least 80% of our full time employees will enroll.

The math sample:

12 employees waive coverage and receive $100 per month pr $1200 annually = $14,400. Since our monthly benefit, family or single plan, is $400, we are saving $43,200.

We have the advantage, of course, of receiving some of this money back if it is not used.

We are seeing it as a win/win situation, but haven't run into problems _yet_.

All My Best~

Elizabetharess · April 2007

How many employees do you have?
I have a question about HSA's. Is anyone out there using them? I have researched this in our effort to lower our premium costs and have been told by insurance companies that alot of companies are moving towards the HD policies such as the HSA.
How has it worked for any of you using it?
Thanks
Elizabeth

dlail · April 2007

We are 4 months into it. People are adjusting and haven't heard any horror stories. Most doctors are just charging the "old copay" and billing the difference. Patients still receive a contracted rate, not "retail" as if they had no insurance. All charges apply to deductible, where before, co-pays were not. Well checkups, annual tests, etc, are still covered at 100%, and ee pays nothing up front. We spent time and effort for the last 6 months of 2006 educating employees and helping them use real life expenses as a guide, and comparing the same transactions under traditional and HD plan, to show them how it works. It's a little confusing because an ee tells the doctor's office "I have an HSA", which doesn't much to them. The HSA isn't the health plan, it's like a "medical IRA" to fund the deductible and other eligible medical expenses. Employees can pay from regular bank acct and hoard the HSA money or not. Even if they must spend the HSA money as fast as it's deposited, it is still untaxed money.

We didn't offer a dual option, we went 100% HD plan through our same provider, set specific contribution amounts for 2007, implemented an HRA to reimburse the first 1/2 of their coinsurance. Premiums were cut in 1/2, and even with the contributions and the maximum exposure on the HRA (if everyone was reimbursed their maximum benefit), we still reduced our expense by 35%. The anticipated HRA expense will probably be 15-20% of the maximum exposure. We have 55 ees, w/ two-thirds carrying dependents.

Most employees simply took the reduction in premium and put that in their HSA, so the net check doesn't look any different. EX: weekly premium for self/spouse was $55. Went to HD, premium dropped to $30 and $25 goes to HSA (all pre-taxed). Net check remains the same.

Elizabetharess · April 2007

What is the HRA? Is that where the er contriutes to the HD?

dlail · April 2007

HRA is a Health Reimbursement Arrangement, self-funded, limited benefit under Sec 105, not taxable to the ee. It is another separate benefit like Flex Plans, MSA, HSA, etc., usually paired with a high deductible health plan. It is another funding mechanism, but a non-taxable benefit to the employee. Is also subject to COBRA laws. Plan design and limits are established by the employer, but any section 213 expense can be allowed, incl deductibles, co-pays, co-insurance and health care premiums; er can fund a specific amount and allow carryover. Our plan is limited to out-of-pocket expenses after employee meets deductible and is for reimbursement only. EX: Single-parent family has a deductible of $5600, and coinsurance at 80/20 up to $4,400 (Total OOP $10K). They have met the $5600 deductible, so now they are responsible for 20% of costs. Thru the HRA, our company reimburses all those 20% expenses up to $2,200, or the first half of the $4,400. We are using a TPA that generated the plan document and will process the claims. The plan only covers those expenses that are covered by the health plan, as we designed it. Self-employeds are prohibited from using the benefit, however, they can establish plans for their ees. LLC members,partners in partnerships, S-Corp more-than-2% owners and their employed offspring, spouse, parents or grandparents are ineligible.

ACU Frank · April 2007

I must say, that is an outstanding summary of HSAs!

AJ SPHR · April 2007

This is actually pretty common, to offer a waiver benefit to employees who waive coverage under the employer's plan. It in no way matches the premiums we would have spent had they elected coverage, but is an amount to encourage employees to consider enrolling under their spouse's plan.

Our waiver benefit is $100/month.

Declining Health Insurance

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