withholding for insurance

valentine · March 2003

Our employees are paid bi-weekly and we hold out for their health insurance bi-weekly. We pay the insurance company one month in advance.

We recently had an employee who became eligible for benefits on March 1st get quite upset because we took out for insurance for two weeks. The pay period went from 2-16 to 3-1. When the employee leaves, his insurance is paid to the end of the month so he picks up the payment on the end. He is saying we should only have taken out for March 1st since that is when his benefits began.

Could other companies who pay bi-weekly tell me how they take out for health insurance? I don't know of any other way to withhold the insurance.

Thanks

Valentine

E Wart · March 2003

Where I have worked in the past we were paid bi weekly. Our group insurance premium was divided into 24 payments (or 12 months/2). The payment was taken out of the first and second paycheck of the month. If there was a third paycheck (like there is for 2 months out of the year) no group insurance was deducted. Even though the employee was paid in arrears, the insurance was taken out for the actual month (ie. If eligible for insurance in March, would begin taking out the first paycheck in March, even though part of this was for Feb.) It is quite easy to administer and for employees to understand if they know that the premium is deducted twice a month, first and second check of the month, for that particular month. I know this can be confusing for employees.

HRMaiden · March 2003

I do the payroll for my company and we have some employees who are paid bi-weekly and some employees who are paid weekly. For bi-weekly paid employees, the way I handle your situation is:

I wait until they have been covered by the insurance for a week before I deduct any premiums. Our bi-weekly employees are paid every other Wednesday. Therefore, in your example, what I would do is wait until the March 12 paycheck to deduct premiums and then I would only deduct for one week of premiums. When the employee terminates, I do deduct total premiums from their final paycheck as they are covered through the end of the month. I have never received any complaints (from employees or our accounting department) regarding how I deduct premiums.

Mentel · March 2003

We are also bi-weekly and we withhold for the actual days covered. We would not have started to deduct until the paycheck of March 21 which covers the days from March 1 through March 14. We have a lag of one week before the checks go out. I understand why you want to do it ahead because of the premium payment the company makes but I would not charge employees for insurance that they don't in fact have yet. I also get the premium for the remainder of the month from the last check when an employee leaves. I have employees sign off on this so there is no confusion regarding the last check. Some employees even pay for a month or two of COBRA on their last check so that they are sure of coverage.

Pork · March 2003

You should always recover your premium paid "after the fact of coverage", therefore, weekly, bi-weekly or monthly you would collect the premium "after the fact of coverage".

At the end of employment, the employees coverage will normally stop on the actual date of termination and COBRA premium is paid (pro-rated by day)prior to the last day of the designated period (normally 60 days, but I have heard of plans that are written as 45 days).

In any event, the X-employee will pay the premium back to the day after termination, and the next months premium prior to the next months beginning date.

We always start the employee coverage on the 1st day of the next month after the completion of the 60 day waiting period. I have one new manager that enrolled on the 3rd March; he and his family will not be covered by our insurance until the 1st day of the next month after 60 days which means June 1, 2003. Therefore, he will have waited almost 90 days. His first premium will not come out until the pay week which covers June 1, 2003 and that is June 13, "PAYDAY". HOPE THIS HELPS! Pork

valentine · March 2003

Hi Pork: Yes, that is very helpful. We start a person the first day of the month after 90 days so in this case. The person signed up for benefits in February to take effect March 1st. Our pay date was March 7th and covered payroll from 2-16 thru 3-1. Accounting took out the health insurance for two weeks, 2-16 and 2-23 because that is the first pay period in the month. The employee was upset because he felt we should have taken for only 1 day - March 1st; however, payroll contends that we have to take it out to cover the pay periods and there will only be two pay periods in March 7th and 21st. My concern is the ee threatened to go to the labor board because he feels we took money out for a period that wasn't covered (2-16 thru 2-28). We've always done it this way and never had a problem in the past.

withholding for insurance

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