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Compensation? - employee opts out of health ins.
Benefits & Compensation
Compensation? - employee opts out of health ins.
Exchange ideas about health plans, retirement, work/life benefits, and employee assistance.
We are a small medical office. We have come across employees that are covered by a spouses policy and doesn't need our Health Ins coverage. However, since we pay 100% of their premium, some have consi
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Forums » Topic Forums » Benefits & Compensation » Compensation? - employee opts out of health ins.
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Compensation? - employee opts out of health ins.
posted at 11/20/2008 5:05 AM EST
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Posts: 4
First: 11/20/2008 Last: 11/24/2008 |
We are a small medical office. We have come across employees that are covered by a spouses policy and doesn't need our Health Ins coverage. However, since we pay 100% of their premium, some have considered taking it anyway since its no cost to them and it would be an extra layer of coverage. Some have asked if we offer compensation if they opt out. Does anyone do this? It would cut costs to pay a small amount to the employee rather than a large premium for unnessesary coverage. Any thoughts?
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Compensation? - employee opts out of health ins.
posted at 11/20/2008 5:27 AM EST
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Posts: 2442
First: 2/12/2000 Last: 9/14/2011 |
Before you allow or incent folks to "opt out" make sure you check on your group insurance contract. Most times they require everyone to join in small groups to avoid adverse selection.
Remember if only sick people join health plans the cost will become prohibitive. |
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Compensation? - employee opts out of health ins.
posted at 11/20/2008 5:43 AM EST
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Posts: 4
First: 11/20/2008 Last: 11/24/2008 |
Don't get me wrong, I would only offer this if they were fully covered by another Insurance through their spouses policy, not to try to get them not to cover themselves. Our insurance co. has them sign a refusal of coverage based on other insurance coverage. The problem was that an employee wanted to be compensated for not taking part in a benefit that was offered to everyone, because she didn't need it. Since we said no, she went ahead and took the second policy anyway. It just got me thinking if we could change that policy to avoid people taking coverage that are covered already somewhere else.
Thanks for the input! |
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Compensation? - employee opts out of health ins.
posted at 11/20/2008 5:48 AM EST
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Posts: 31
First: 8/4/2000 Last: 7/8/2011 |
Many organizations provide for an opt-out, or "waiver" credit for just the reasons you mentioned. It makes complete sense to have the person opting out show proof of other coverage, then set up a payroll contribution (it is taxable income) for the amount you have decided to provide the employee for opting out. We give $100 for an individual, and $200 if the person had 1 or more dependents, plus themself, on our plan. |
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Compensation? - employee opts out of health ins.
posted at 11/20/2008 6:51 AM EST
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Posts: 2442
First: 2/12/2000 Last: 9/14/2011 |
"The problem was that an employee wanted to be compensated for not taking part in a benefit that was offered to everyone, because she didn't need it."
Was she covered somewhere else? |
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Compensation? - employee opts out of health ins.
posted at 11/20/2008 7:01 AM EST
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
We have not done so in the past, but in figuring the company budget this year, we went backwards from the total true cost for an employee (wages plus taxes plus benefits). Almost all employees took a pay decrease.
But we gave the employee a choice -- If the employee wants higher wages, then they have the choice to lower their benefits. But we do require that they show proof of other insurance coverage -- whether that be a spouse's plan OR individual private coverage. |
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Compensation? - employee opts out of health ins.
posted at 11/20/2008 7:11 AM EST
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Posts: 4
First: 11/20/2008 Last: 11/24/2008 |
Yes, she was covered under her husband's insurance.
[quote] On 2008-11-20 11:51, howard7 wrote: "The problem was that an employee wanted to be compensated for not taking part in a benefit that was offered to everyone, because she didn't need it." Was she covered somewhere else? [/quote] |
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Compensation? - employee opts out of health ins.
posted at 11/21/2008 8:04 AM EST
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Posts: 1047
First: 4/11/2002 Last: 9/14/2011 |
From a benchmarking perspective, only 10% of small employers offer a cash incentive for employees to opt out, according to the 2007 Mercer survey. Why more employers aren't doing this, I'm not sure.
I agree that it makes more sense to offer this employee $1000 or $1500 rather than have her on your plan at a much higher overall cost. Just keep in mind that what you do for one employee, you need to do for all employees. And because your rates are almost exclusively going to be based on demographics, if enough younger employees ended up opting out, it could adversely impact your medical rates. Just make sure you are looking at the total picture before butchering your plan down the road if this becomes an issue. |
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Compensation? - employee opts out of health ins.
posted at 11/24/2008 3:39 AM EST
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Posts: 4
First: 11/20/2008 Last: 11/24/2008 |
I hadn't thought about the employee participation numbers effecting the rates, but that is very true. As of now, we would only have 2 people eligible to opt out because of other insurance, but in the future if our new hires end up with outside ins as well, it could really effect our premium rates with lack of participation. Thank you for all of your responses.
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Compensation? - employee opts out of health ins.
posted at 12/9/2008 5:13 AM EST
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Posts: 3
First: 12/9/2008 Last: 6/2/2009 |
We offer incentive amounts to employees whose family members are covered under another plan, not for the employee themselves. One, we want our participation rate remaining up but we also want to offer options for employees as well as keeping more lives off the plan. If they choose to opt-out family members they need to provide proof of coverage in order to receive the opt-out incentive. Hope this helps. |
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