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Employee Benefit Opt Out Programs
Benefits & Compensation
Employee Benefit Opt Out Programs
Exchange ideas about health plans, retirement, work/life benefits, and employee assistance.
Does your company offer its employees the option of "opting out" of its medical/dental/vision plans if other coverage is available to them? If so, how much and what type of opt out incentive are you o
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Forums » Topic Forums » Benefits & Compensation » Employee Benefit Opt Out Programs
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Employee Benefit Opt Out Programs
posted at 6/29/2009 9:28 AM EDT
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Posts: 2
First: 6/29/2009 Last: 7/8/2009 |
Does your company offer its employees the option of "opting out" of its medical/dental/vision plans if other coverage is available to them? If so, how much and what type of opt out incentive are you offering. |
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Employee Benefit Opt Out Programs
posted at 6/29/2009 10:04 AM EDT
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
My employer decided to do something wacky at its last round of compensation planning. That is, the calculated what we call a "carry cost" by employee that includes all costs (payroll taxes, workers comp insurance, benefits, etc). They then worked backward to a base salary. If an employee chose to drop some/all of their benefits, then their base went up, but their overall carry cost stayed equal.
So I guess you could say we gave them back any dollars that we didn't spend on them at a one-to-one ratio...except that we also took a pay decrease the month or two prior to benefit changes...so in reality some of these benefit changes/decreases helped bring the employees back closer to their prior base salary. Convoluted -- yes it was and I wouldn't suggest it as best business practice. But our CEO had a specific "carry cost" or burn rate for payroll/benefits and this was his way of meeting it. |
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Employee Benefit Opt Out Programs
posted at 6/29/2009 10:54 AM EDT
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Posts: 1047
First: 4/11/2002 Last: 9/14/2011 |
From a benchmarking perspective, about 30% of companies have an opt-out-program with the cash incentive being between 1/4 and 1/2 of the single annual premium. It's going to be more common in larger employers than in smaller employers, but that has more to do with sophistication than economics.
If you go this route, I would recommend creating an actual policy so that someone doesn't take the extra cash one year and then try to elect medical insurance the next without his or her pay being impacted. On a side note, I'm not overly high on this as a long-term strategy. The number of companies offering a cash incentive to not elect health insurance will continue to increase to near saturation. At that point, the opt-out-plans will negate each other and most employers will be right back where they started. |
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