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Non-employees Receivung Benefits
Benefits & Compensation
Non-employees Receivung Benefits
Exchange ideas about health plans, retirement, work/life benefits, and employee assistance.
Hello,
My boss want to put his in-laws on the company health insurance even though they are not employees.
Because employees need to be on at minimum wage to receive health benefits he want to
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Forums » Topic Forums » Benefits & Compensation » Non-employees Receivung Benefits
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Non-employees Receivung Benefits
posted at 4/8/2010 1:26 PM EDT
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Posts: 1047
First: 4/11/2002 Last: 9/14/2011 |
I doubt that insurance carriers are going to allow older dependents onto employer plans - too much cost. Allowing dependents to age 26 is a lot different than allowing a 63-year old parent with a host of maladies.
The solution for these people is going to be the insurance exchanges (Commonwealth Connector in MA for example) that each state will most likely be setting up. While the insurance may not be dirt cheap, it will be heavily subsidized for those with bad health. |
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Non-employees Receivung Benefits
posted at 4/27/2010 1:04 PM EDT
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Posts: 21
First: 6/5/2007 Last: 6/11/2010 |
From my own experience, this may be allowable if the plan is self-insured.
My boss didn't try it with the health insurance, but he did put his 30-year old, non-employee daughter on the company's self-insured dental plan. The administrator's opinion was, It's your plan and your money. |
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Non-employees Receivung Benefits
posted at 4/28/2010 4:25 AM EDT
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Posts: 562
First: 11/12/2009 Last: 9/14/2011 |
Just because the administrator decided to look the other way doesn't mean putting a non-employee on the company's insurance is legit. If the SPD doesn't allow it, then there could easily be repercussions (assuming someone cared enough). |
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Non-employees Receivung Benefits
posted at 4/28/2010 5:31 AM EDT
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
And don't self insured plans have to go through nondiscrimination testing? If the CEO is an HCE, then with family aggregation, his daughter's benefits might be combined with his...to the point that he might lose the taxable benefit of premium deductions under a Section 125 plan.
Often the carrier itself doesn't care about the testing side as it is the responsiblity of the employer and/or a TPA/broker. It's been a while since I've done that so maybe the parameters have changed. Not to mention if he opens it to his daughter, does he have to open it to other non-dependent children of other employees. Might be a large can of worms.... |
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Non-employees Receivung Benefits
posted at 4/28/2010 7:23 AM EDT
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Posts: 21
First: 6/5/2007 Last: 6/11/2010 |
Please explain,
"If the CEO is an HCE, then with family aggregation, his daughter's benefits might be combined with his...to the point that he might lose the taxable benefit of premium deductions under a Section 125 plan." What is an HCE? And would losing the taxable benefit mean simply that the benefit premium would be deducted after tax? Not that he pays for any of his benefits, anyways. The company pays for all of the officers' insurance benefits. Also, I'm still unfamiliar with any testing done on a self-funded plan. Who does the testing and by what standards? Is there any authority that the test would be submitted to? |
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Non-employees Receivung Benefits
posted at 4/28/2010 7:36 AM EDT
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Posts: 1047
First: 4/11/2002 Last: 9/14/2011 |
HCE = Highly Compensated Employee. Discrimination testing comes into play for Section 125 plans. If a company doesn't pass the testing, they would lose the ability to allow employees to pay premiums pre-tax and coould face penalties. |
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Non-employees Receivung Benefits
posted at 4/28/2010 7:39 AM EDT
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
HCE = Highly compensated employee (with a very specific definition)
If the premiums are taken out of the employee's paycheck on a pretax basis, you have a Section 125 plan. Section 125 plans require that you test to make sure that HCEs aren't getting a larger benefit than non-HCEs. If they are, then part or all of their benefit (including the amount the employer pays for) is considered taxable income. Here's a really good synopsis: http://www.arlengroup.com/facts/fact_sec125_ndtest.pdf |
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