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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 3/29/2010 11:32 AM EDT
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Posts: 3
First: 3/29/2010 Last: 9/16/2010 |
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 put them on at $200/week. What are our potential liabilities and issues form this? Thank you. |
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Non-employees Receivung Benefits
posted at 3/29/2010 11:54 AM EDT
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Posts: 562
First: 11/12/2009 Last: 9/14/2011 |
You could easily lose any tax benefits from providing healthcare and loss of your insurance if the carrier finds out. Which they just might since the in-laws would have to fill out an application for insurance. Might even be some fraud involved.
Your Summary Plan Description will delineate who is eligible for health insurance. My recommendation is to follow that very closely. |
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Non-employees Receivung Benefits
posted at 3/30/2010 4:31 AM EDT
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
Agreed that it is going to depend on how the plan document/SPD and carrier contract are all written. I have yet to see one that would allow something such as this. Is there minimum work hour eligibility? I know some allow for part-time workers to receive benefits (although rare). Many require 30+ work hours per week to be covered.
If the employer knowingly puts someone on the plan that doesn't meet the requirements under the plan document, there could be fraud issues, ERISA issues, IRS tax issues and many other cans of worms that shouldn't be opened. One possible work around is to see whether the carrier would allow the Board of Directors to be covered. If so, they could be appointed to the Board and be covered that way. However, you would have to cover EVERYONE on the BODs. If he is able to lower the eligibilty requirements through the carrier, then those eligibility requirements would have to apply to EVERY employee. Say, the new rqmt was 10 hrs per week (if the carrier allowed it)....then if he hired someone else for 12 hours per week, that person would have to be eligible also. From a cost perspective, this owner is looking at paying $1600+ per month wages plus payroll taxes of at least another 8%...close to $1800 a month. Can he not find individual coverage for the two of them for that? How about the state risk pool if they have pre-existing conditions? Remind him that even if he is able to add them by some type of special case, their claims will work against his rates each year. So if they do have pre-existing conditions and high claims, his rates for all employees could significantly increase because of it. |
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Non-employees Receivung Benefits
posted at 3/30/2010 5:51 AM EDT
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Posts: 1047
First: 4/11/2002 Last: 9/14/2011 |
Both of the previous posts are very well laid out. One of reasons, albeit much smaller in the grand scheme of things, as to why health care premiums were skyrocketing for employers, especially for small ones, was because owners were doing just this. That's why most carriers require quarterly payroll reports and signed affadavits before approving a case for implementation.
You're going to be caught in between a rock and a hard place though since the owner has told you to do something and unfortunately, you're probably going to have to do it. |
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Non-employees Receivung Benefits
posted at 4/4/2010 5:59 PM EDT
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Posts: 2442
First: 2/12/2000 Last: 9/14/2011 |
If you follow the SPD and hire one of the inlaws (the spouse will be the covered dependent) to do some work and pay that person a wage above the minimum you will be ok. Of course this assumes the hired inlaw comes to work. |
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Non-employees Receivung Benefits
posted at 4/7/2010 12:11 PM EDT
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Posts: 1
First: 4/7/2010 Last: 4/7/2010 |
What your boss is asking you to do is commit insurance fraud. Fraud is still a crime and if you knowingly help him commit it, you are also guilty. Find a way to tactfully tell him you can only put legitimate employees on the plan. Talk to your legal department or your health care plan representatives to alert them to this potential problem. If your boss wants to pay the fine and/or face prosecution then let him, but you would be just plain stupid to follow his lead. |
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Non-employees Receivung Benefits
posted at 4/8/2010 7:07 AM EDT
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Posts: 562
First: 11/12/2009 Last: 9/14/2011 |
Interesting question, deltac. Since it'll be required that people purchase insurance if they don't have any it's entirely possible that some might try to piggyback onto corporate insurance programs. |
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Non-employees Receivung Benefits
posted at 4/8/2010 8:50 AM EDT
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
I agree and wonder if the insurance industry itself won't loosen the bounds of who is covered...they are already being required to with the increase in age of a dependent. Wonder if they will voluntarily change other parts if the employers were to push hard enough -- that is if the employer really wanted to cover more -- say aging parents of employees, etc.
Don't know...but I suspect someone in the insurance industry is going to have to come up with an innovative solution. I don't see that the govt has...and I am not sure that employers can because their hands are tied by the govt (both federal and state) AND insurance companies. The ones with the most flexibility will be those that self-insure but I am wondering how self-insured are going to do with the no caps in benefits AND no pre-existing condition limitations. |
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