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Monetary Incentive to Waive Medical Coverage
Benefits & Compensation
Monetary Incentive to Waive Medical Coverage
Exchange ideas about health plans, retirement, work/life benefits, and employee assistance.
If an employer provides medical plan coverage to their employees and the employees dependents at no cost (fully employer paid), can the employer offer a financial incentive to waive this medical cover
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Forums » Topic Forums » Benefits & Compensation » Monetary Incentive to Waive Medical Coverage
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Monetary Incentive to Waive Medical Coverage
posted at 11/3/2010 5:06 AM EDT
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Posts: 1
First: 11/3/2010 Last: 11/3/2010 |
If an employer provides medical plan coverage to their employees and the employees dependents at no cost (fully employer paid), can the employer offer a financial incentive to waive this medical coverage if an employee has other coverage (through their spouse for instance)? Or can you only provide this incentive if the employees are charged for a portion of their medical plan coverage? |
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Monetary Incentive to Waive Medical Coverage
posted at 11/3/2010 6:55 AM EDT
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
I don't see any reason why not. But where you need to be careful is on the taxability of the given opt out amount. It is my understanding that it would be taxable. But check with your tax accountant/attorney on that one.
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Monetary Incentive to Waive Medical Coverage
posted at 11/8/2010 7:47 AM EST
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
One other thing though is that you can NOT incentivize employees to go onto Medicare as primary and to drop your coverage. That is illegal. They can do so if they choose but you can not pay them an opt out premium.
I know a lot of companies who are going with the spousal surcharge like Robin mentioned. Usually it isn't large (less than $100 a month), but enough to make them stop and think. Robin, what is the monthly cost of your spousal surcharge (if they are eligible for their companies plan) and how are you going to audit it, if at all? |
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Monetary Incentive to Waive Medical Coverage
posted at 11/8/2010 7:48 AM EST
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Posts: 1047
First: 4/11/2002 Last: 9/14/2011 |
Just be careful how much $$$ incentive you provide. How large is your company? Have you estimated who would jump off vs. stay on?
Sometimes these incentives actually have an adverse financial impact for a company. For example, if the younger, healthier risk end up jumping off your plan, it's going to cause your premium rates to go up at some point. If you have a higher than average contribution ratio on your medical plan, that's good when it comes to attraction and retention, right? Is it worth messing with that to save a few thousand $$$? Only you can answer that question. |
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