Is it legal to pay an employee less if they want to receive medical and dental benefits from their employer? My company is thinking about giving the option to new hires to take a reduced hourly wage if they want to be eligible for medical and dental benefits, and, in the alternative, paying those who choose to waive their benefits more. Are there any laws or regulations that would prevent them from giving new hires this option?

None at all.

Aren't there problems with paying people to opt out of a health plan?

I know the new TriCare law is just a recent example of where that would be illegal.

This would only be an option for new hires. The company wouldnt be compensating current employees for opting out of the health / dental plan they already have. Just for those coming in.

This would only be an option for new hires. The company wouldnt be compensating current employees for opting out of the health / dental plan they already have. Just for those coming in.

I know the way it worked where I was once, was like this:

Insurance premiums cost $X per month, so they put it like this:

Benefits include $x per month. We can put it in as your insurance premium, or we can pay it to you directly.

I don't know how they worked it on the accounting side, but basically if we didn't need or want the insurance, they just gave us the premium they paid (supposedly) instead of paying it to the health insurance company. :)

I know the way it worked where I was once, was like this:

Insurance premiums cost $X per month, so they put it like this:

Benefits include $x per month. We can put it in as your insurance premium, or we can pay it to you directly.

I don't know how they worked it on the accounting side, but basically if we didn't need or want the insurance, they just gave us the premium they paid (supposedly) instead of paying it to the health insurance company. :)


That's the basic definition of a cafeteria plan.

That's the basic definition of a cafeteria plan.

Patty, has anyone ever told you you're full of helpful information? :D

I thought it might have been called that, but was thinking 'why would they call something related to insurance "cafeteria", that would be silly.' Apparently the only silly thing about it was me. LOL

Patty, has anyone ever told you you're full of helpful information? :D

I thought it might have been called that, but was thinking 'why would they call something related to insurance "cafeteria", that would be silly.' Apparently the only silly thing about it was me. LOL


If you weren't being sarcastic, thanks. :D

It's called a "cafeteria" plan, I figure, because there are a list of benefits and the employee can pick and choose which ones they want, or none of them.

Are there even cafeterias any more? Now I guess they call them "buffets", except the cafeterias I remember, all the food items were already plated up separately and you just added a gazillion little plates to your tray. :)

If you weren't being sarcastic, thanks. :D

It's called a "cafeteria" plan, I figure, because there are a list of benefits and the employee can pick and choose which ones they want, or none of them.

Are there even cafeterias any more? Now I guess they call them "buffets", except the cafeterias I remember, all the food items were already plated up separately and you just added a gazillion little plates to your tray. :)

No sarcasm. A little silliness, maybe, but no sarcasm. :)

Colleges have cafeterias, and schools, from what I know, but no cafeteria style restaurants that I know of. :)

Edit: I think, maybe, they called them cafeteria because maybe 'ala-carte' hadn't been, I dunno, coined yet?

No sarcasm. A little silliness, maybe, but no sarcasm. :)




Thanks. Silliness is not necessarily a bad thing. ;)

Hey, when they were in machines in New York, they were called automats. Which was before even MY time. :D

Is it legal to pay an employee less if they want to receive medical and dental benefits from their employer? My company is thinking about giving the option to new hires to take a reduced hourly wage if they want to be eligible for medical and dental benefits, and, in the alternative, paying those who choose to waive their benefits more. Are there any laws or regulations that would prevent them from giving new hires this option?

I cannot think of any law that prohibits this, but you can (should) encourage the use of the plans (I will not get on a soap box right now).

"If you opt out of our insurance, you will be paid $X, if you opt in, you will be paid $Y." Their choice. The exact structure of the two options could be cost neutral for the company. Probably should be.