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POP 125 plan question California

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  • POP 125 plan question California

    Hello everyone! Our owner came to me and wants to start newly hired employees to pay a higher percentage contribution towards their health insurance premiums for at least a few months. Currently we have a 90 day waiting period and then eligible full-time employees will pay 40% towards their own premium and 100% of their dependents premium (if they have any). He wants to make it so that new employees would pay 70% of the premium and then at some point be changed to the 40% after he deems they are loyal and good employees and not out to "rip him off"... This stems from two employees getting health insurance and then getting pregnant right after...

    Would this type of change be allowed within the section 125 POP plan? I've tried research but can't get a conclusive answer. We do not have a HSA plan.

    Thank you for your consideration and time.

  • #2
    Does your plan document (I am not talking about your company handbook - I am talking about the insurance plan document specify what percentage your employees pay? That would be unusual, but does it?
    The above answer, whatever it is, assumes that no legally binding and enforceable contract or CBA says otherwise. If it does, then the terms of the contract or CBA apply.

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    • #3
      No, the plan document does not specify it - I read it thoroughly. However, our Blue Shield original application asked the question and we had specified the 60% / 40% there. (as well as the 90 day waiting period) Blue Shield had a space where you could have offered different waiting periods for different classes of employees (MGRs vs. non-managers etc.) but not different contribution rates. Does that make a difference?

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      • #4
        If the plan document does not specify, then you are not in violation of the law by making the change. (Very Bad Things happen to employers who do not follow the plan document to the letter.) However, you might well be in violation of your contract with Blue Cross. If you are going to make this change, I would very strongly recommend that you wait until your contract comes up for renewal.

        I'm also a little concerned about the way this is worded. I hope you don't mean that it would be up to the owner to decide when an employee has proven his or her loyalty. If that's the idea (and I know it is not your idea - don't take it personally) then he might as well paint a target on his back, wear a sign that says "Sue me for discrimination" and be done with it. If he's intent on doing this, then the ONLY safe way to proceed would be to set it up something like, Employees pay 70% of the premium for the first 6 months and 40% thereafter. (BTW, in my state asking an employee to pay 70% of the premium would be illegal - double check your state laws and don't forget to read the Affordable Care Act.)
        The above answer, whatever it is, assumes that no legally binding and enforceable contract or CBA says otherwise. If it does, then the terms of the contract or CBA apply.

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        • #5
          Thank you CBG, it makes total sense to me. I will present my findings to him. I believe just the Blue Shield contract prohibits us from going this route but I thought maybe the POP had some general government mandated rules that were not mentioned in the specific plan documents... And no it would not be up to him to decide the length of time individually based on the person... LOL! Yeah that would probably not be a good idea. And now that you mentioned the minimum I'm pretty sure Blue Shield has a 50% in there somewhere as well so I'll double check it and also the ACA for California. Thanks again for your help. It's always good to hear input whether it's for or against what I'm thinking.

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