Q. We’re trying to reduce our group health benefit costs. Several employees are on both our plan and that of their spouses. They are willing to go off our group plan if we compensate them a certain amount of money each month. Is it legal to offer either medical insurance benefits or a cash alternative?
A. Yes, you can offer cash incentives to employees who do not enroll in, or terminate coverage under, your health plan. However, anytime employees are removed from health plan coverage, be sure to consider whether it exposes you to discrimination liability.
At this point, it’s uncertain how cash incentives offered to employees who opt out of coverage would be treated under the nondiscrimination rules of the Affordable Care Act, the health care reform law enacted in 2010.