Q. We are a self-insured company, and pay 100% of the premiums for employee-only health insurance coverage. (Employees with spouses and families are responsible for those premiums.) After several large claims last year, our president decided to increase the premiums deducted from employees’ paychecks. However, the rate he has directed to be deducted is higher than the rate at which we are billed for the spouse and dependent coverage. Is it legal to make money off of the “premiums” we ask employees to pay?
A. Employers are generally free to decide how much of the costs of health insurance coverage to pass through to employees. Generally, the process for establishing premiums for self-funded health benefits starts with the employer getting a handle on three major variables:
- Expected costs of the benefits themselves
- Extent to which those benefits costs are covered by a stop-loss carrier
- Expected costs of plan administrati...(register to read more)