Health Insurance Pre-tax

[rustyalice]

What is the name of your state?What is the name of your state? Illinois
I am employed by a non-profit. We have about 15 staff. Most are independent contractors. About 5 of us are considered employees and of the 5 only one is working 40 hours. That employee (the full-time employee) receives full medical benefits that are paid by the organization. I work approximately 31 hours a week as an employee and am paid on an hourly basis. I also consult with the same organization as an independent contractor for hours that vary, again being paid on an hourly basis. I approached the Executive Director about the possibility of helping me with health insurance. I desire to have my health insurance premium taken off the top of my monthly wages (i.e., pre-tax). Ideally, I would also like my employer to pay a portion of the premium but I would settle for just getting the premium deducted before taxes. I have been told that the only way this organization can do it is if I were willing to go to a salary arrangement where my employee hours and my consulting hours are combined to put me at 35 hours a week, or as they see it, into full-time status. I don't understand why this is the only way, as they deduct and administer health insurance pre-tax for several independent contracts in the organization that also earn a salary in their role as directors (and are therefore, considered employees as well as independent contractors). Am I getting the run around? I don't want to go to a salary arrangement as I know it will mean I will lose income while being expected to do more. Thank you for your assistance.

 

[cbg]

No, you are not getting a runaround.

It is not even remotely unusual for an employer to limit insurance benefits to full time employees.

In addition, Section 125 plans (which is what your employer is operating under if they are offering insurance on a pre-tax basis) are VERY strictly regulated and they MUST follow the definitions in the plan document.

If the plan document says (and it would be quite unusual if it did NOT say) that benefits are limited to full time employees and/or directors of the company, then if you are not a full time employee as defined or a director of the company, they MAY NOT LEGALLY offer you insurance benefits.

 

[rustyalice]

I understand that Section 125 plans are highly regulated, but what if an organization has no formal, written "Section 125 Plan" with regard to this issue. As a small non-profit, we have only recently begun to formalize many of our policies in writing. Our SOP manual for example, says only this with regard to benefits: "The Center does not provide uniform benefits for employees in the health care, insurance, pension area but does allow each individual employee to designate a portion of his/her negotiated income for particular benefits needed." There is no mention of benefit designation specifically to full-time employees or directors. Could this statement on benefits be construed to stand as the Section 125 plan? In addition, my understanding of Section 125 is that it does not make the designation as to what circumstances are required to qualify, but only that it be consistently administered. In other words, it is up to the respective company to determine if all employees are eligible, or if only those working x amount of hours, etc. Is that correct?