Small Group Health Insurance

[kelonious]

State: Texas
I need to know according to Texas law, who, as employees, must be offered insurance. I have people who are employed full time, working 30+ hrs per week, and are not being offered insurance. My boss thinks that since their hiring premise was without insurance that he does not have to offer it to them. He says if he has to offer them insurance, he will terminate them and rehire them at a lower salary. Another solution he says is to make those who do not have insurance pay a portion of the premium, while the rest of us have ours paid by the company. I believe there are three solutions: offer them the insurance with premium paid by the employer; make EVERYONE pay a portion of the premium, or make EVERYONE get insurance on their own and raise their salaries to afford it. I need to know the Texas Laws, if any, that apply to who does and does not get insurance. Is it determined by the State or by the insurance company? If by the State, where can I find these guidelines as to who is eligible for coverage? Isn't what we're already doing a law suit waiting to happen?

 

[cbg]

Whoa, hold on! The situation is not nearly as bad as you appear to think.

First of all, with the single exception of Hawaii, NO state requires that insurance be offered to ANYONE. There is no legal mandate that requires that insurance be offered to any particular group of people.

I'm not going to be able to answer your questions too specifically, since a lot will depend upon your specific insurance contract. Somewhere in there it will say who is an eligible employee. It might be based on hours worked, salary, date of hire, level of management, or any combination of these factors. It might even involve some factors I haven't thought of. As long as everyone who qualifies under those provisions is being offered insurance, you're free and clear, even if it means that everyone is not being offered it. If not everyone who qualifies is being offered it, you've got a problem, but not an insurmountable one.

The one thing that will get you into serious trouble is if the decisions as to who does and does not get insurance is being made on the basis of race, gender, national origin, religion, age, disability or pregnancy. If that's the case, I'd advise you to head for the hills while you have the chance. But if it's not, the situation is controllable. Look over the information here with regards to your situation and post again if you still have questions.

With regards to the premium situation, it's much the same. It's okay to have different people paying different amounts, or none at all, as long as the lines are clearly spelled out and not due to a discriminatory factor. In my company, employees who work 40 hours a week or more get 100% of their premium paid; employees who work between 30 and 39 hours a week pay 25% and the company pays 75%, and employees who work less than 30 hours a week are not eligible for insurance at all. The one thing you don't want to do is have any insurance premium paid by employees who are not covered by the plan. While I haven't had employees in Texas since 1999 and therefore don't remember the Texas regs off the top of my head, most states require that small group employers cover a minimum of a specified percentage of the premium; for example, the employer must pay a minimum of 50% of the cost. There are a few states where the employees can be made to cover the entire premium; the Texas Insurance Commission will be able to tell you the laws there.

By the way, before I went into HR full time I spent five years working for a national insurance carrier as a small group benefit specialist. So while I'm somewhat rusty, I do have some background in this. Feel free to come back with more questions if necessary.

 

[kelonious]

I understand our contract to stipulate people who are eligible for insurance are full-time, working 30+ hours per week. Our provider states we have to pay 75% of the premium. I've been told it's discrimination to ask some people to pay for the remaining 25% of the premium when the rest of us do not, because what's the difference? The difference is the company does not want to pay for their insurance. I'm also concerned that terminating and then re-hiring will put up a red flag to those who should have been offered insurance when they began working the 30+ hours per week. Can they sue us because they've been working for us for a year and they've been working the 30+ hours per week but not offered insurance? Can't we get into trouble by terminating them, then telling them we'll hire them back at a lower rate so they can have insurance? I've also been told in the state of Texas, if workers are 1099 but we govern their hours, location of work, duties, etc., that they also are entitled to insurance. Do you know if this is true?

 

[cbg]

Where does the rate come in? You've mentioned that they would be termed and hired back "at a lower rate". Are you saying that employees above a certain wage are not getting insurance? Is it consistant? If so, there may not be a problem.

The issue is consistancy, but the company is allowed to make certain exceptions. It depends on whether the issue is contractual or not. Example: Unless you have something very unusual in your state regs, and since I used to have offices in both Dallas and Houston I think I'd be aware if you did, the insurance carrier does not have a say in how much you pay as opposed to the employer. The state of Texas may set a minimum standard, and probably does. But nothing in the law prevents an employer from paying more than the minimum. (Your employer may be *saying* that the provider requires the employee to pay 25%, but I'll be very surprised if it's true. What does the provider care where the money comes from?) So the premium payment is (probably) not contractual. That being the case, the employer can make what exceptions they like. It may be that some people have negotiated 100% premium payment as part of their compensation package. That's legal.

On the other hand, assuming for the sake of argument (and this may well be the case - it's quite common) that the ONLY criteria for coverage is that the employee be full time at 30+ hours a week. If this is not being offered to all employees who qualify, it's not a legal issue, since there's no legal requirement to offer insurance. It *may* be discriminatory, but unless the criteria for who does and does not get the insurance is based on one of the factors in my first post, it's not *illegal* discrimination. All discrimination is not illegal, remember. However, it may be a contractual violation with the carrier. What to do about it is troubling, since raising the issue with the provider could result in the contract being pulled for everyone. On the other hand, the provider could decide that it's not an issue they care to get involved with. There's no way to tell beforehand.

I don't know the answer to your 1099 question, sorry. When I was working as a small group specialist, we would not include 1099 employees on the policies we offered, but on the other hand Texas was not included in my territory, either. The state insurance commission could answer that question. Most state agencies can be contacted anonymously.

Let me ask you a question, which might help me help you sort this out. What is your position here? Are you in HR, Accounting, office management? Are you in a position where you would definitely know the terms of the insurance contract, or are you going on assumptions? It might make a difference where I suggest you go next.

 

[kelonious]

The rate comes into play because the employer feels if they have to pay for insurance, the salary should be lowered since the original salary was NOT based on benefits. I am the office manager at this location, and somewhat in charge of HR. Our insurance carrier contract (and all are different) requires us to pay at least 75% of the premium. None of the people who are working full time and not receiving benefits were OFFERED the insurance when they should have been due to them working the 30+ hours per week. They're basically telling the employees who SHOULD be offered insurance that if they want it, they'll have to pay for it, but I KNOW they aren't telling them that they'd only have to pay 25%, they're allowing them to believe they'd have to pay for it ALL. When is it NOT discrimination when you are picking and choosing who you want to allow to have insurance? It's like saying "I like you, you can have insurance, but you are just a grounds keeper so you can't have insurance". They're full time employees just like the rest of us, but because the company doesn't WANT to pay for it (trying to save money?) they're forcing them to sign waivers under false pretenses (sp?). There IS a legal requirement that ALL employees who are working 30+ hours per week are considered full-time and must be offered insurance. They are considered "eligible for participation" and become a part of the umbrella. This is, unless, you decide not to offer ANYONE insurance, therefore, offering them a bit higher of a salary so they can seek it on their own. I'm having a meeting with my broker, an insurance rep and my boss on Monday in order for him to ask some questions. I'm sorry, but it just seems to me that if they're going to screw SOME of the employees out of some benefits, they'll do the same with regards to something else to the rest of us. It's not fair to the employees who should be offered insurance and maybe do not have it at ALL.

 

[cbg]

If there are specific classes of people who are eligible for the insurance and they are picking and choosing who gets it, that is a violation of the insurance contract. It is not a violation of the law unless the decision of who is and is not offered the insurance is made on the basis of the employee's race, religion, national origin, age, gender, disability or pregnancy. It's a fine line distinction but a definite one, nonetheless.

It's not a legal requirement that employees working 30+ hours be offered insurance. It's a contractual requirement. That's very important to remember. I'm not minimizing your concerns and you are right to be concerned, but you need to have a clear distinction of what is against the LAW and what is against the CONTRACT. It's not the same thing.

Yes, picking and choosing who gets the insurance is discrimination. But it's not ILLEGAL discrimination unless it's made on the basis of the protected groups above.

Yes, you need to do something about this. I'm not saying you should let it go. But again, no LAWS are being violated based on what you've said. Contractually, your boss is in very deep trouble, and I'm sure the insurance commissioner will be very interested to hear what's going on. But LEGALLY, there is no requirement that he offer insurance in the first place.

Meeting with the insurance rep and the broker is a good first step. See how that goes, and then you can determine whether you need to notify the insurance commission.

 

[kelonious]

Thank you for clearing that up. I was confusing the contractual obligations and the legal limitations. It is nice to know the differences, especially since this my first attempt at HR and I am not completely familiar with the legalities.

The meeting with the broker and insurance rep was interesting. I'll leave it at that.

 

[cbg]

Hope it went well, Kelly. C'mon back if you have additional questions as you go forward.