Employee (under 26) healthcare/salary situation (1 Viewer)

[IC FBGCav]

We hire students directly from college. They are usually covered under the parents insurance until they are 26. So what is happening more and more is they want to stay on their parents insurance and not go on ours. In return they are looking for a bump in pay. My concern is, if you bump their pay and they are still employed here at 27, what do you do then? Cut their pay? Anyone else run into this and how do you handle it? My employer pays 80% of the employees premium costs.

 

[Cold Dead Hands]

You tell them no bump in pay up front and hire someone else out of college that will be less of a pain in the ###.

 

[El Floppo]

why not offer them what you'd be paying for the insurance?

what happens to them later is their problem- if they want the insurance (which is probably better than anything they'll get on their own), they take that money and pay for it.

 

[thayman]

Would you give a 42 year old a bump in pay if they were on their spouse's plan?

 

[Gator Shawn]

No bump in pay but you could have a credit from their not choosing benefits as a line item.

For example

Benefits Election:

No Coverage +$250 Credit / Month
Employee Only $0 / Month
Employee + Spouse -$150 / Month
etc....

 

[Gawain]

Agree with Thayman. I'm on my wife's plan and all that means is I don't have to pay.

When I worked where they covered 100% of the basic plan, they generally did offer something if you didn't take the company plan, but that age is gone. As long as there's some employee contribution, the benefit in staying on your parents plan is to not have to pay that amount.

 

[Gator Shawn]

No bump in pay but you could have a credit from their not choosing benefits as a line item.

For example

Benefits Election:

No Coverage +$250 Credit / Month

Employee Only $0 / Month

Employee + Spouse -$150 / Month

etc....

Which of course would then apply to any employee of any age....

 

[IC FBGCav]

why not offer them what you'd be paying for the insurance?

what happens to them later is their problem- if they want the insurance (which is probably better than anything they'll get on their own), they take that money and pay for it.

I am going on my 4th employee in this situation. This happened with one of the earlier ones. We have her a bump and dad lost his job. Now she is on our plan and by law she must be treated like every other employee with healthcare. So this was a lose lose, financially, but she is a great employee.

 

[Pipes]

Would you give a 42 year old a bump in pay if they were on their spouse's plan?

This. Unless your in a real technical industry with limited job candidates I'd tell them the salary is the salary regardless of whether or not they take the insurance. Plus a dollar paid for insurance isn't the same as a dollar paid for salary as salary costs the company Fica SS & Med and workers comp insurance premiums.

 

[IC FBGCav]

Would you give a 42 year old a bump in pay if they were on their spouse's plan?

No.

 

[Baloney Sandwich]

You are hiring kids straight out of college, why even bother negotiating with them? Tell them no and if they bring it up again rescind the offer and go to the next one.

 

[IC FBGCav]

No bump in pay but you could have a credit from their not choosing benefits as a line item.

For example

Benefits Election:

No Coverage +$250 Credit / Month

Employee Only $0 / Month

Employee + Spouse -$150 / Month

etc....

Which of course would then apply to any employee of any age....

Not following, a credit against what?

 

[RUSF18]

Could also structure it as a signing bonus to avoid the whole "what happens at 27" issue.

 

[roadkill1292]

Time to do the smart thing as an American businessman and join the single-payer advocacy team.

 

[TenTimes]

Any chance you could hire them as independent contractors? That's kinda what I'm doing right now, my way of taking the money in lieu of the benefits.

 

[IC FBGCav]

You are hiring kids straight out of college, why even bother negotiating with them? Tell them no and if they bring it up again rescind the offer and go to the next one.

Easiest way to sink our business right here. We get top of the class students that we intern first. We aren't picking these kids out of a hat.

 

[jon_mx]

You tell them no bump in pay up front and hire someone else out of college that will be less of a pain in the ###.

Seems like the logical answer. In just a couple of years they will be needing insurance.

 

[roadkill1292]

No bump in pay but you could have a credit from their not choosing benefits as a line item.

For example

Benefits Election:

No Coverage +$250 Credit / Month

Employee Only $0 / Month

Employee + Spouse -$150 / Month

etc....

Which of course would then apply to any employee of any age....

Not following, a credit against what?

They can use the credit against medical claims that they incur. The credit is basically a promise to pay a certain amount of medical bills from the business.

 

[IC FBGCav]

No bump in pay but you could have a credit from their not choosing benefits as a line item.

For example

Benefits Election:

No Coverage +$250 Credit / Month

Employee Only $0 / Month

Employee + Spouse -$150 / Month

etc....

Which of course would then apply to any employee of any age....

Not following, a credit against what?

They can use the credit against medical claims that they incur. The credit is basically a promise to pay a certain amount of medical bills from the business.

Doesn't seem like something we would do.

 

[eoMMan]

You tell them no bump in pay up front and hire someone else out of college that will be less of a pain in the ###.

Seems like the logical answer. In just a couple of years they will be needing insurance.

Yeah, I'd tell them tough luck. You're is what it is.

 

[IC FBGCav]

Any chance you could hire them as independent contractors? That's kinda what I'm doing right now, my way of taking the money in lieu of the benefits.

Probably not. My daughter does this at Duke so I am familiar with it.

 

[roadkill1292]

No bump in pay but you could have a credit from their not choosing benefits as a line item.

For example

Benefits Election:

No Coverage +$250 Credit / Month

Employee Only $0 / Month

Employee + Spouse -$150 / Month

etc....

Which of course would then apply to any employee of any age....

Not following, a credit against what?

They can use the credit against medical claims that they incur. The credit is basically a promise to pay a certain amount of medical bills from the business.

Doesn't seem like something we would do.

That's a little vague. Makes a lot more sense than giving somebody a raise for not using all the available benefits. If they incur no claims, it doesn't cost you anything.

 

[IC FBGCav]

Other bad thing is young males are the prime targets for insurance companies because they tend not to use insurance much. So usually when you add them rates go down for the group. If you lose all your young males you pay more as a group. On the other hand, when young males are on a family plan the insurance companies make bank. It is a win win for insurance companies all the way around.

 

[Sand]

We have folks here that wanted that same thing. They're brought on as outside consultants.

 

[IC FBGCav]

We also get a small business tax credit for premiums paid. 35-50%

http://www.irs.gov/uac/Small-Business-Health-Care-Tax-Credit-and-the-SHOP-Marketplace

 

[matttyl]

You don't give them any bump in pay if they don't enroll. All that does it add problems later - trust me, I'm an insurance agent and I see it all the time.

You pay them whatever you're going to pay them and that's that. You don't treat Molly differently than Sally because Molly is still on her dad's insurance and Sally isn't. If either Molly or Sally want on your group plan, and you apparently pay 80% of their cost - fine, they pay the other 20% out of their identical salaries (assuming they have the same job/salary).

The other issue I see all the time is what if Molly is married and has 2 kids and Sally isn't. Are you, as the employer, going to pay anything toward Molly's spouse and children's coverage? If so, why are you "discriminating" against Sally and not giving her something?

 

[matttyl]

why not offer them what you'd be paying for the insurance?

what happens to them later is their problem- if they want the insurance (which is probably better than anything they'll get on their own), they take that money and pay for it.

Because then all the young folks will opt out of the group plan, and the average age of an insured on the plan goes from ~35 to ~50.....and premiums shoot up. It's akin to a "death spiral" (insurance term) when the only folks left in the group plan are the older folks. Depending on the group's size (which in many cases determines the type of group they have) the younger and healthier in the group are offsetting the older and the sicker in the group.

 

[matttyl]

Agree with Thayman. I'm on my wife's plan and all that means is I don't have to pay.

When I worked where they covered 100% of the basic plan, they generally did offer something if you didn't take the company plan, but that age is gone. As long as there's some employee contribution, the benefit in staying on your parents plan is to not have to pay that amount.

You're assuming that there is no cost for that 25 year old to be on mom or dad's plan. Of course, maybe that's mom and dad's money, and not yours.....

 

[IC FBGCav]

Other bad thing is young males are the prime targets for insurance companies because they tend not to use insurance much. So usually when you add them rates go down for the group. If you lose all your young males you pay more as a group. On the other hand, when young males are on a family plan the insurance companies make bank. It is a win win for insurance companies all the way around.

Okay this is wrong, with ACA this no longer applies.

 

[Gator Shawn]

No bump in pay but you could have a credit from their not choosing benefits as a line item.

For example

Benefits Election:

No Coverage +$250 Credit / Month

Employee Only $0 / Month

Employee + Spouse -$150 / Month

etc....

Which of course would then apply to any employee of any age....

Not following, a credit against what?

A credit on their pay check deductions versus a debit if they chose coverage....

 

[Johnny Rock]

I agree with matttyl. Treat them all the same.

We have part-timers on their parents insurance who want to work > 30 hours per week and promise not to accept insurance that we would need to offer because of ObamaCare. No. We can't do that. Company could be in a world of hurt if it "looked" like you were trading favors because the employer being in the power position would be construed as forcing the worker to deny coverage in order to remain employed. No way.

 

[thayman]

Would you give a 42 year old a bump in pay if they were on their spouse's plan?

No.

That should be your answer right there.

 

[matttyl]

Other bad thing is young males are the prime targets for insurance companies because they tend not to use insurance much. So usually when you add them rates go down for the group. If you lose all your young males you pay more as a group. On the other hand, when young males are on a family plan the insurance companies make bank. It is a win win for insurance companies all the way around.

Okay this is wrong, with ACA this no longer applies.

It could, depends on the size of group we're talking about. And "young" (regardless of male or female) could still apply here.

Let me ask you this - is there a "Set rate" for all employees, regardless of age? Meaning would 20 year old Jim and 40 year old Jack both pay the same "employee rate"?

 

[IC FBGCav]

You don't give them any bump in pay if they don't enroll. All that does it add problems later - trust me, I'm an insurance agent and I see it all the time.

You pay them whatever you're going to pay them and that's that. You don't treat Molly differently than Sally because Molly is still on her dad's insurance and Sally isn't. If either Molly or Sally want on your group plan, and you apparently pay 80% of their cost - fine, they pay the other 20% out of their identical salaries (assuming they have the same job/salary).

The other issue I see all the time is what if Molly is married and has 2 kids and Sally isn't. Are you, as the employer, going to pay anything toward Molly's spouse and children's coverage? If so, why are you "discriminating" against Sally and not giving her something?

My agent just told me the same thing.

 

[IC FBGCav]

Other bad thing is young males are the prime targets for insurance companies because they tend not to use insurance much. So usually when you add them rates go down for the group. If you lose all your young males you pay more as a group. On the other hand, when young males are on a family plan the insurance companies make bank. It is a win win for insurance companies all the way around.

Okay this is wrong, with ACA this no longer applies.

It could, depends on the size of group we're talking about. And "young" (regardless of male or female) could still apply here.

Let me ask you this - is there a "Set rate" for all employees, regardless of age? Meaning would 20 year old Jim and 40 year old Jack both pay the same "employee rate"?

Yes, we average cost.

 

[matttyl]

I agree with matttyl. Treat them all the same.

We have part-timers on their parents insurance who want to work > 30 hours per week and promise not to accept insurance that we would need to offer because of ObamaCare. No. We can't do that. Company could be in a world of hurt if it "looked" like you were trading favors because the employer being in the power position would be construed as forcing the worker to deny coverage in order to remain employed. No way.

The other thing that I've seen get employers get into worlds of trouble is paying 100% of the employee's rate....and then not having 100% enrollment (similar to your situation above). Why would someone turn down something that's "free"?

 

[matttyl]

You don't give them any bump in pay if they don't enroll. All that does it add problems later - trust me, I'm an insurance agent and I see it all the time.

You pay them whatever you're going to pay them and that's that. You don't treat Molly differently than Sally because Molly is still on her dad's insurance and Sally isn't. If either Molly or Sally want on your group plan, and you apparently pay 80% of their cost - fine, they pay the other 20% out of their identical salaries (assuming they have the same job/salary).

The other issue I see all the time is what if Molly is married and has 2 kids and Sally isn't. Are you, as the employer, going to pay anything toward Molly's spouse and children's coverage? If so, why are you "discriminating" against Sally and not giving her something?

My agent just told me the same thing.

Great minds think alike?

 

[matttyl]

Other bad thing is young males are the prime targets for insurance companies because they tend not to use insurance much. So usually when you add them rates go down for the group. If you lose all your young males you pay more as a group. On the other hand, when young males are on a family plan the insurance companies make bank. It is a win win for insurance companies all the way around.

Okay this is wrong, with ACA this no longer applies.

It could, depends on the size of group we're talking about. And "young" (regardless of male or female) could still apply here.

Let me ask you this - is there a "Set rate" for all employees, regardless of age? Meaning would 20 year old Jim and 40 year old Jack both pay the same "employee rate"?

Yes, we average cost.

Ok, and I hope that this doesn't get too complicated......

That "average cost" is determined based on your group's dynamic. So if you for instance have a few 20 year olds and a few 30 year olds and a few 50 year olds - the average age is ~35 and the average cost/rate could be lets just say $400 per employee per month.

If you then lose all those 20 year olds (from the group plan), the average age might go up to ~45. Now the average cost/rate could go up to lets say $550 per employee per month. Now, if you hired a new 20 some year old (off policy anniversary/renewal) and that 20 year old wanted to join the group, they come on with a $550 rate (the same as everyone else).

I've had this happen with a lot of my small/medium groups that have a "average cost" (called "community rating"). All the young folks drop off the plan cause they are paying, in our example, $550 a month, and they can go to the individual exchange and get coverage for less. On the individual exchanges, in most states, there isn't "community ratings" so a younger person pays less than an older person.

 

[Leeroy Jenkins]

Would you give a 42 year old a bump in pay if they were on their spouse's plan?

No.

Ready for an adea lawsuit?

 

[Long Ball Larry]

Certainly no expert, but it does sound like it could open up a big can of worms down the line throughout the company.

If you are that worried about remaining competitive with your talent pool, seems like it could be reasonable to sort of split the difference and offer a little bit more than you normally would, if it's a candidate that you really want and it seems important to them. But even in that case, it doesn't seem necessary to give any indication that it is a trade for no health insurance.

Something like RUSF's idea of structuring some of the compensation like a signing bonus (paid out over time) seems like it could also help out with the long-run salary escalation.

 

[El Floppo]

Agree with Thayman. I'm on my wife's plan and all that means is I don't have to pay.

When I worked where they covered 100% of the basic plan, they generally did offer something if you didn't take the company plan, but that age is gone. As long as there's some employee contribution, the benefit in staying on your parents plan is to not have to pay that amount.

You're assuming that there is no cost for that 25 year old to be on mom or dad's plan. Of course, maybe that's mom and dad's money, and not yours.....

but that's kind of the point... and fwiw, I've swung over to what Gawain is saying. the money they're saving by not having to pay (themselves) the employee contribution should be bump enough. when they want to be adults, and pay their own way, they can renegotiate- they should have proven their worth by that point.

and fwiw- I know why I knee-jerked to my initial response... I'm an independent contractor and my insurance plan is better/cheaper than most company plans, so I choose to stay a contractor and use the savings company's gain by not paying benefits as a bargaining chip.

 

[Foosball God]

Their bump in pay is not having to pay the premium on their health insurance.

If you really felt like you wanted to accommodate this I would set it up as a "bonus" not a pay increase.