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John, Employment Lawyer
Category: Employment Law
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Experience:  Exclusively practice labor and employment law.
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Can an employer take health insurance premiums out of an employees

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Can an employer take health insurance premiums out of an employee's paycheck without the employee's knowledge or permission?
My husband's employer claims he started an employee insurance program in July (claimed they got a month "free", yet no one was informed it existed), and began pulling premiums out in August. All my husband received, on August 3, was a very generic description of a possible insurance plan. There were no specifics on what the plan would cover, deductible or copay information or amount each employee would be responsible for paying, yet he began withholding on August 1. On August 28, my husband and I were finally given dollar amounts and immediately informed the employer, in writing, that we were not interested. (A $10,000 deductible plan, with nothing covered until the deductible is met, then 30% coinsurance, for $1200/month!). We informed them we would wait for the ACA marketplace to open in October. Yet the amount stated in the August 28 email was pulled out of each paycheck from August 1 through the October 1 paycheck. The company has refused any refund of the amounts deducted, claiming that my husband now has to "wait" until the next "coverage period" or "open enrollment period" (January 1, 2014) to refuse coverage. We have also been threatened with "federal consequences" for refusing required insurance under the ACA and been told we must accept this insurance plan. This is their rationale for withholding premiums without informing the employees. The employer has 12 employees.
Submitted: 11 months ago.
Category: Employment Law
Expert:  John replied 11 months ago.
Hi, thanks for submitting your question today. My name is XXXXX XXXXX I’m happy to assist you with your question today.

You are asking a few different questions here, so I think the best approach is to break it down into palatable sections and and answers, as follows:

Can an employer take health insurance premiums out of an employee's paycheck without the employee's knowledge or permission? - ANSWER No, the employer needs permission from the employee to take out any fringe benefit payment, which are optional payments other than payroll taxes or amounts taken by court order etc. Health insurance premiums would not be one of those.

Yet the amount stated in the August 28 email was pulled out of each paycheck from August 1 through the October 1 paycheck. The company has refused any refund of the amounts deducted, claiming that my husband now has to "wait" until the next "coverage period" or "open enrollment period" (January 1, 2014) to refuse coverage. ANSWER - not that the deduction for health insurance was ever authorized, but once it was specifically revoked the employer had no right to continue to take it. It's the employer's problem if it enrolled everyone in healthcare plans without their consent...which I find hard to believe it got an insurer to accept applications without the employees' consent for this size group they'd probably want a health history on every employee. But, in any event, since you didn't authorize the deduction it doesn't somehow make it your problem that the employer cannot end the insurance until open enrollment, which also sounds like a fishy answer, since every plan that I've ever dealt with can end enrollment in a month.

We have also been threatened with "federal consequences" for refusing required insurance under the ACA and been told we must accept this insurance plan. This is their rationale for withholding premiums without informing the employees. The employer has 12 employees. - ANSWER The ACA applies only to employers that have 50 or more full-time equivalent employees. This is calculated by adding the number of all full-time employees (those working an average of 30 or more hours per week for the look back period of no less than 3 but no more than 12 months) and adding the average hours of all non-full time employees for the same look back period for a number of average weekly hours divided by 30 (i.e., how many 30-hour per week positions exist from the average weekly hours of part-timers). An employer would then be considered covered or not covered by the Act in the subsequent “stability” period equal to the employer’s chosen look back period. An employer with only 12 employees wold not be subject to the law. You and your husband are required to get affordable coverage on your own under the ACA, but there is no employer involvement or penalty for not providing these benefits to you. Likewise even if this employer was mandated to offer benefits by the ACA, an employee can still deny such offered benefits and the employer would not be penalized.

The employer has clearly taken impermissible deductions, and the ACA is not a legally justifiable reason to take these deductions. I'd recommend you consider filing a charge with the Colorado Department of Labor here to get your withheld wage back and to stop the employer from further withholdings.

I believe this answers your question. However, if you need clarification or have follow-up questions regarding this matter, I will be happy to continue our conversation – simply reply to this answer. If you are otherwise satisfied with my response, please leave a positive rating as it is the only way I am able to get credit for my answers. Thank you, XXXXX XXXXX wish you all the best with this matter.

Customer: replied 11 months ago.

Thank you for your prompt answer.


 


The answer to your question as to why an insurer would authorize the coverage, is that the insurance agent is the employer's mother. The employer used the I9 information he had on file to determine ages of employees. Whether they "guessed" about health conditions, I am not sure. They have some information from doctor's notices for sick time requested. Employees were casually asked the ages of their spouses/children at a company function in July. I believe this is also illegal.


 


For my clarification, the employer must get permission, in writing and with the employee's signature, with a clear explanation of what is being withheld (health insurance) and the exact dollar amount to be withheld and on what schedule (monthly, per paycheck, etc.). Is my understanding correct? I have asked the employer to produce such a document, signed by my husband, and they responded that they didn't need such a thing, as this is all required by the ACA. (You have adequately answered my questions regarding their responsibilities/liability in terms of the ACA. Thank you!).

Expert:  John replied 11 months ago.
Lisa, I believe this employer is severely misunderstanding the ACA. You are correct in your understanding of what is required for a permissible deduction of health insurance.

Let me know if I can be of further assistance to you. Thanks and good luck with the matter.
John, Employment Lawyer
Category: Employment Law
Satisfied Customers: 2866
Experience: Exclusively practice labor and employment law.
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