Premium Rebates – United Healthcare and Anthem have both announced premium rebates.
Employers are required to refund to employees the portion of the premiums the employee paid. (We suggest returning employees premium using a premium holiday for the amount of the employee refund.)
United Healthcare, for example, announced a 10% premium forgiveness for May in the form of a credit to be applied to the July invoice. However, if you, the employer paid 75% of the employee premium and the employee paid 25%, you need to credit the employee proportionately.
If the employee pays 100% of their dependent’s premium, you need to refund 10% of the amount the employee paid towards the dependent premium based on the May invoice.
Example: Employee with dependent coverage in May
- Plan monthly cost for employee coverage: $400 / employee pays $100 per month/$50 per pay
- Employee pays for dependent coverage: $800 /employee pays $800 per month/$50 per pay
- Employee pays a total of $900 in premiums for May
- Employer must refund 10% of the employee-paid portion ($90) to the employee
- Note: this example is based on 24 pays per year
DO NOT CREATE A TAXABLE EVENT – if the employee’s payroll deductions were taken pre-tax, writing the employee a check for $90 creates a taxable event. To avoid this situation, give a $90 credit towards the employees benefits in August or September – keeping the company in compliance and making the employee feel as if they received a small bonus.
Braden Benefits administrative staff worked with our clients and our enrollment system, Employee Navigator, to accurately calculate the employer rebate obligation. Braden Benefits is recognized by our clients as providing services that exceed their expectations.
Read more about Braden Benefits’ admin support and technology