Health insurance question regarding employment law

[Phoebe Loosinhouse]

I have a friend who told me that her company offers a completely different (excellent) health plan to salaried managers and above and only offers a completely crap "mongrel" catastrophic expensive type insurance to full time hourly employees. They consistently use the word "grandfathered" in order to explain the disparity. In other words, the good policy is only available to people who worked during the time it was originally offered, or so they claim.

When I had my own small business, I recall distinctly our insurance company representative being very clear with us that we had to offer the same health care to full-time employees that we gave ourselves if it was a company group plan as opposed to individual private coverage - which of course we did.

So, is what my friends company doing legal? The plan she was offered was unbelievably crappy - like 5k a year for a max 10K coverage. She is full time, but she is not offered the same plan available to the "grandfathered" salaried types.

What do you think?

[Phoebe Loosinhouse]

1. No one? I thought for sure one of our in-house resident experts would

have an opinion.

[madrchsod]

2. i think they are hosing her

there used to be different plans for salaried but those days went out when co-pays came in.grandfathered is just a convenient way to say we are not obligated to give her the same plan. if the insurance company wants to sell them different plans..oh well. one of the last company i worked for offered 5 different plans from blue cross of illinois.

[Raspberry]

3. This may be ancient info--

I used to work for an insurance co. that specialized in employment plans. At that time (25+ years ago) an employer could offer different plans to different _classes_ of employees; for instance, all managers could have one type of plan, while all clerical would have another, and all production employees would have another. That may have changed sometime in the intervening years, but that was perfectly legal at the time. You could not discriminate within the group--different plans for people having the same job titles, but you could offer different benefits within the same company.

[RB TexLa]

4. has nothing to do with grandfathering. It's called a carve out and any company can do it.

They don't have to offer the same plans to all employees. Their section 125 plan has to be in compliance. Simply meaning all of the tax benefits of pre tax spending has to balance out over all employees. To prevent the plans from going out of compliance often time higher earning employees with pay for insurance with after tax dollars and receive a raise to offset not getting the tax savings.