Paying for benefits

Premiums for PEBB benefits

The employee contribution is the portion of the total monthly premium paid by an employee.

The employer contribution is the portion of the total monthly premium (or rate) paid by the employer, for each eligible employee.

What portion of the total premium do employees pay?

The employee contribution may include the following premiums and/or surcharges, as applicable:

• Medical premiums for the employee and any enrolled dependents (unless the employee has waived PEBB medical).

See medical premiums for employees of state agencies and higher-education institutions on the Public employees website. Employer groups determine the employee premium.

• Dental premiums and vision premiums for employees of state agencies and higher-education institutions are paid by the employer. There is no additional cost for employees to add dependents to dental or vision coverage.

• Premium surcharges are in addition to the monthly medical premium. If applicable, employees may pay a:
  • $25-per-account tobacco use premium surcharge, and/or
  • $50 spouse or state-registered domestic partner coverage premium surcharge.
• Basic life, accidental death and dismemberment (AD&D), and long-term disability insurance premiums
  • There are no employee premiums for basic life, basic AD&D, and employer-paid LTD insurance.
• Supplemental life and AD&D insurance premiums are paid posttax if the employee enrolls in supplemental coverage(s).

See the supplemental life and AD&D rates on the public employees website.

• Employee-paid long-term disability insurance premiums are paid posttax unless the employee chooses to decline the coverage.
  • Newly eligible employees will be automatically enrolled in employee-paid LTD at the 60-percent coverage level unless they choose to reduce or decline the coverage, which can be done at any time.

See the employee-paid LTD rates on the public employees website.

What portion of the total premium does the employer pay?

The employer contribution and rates vary based on employer type:

• State agencies and higher-education institutions
• PEBB participating employer groups:
  • Who offer PEBB medical, dental, vision, life, AD&D, and LTD coverage,
  • Who offer PEBB medical-only,
  • For whom the Employer Group Rate Surcharge does apply, and
  • For whom the Employer Group Rate Surcharge does not apply.

Payment of monthly premiums for PEBB benefits

Eligible employees pay premiums and applicable premium surcharges to their employer or the contracted vendor (for supplemental benefits).

Employers are responsible for collecting the employee contributions and any applicable surcharges from their eligible employees. Each month, employers must pay the full premium payment (total monthly billed amount) to the PEBB Program for each eligible employee, even for those who waive medical coverage.

If an employee enrolls in supplemental coverage or is enrolled in employee-paid coverage, the employee is responsible for payment of premiums from the month that coverage begins.

View the accounting manual for your employer type to learn more.

Paying monthly premiums with pretax dollars

Under federal law, employer contributions for health insurance do not need to be included as gross income for federal income tax. However, if an employee's enrolled PEBB dependent does not qualify as a tax dependent for tax purposes under Internal Revenue Code (IRC) Section 152, as modified by IRC Section 105(b), employers must report the fair market value of the dependent's health insurance as gross income.

Employees adding a dependent who does not qualify as a dependent for tax purposes (e.g., state-registered domestic partner (SRDP), SRDP's child(ren), extended dependent) to their employer-sponsored insurance must identify their family tax status for the upcoming calendar year by completing and submitting the Declaration of Tax Status form to their benefits administrator.

Learn about tax issues related to nontax qualified dependents.

Collecting the employee contribution when payroll deduction is not possible

Situations may occur where employers are unable to deduct the employee contribution from an employee's paycheck. Examples include the following scenarios:

• Employee on approved leave, who is maintaining eligibility for PEBB benefits by using eight hours of paid leave per month, but their pay does not cover the total pretax deduction.
• Employee on approved leave without pay for more than a month, but is maintaining eligibility (e.g., FMLA and PFML that runs concurrently with FMLA).
• Quarter-to-quarter or semester-to-semester faculty who is not working for a quarter/semester or more but is maintaining eligibility through two-year averaging.
• Seasonal employee who is not working but is eligible for off-season coverage.

Employers should make arrangements with their employees to pay the employee contribution through other methods while payroll deduction is not available.

Examples include:

• Prepayment
  • Prepayment of health coverage by payroll deduction cannot cross the plan year.

• Pay-as-you-go

Employee failure to make premium payments

If you are unable to collect the employee contribution due to the employee not responding to the employer's requests for payment of premiums, the employer must pay for PEBB insurance coverage billed by the PEBB Program regardless of an employee's underpayment or nonpayment.

Employee benefits may not be terminated due to nonpayment of the employee contribution. Benefits may only be terminated when eligibility for the employer contribution toward PEBB benefits ends as outlined in WAC 182-12-131(7) and PEBB Policy Addendum 19-1A.

See below for general guidance on how you can address employee failure to make premium payments and speak with your HR and legal advisers as you deem necessary:

1. Implement policy or strategies to obtain the employee contribution:
   • Prepayment: Implement payroll deductions for the employee contribution from the last payroll (or last several payrolls) based on the anticipated duration of the absence from work or the duration of the eligibility period following the end of payroll deductions (e.g., as much as 6 months for faculty maintaining benefits through two-year averaging).

   • Pay-as-you-go: Negotiate timely payments by the employee on the same schedule as if payroll deductions were occurring.

     • Incorporate the "pay-as-you-go" concept into employment contracts (e.g., quarter-to-quarter faculty contracts) as a condition of continued employment. For example, "Failure to remain up-to-date (employer option on the definition) will result in termination of the employment relationship." (WAC 182-12-131(7) allows for ending PEBB insurance eligibility).
   • Electronic Funds Transfer (EFT): Negotiate and implement automatic electronic payments prior to the employee's transition to nonpayroll deduction status.
     • Engage a collection agency to recover the employee contribution.
2. Engage the HR department:
   • How does HR deal with similar personnel issues like employee failure to submit payment for other fees such as parking, association membership, dues, or clubs? Consider responding similarly or involving HR to engage the employee.
   • How does HR deal with employee failure to respond to efforts to contact them (e.g., phone, email)? At what point has job abandonment occurred? Does this lead to termination of the employment relationship and the application of WAC 182-12-131(7)?

Premium refunds

PEBB insurance premiums and applicable premium surcharges will be refunded using the following methods:

• When an enrollment change affects employee or dependent eligibility, the PEBB Program:
  • May allow up to three months of accounting adjustments, and
  • Will refund to the employer any excess premiums and applicable premium surcharges paid during the sixty-day adjustment period, except as indicated in WAC 182-12-148(5).
• When an employee or dependent submits a written appeal as described in WAC 182-16-2010 showing clear and convincing evidence of extraordinary circumstances, the PEBB director, the PEBB director's designee, or the PEBB appeals unit may:
  • Approve a refund not to exceed twelve months of premiums; and
  • Approve the enrollment change that was originally requested, and which forms the basis for the refund.
• PEBB Program (HCA) errors will be corrected by returning all excess premiums and applicable premium surcharges paid by the employer or employee.
• Employer errors will be corrected by returning all excess premiums and applicable premium surcharges paid by the employee as described in WAC 182-08-187 (4) and (5) to the employee who paid them.

Related rules and policies

• WAC 182-08-180: Premium payments and premium refunds.
• WAC 182-08-190: "State agencies and employer groups that participate in the PEBB Program under contract with HCA must pay premium contributions to the HCA for PEBB insurance coverage for all eligible employees and their dependents." No relief is provided in rule for situations where the employee doesn't provide their contribution.
• WAC 182-08-200: Which employing agency is responsible to pay the employer contribution for eligible employees changing agency employment or for faculty employed by more than one institution of higher education?
• WAC 182-12-114: How do employees establish eligibility for public employees benefits board (PEBB) benefits?
• WAC 182-12-116: Who is eligible to participate in the salary reduction plan?
• WAC 182-12-131: How do eligible employees maintain the employer contribution toward public employees benefits board (PEBB) benefits?
• RCW 41.05.050: A PEBB affiliated employer "...shall provide contribution to insurance and health care plans for its employees and their dependent..." There is no relief offered in the law to a situation where the employee doesn't provide their contribution.
• PEBB Policy 19-1A: Addendum - Termination due to loss of eligibility or enrollment error