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Employee failure to make medical premium contribution

12/17/2018

Applicable to

Employees covered by Public Employees Benefit Board (PEBB) benefits in situations in which employers are unable to deduct from pay or collect the employee contribution for medical premiums.

Examples

  • Quarter-to-quarter or semester-to-semester faculty who maintain benefit eligibility through two-year averaging, are not working (i.e., no payroll deduction option) for a quarter/semester or more, and who don't respond to requests to submit the employee contribution for medical premiums.
  • Seasonal employees not working but are eligible for off-season coverage who don't respond to requests to submit the employee contribution for medical premiums.

Relevant law and rule

  • 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.
  • WAC 182-08-190:  "State agencies, employer groups, and charter schools 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.

PEBB guidance

  • Based on law and rule, if an employee meets eligibility criteria, the employer must pay for PEBB insurance coverage regardless of the employee's having made their employee contribution.
  • Speak with your HR and legal advisers as you deem necessary.

Options to address employee failure to contribute toward PEBB premium:

  1. Implement policy or strategies to obtain the employee contribution:
    1. 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).
    2. Pay-as-they-go: Negotiate timely payments by the employee on the same schedule as if payroll deductions were occurring.

    3. Incorporate the "pay-as-they-go" concept into employment contracts (e.g., quarter-to-quarter faculty contracts) as a condition of continued employment. Failure to remain up-to-date (employer option on the definition) will result in termination of the employment relationship (whereupon WAC 182-12-131(7) allows for ending PEBB insurance eligibility).
    4. Electronic Fund Transfer: Negotiate and implement automatic electronic payments prior to the employee's transition to nonpayroll deduction status.
    5. Engage a collection agency to recover the employee contribution.
  2. Engage the HR department:
    1. 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 them to engage the employee.
    2. 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)?