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An employer of mine heard the following presentation from a decent sized agency operating in multiple states. They currently have a group medical plan, here are the details:
1. They have a system where the employer contributes after tax compensation to the employee to purchase medical coverage. They will contribution $X per age band. I didn't think the employer could base contributions in this manner? Maybe if it's not run through pre-tax like the old Sect. 125 plans there aren't any discrimination rules?
2. The condition for the compensation is based on continued individual medical coverage. If the employee drops the coverage, the agency/TPA will alert to employer to cancel the coverage.
3. The agency/TPA collects money from the employer and employee via payroll deduction and pays the indiviudal plan directly on behalf of the employee.
Is this legit? This seems to go against everything I knew, but maybe what I knew changed. I didn't think employer contribution could be tied to the purchase of an individual policy. I also didn't think the compensation could be tied to age bands as that would be discriminatory.
1. They have a system where the employer contributes after tax compensation to the employee to purchase medical coverage. They will contribution $X per age band. I didn't think the employer could base contributions in this manner? Maybe if it's not run through pre-tax like the old Sect. 125 plans there aren't any discrimination rules?
2. The condition for the compensation is based on continued individual medical coverage. If the employee drops the coverage, the agency/TPA will alert to employer to cancel the coverage.
3. The agency/TPA collects money from the employer and employee via payroll deduction and pays the indiviudal plan directly on behalf of the employee.
Is this legit? This seems to go against everything I knew, but maybe what I knew changed. I didn't think employer contribution could be tied to the purchase of an individual policy. I also didn't think the compensation could be tied to age bands as that would be discriminatory.