It is not usual and customary, but some companies do it. Most companies simply charge the employees enough of a portion of the premium to discourage anyone who does not need the coverage from enrolling in it. But going the extra step to pay employees an amount of taxable income if they do not enroll for health coverage is a practice mostly used by smaller employers whose health coverage cost-per-employee is a serious expense. As long as the employee has health coverage through another source, it is not a bad practice; but it is also not really necessary and I would not recommend that a business start doing this as a general rule.
What I think is at the other end of the spectrum and not a good trend are the companies that are now actually requiring employees who have spouses with access to health insurance coverage to take their spouses dependent coverage regardless of whose coverage is better for the employee and his/her family. This new trend is worrisome on a number of levels in my opinion.
Question added to topic Human Resources • September 11, 2007
Do businesses normally reimburse employees if they decline their health insurance premium?
We pay our employees' health insurance and 50% of their family's. This is the first time in 12 years an employee has asked what his reimbursement amount would be if he declined our health insurance. Do I reimburse the full amount monthly or a percentage?
Penny is a seasoned human resources executive and consultant with over 25 years of diverse business experience in advising enterprise leaders on employment-related matters.