What You Should Know About Benefit Coverage And Employee Classifications

 

Navigating benefit coverage for all the different employee classifications can be complicated. It is easy to get lost in all the rules and regulations. However, it is important to know the basics outlined by the law to avoid any fees or penalties.

The law doesn’t currently require having the same benefit coverage plan for all employees. This allows employers discretion in structuring their benefits plans. They may offer different access and benefits to employee populations. However, they’ll be unintentionally discriminating if they have protected groups. The key is to ensure that such decisions are nondiscriminatory.

The Health Insurance Portability Accountability Act (HIPAA) allows an employer to make distinction in benefits and cost offered, as long as the distinctions are non-discriminatory. But to base health insurance premiums on health factors such as medical conditions, claims experience, receipt of health care services, genetic information and disability, is illegal. Employees can’t be charged more than other similarly situated individuals.

Plans may differ among employees only on “bona fide employment-based classifications” consistent with the employer’s usual business practice.
 

Importance of Employee Work Classifications

Maintaining employee classification prevents discrimination in benefit plan eligibility and ensures that compensation payment is in accordance with federal and state law. This policy then defines the company’s employee classifications for benefit plan eligibility.
 

The Role of HR and Operating Managers

Human Resources will classify employees by the following procedures to ensure that all appropriate employees are offered the appropriate benefit enrollment opportunities.

Operating department managers must advise HR and request changes in status and extensions in employment situations where specified periods are being exceeded.

 

Let’s take a look at employee work classifications.

 

1. Full-Time Classifications:

Temporary (TFT)— Employed at least 40 hours/workweek, this employee is full-time yet temporary as the workweek period shouldn’t exceed 90 days. An extension of one additional 90-day period may be requested by operating manager with concurrence of Human Resources. After the 180-day period, the employee will either be converted to regular status or released. 

Regular (RFT)— This employee is employed on a regularly scheduled 40-hour basis for a non-specified period. 

Benefit Plan Participation:

TFT employees are eligible to participate in the company’s defined contribution plan once the employee has completed 1,000 hours of service. TFT employees will receive holiday pay prorated according to their scheduled hours for the workweek in question.

RFT employees are eligible to participate in all benefit plans offered once eligibility requirements have been met.

 

2. Part-time Classifications: 

Temporary (TPT)— This employee is employed on a regularly scheduled basis which is less than full time but equals or exceeds 20 hours per week. The period shouldn’t exceed 90 days. A TPT employee may continue for one additional 90-day extension period upon request of the department’s operating manager and with the concurrence of Human Resources. After the 180-day period, the employee will either be converted to regular part-time status or released.

Regular (RPT)— This employee is employed on a regularly scheduled basis which is less than 40 hours per workweek but equals or exceeds 20 hours per week for a non-specified period.

Benefit Plan Participation:

TPT employees will receive pro rata holiday pay in accordance with the employee’s regularly scheduled hours for the workweek in question. 

RPT employees are eligible to participate in all benefit plans the company offers once eligibility requirements have been met. However, all leave accrual programs and holiday pay will be provided to regular part-time employees on a pro rata basis in accordance with the employee’s regularly scheduled hours for the workweek in question.

 

3. Part-time Excluding Benefits:

Temporary (TEB)— This employee is employed on a regularly or non-regularly scheduled basis of less than 20 hours per week for a period not to exceed 90 days. Employees in this class are not eligible for any company benefit plans nor may their employment be extended.

Regular (REB)— This employee is employed on a regularly scheduled basis of less than 20 hours per week for a non-specified period. Employees in this class may participate in the defined contribution plan if the employee completes 1,000 hours per year. REB employees will receive pro rata holiday pay.

 

4. Special Classes: 

On-call Employee (OCE)— This employee is employed on an “as-needed” basis for a non-specified period. Employment in this class will be re-evaluated no less than every 180 days to determine if the employment relationship will be continued. After the first 180 days, the operating department manager must request a continuation. He must provide supporting documentation and receive the concurrence of Human Resources for the employment relationship to continue.

Benefit Plan Participation: OCE personnel are not eligible to participate in any company benefit plan and may not be employed for more than 400 hours in any 180-day period.

Interns (INT)— Performing work in a special status for a specified period, i.e., summer, academic semester. 
Benefit Plan Participation: INT personnel are ineligible for participation in company benefit plans.

** The nondiscrimination rule was supposed to apply for plan years beginning on or after September 23, 2010. However, on December 22, 2010, the IRS and Departments of Labor and Health and Human Services announced that compliance with the new nondiscrimination provision will not be required (and thus, any sanctions for failure to comply will not apply) until after regulations or other administrative guidance has been issued. In order to provide insured group health plan sponsors time to implement any changes required as a result of any regulations or other guidance, the Departments anticipate that the future guidance will not apply until plan years beginning a specified period after issuance of the regulations.

Classifications can be complex.  BenefitMall is here to help. Partnering with BenefitMall as your payroll, benefit, compliance expert allows you to focus on what matters most - your business.

 

Source:
Society For Human Resource Management – https://www.shrm.org/