Expert: Shirley McAllister, CPP, PHR - 9/15/2009

Question
QUESTION: Hello. Is it legal to deduct health insurance fees from employee's paycheck the pay period before the health insurance is active/usable?

I was told that it is company policy to pre-pay the health insurance, that way if an employee parts ways with the company the health insurance will extend to the end of the month [and not terminate immediately]. At every job I've ever had, in all states I've worked, health insurance is never pre-paid before it's usable and it always goes to the end of the month of when I leave a company.

I asked if my pre-paying my health insurance covers the following month if I part ways with the company during or after the second pay period of the month and was told it does not.

I am in CA and the company corporate office is in IL, if that matters. Thank you.

ANSWER: Some companies do this. Insurance is paid on the 1st of the month. If you leave they than have the last month covered.

Yes, it is legal for them to do it this way as long as it is done the same for every employee.

Shirley

---------- FOLLOW-UP ----------

QUESTION: Thank you Shirley,

I'm still not quite understanding the legality that they take out for insurance from the second pay period of the month [say September] to pre-pay the following month [October] and if I leave the company during the second pay period of September my insurance ends at the end of September and not the end of October. Haven't they charged me for services they're then denying me? Thanks again.

Answer
If you are paying a month ahead for insurance and you terminate than you should be prepaid a month ahead.

If you already paid in September for October insurance than you should have insurance through October.  

We take payments out twice a month, but it is for the current month, we just withhold 1/2 of the payment each payday instead of all the payment in one pay period.

Shirley