This method of providing health insurance benefits is specifically tailored for the construction industry. It compensates for the fluctuating work hours (due to weather, gaps between job starts, vacation and illness) typically associated with this industry and facilitates meeting the compliance requirements to account for fringe expenditures on a per hour/per employee basis.
Because cost is based after the fact and solely on hours actually worked in the preceding month, it is the fairest and most economical method of providing coverage – you never over pay or under pay a premium.
You become eligible for insurance coverage by accumulating the minimum required hours of work credit. If, for example, eligibility for benefits is based on working 120 hours per month, each 120 hour increment of work credit provides one subsequent calendar month of benefit for you (and your dependents, if family coverage is elected). Contributions will be made on every hour worked. No break in coverage will occur as long as the minimum hours of work credit in the Hour Bank is maintained.
Once you have completed the necessary 120 hours work credit, you will be covered effective the 1st day of the following month.
You may accumulate hours of work credit for excess hours worked (i.e. if eligibility requires 120 hours worked in a month and the employee actually works 160 hours that month, the excess 40 hours would be credited to their account. Excess hour accrued in the employee’s account can be used as a credit in future months where hours worked fall below the required 120 hours thereby keeping insurance in force without additional out of pocket expense to the employee or employer). However, no more than the equivalent of 12 months of future premium payments can be accumulated.
If you fall below the required amount of hours of work credit, you will receive a COBRA notification and you may exercise your COBRA rights if desired. If you do not elect COBRA, your coverage will lapse (you will have no benefits). Once the minimum required hours have been reached again, your benefits will resume the 1st of the following month.
Upon termination of employment, any remaining hours may be used to offset COBRA premiums, if elected, or the employee may request a cash refund in writing. All refunds are subject to income tax and you will receive a 1099 at the end of the calendar year.
For additional info please visit: The T&M Group