This is not going to be another blog about the Supreme Court's healthcare decision. Instead, we will deal with certain facts. Presently, many lenders do not provide benefits to LOs. For those lenders who decide not to pay the penalty under the new healthcare law, and instead provide insurance there are certain practical realities to consider. First, it is imperative that beyond the descriptions contained in summary plan descriptions provided by the insurer, employers should say little about the actual benefits—getting into any level of detail can create massive liability if it somehow misstates any aspect of the plan (including who it covers). Moreover, employees (especially those working outside whose hours are not tracked) need to be advised (per the summary plan description) of the eligibility requirements. Indeed, an employer does not want an insurer refusing coverage because the work hours were too low and the employer becomes liable for the benefits as a result of non-disclosure.
With respect to contributions, lenders (all employers actually) will also need to make a "substantial contribution" to employees' insurance premiums. While this is subject to as-yet unwritten regulations (sound familiar?), the expectation is it would approach 50% of the premium. Hence, the model of true commission-only outside-sales employees would effectively become a thing of the past since employers would now need to at least pay a significant portion of the premium cost.
Another struggle and consideration for lenders would be how to collect premiums for commissioned employees who may not have regular compensation. Indeed, will the lender advance the employees' share of the premium or make the employee pay it out of pocket? The answer carries serious tax consequences because only deductions are considered pre-tax. What will be the rules and procedures for terminating employees who don't pay the contributions? While typically a termination for non-payment does not require COBRA notice, an employer would want to ensure that an employee received adequate notice so as to prevent the possibility of improper termination.
These are just a few of the considerations that employers will need to consider as we approach the effective dates of the healthcare plan. While these may seem insignificant or trivial, the procedures on how things work do require some thought. Otherwise an employer can unwittingly and unintentionally become a self-insurer for an employee's illness.
