- Reduce or eliminate employer premium contributions towards health and welfare plans;
- Shift costs to employees or otherwise reduce costs through plan design changes, such as increased deductibles and copayments, medical management, or reduction or elimination of certain costly benefits;
- Change eligibility criteria to exclude cohorts of employees;
- Reduce or eliminate 401(k) matching or other employer contributions; or
- Reduce paid time off or other employee perks (such as subsidized child care or fitness centers, transportation subsidies, or parties).
- 401(k) Plans. For purposes of calculating employee elective deferrals and matching contributions, some 401(k) plans count overtime and bonuses as “compensation” and others do not. If plans do count overtime and/or bonuses, and overtime/bonuses increase, the employer’s matching contribution will increase. But if plans do not count overtime, and overtime pay increases, the amount of elective deferrals and matching contributions may be skewed towards exempt (higher paid) employees, resulting in nondiscrimination testing problems.
- Waiting periods. An employer’s short term disability plan may impose a 5-day waiting period on non-exempt employees, but allow exempt employees to receive benefits on day one of disability. Shifts among the exempt and non-exempt groups will cause waiting periods to change, perhaps inadvertently, for some employees.
- Premium share. Some employers may vary health and welfare premium contributions based on compensation. If an employer decides to increase compensation to avoid paying overtime, its premium contributions may need to increase or decrease unless plan design changes are made.
