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Is this legal????
Jan 7, 2005

Is this allowed? I always believed that different classes of coverage were NOT allowed....that the CEO's coverage had to be the same as the worker bees....the company that I am starting with charges twice as much for coverage if you have been employed less than one year...after one year the cost is half...can you point me to the regulations that allow this?....thanks

Response from Ms. Franzoi

Although a qualified plan like a 401(k) plan or a pension plan cannot discriminate in favor of a highly compensated employee, the same rules do not apply to health and welfare plans. It is permissible for a company to base employee costs on length of service, part-time vs. full time status, etc. For example, the number of days of sick leave or vacation time are often based on service. Likewise, a company can charge more for health care coverage for employees with less service.



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