Seattle Minimum Wage Guide: Health Care

Seattle Minimum Wage Guide: Health Care

Tips aren’t the only other form of compensation you can factor into an employee’s wages.  Health care plans can also be considered.  Of course, you need to make sure you’re classifying “health care” properly, so here’s how this form of compensation is defined:

Health Care – Per the Ordinance, to qualify for the credit, the medical benefits plan must be “a silver or higher level essential health benefits package, as defined in [the Affordable Care Act], or an equivalent plan that is designed to provide benefits that are actuarially equivalent to 70 percent of the full actuarial value of the benefits provided under the plan, whichever is greater.”

Rules for Health Care

You can only apply health care credits to the wages of employees for whom you pay towards their qualifying medical benefits plan, and only for the period of time during which you make such contributions.  If you offer an employee health coverage, but they opt out, then you cannot apply health care credits toward their wages.

Here are some other instances in which health care credits could not be applied:

If an employer has a policy of delaying medical benefits for a new employee until the employee has completed an eligibility period (e.g. 90 days), the employer must pay the new employee the higher minimum wage rate until the employee completes the eligibility period and enrolls in the employer offered medical benefits plan.

The same applies if, for example, an existing employee loses eligibility under the qualifying medical plan for a period of time.

Schedule 1 (large) and Schedule 2 (small) employers have different annual schedules for health insurance credits. For a chart outlining the annual schedule of the health insurance credit for Schedule 1 employers, and when it expires, see Exhibit 4.  Schedule 2 employers, see Exhibit 5.

For more detailed information about considering health care as compensation, consult page 11 (schedule 1) or page 18 (schedule 2) of our Minimum Wage Ordinance Guide (MWG).

We realize implementation of the new Seattle Minimum Wage ordinance can be intimidating and confusing. If you have any questions about what you should or should not do, we’re here to be your resource. You can call us anytime (360) 956-7279.