An August court decision in U.S. District Court for the EasternDistrict of Pennsylvania found that anemployee discount received through a group voluntary policyconstitutes an employer contribution, and thereforedisqualifies such products from falling under the Department ofLabor’s voluntary benefit safe harbor.
The decision, rendered in a lawsuit brought against Unum LifeInsurance Company by a beneficiary of a voluntary disability policythat failed to pay out as promised, confirms what several otherfederal courts have found: A discounted group voluntary benefitdoes not qualify for voluntary safe harbor, even when the employeepays 100 percent of the premium.
In 2013, in a separate claim brought against Unum by abeneficiary of one of its voluntary disability policies, a federalcourt in the District of New Jersey also issued a decisive rulingon the question of whether discounts for plan participants negotiated througha group voluntary benefit – as opposed to an individual voluntaryplan – constitute employer contributions.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
