What to do when benefits lifeline is yanked

Beyond pay, employees often look to their benefits as a lifeline. And when their employer yanks those benefits away, they're upset. But can they do anything about it? Maybe, maybe not.

Q. I work for a company that offers good benefits and insurance for employees and their children. When I was hired, there was no discrepancy in the coverage between biological and stepchildren. I consider my husband's daughters to be my children. Since I had a better premium rate, I covered the family on my policy. Last week, we were informed by the company that they were going to discontinue insurance coverage for stepchildren, and that they were going to make the decision retroactive to June 2002. This can't be legal, can it?

A. Probably not.

Diane A. Seltzer, a Washington lawyer who mostly represents employees in workplace disputes, said: "I have never seen an exclusion for stepchildren. Children are children."

Moreover, she said she is "not aware of any law that would allow (a company) to change insurance coverage retroactively."

"The insured has a good argument that they paid a premium and that they relied on the assurances provided in the policy that they were covered," she said, which may have affected decisions made on what health-care procedures to have done in the past three months.

"I cannot see any justification for retroactively changing the policy," she said. "It's another thing if the company wants to change the policy prospectively."

But even then, she said, the Health Insurance Portability and Accountability Act of 1996 requires that a 60-day notice be given employees whenever there is a "material reduction in coverage, services or benefits."

Q. I work for a law firm in Washington, D.C., in a support staff capacity. My firm contributes 5 percent of gross pay to our 401(k) accounts. The fine print is that this is not guaranteed and they do not have to contribute any money, which is fine. What I have a problem with is that they have yet to make the contribution for 2001 earnings. Do they have a legal obligation to either make it or not at a certain point?

A. In this instance, Seltzer said that if the law firm "reserves the right to do it at their discretion, there's not much you could do to compel them" to make a donation at any specific time. "This doesn't shock me, because it's a discretionary contribution.

"I'd be much more concerned if the employee's portion (of the 401(k)) was not showing up," she said.

Seltzer said the worker and her colleagues could ask to see the legal plan under which the law firm established the 401(k) account, but added that "unless they've imposed rules on themselves (to make a contribution), she'd have a tough time making a claim that it was illegal" that the firm delayed a contribution.