The use of an “hour” bank system is a method of providing health insurance benefits to employees that work a minimum 40 hours in a month. This system is typically used in the construction industry. The hour bank compensates for fluctuating work hours while meeting the compliance requirements set forth by the government.
Employees essentially pay for health insurance by the hour as opposed to a set rate. Once an employee has worked an established amount of hours to compensate for a months’ worth of insurance coverage, the additional hours will be “banked” for future use. As long as an employee has the minimum hours banked in their account, health insurance coverage is guaranteed for the next month. This comes in handy when specifically in the construction industry; an employee is unable to work due to weather or layoffs. Hour Banks provide contractors with the ability to avoid overpaying health insurance premiums, but still maintain insurance coverage or even extending medical coverage during the time jobs are inactive.
When an employment is terminated the remainder of the banked hours can be used towards COBRA, or in some circumstances a cash refund may be requested. Please note that this may change per company and any cash refund is subjected to income tax, and you will receive a 1099 at the end of the year.
To keep your costs down while remaining in compliance of standards with the health care industry, contact Health Insurance Specialists Inc today at (301) 590-0006, and we will help you determine the details of a hour bank system.