Text · page 8 of 15
What Are Accurate, Approved and Supported Opt-Out Payments? A town can offer employees the option to decline health insurance benefits in exchange for receiving a cash payment when an employee receives health insurance benefits from another source such as through a spouse or other family member. These payments are often provided pursuant to CBAs, employment contracts or board resolutions. The eligibility and documentation requirements should be clearly communicated to employees and those responsible for processing opt-out payments. The Town’s five separate CBAs include opt-out programs and specific cash payment amounts that are offered to the employees covered under such contracts. Each CBA specifies the dollar amount or percentage of the current plan’s cost that employees are eligible to receive and whether documentation is required. Generally, employees must provide the Town proof of coverage and submit a signed waiver attesting to their desire to waive their option to receive health insurance coverage through the Town. The waiver and other proof of coverage should be retained by the payroll department to support all opt- out payments issued to employees or officials. To help ensure opt-out payments are accurate, approved and supported, the town board should adopt policies and procedures for requesting, approving and paying opt-out payments in accordance with CBAs, employment contracts or board resolution. In addition, an appropriate official, such as the town supervisor, or when payments are issued to the town supervisor, the town board, should regularly review and approve payments made and all necessary supporting documentation to ensure that payments are accurate, and employees are eligible to receive payments. Opt-Out Payments Were Not Always Accurate, Approved or Supported We reviewed all 70 opt-out payments made to 18 employees and one elected official totaling $105,740 during our audit period to determine whether they were accurate, approved and supported. For the 2020 fiscal year, all 22 opt-out payments made to employees were accurate, approved and supported. However, 38 of the 44 opt-out payments made in 2021, 2022 and 2023 were not properly supported by waivers as required by the CBAs or reviewed and approved by an appropriate official. Additionally, three employees received incorrect payment amounts and we could not determine whether one elected official was entitled to receive an opt-out payment. Specifically, one employee was promoted to a full-time position four months into the billing cycle, and another was hired as a full-time employee one month into the billing cycle; therefore, these employees were only entitled to pro-rated or partial payments, but they were paid the full amount. As a result, these two employees were overpaid a total of $1,951 in 2022. A third employee was paid using an incorrect rate, which caused underpayments totaling $225 for 2021 and 2022. The Personnel Clerk told us that due to the turnover in the payroll department and the lack of written procedures, they were unaware of the waiver requirements for opt-out payments until they received vouchers requesting the payments from other departments. The three incorrect payments may have been identified had an appropriate Town official been designated to review and approve opt-out payments for accuracy, support and eligibility. 6 Of f ic e of t he New York State Comptroller