Is an employer required to deduct monthly premium payments for group health benefits from an employee's pay when calculating disposable earnings for purposes of a creditor garnishment order?

Author: Alice Gilman

No. Although the Affordable Care Act (ACA) requires most individuals to have health insurance, employees are free to buy health insurance coverage on their own instead of participating in their employer's group health insurance plan. In addition, the ACA does not require employers to withhold premiums for health insurance from their employees' pay.

When an employee is subject to a creditor garnishment order to repay a debt, the employer must comply with the order by withholding (and paying over to the appropriate agency or court) the amount stated in the order from the employee's disposable earnings. Title III of the Consumer Credit Protection Act (CCPA) defines disposable earnings as that part of earnings that remains after an employer makes deductions from an employee's pay that are required by law, such as to pay income and employment taxes.

Since an employer is not required by law to make deductions for health insurance premiums, it should not deduct the premiums from an employee's pay when calculating the amount of disposable earnings available to satisfy a garnishment.