If my employer incorrectly calculated the medical insurance premiums deducted on my paycheck, do I have to pay the employer back?

Yes, you have to pay back your employer for your share of the premiums if they were underpaid for any reason. Insufficient funds were taken out of your paycheck, so the company paid more than it should have for your coverage. Even if the error was the company's, the law is very clear that an error does not absolve you of the responsibility to pay the correct amount.

For the sake of this discussion, let us assume that the employer is correct: that they had previously taken out the wrong amount (too little) for your premiums, and let us also assume that they now have done their math right, and have correctly determined the shortfall—i.e. how much less you, in fact, paid, compared to what you did pay. If that is the case, you do have to pay your employer.

Start with two basic concepts. First, the law does not let you keep a windfall due to an error. If someone charges you less than they should have, based upon the documented or provable costs, once the error is detected, they can recover the additional amount from you. An error does not create an entitlement or a right to keep money. You can easily see this if you substitute your paycheck for the premium. Say that you are an hourly employee and earn $20 per hour. If you work 40 hours per week, you are owed $800 (gross) in wages weekly. Now suppose that your employer made a mistake and only paid you based on 35 hours of work per week, or $700. Suppose further that that the error went undiscovered for some weeks or months, but then you did notice it. At that point, you would expect them to pay you the extra 5 hours of work per week in wages—and you’d be correct: they’d have to make good the shortfall, and could not refuse to pay simply because they made an error. Even if the error was yours, they’d still have to pay: e.g. if you accidently put down 35 hours on your time sheet because the last job you’d worked was based on a 35-hour work, but you worked 40 hours per week, when you noticed your error and came to them for the extra money, they’d have to pay it.

The same concept applies with the medical insurance premiums: the error does not lock your employer into the mistaken amount. They can legally recover the extra money you should have paid.

The second concept is that the law dislikes “unjust enrichment”: that is, getting a benefit without paying for it. This includes not merely failing to pay at all, but also failing to pay the actual price or cost. If you received insurance coverage, you need to pay for what you received; if you don’t—if you underpay—you will have been “unjustly,” or unfairly, enriched.

From both a practical and moral point of view, you are not being hurt: while the timing of payments may be different, if you are truly being charged the difference between what you should have paid and what you did pay, at the end of it all, you will be paying no more than what you should have paid in the first place—paying now or paying later, mathematically, it is the same. Of course, you may have a cash flow challenge in making the repayment now; that’s why rather than fight the repayment (to which they are entitled anyway), you are better off using your efforts and any “good will” you have to try to negotiate payment terms—e.g. repaying over time, so the impact on you is moderated.