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November 24, 2010

Wage-Based Health Plans Pass the Cost to Higher Paid Employees

Filed under: Benefits,General HR Buzz,Insurance7:31 am

As more companies look for ways to ease the burden of rising health care premiums, some are looking to wage-based plans where “the more you make, the more you pay”.

Over the past year, several companies have made headlines as they devised creative ways to balance increasing healthcare costs with reduced or nonexistent pay increases.  One way to ease the burden on employees in mid- and lower-income jobs is to pass more of the cost to employees in higher paying jobs.

For example, Vanderbilt University has adopted a wage-based benefit program for 2011 under which premiums will remain the same for employees who make $50,000 or less, while everyone else will pay up to $75 more a month.

Also, employees at Bank of America who make $100,000 or more a year will pay at least 14% more for coverage in 2011.  But workers who make less will actually see their contributions decrease, although their deductibles and co-payments will stay the same. Employees earning less than $50,000 could see as much as a 50% drop in the amount deducted from their paychecks, as compared to 2010.

Consultants say the trend is likely to continue, though in the interest of perceived fairness, some companies may be reluctant to ask certain employees to pay more than others.

For example, what about the low earner whose spouse is a very successful small business owner?  Or the higher paid employee who is a single parent and sole source of income for eight kids?

What do you think?

Read the full article here



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