My company is attempting to set up a fair and equitable way of sharing health insurance costs with employees.
The initial plan was to require a 25% employee contribution, regardless of the level of coverage, e.g., single or family. In discussing the plan with the CEO, he felt the plan is unfair to employees with single coverage because their benefit is far less than that of employees with family coverage.
Do you have any ideas for making this an equitable plan? We cannot afford to require employees with family coverage to pay for 100% of their dependent coverage. We would lose employees. In the past, we have paid all employee coverage (for both single and family coverage employees) and 56% of all dependent coverage.
A Dear Karen:
One solution would be to allocate a fixed dollar amount to each employee for health insurance.
If the cost of coverage for a particular employee and his or her dependents -- if any -- was below the dollar amount allocated for the employee, the employee would not incur any cost. If the cost of coverage for the employee exceeded the dollar amount allocated, the employee would be responsible for the excess.
You may also want to consider offering several different health insurance products to the employees, so that their health insurance decision is not limited to simply choosing between individual and family coverage, but also includes what type of insurance coverage they want. It could be that the cost difference between a plan for a single employee with a certain PPO that -- for example -- included extensive orthodontia coverage would be comparable to the cost of an HMO with limited dental, even with a dependent.
SOURCE: Mark J. Browne, a professor at the University of Wisconsin, in the Risk Management and Insurance department.
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