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Insuurance Costs On A Sliding Scale
Benefits & Compensation
Insuurance Costs On A Sliding Scale
Exchange ideas about health plans, retirement, work/life benefits, and employee assistance.
Our workplace has a wide variety of employees and pay ranges, from minimum wage workers to highly paid execs. Does anyone have any experience implementing a sliding scale for insurance costs based on
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Forums » Topic Forums » Benefits & Compensation » Insuurance Costs On A Sliding Scale
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Insuurance Costs On A Sliding Scale
posted at 5/19/2009 5:34 AM EDT
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Posts: 5
First: 5/19/2009 Last: 7/21/2010 |
Our workplace has a wide variety of employees and pay ranges, from minimum wage workers to highly paid execs. Does anyone have any experience implementing a sliding scale for insurance costs based on the employees wage range? Insurance is getting unaffordable for our lower level employees and I am trying to brainstorm ways to ease this burden. Thank you. |
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Insuurance Costs On A Sliding Scale
posted at 5/19/2009 7:34 AM EDT
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Posts: 1047
First: 4/11/2002 Last: 9/14/2011 |
It's actually a good way to look at contribution costs. You can handle this 2 ways:
1. Increase the contribution % based on an employee's tax bracket. 2. Make up your own brackets or levels (administratively easier) to what you think is equitable. I've only handled this for medical insurance. If you'd like to discuss further, just shoot me an email: matthew.roberts@heliosconsultinggroupllc.com. |
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Insuurance Costs On A Sliding Scale
posted at 5/19/2009 8:30 AM EDT
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
Okay, I love to brainstorm, so here goes:
The only problem with option #1 is knowing what an employees real tax bracket is. Just having a W-4 election doesn't really tell you that. Many either intentionally have too much or too little withheld or just don't understand taxes in the first place. And there are many employees who might feel it is an invasion of privacy to have to give out that information. You also don't know a spouse's income or any other outside income. I think option #2 is a better solution. However, there will be some administrative/payroll burden of changing the deduction amounts at promotion/demotion etc. I would run the idea past your payroll department also. Too many different levels mean that it is much easier to make errors. Hopefully your payroll system could handle multiple levels. The one I use has to have each person individually done -- it doesn't look at any other field to calculate it . If your payroll could look at the coverage level and the job level, then you might be better off than me! And of course there is always the argument of "fair". Just because you have a low paid employee doesn't mean that their spouse isn't a Doctor or Lawyer. Or they may be telling you that they can't afford the premiums when they have just chosen not to do so. Even with lower premiums they may still chose not to participate, because any cost is too much when you haven't been currently paying for it. What we have done that we have a dual choice option. One with lower premiums and benefits and the other with higher premiums and benefits. What was interesting to me is that ALL the lower paid employees chose the higher premiums to get to the lower risk and ALL the higher paid ees chose the lower premiums with the higher risk. It was exactly the opposite of my expectations...that is that they would base it on what premiums they could afford. |
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Insuurance Costs On A Sliding Scale
posted at 5/19/2009 9:12 AM EDT
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Posts: 5
First: 5/19/2009 Last: 7/21/2010 |
Wow, lots of good info. Yes, all those issues are what I am struggling with. The idea of "fair" means different things to differnt people. I'm not even sure my boss would go for this, but I wanted to get ideas and input from the outside world to help me sort through my thoughts. |
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Insuurance Costs On A Sliding Scale
posted at 5/19/2009 9:29 AM EDT
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Posts: 1047
First: 4/11/2002 Last: 9/14/2011 |
That's the way high/low plan options tend to work out ruppert - against conventional thinking. Most of the time, lower paid employees would rather pay more for insurance upfront (since payroll deductions are "invisible") than at the point-of-service.
I'm not high on a long-term strategy of high/low plan options, however. If you're IBM, that's one thing since you need to cater to your workforce, especially when they reside in different regions of the country. If you have less than 200 employees, it's another. I do like dual options as a bridge when trying to migrate employees from one type of plan to another to ease the pain of change. If you have an underlying goal of improving the health of your organization (the only way you're going to "fix" health insurance), that's what you should spend your time communicating, not the difference between the copays of your health plans. |
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Insuurance Costs On A Sliding Scale
posted at 5/19/2009 12:49 PM EDT
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Posts: 12
First: 5/23/2007 Last: 11/24/2010 |
We have been using the format for a very long time. We have five salary tier e.g. $0 to $29,999 and the company select the amount to charge each salary level. There is a very unique formula. Once we have determined the rates we have a total of 45 rates and we even have one smoker ($30) and multiple smoker ($60)rate that we surcharge. We are self insured. |
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Insuurance Costs On A Sliding Scale
posted at 6/14/2009 7:52 AM EDT
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Posts: 1
First: 6/14/2009 Last: 6/14/2009 |
I work for the University of California. Benefit premiums are based on salary level not tax brackets. The University's contribution is adjusted as the salaries increase. There are three salary bands: $0-45,000: UC pays a higher amt of the premium needed since employees in this salary band don't earn very much. 2) $45,001-80,000: this group of employees pay more since they earn more; 3) $80,000+: these employees pay the greatest share and the University's costs are lowered.
I don't know your company's assets or how many employee you have. Because UC is such a large employer, it has an advantage of negotiating lower health premium costs. But a salary approach might work for you--you don't have to be concerned with tax brackets--just what salary your company pays the employee. Hope this is helpful. |
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Insuurance Costs On A Sliding Scale
posted at 6/23/2009 5:33 AM EDT
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Posts: 3
First: 7/25/2006 Last: 6/23/2009 |
We have used a two-tier structure for employee contributions for health premiums for several years. Those who earn below $60,000/year contribute 15% towards their premium, those who earn more than $60,000 contribute 20%. Considered 3 tiers but more difficult to manage. Also - smokers pay a $25/month surcharge on their premium contributions. |
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Insuurance Costs On A Sliding Scale
posted at 6/23/2009 8:42 AM EDT
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Posts: 3
First: 7/1/2008 Last: 8/9/2011 |
What exactly are you trying to accomplish? That is what is not clear in any of the replies to the initial query. If your basic goal is to save the company money, then maybe tiers make sense. But how much money are you saving? Altruism? Higher paid employees "should" pay more (because they can afford it -- you assume) while lower paid employees "should" pay less? If you work in the private sector, altruism should never be expected. Now, if your goal is to get people to use healthcare more responsibly -- which, in the long run, should save the company money -- tiers make no sense at all. Other approaches make more sense. So, what is your goal? Why are you even considering it? And, if your goal is to save money, how much are you really saving with these tiers? Is there a better way for your company to achieve its goals? |
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Insuurance Costs On A Sliding Scale
posted at 6/23/2009 2:00 PM EDT
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Posts: 1047
First: 4/11/2002 Last: 9/14/2011 |
The goal is pretty straightforward - to save the company money by not slashing the employer contribution ratio across the board since the lower paid employees would not be able to afford them. |
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