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Different amounts of employer contribution for health benefits
Benefits & Compensation
Different amounts of employer contribution for health benefits
Exchange ideas about health plans, retirement, work/life benefits, and employee assistance.
We want to change the amount of our employer contribution for employees hired in 2011. New hires will get a 50% contribution while anyone hired before 2011 will get 75% contribution. Does anyone see a
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Different amounts of employer contribution for health benefits
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Different amounts of employer contribution for health benefits
posted at 1/27/2011 6:03 AM EST
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Posts: 4
First: 1/27/2011 Last: 1/27/2011 |
We want to change the amount of our employer contribution for employees hired in 2011. New hires will get a 50% contribution while anyone hired before 2011 will get 75% contribution. Does anyone see a problem with this? |
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Different amounts of employer contribution for health benefits
posted at 1/27/2011 7:14 AM EST
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
"We want to change the amount of our employer contribution for employees hired in 2011. New hires will get a 50% contribution while anyone hired before 2011 will get 75% contribution. Does anyone see a problem with this? "
(1) possible nondiscrimination requirements if lower level employees leave more often than upper level employees...in the beginning you will probably be ok because of your historical group getting the 75% but eventually it could lead to an issue where you are paying more for the upper group. Which means that the upper group could get to a point where their benefits would be taxable to them. (2) Honestly, whenever I have grandfathered any benefit, it later becomes a nightmare to remember who has what. Someone always realizes that they are paying differnet than someone else, questions it and then we have to research and remember the date of the changeover. For payroll deductions, etc it means multiple depts keeping up with this. Granted if you have a good HRIS/payroll system that can flag this based off of hire date, that's easier. But it still means extra programming/testing etc. And remembering each year to change two sets of costs/premiums. (3) If your plan is grandfathered under the new Health Care Reform Act, this change would be enough to lose that status, if it matters to your company. (4) Personally I think it would be better to pick a different rationale than a hire date. But that is just me....I would rather do something that is more controllable for the employee than their hire date...rather I would do it based on salary/job type and/or length of service. All of which would inspire an employee more. To me, it would be a morale buster to know that Joe was hired 12/30 and got the better deal and I was hired 1/2 and got the worse deal...while we do the exact same job for the company. Hard to explain to the random employee why they are worth less just because their hire date was 3 days different! |
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Different amounts of employer contribution for health benefits
posted at 1/28/2011 4:44 AM EST
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Posts: 1047
First: 4/11/2002 Last: 9/14/2011 |
Keep in mind that if you start contributing only 50% towards health insurance, you're way below the benchmarks (roughly 80%). Of course, company size, industry, region have to be taken into consideration, however, these won't have that much of an impact when it comes to the benchmarks.
I bring this up because it's definitely going to hurt when it comes to attracting new employees. Additionally, this could end up really hurting your medical plan's experience. If the contribution isn't set properly, the new employees that are younger and healthier are going to opt out of the insurance due to cost and leave you with adverse selection. I would highly advise not doing this on the surface. |
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