Skip to comments.Wachovia health-benefits premiums tiered in price, Higher the salary, the higher the employees' cost
Posted on 11/12/2004 2:16:04 PM PST by Between the Lines
CHARLOTTE, NC -- Wachovia Corp., the nation's fourth-largest bank, is giving its lowest-paid employees a break on their health-insurance premiums while asking their higher-paid colleagues to fork over more cash for the same coverage.
The new tiered pricing system replaces one in which employees earning the highest salaries paid the same premiums as lower-paid workers for the same benefit. Wachovia has nearly 100,000 employees.
It's the latest twist in employers' struggles with skyrocketing healthcare costs. And it's surfacing at a time when employees are signing up for health benefits and learning about changes in their plan.
Such a system can help retain lower-paid employees who are squeezed by rising costs, and can help keep healthier, younger workers in employer medical plans, experts said. But they also said that employers need to be careful not to alienate their higher-income employees.
Wachovia spokeswoman Christy Phillips would not provide details on the company's premiums or how they would affect the company's health-care costs. But she said that the change has been well-received.
"We have received positive feedback from many employees," she said Wednesday.
Wachovia is based in Charlotte, but its wealth-management, data operations and Carolinas banking divisions are based in Winston-Salem.
Raising monthly health-insurance premiums is one way that companies can meet the burden of rising health-care costs, experts said. Raising co-pays and deductibles are other ways. But usually all employees face the same increases, regardless of how much they make.
Cathy Graham, the manager of benefit services for The Employers Association in Charlotte, said that it could be the start of a trend.
"It's an interesting idea and I expect others to pick up on it," she said yesterday.
Graham said that a possible downside would be if Wachovia's rivals don't follow suit and they use it as a recruiting tool for executives.
"Benefits always have been a strong recruiting tool, and if they don't match up it could become a problem," she said.
A recent survey of 530 U.S. employers found that 18 percent had adopted some form of salary-graded system.
"I would say (employers in) the Carolinas have been less aggressive on this strategy," said Will Sneden, a Charlotte health-care consultant with Hewitt Associates, which did the survey.
At nearby Davidson College, some higher-income faculty agreed last year to pay higher premiums if it meant a smaller burden for their lower-income colleagues. Starting Jan. 1, the liberal arts college started charging employees on a system based partly on their salary.
Nearly half of the 570 faculty and staff getting health benefits through the college saw their premiums decrease this year, many in the range of 20 percent. The higher-paid employees are paying up to 8 percent more this year.
Although school officials said that the system has worked well, they are going to amend it next year to a graded system based not on salary but on household income. The change came after administrators found that some low-salaried employees have spouses with high incomes.
"From each according to their ability, to each according to their needs." -- Karl Marx
The more we subsidize, the more we are asked to subsidize.
Means testing comes to the work place.
Sounds like it's time for the Higher Echelon to put out resumes and leave the nanny state higher managment and their welfare state toadies to go bankrupt together.
Look at your own policy. Is there one price for family coverage? Do you pay the same price if you have 1 kid or if you have 20? Isn't that subsidizing?
Marx would be thrilled to see the owners of capital embracing his ideas.
dont know. I am on my wife's
I like it!!
I guess if progressive income tax rates are okay, the same should be true for workplace health insurance premiums. (In either case, it's not like the disgruntled payer has a lot of choice in the matter. ;-)
My company has been doing this for years. Remember, it's the higher paid people who came up with this idea.
Not in that case of wachovia.
Is this legal under ERISA? It's been a long time since I was in this business, but it seems to me that it is not.
If a company pays $600 per month for an employee's plan, and a high-level employee is expected to pay $300 per month, then the total monthly cost for the policy is $900 per month. An employee may be able to get his own policy for less than that, which means he'd be better off with a cash bonus from the company in lieu of the insurance coverage.
I can see this coming to an end, from corporate Amerika to Government, when a court finds this AND tax laws discriminate. Watch, it will happen as this stuff gets pushed more and more. Where does it stop? There is no end, just incrementalism followed by collapse.
How about a radical idea like incentivizing healthy behavior...er...never mind.
So you think that you should be charged more for gas, food, clothing or anything else you buy because you make more money? Why health insurance?
I like what my wife's company does. They give each employee a benefits budget allotment. It shows up in your pay statement and each benefit cost is then backed out from the gross. It allows each based on their priorities to ala carte select what works best for them. Seeing that extra $1400 per month in benefits makes them stop their bitching and whining. When healthcare costs them $800 of that each month, they understand. Extra life insurance, dental, top shelf health insurance and crappy low budget HMO/PPO stuff as well.
This is nuts, and another example of why it's stupid that health insurance is tied to your employer.
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