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.
A very good point! It is already cheaper for me to have a private policy as opposed to my company's plan. If you live in a state that allows co-op health insurance, check it out. I pay about 3/4 of what I would through my company.
Yes and yes.
The way group insurance rates are calculated this can't happen. It's cheaper to insure employees of a company than it is to insure individuals because you can get an experience rating from the group that you can't get from individuals. That's why president Bush is pushing for small business to band together to buy insurance.
You have made a very good argument for a flat tax.
It would be better for the entire medical issue for a low income employee to be able to afford insurance rather than have no insurance and go to the emergency room...that is what drives up premiums/cost for all.
That would be from all the cafeteria workers, I assume.
It's not subsidizing, it's a volume discount
Actually uninsured hospital visits are paid mostly by the county government. There is a percentage not covered that the hospital would have to absorb.
The biggest reason for soaring health care costs is that everyone thinks that every doctor visit for however minor an illness or injury should be paid by the insurance company. If we went back to only major medical expenses being covered by insurance many more would be able to easily afford insurance.
Let's suppose I work for Wachovia, and my insurance plan costs a total of $900 per month ($600 paid by the company, $300 paid by me). While I probably won't be able to get an identical individual policy cheaper, I could certainly find one that suits my needs for less money. (Remember -- we're talking about high-salary employees here.)
What if I shopped around and found an individual policy with a high annual deductible of $5,000 or so, and could get this policy for only $500 per month? Here's what I would do . . . go to Wachovia and tell them that they could save themselves $200 every month by giving me a monthly bonus of $400 in lieu of their insurance coverage. I then take the $400 they give me, add it to the $300 I used to pay as my employee contribution, and buy myself the individual policy for $500 -- which leaves me $200 to spare. Even if you assume that I lose $100 to taxes, I still get that $100 to put aside to apply to future deductibles.
Wish they had done this when I worked for them...
Hahahahahahahahaha! A company paying you for not using their insurance plan. Thanks for the laugh.
As a highly paid employee of a large financial institution, I have to say I wouldn't object to this (within reason). We have excellent medical benefits, and they are increasingly costing the company an arm and a leg, due to forces beyond the company's control. I'd rather subsidize the lower paid employees, and thus retain both the excellent benefits and the best of the lower paid employees. As long as it's a private company doing this, I don't see it as reflecting "Communist ideals". None of us are being forced to work here, and any time we don't find our overall compensation package and working conditions (which includes competent support staff) to be satisfactory, we are free to leave and work elsewhere.
I get a $50 per month benefit credit regardless of whether I use it towards health insurance.
If I don't buy my employer's health insurance plan, I get an extra $50 per month (pre tax).
That's an awful lot like my employer paying me for not using their insurance plan, if it's not the very thing.
The key, as I pointed out in my last post, is that under the right circumstances the employee can make the case that the employer will save money by NOT having the employee on the plan.
The parable of the vineyard owner -- who hires workers at different times of the day but pays them all the same at the end of the day (prompting outrage among those who started at dawn) -- comes to mind here.
When you analyze it, they wind up charging the older workers more for their health insurance as one typically makes the higher salary at a higher age. So, one could claim age discrimination as, in my opinion, that is exactly what it is.
Of course, it goes without saying, that the older workers have a higher claims level in nearly all cases.
Add a few more plans like this and you can look for the higher paid employees to leave first.
Good point. As long as the company is going through this process, they ought to do the following: 1) make the smokers pay more for their insurance, 2) give everyone an annual physical and make those who grade poorly pay more for their insurance, 3) check the driving records of all employees and make the bad drivers pay more, etc.
So we are to apply a parable meant to describe the kingdom of Heaven to corporate policy?
It looks as though my wife's insurance will be a much better deal. Do you think my company will let me keep the portion of my health insurance "benefit" when I drop it? No way. It's exactly what they want. They don't want to provide insurance at all. More profit in it that way.
No offense intended. Just tickled me at the thought of asking the company for my portion of the benefit.
I think that's great. I know my company's HR clown would laugh in my face if I asked for that money.
My boss is already said he is putting his resume out after the first of the year.
Granted, it's not much dough, but as I understand it, it really is meant as a (small) incentive to not buy into the company plan.
Except the vineyard owner didn't take money away from those who worked all day to pay those who did not.
Presumably things won't go that far. If they do, the dimwits who let it will indeed see their highly paid employees start hiking out the door. Right now, however, I pay so little for my medical insurance that I wouldn't even notice if they tripled or quadrupled my cost. I would, however, notice if my highly competent administrative assistant and back office support staff hiked out the door, and were replaced by the barely literate drones who populate the back offices and secretarial pools of a lot of big financial institutions. The extra couple of hours a day I'd have to spend cleaning up after them would be a lot more painful than subsidizing the health insurance of the current crew.
That's the purpose of the parable, isn't it -- to teach something by stating it in the context of a story that people can relate to?
Many talking about leaving my husband's shop too...
They've doubled health insurance costs last year, and haven't given them a raise in 2 years - blaming the economy...
My husband brought home a copy of his resume last night for me to update...
I think I'll switch my banking to a non-communist bank.
No, but the high-paid employees who accept the terms of their compensation are in no position to complain about someone else's terms of compensation, right?
If I pay $300 a month for my insurance and I'm quite content with that, what difference does it make if someone else is only paying $200?
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