Skip to comments.Big Firms Overhaul Health Coverage [Giving money to employees to buy own coverage]
Posted on 09/28/2012 8:24:43 AM PDT by Lorianne
Two big employers are planning a radical change in the way they provide health benefits to their workers, giving employees a fixed sum of money and allowing them to choose their medical coverage and insurer from an online marketplace.
Sears Holdings Corp. and Darden Restaurants Inc. say the change isn't designed to make workers pay a higher share of health-coverage costs. Instead they say it is supposed to put more control over health benefits in the hands of employees.
The approach will be closely watched by firms around the U.S. If it eventually takes hold widely, it might parallel the transition from company-provided pensions to 401(k) retirement-savings plans controlled by workers and funded partly by employer contributions. For employees, the concern will be that they could end up more directly exposed to the upward march of health costs.
"It's a fundamental change
the employer is saying, 'Here's a pot of money, go shop,' " said Paul Fronstin, director of health research at the Employee Benefit Research Institute, a nonprofit. The worry for employees is that "the money may not be sufficient and it may not keep up with premium inflation."
(Excerpt) Read more at online.wsj.com ...
Of course that extra income will be taxable.
Will wipe out the current advantage of contributions to 401K’s and health plans being paid for with pre-tax income.
True. And they will be less likely to abuse it [ex: going to the E.R. for the flu].
The line about "the change isn't designed to make workers pay a higher share of health-coverage costs" is pure B.S.. That JUST what it is. It probably exempts the companies from all kinds of crap under ObamaCare.
This is the way it should be. Employer paid benefits started as a way to get around government wage limits.
Start with “this money is for your insurance’ and eventually it becomes obvious that it is all part of wages anyway. And we get back to normal, and as you point out, a step closer to the consumer being in charge of shopping for what he consumes.
A good argument for real HSAs.
In the event of cancer or something serious, you'll be covered and able to get into a hospital. An extra $40,000 in life insurance covers the excess for the family... Had a family member do this years ago.
I agree. If republicans had proposed having individuals pay for their own health care, which many have, in order to control costs, they would be vilified. We need to dump Obamacare, and people should just buy medical savings accounts.
You're missing the obvious change wrought by Obamacare - guaranteed issue with no pre-existing condition clause. What that means is that only idiots will use their extra money to buy health insurance - why would they, when they can just buy it the night before the operation? Of course, that will leave only the sick with health insurance, which means premiums will skyrocket. Eventually, we all wind up where Obama wants us - in line for our single-payor health "benefits", if the death panel permits it.
Welcome to 1984, comrade.
makes good sense
Once Obamacare is fully implemented, high deductible policies will no longer be permitted. HSAs will also be phased out.
I have thought for some time that it’s not good for your insurance to be tied to your job, especially in my case where I was diagnosed with Type 2 Diabetes after hiring my current job. I have been concerned about how changing jobs would affect my coverage. It would open up competitive rates and my job coverage sucks anyway. I pay $51.00 per pay period, and I have to meet the 1500 person deductable before they cover any coverage except pharmaceuticals and drugs. So, basically, I am on a catastraphic coverage only but they (our company) seem to think its such a great plan. I am hoping for a Romney win so jobs will start returning and maybe I can jump off this wagon and go to a better option.
Won’t help much as the price of individual policies is skyrocketing due to mandated changes in the risk pool, i.e., no pre-existing condition(s) exclusion(s).
Real culprit IMHO for high health care costs? I did data work for the MEDICAID agency here in IL for years. When I started the cost of an office visit was around $20 and nobody needed insurance to cover that. Insurance covered major medical only.
But Medicare, and by extension due to Federal regulations, MEDICAID capped physician payments for decades at around $8.20. That payment wasn’t enough to cover their cost of doing business especially with rising malpractice insurance costs. So, inevitably, and in a stealth ‘tax’ the cost of office visits began to creep and then went ballistic to around $160 here in Springfield. The person not on the government programs is taxed for the minimal payment by the government and then foots the bill for the remainder of the shortfall in the increase in private-pay/insured patients. Eventually, everyone wants insurance to cover the ever-more-expensive office visits and routine care. Demand drives prices.
The case can be made for getting government out of the healthcare business, of course, but we all know that won’t happen anytime soon - until the country is broke. The abysmally low rate paid to doctors wasn’t an accident BTW. They knew it had to cause prices to rise to meet the manufactured shortfall. But, had they paid the ‘going’ rate taxes (the visible ones) would have had to raise dramatically. Far easier and safer for re-election if the tax is hidden in passed-on costs to consumers, then insurance companies, then right back to consumers again.
The new smaller paychecks would certainly not help Obama.
Of course they’ll have to buy it from a Gubbermint-run exchange where all the required benefits have been mandated by Obama. Hence the price will not possibly vary from provider to provider by more than 5%.
Maybe for the company - BUT NOT for you ...
That extra money is TAXABLE income to you ...
For example, lets say you are single and a policy will cost you $4K ...
About 30% of that "income" will be taxable to you [$1.2K] in the form of Federal, State, FICA, etc.
So, now you have $2.8K for your healthcare that costs $4K ...
HELLO - YOU now need to pony up the $1.2K difference in order to get your healthcare ...
Let them compete......
How long before Sebelius orders them NOT to do this?
Big Insurance doesn’t want to have to compete, they want it all in big chunks, thats what the mandate was for.
These evil business owners are just doing this to screw the 99%. We need the gubment to tell us what is best.
must I? /s
I have the same $1500 per person deductible, but my employer sponsored plan takes $300 per pay period. That includes coverage for my wife and youngest son. The costs are likely to change significantly next month when the annual benefits enrollment period starts.