Shifting Health Costs to High Earners

November 11, 2010

More and more companies in the last year or so have begun signaling their recognition of the added burden shouldered by workers in low- and middle-income jobs by varying the health insurance premiums they pay based on salary, says the New York Times.

  • Vanderbilt University, for instance, has adopted a wage-based benefit program for 2011 under which premiums will remain the same for employees who make $50,000 or less, while everyone else will pay up to $75 more a month.
  • Across the country, the percentage of workers with coverage in large companies whose premiums vary with their wages climbed to 17 percent in 2010, up from 14 percent two years ago.
  • About 20 percent of employees who are covered by large companies in the Northeast have the premiums they pay tied to their wages, according to Kaiser.

Some corporations have gone further than others in trying to spare their lowest-paid workers, even as they increased the cost of premiums for everyone else.

  • This year, for example, employees at Bank of America who make $100,000 or more a year will pay at least 14 percent more for coverage for 2011.
  • But workers who make less will actually see their contributions decrease, although their deductibles and copayments will stay the same.
  • Employees earning less than $50,000 could see as much as a 50 percent drop in the amount deducted from their paychecks, as compared to 2010.

Other companies could be wary of carrying out a system that could be viewed as unfair since salary may not be the best indication of household income.  Some low-paid employees, whose spouse is a high earner, may not need the help, while a single person with a higher salary could be struggling, says the Times.

Source: Reed Abelson, "Shifting Health Costs to High Earners," New York Times, November 9, 2010.

For text:

http://www.nytimes.com/2010/11/10/business/10insure.html?src=mv

 

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