Have you ever broken down the numbers on your insurance plan?
People generally look at the numbers only as it relates to themselves and know they are being hurt financially because of the large deductibles, especially in recent years.
But have you ever compared the cost per employee via the income levels?
In that analysis comes a secret that companies have hidden in plain sight, the lower the salary the greater the burden on the employee to bear the insurance costs
Pull up your corporate Insurance offering chart for the most recent year and you can do the comparison also.
(note this is little technical, but if you can read thru it, you may learn about your own company's plan and chances are it was designed similarly since there are only a few large insurers for corporations)
I will use GE’s as a case study.
GE offers 3 insurance options under their GE Health Choice plan
Option 1 is a low deductible plan with higher payroll contributions.
Option 3 is a high deductible plan with lower payroll contributions. (Option 2 is in between)
See the company provided chart below
Chart 1
source
https://www.globalempservices.com/...
When factoring the Total Cost for a year, you have to add
Annual payroll contribution
+ Annual Deductible
+ Annual Co-Insurance Maximum
= Total Cost
The below chart is an comparison of costs (as a percentage of salary) by income level
Chart 2
Comparison Table of GE's insurance cost by employee salary range
Option 1 | Option 3
Range Is | Salary | Total Cost| % of salary | Total Cost | % of salary
Lower Than | $ 25,000 | $2,002 | 8.01% | $3,600 | 14.40%
Lower Than | $ 50,000 | $2,710 | 5.42% | $3,600 | 7.20%
above | $100,000 | $5,094 | 5.09% | $5,672 | 5.67%
above | $150,000 | $5,692 | 3.79% | $6,140 | 4.09%
Example
Jeff Immett's Salary
|$3,300,000 | $5,692 | 0.17% | $6,140 | 0.19%
**Note 1: Costs are from GE's insurance plan (ref. Chart 1),
percentages are calculated (cost/salary)
**Note 2: Jeff Immelts salary source: http://people.forbes.com/...
If you look at the cost for employees earning less than $25,000, they pay about $2k to $3,600, which is between 8% to 14% of their salary (depending on Option 1 or 3). These earners can be factory workers, clerical, maintenance staff, etc.
As you go up the income ladder, the cost decreases as a percentage of salary. So higher paid employees get the same level of coverage but pay significantly less. For those with salaries above $100,000, they only pay 5%. It gets even better for those above $150,000 they pay about $6,000, which is only 4% of their salary to insurance costs. The people earning these salaries are the VP’s and managerial staff.
Now, most corporations and insurance companies are clever about how they set this up. Visually, as you go down the company chart (Chart A), it will appear as if the costs are increasing as the salary increases. But they are betting that people will not dig into the numbers and calculate how much they are being hurt, especially when their salary is below $25,000, even people below $50-100K are bearing a greater cost than the people above 100,000. The higher earners have capped their insurance costs at $6,000. So although the total $ cost may look reasonable, the percentage is where the actual story is. The lower earners do not have the income to cover the insurance costs, but they are expected to pay a higher share of the insurance cost burden (the alternative is not to use the health insurance). In essence, the wealthier are getting richer from capping their costs and getting a back door salary increase, while the lower income people get a back door salary cut (sounds the same as the way social security is being capped for wealthier people)
In the last year, GE’s CEO Jeff Immett earned $3 Million base salary. Do the math and you will see that he only bears .20% (not 20%) fraction of the cost. A person among the 1% has cleverly set the system up to pay only .20% of insurance costs whereas his employees with salary of $25000 are paying 8 to 14%. This is a backdoor corporate transference of wealth to the rich, and putting a hidden burden on the lower classes.
Have you looked at your insurance plan lately?