Cost of Family Coverage - Over $11K
USA Today noted that the cost of family health insurance has topped $11,000/year for the first time. They reference a survey from the Kaiser Family Foundation. I'd suggest that in some areas, that cost is even greater - here in NY, where medical costs are known to be notoriously high, I've seen annual premiums in the neighborhood of $15,000/year.
I was recently quoted in the Long Island Business News on the subject of employers paying employees to opt-out of their plans. Noting that it is cheaper to add a few thousand dollars to someone's pay than to pay in excess of $11,000 for health insurance, a few (particularly smaller) employers are jumping on the band-wagon. The problem with this approach, I noted, is that if you add a few thousand dollars to someone's pay who has the choice between two health plans, what do you do for the person who doesn't have that choice? Will an employee (let's say a single employee) who doesn't have a spouse who can provide coverage be offered the same cash incentive? Obviously this will result in the employee having no coverage - not an option I'd want to provide as the employer. Another problem with this approach is that in very short order the employee who got several thousand dollars added to his/her pay will quickly forget that it's because of health insurance. And, every time you give him/her a raise, you're adding to an already inflated base salary. I think there are other approaches, and this is not one I would advocate. Any other thoughts out there?
The simple answer is not to add the 'opt-out' payment to base pay but to deliver it in a lump sum. Matters of internal and external market equity aside, raising base pay also has a 'ripple effect' on all salary/pay-related group benefits, e.g., life and disability insurance, capital accumulation plan matching contributions, vacation accruals, and so forth. I cannot imagine this is something an employer with a reasonably mature understanding of salary/pay management would consider.