HR: Rising Healthcare Costs
As healthcare costs continue to rise, more employers are looking for creative ways to ease the burden of higher premiums. Since 2005, workers have seen their contributions for premiums rise as much as 47%.
In 2010, employers tried multiple ways to hold down increases. In addition to increasing employees deductibles - some companies have also:
- Dropped HMO’S- which were more costly than PPO’s
- Added low cost Consumer Directed Health Plans(CDHP)
- Provided employees with financial incentives for healthier lifestyles.
With the trend of rising costs likely to continue, some employers are now adopting a tiered system to pass on costs to employees. These “wage based plans” assign larger contributions to workers in top salary brackets, in order to provide relief to workers who make less money. Basically- “the more you make, the more you pay”.
Vanderbilt University, for example, has adopted a policy for 2011 where employees who make $50,000 or less will not see an increase in premiums- all other employees will pay up to $75 more a month.
At Bank of America- employees who make $100,000 or more a year will pay on average 14% more for coverage in 2011. Employees who make less will actually see a decrease in their contributions.
Although tiered plans are designed to ease the burden for employees in mid and lower income jobs - is it fair to ask certain employees to pay more than others? Wouldn’t it make more sense for employers to adopt a plan design that required all employees to pay more of their own medical bills?