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health benefits vs. salary increase


Guest segisara
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Guest segisara

Upon hiring the leader of our organization we agreed to a full salary and to cover him and his family of 4 with full health benefits. The coverage for his family of 4 was more than we had hoped to spend, however we wanted to hire him.

Now his wife is employed and will receive full health benefits. He has asked that instead of receiving the agreed upon health benefits, that we increase his salary by that much instead. In addition he would like us to retroactive it starting at the beginning of September.

What is the correct and most ethical thing to do?

It doesn't feel right to us, however we just aren't sure. People have advised us to keep our apples and oranges separate, but I can't really see the direct reason to do so.

Thanks for your advice.

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Getting into HR and total compensation theory can always get a bit sticky. All depends on points of view and what the desired outcomes are.

One issue is how you define a competitive salary. Another issue is whether other employees can opt out of benefits and take that money as extra salary as well. Also, you said the insurance cost more than expected, which means it's a larger sum of money than the organization had really intended to spend, so why would you keep spending that much given the option?

A more fair thing than just giving him the entire amount as salary might be to pay the difference in the wife's cost between single coverage and family coverage. This way he's not penalized by taking the other insurance but your organization isn't penalized for the full cost of the existing coverage (which you said was higher than had been hoped). The organization is still providing insurance for the family and he doesn't get a windfall by having taken the less expensive insurance (the windfall in my opinion should stay with the organization).

Either way, you want to be sure that the money representing the medical insurance is kept separate from his base salary. Imagine in a couple years that his wife stops working and he asks for insurance again; by keeping it separate from base salary, it's easier to switch from cash back to coverage. The worst scenario would be that he insists it was given to him as a raise and insurance should be added on top of that.

Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra

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  • 1 month later...
Guest andrei.dana@yahoo.com

I think you should give the man what he asks for, after all he know better why he asks it. I can't see a reason why you shouldn't do that...

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Do you know the defintion of cafeteria plan?

Do you actually think that your obtuse, condescending comment in the form of a question actually provides any real enlightenment to the original poster?!?!?

You make a valid point but that's the 2nd or 3rd time in recent posts that you've been both vague and harsh.

Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra

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masteff's response is good. I see this is under 'church' plans. The same board or council, or whatever group has the authority to make such a change in pay will need to weigh in all of the facts and circumstances. I personally would avoid thinking along the lines of what is fair or not fair. IMHO, when it comes to wages, fairness may not be relevant (I had to explain to my oldest son (age 6): if there's only one day of school left, would it be fair for your friend to be first in line to get on the bus instead of you? His original answer was no, because he would want to go first). Sometimes no true fair answer can be found using our puny human wisdom.

If this is a church, perhaps an honest discussion about the budget and it's strain on your organization (I assume that's the case) shouldn't be too difficult, perhaps the nice coverage that the spouse was able to obtain was the work of the powers above (as all good things are anyway). If that results in a relief from the budget strain that your organization is having, then all is well! If the individual has a problem after that, then they are truly overpaid.

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