Premium contributions linked to salary

[Guest mk4146]

I am looking for useful information or "best practices" used in various states and municipalities around the nation that effectively links employees' premium contribution with salary categories. As health care costs have risen out of control, my organization is searching for equitable strategies to spread out the increases over a range of salaries. Any feedback to what mechanisms you may apply in your organization or direction to where I may find this type of information would be appreciated.

Thank you.

[jeanine]

Either on this site (Benefitslink) or some other, I saw an article just a few weeks back on OutBack Steakhouse Restaurants who do exactly what you are stating. Very interesting, but we haven't seen anyone locally willing to do the same thing.

[mroberts]

I read the same thing jeanine. It would be very interesting to see how something like this played out. I could see it being a tough sell to some VPs and Presidents of a company however. But if they are interested in doing the right thing, ya never know.

[Guest mk4146]

Thank you for the Outback Steak House article. Harvard University has had a tiered premium contribution strategy since 1994. I spoke with a representative of the Harvard Health Benefits Board recently and he said that the "higher-ups" were not at all upset about paying more of their share.

Also, I have found that Kansas uses a similar strategy that links contribution to salary.

Michael

[Larry M]

Years ago, some carriers used a modification of charging a higher premium to those making a higher salary.

The major medical plan designed had a deductible which varied by the employee's salary.

The deductible is the amount which an employee can afford to pay on his/her own without undue hardship, and yet is still high enough to discourage small claims or frivolous expenditures.

It made sense then, and still makes sense.

Unfortunately, major medical plans became more and more "first dollar through catastrophic" in coverage, and the idea became almost extinct.

There are some still in existence - and working well.

[KIP KRAUS]

I agree with Larry M. The deductible related to salary brackets is an excellent method of applying varying deductible amounts in a comprehensive medical plan, and cost effective in reducing the overall cost of a medical plan. However, until we get people out of the HMO mentality and get back to a consumer based medical delivery system you won’t see these types of plans.

Even if we can get to the PPO mentality we could use this type of system for out-of-area benefits and prescription drug plans. Start requiring deductibles and 80/20 coinsurances for Rx plans and we may see the cost of brand name drugs become more competitive. If a person has to pay 20% of $100 rather than 20% of $200 they may opt for the $20 co-payment over the $40 co-payment.

It’s amazing what consumerism can to drive down the cost of an item.

Pardon the soapbox oratory.