April 27, 2011

Flat Dollar versus percentage

Assume you had two employees who do the same exact job and get paid the same exact amount of money.  One has his family plan with Blue Cross while the other has his family plan with Fallon Select.    The employee, who has Blue Cross is in essence getting compensated (not w-2 wise) 3,000 more per year then the person who has opted for Fallon Select.

Does this make sense?


Wyatt said...

FWIW - Our company used to pay 95% of the LOWEST cost plan. As prices rose, we dropped to 90%, then finally 80%. That Flat Dollar versus percentage encouraged employees to be better health care choosers.

Just some facts from Main St.

Bill Randell said...

key part of what Wyatt is saying is that they set the flat dollar amount based on 80% of the lowest plan.

They dont pay 80% no matter what health plan you choose like the city of Worcester

Wyatt said...

Reminds me of the book Freakanomics.

The theme is that INCENTIVES drive economic decisions.

In the city of Worcester, there are NO current incentives to choose a more cost effective plan without Flat Dollar employer contributions.

Bill Randell said...

Thought I was the only one to read that book

i loved it

S said...

I honestly don't understand why employers are suck footing the bill for health insurance. My employer doesn't pay my automobile insurance or my homeowner's insurance.

We don't use my wife's insurance plan because my employer pays more towards the premiums. It's kind of sad that she is making so much less than the person sitting next to her doing the same job for the same pay.

The best one was a former employer who paid 100% of whatever the employee's spouse contributed.

The worst one was a married couple working for the same employer and both enrolled in single plans. It cost the employer much more, but not the employees. That was one of those bureaucratic rules.