The Homa Files

I’m embarrassed to admit that, in the past, I just hadn’t given much thought to my company provided health care insurance.

The premiums – or more precisely, my share of the premiums – seemed reasonable, our docs were on the plan, and the plan covered our needs fairly. Every year, I simply continued the coverage I had in place the prior year.

Since I’ve gotten deep into the health care reform fiasco, I was more diligent this year.

Below is what I found, and far below are some observations re: Cadillac insurance plans.

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The Plans

My employer offers 3 plans that are relatively comparable in coverage.  See the chart below for premium details.

The 3 plans differ slightly in co-pays, deductibles, limits, etc., but I concluded that the differences aren’t “statistically significant”. (Note: I didn’t even consider the lowest cost alternative – a Kaiser HMO).

First, note that – depending on the specific plan — my employer pays somewhere between 59% and 77% of the total premiums – employees pay between 41% and 23%.   I’m told that the split is comparable to most company plans – with the COMPANIES paying at least half of the premiums, often more, sometimes much more.

The shocker was the range in total premiums by carrier – for roughly equivalent coverage.  For example, the UHS premium for a couple ($15,376) is more than $6,000 higher (almost 70%) than the premium from CareFirst Blue Shield ($9,088).

Note that there’s a modest “marriage penalty”.  The total premiums for a couple are more than twice the individual premiums – by about 10%.

If you’re going to have kids, you might as well have a lot of them.  The family rate is 3 times the individual rate, regardless of the number of children in the family.  Hmmmm.

On balance, the premium levels are about what I expected.  Per capita health care expenditures average a bit over $7,000 – pretty much in line with UHS – the high cost provider.

I’d been riding along with United Healthcare (UHS).  I knew they were premium priced, but I didn’t realize by how much. Ouch.  My shiny new CareFirst card is in the mail, and my projected 2010 disposable pay is plus $4,000 … not bad.

Teaching point: Do the homework when selecting healthcare insurance plans.  There’s serious money involved.

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Cadillac Plans

Company paid premiums are not subject to income taxes.  I think that’s unfair (to folks paying 100% of their policy’s premiums), and arbitrary (it sure looks like compensation).  I’m all for rolling company paid premiums into W-2s,  giving taxpayers an exclusion – say, $3,000 for individuals, $6,000 for couples, $10,000 for families, and then income-taxing the balance.

While the approach is different (largely to “hide the weenie”), I agree with the spirit of the Senate bill.  Taxing Cadillac plans can raise some money, and might start to cap the upside on coverage.  In effect, the folks getting the best health care benefits have to ante in to support folks who get none or relatively little.  Seems fair to me.

The Senate proposal is to levy a 40% tax on the excess of premiums over $8,500 a year for individuals or $23,000 for families.  If anything, the levels – which were set to outboard lucrative union plans  —  are too low – probably by a factor of 2 based on my company plans.

Side note: I haven’t heard or seen anything that distinguishes between premiums paid by individuals and premiums paid by companies.  Obviously, premiums paid by an employee aren’t wages to be taxed.

This entry was posted on December 1, 2009 at 7:59 am and is filed under Health Care / Medical Insurance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.