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Fri Oct 28, 2011 2:28pm EDT (Reuters) - Open enrollment for benefits ends today at the University of Illinois at Chicago, and Jason Rothstein, 40, has just finished all the needed paperwork. Once again, his health insurance premiums will go up - about 5 to 6% in 2012. And, as an employee with earnings in the $61,000 to $76,000 range, he'll pay more for his insurance than colleagues at a lower salary level.
Rothstein, who is single, says that UIC divides its employees into five income divisions for benefits purposes. Even though he's in the second-highest quintile, you won't hear him complain about paying roughly $120 a year more for his Blue Cross-Blue Shield HMO plan than employees at the bottom of the ladder.
"I think it's entirely fair and appropriate," says Rothstein, a project manager for UIC's Center for Public Health Practice. "To me, it makes sense that people who can afford a little bit more pay a little bit more."
That attitude squares with expert opinion: that in an age of ever-soaring health care costs, higher wage earners must pull more weight, lest their lower-earning colleagues face precarious risks. UIC's five tiers begin at $30,200 and below (where single-payer managed care plan is $47 monthly), and go up to $75,901 and above (where the same premium is $59.50), says university spokesman Thomas Hardy.
A survey of about 600 employers by the National Business Group on Health and Towers Watson shows that 23% of large- and mid-sized companies structure health benefit premiums based on employee pay levels. About one in five employers (22%) that kept health care costs at or below national averages the last four years used this approach. By contrast, only 10% of employers with the highest health care increases structure premiums based on pay.
"It's not new, it's not illegal and I'm not surprised by the numbers, given the significant cost of health care," says Karen Pollitz, a senior fellow at the Kaiser Family Foundation and a former health policy adviser to members of Congress. "It's a good, human thing to do; you want your employees to be in the pool and you want the pool to be as large as possible. That's what helps bring people in."
Linking premiums to pay isn't commonplace -- yet. "Creeping up is the right phrase; it's not moving up quickly," says NBGH president and CEO Helen Darling, whose association includes more than 330 large U.S. employers. "It's directly related to the extent health care costs are rising. There's no way to get out of charging low-wage employees more as prices increase, but you can't ask them to pay too much."
And paying more seems a given for almost everyone in the workforce. Darling cites figures that show health care costs rising by 7.6% in 2011. While the increase should only hit 5.9% in 2012, benefit offerings will begin to shrink, according to a Towers Watson survey of 368 midsize to large companies.
What to do, then? Darling says some companies give workers chances to "buy back" what they lose in higher premiums and deductibles by participating in wellness programs. "If costs go up $300, you can take some tests, or work with a [wellness] coach, and earn back some of that money," she says.
Workers have a few options to minimize health care expenses. For starters, spend more time deciding what insurance plan best suits your budget and medical needs. Someone who rarely needs medical care may want to opt for a high-deductible health plan, which has lower premiums but a high deductible of at least $1,200 in 2012 for a single person and $2,400 for a family.
Another option is that you can take advantage of your flexible spending account. These pre-tax dollars could be used on certain out-of-pocket medical expenses but need to be used by the end of a given calendar year. Limits exist on how much an employee can contribute annually. At UIC, the flex account limit is currently $5,000. But come Jan. 1, 2013, the maximum contribution for a flexible spending account changes universally to $2,500 under the federal Patient Protection and Affordable Care Act.
(Editing by Lauren Young and Jilian Mincer)
© 2010 Thomson Reuters.
