I read that some employees medical plan costs are increasing by as much as 60% in 2007, but salaries are only increasing by about 3%. Doesn UC care that employees are losing ground on salaries?
A. It’s important to look at the big picture when evaluating health care cost increases. Here’s an example that may help. Someone in Pay Band 1 with employee-only coverage in the Health Net HMO will see a rate increase from $12.49 to $20.64, which does work out to over a 60% increase. However, in dollars that’s $8.15 per month, or $97.80 for the year. Now, let’s say the same person earned $40,000 in 2006. With a 3% salary increase, his or her 2007 salary will rise to $41,200 $1,200 more. So this person receives a salary increase of $1,200 far more than the annual health care cost increase. Since health care payroll deductions are pretax, the net effect on take-home pay will actually be less than $97.80.
Related Questions
- I read that some employees medical plan costs are increasing by as much as 60% in 2007, but salaries are only increasing by about 3%. Doesn UC care that employees are losing ground on salaries?
- Ive heard that employees in the lowest pay bands will have to pay the highest increases in their medical plan costs for 2007. Is that really fair to lower-paid employees?
- After the plan has been issued, do new employees go through medical underwriting before they are eligible for enrollment?
