Question about health insuranceFollow

I have no desire to figure out what portion of the governments' budgets are healthcare and then work backwards to tell you how much I pay. I'm fairly certain it's only a few hundred/month though.

Just an FYI. You're paying the other 75% as well. It's part of the total compensation you get from your employer, so it's effectively deducted from the amount your employer pays for you to work for him. You just don't get the money handed to you first is all.

And if the company didn't contribute to his health care, they wouldn't make that up dollar for dollar in extra wage, so no, not quite the same.

That's the wrong way to look at it though. If it makes it easier to visualize, how about assuming that for every extra dollar an employer has to pay in health benefits in return for a given value of labor performed for them, they will reduce the amount paid in wages for that labor by one dollar. It's the exact same effect, but it's easier for some people to assume that the company will take from the employees to cover for their increased costs than to give back to the employees if their costs are lower.


The employer doesn't really care how much money the employee takes home in wages, and it's backwards thinking to assume that they do. The employer cares how much the employee costs compared to how much the employee's labor generates in revenue. That's it. I know that it's hard for some people to accept the notion that if an employer has to pay less for employee benefits that he'd pay more in employee wages, but he's clearly willing to pay $X in total compensation in return for that employees labor right now. He really doesn't care what form each dollar that makes up X takes. Assuming that's the fair market value of that labor, he would pay that in direct wages if benefits were taken off the table. He'd have to, or the employee would go work for someone else who would.


That's how the free market works.

Edited, Oct 12th 2011 2:42pm by gbaji

So you're arguing that if the cost to provide an employee's health benefits increases over time the employer will not find ways to decrease wages over time to compensate? They'll just pay the extra cost and the full salary out of the goodness of their hearts? That seems somewhat counter to the usual rhetoric around here, but go for it!

If he hadn't had to cover an extra $100/month, you don't think the raise might have been 16% (or whatever the equivalent would be) instead? Employers think in terms of the cost of compensation. Period. If he decides that your labor is worth more to him and thus justifies a raise/promotion/whatever, that's a separate decision. However, the size of that raise absolutely is based on how much the total cost to employ you is.

There's seriously no one on this forum other than myself with any knowledge or understanding of how corporations budget compensation and how that affects raise and promotion decisions? Really? That's just surprising. I'll give you all a hint: Corporations look at departments and budget everything related to it based upon some relative value of that department to the company as a whole. This includes the compensation for the workers. They calculate the existing cost of compensation, which includes benefits. They then adjust for changes in the costs for benefits. The remainder is the total pool of compensation increase for that department for that budget cycle. This is then divvied up by top management within the department, and then the managers divvy it up among their reports.

It can get more complex than that, with payroll debited from different budgets based on hours worked on different projects, but the bottom line is that the total amount available to hand out raises and promotions is what's left over after paying for benefits for the total work force. It has to work that way. Therefore, it's absolutely true to say that while we can't say each individual would make exactly X dollars more if his own benefits were cut by X dollars, we can say that over time the total resulting wages across the whole organization is directly reduced by the total cost of benefits across that same budgetary organization.


Thus, your wages (average wages of everyone you work with really) is reduced dollar for dollar by the cost of your collective benefits. If the cost goes up, the total wages over time drops (relative to what it would have been otherwise). If the cost goes down, the total wages increase. So yeah, you are paying for your benefits. They aren't "free" by any stretch of the imagination. They're just taken out of your paycheck before your pay rate is even determined by your employer, so you never see it.

For the individual? No. For the group? Of course it is.



Sure. And if fewer employees take the benefits, then there's more money available for raises and promotions in the compensation budget. That employee doesn't get anything extra, but everyone does as a group.

The point being that if the employer didn't offer any benefits to any employees, the employees would be paid more instead. Or... If the benefits the employer provides become less expensive, the employees will be paid more. Similarly, if the benefits become more expensive, the employees will be paid less. I'm not saying that each individual is choosing between being paid more or getting benefits. That was not my intent. I *am* saying that the benefits you receive aren't "free". You, and everyone else you work with, collectively pay for those benefits.

Quite possibly the truest thing you have ever posted.

Agreed. While these companies aren't the rule, they're not a rarity either. Just uncommon. We worked very hard to reduce layoffs over the last 2-3 years.

You do realize that that is not a sustainable solution, right? Ultimately the choice must be made: lay off a few people or keep everyone and allow the whole company to go under, thus rendering many more people out of work.

Given that this whole little tangent wasn't about the point either...?

This is an 'it depends' for me. I'd run a loss for a little while under certain conditions. Like if I expected the amount of time I'd be losing money to be limited, and the workforce was skilled and took a decent amount of time to train. If I didn't cut and my competitors did I'd be in a better position when things recovered (i.e. we could quickly produce more of whatever while the others were training new employees and ramping up production again).

Our childrens insurance costs now 440 every three months. When we opened the plan it was 786 every three months. All of their Dr's visits are covered and we only pay 25$ per visit. ER is covered and up to three days hospital stay after that (a longer hospital stay) we dig into the deductible =/ (which is 10k)

My husband uses the V.A. because its free and I currently have Cigna but we normally prepay on our medical care or just pay cash because the negotiated rates are often cheaper than what insurance would leave us left with to pay.