Health Ins Premiums based on income

[gbossert]

What is the name of your state? NJ

My employer has announced their plans to change the premium structure of our plans. Going forward they will be based on income. Thus, the more you make, the more you pay. I'm wondering if this arrangement is 1)legal and 2)prevalent. I've never heard of such a premium structure before.

 

[ecmst12]

Yes to both. The actual premium itself isn't what's changing, it's the portion of the premium that your employer is paying for. They feel employees who make more money should cover a greater portion of the premium; that's legal, fair, and not uncommon.

 

[mlane58]

What is the name of your state? NJ

My employer has announced their plans to change the premium structure of our plans. Going forward they will be based on income. Thus, the more you make, the more you pay. I'm wondering if this arrangement is 1)legal and 2)prevalent. I've never heard of such a premium structure before.

Its entirely legal and why shouldn't someone who makes a higher rate of pay, pay more of the premiums? The last two companys I worked for had it structured that way.

 

[gbossert]

I disagree with your claim that this arrangement is fair. First definition of fair on dictionary.com is unbiased. I would say that the premium scale is biased against higher income earners.

This issue is exacerbated by the fact that higher income earners are more likely to live healthier lifestyles, usually work in less hazardous environments. Low income earners are more likely to smoke, to be obese... I could go on and on. Basically, a high income earner will cost the insurance company less over time and thus should pay less.

The same strategy is applied to auto insurance. The more likely you are to make a claim, the higher your premium.

A system that calculates the likelyhood of submitting a claim and charging based on claim payout likelyhood seems more "fair" than one that is based on income. Charging people more for being overweight, smokers and old is fair. Charging more based on income is not.

By the way, I understand it is not the premium that is changing (rather the employer's contribution) but I disagree that this arrangement is fair.

 

[cbg]

Okay, so it's not fair. Fine.

It's still legal.

 

[gbossert]

Would it also be legal for a company to provide higher employer contributions to blondes than to brunettes?

 

[Zigner]

Would it also be legal for a company to provide higher employer contributions to blondes than to brunettes?

What does THAT have to do with it?
Please see the last statement in my signature.

 

[gbossert]

I didn't start the fair discussion, ecmst12 did. I asked a question (actually 2 questions, legal and prevalent) and I'm satisfied that I received responses as to the legality and prevalency. I simply responded to the claim that the arrangement is fair.

And my blonde vs. brunette question was an example of how far this logic could be extended and, might I add, a legitimate question.

 

[Zigner]

It was a totally irrelevant and illogical question. Your questions have been answered - don't sit here stirring up trouble

 

[gbossert]

Senior Members like ecmst12 and you should concentrate on answering concise questions with concise answers and trouble would not get started. I have exercised my right to respond when someone implied that I might not be thinking "fairly".

I appreciate the answers, not the judgement.

 

[cbg]

The answer to your blonde vs. brunette question is no, that would not be legal. Hair color is in many ways tied to race, which is a protected characteristic. You cannot make one protected group pay more than another BECAUSE OF that protected characteristic.

However, income is NOT a protected group; therefore it is legal to base the amount of premium on that basis.

 

[Zigner]

Senior Members like ecmst12 and you should concentrate on answering concise questions with concise answers and trouble would not get started. I have exercised my right to respond when someone implied that I might not be thinking "fairly".

I appreciate the answers, not the judgement.

Ahh, exercising your "right". Gotcha.

Again - please read the last line in my signature. I'm looking forward to responding with your desired answer.

 

[gbossert]

cbg - Thanks!

 

[gbossert]

Zigner - not sure what you don't understand here. Here's my suggested answer based some of the good responses I have seen:

1) Legal yes. Income is NOT a protected group; therefore it is legal to base the amount of premium on that basis. (thanks cbg)

2) Prevalent yes. My last two employers have structured their employer contributions in this manner. (thanks mlane58)

So no need for further response. Unless you'd like to copy and paste the above into yet another unnecessary post.

 

[Zigner]

Thanks!

No problem, glad to have helped!