cbg
I'm a Northern Girl
An example on a small scale of how people can misunderstand their financial circumstances; my employer provides health and dental insurance benefits to qualifying retirees. The retirees pay the entire cost of the dental coverage (but get the benefit of group rates) but they pay for their medical coverage on a sliding scale based on their years of service. The longer you worked for the university, the less you pay.
We offer a choice of three different plans. One of the plans is considered the standard. The amount a retiree pays is based on a percent of this "standard"plan, with retirees who have ten years with the university (the minimum for qualification) paying 50% of this plan, retirees with eleven years paying 47%, employees with twelve years paying 44% and so on. It caps at 20 years, with everyone who has 20 years and up paying the same amount. The amount carries through the other two plans, so if, for example, 50% of the standard plan is $150, then everyone with 10 years pays $150 no matter what plan they choose.
Because of this formula, for a few years retirees who chose one of the other two plans and who had seventeen and up years with the university, paid nothing at all as the total cost of the plans were less than the percentage they would normally pay.
I'm explaining all this as background to explain about a retiree who contacted me a couple of months ago, while Open Enrollment was going on. Generally, if they don't want to make any changes, they don't have to do anything at all, and unless they make a change we don't send out confirmations; they just get their updated billing notice with the new rates. Because of a minor change to the way family coverage for the dental was being structured, this year we sent out confirmations to the retirees. I received a call from a retiree who was terribly confused; he couldn't understand why his dental coverage cost so much less, and his formerly free medical had such a high cost.
I was confused too. His dental premium had gone down, it was true, but only a matter of a couple of dollars - less than five. On the other hand, his medical plan hasn't been free for at least six years. At first the cost was minimal - $6 a month, but had gradually gone up so that it's now the most expensive plan we offer. Yes, there had been an annual increase, but it wasn't out of line with the other plans and when combined with the decrease in the dental premium, he'd only be paying about three dollars more a month than last year. Yet he was convinced that the change was over a hundred dollars.
After a lot of conversation I realized that he had not understood the rate charts we send out every year; he believed that until this year, his medical coverage was still free and that the $250+ he paid for the month was entirely for the dental. It took a long time to get him to understand how this was not true; his belief that he got "free medical insurance" was so deeply ingrained that even in the face of emailed rate charts from previous years marked and noted for him (which he had been sent every year but either hadn't read or hadn't read properly) it was a big job to convince him.
So yes, I can entirely believe that your friend's situation is not exactly what she believes it is.
We offer a choice of three different plans. One of the plans is considered the standard. The amount a retiree pays is based on a percent of this "standard"plan, with retirees who have ten years with the university (the minimum for qualification) paying 50% of this plan, retirees with eleven years paying 47%, employees with twelve years paying 44% and so on. It caps at 20 years, with everyone who has 20 years and up paying the same amount. The amount carries through the other two plans, so if, for example, 50% of the standard plan is $150, then everyone with 10 years pays $150 no matter what plan they choose.
Because of this formula, for a few years retirees who chose one of the other two plans and who had seventeen and up years with the university, paid nothing at all as the total cost of the plans were less than the percentage they would normally pay.
I'm explaining all this as background to explain about a retiree who contacted me a couple of months ago, while Open Enrollment was going on. Generally, if they don't want to make any changes, they don't have to do anything at all, and unless they make a change we don't send out confirmations; they just get their updated billing notice with the new rates. Because of a minor change to the way family coverage for the dental was being structured, this year we sent out confirmations to the retirees. I received a call from a retiree who was terribly confused; he couldn't understand why his dental coverage cost so much less, and his formerly free medical had such a high cost.
I was confused too. His dental premium had gone down, it was true, but only a matter of a couple of dollars - less than five. On the other hand, his medical plan hasn't been free for at least six years. At first the cost was minimal - $6 a month, but had gradually gone up so that it's now the most expensive plan we offer. Yes, there had been an annual increase, but it wasn't out of line with the other plans and when combined with the decrease in the dental premium, he'd only be paying about three dollars more a month than last year. Yet he was convinced that the change was over a hundred dollars.
After a lot of conversation I realized that he had not understood the rate charts we send out every year; he believed that until this year, his medical coverage was still free and that the $250+ he paid for the month was entirely for the dental. It took a long time to get him to understand how this was not true; his belief that he got "free medical insurance" was so deeply ingrained that even in the face of emailed rate charts from previous years marked and noted for him (which he had been sent every year but either hadn't read or hadn't read properly) it was a big job to convince him.
So yes, I can entirely believe that your friend's situation is not exactly what she believes it is.
