Too Much Employee Contribution?

[Edsel]

I have encountered a situation where the medical premium for an employee is $800/mo ($9600/yr), but his bi-weekly withholding is $220 (or $5720/yr.).  In other words, employee is paying nearly 60% of the cost.

Perhaps not as rare as you may think.  Some employers don't want to pay anything - believe employees should tote the entire bag.

I have heard from other people that the employer may not recover more than 50% of the total premium.  My information comes from a couple of comrades in the industry, but I don't know where the cite exists.  Perhaps it is part of Obamacare, perhaps part of section 125 - dunno.

Any discussion?

[Yardley CPA]

I'm sure everyone recognizes that employer sponsored healthcare evolved over time.  Long ago, employers did not offer healthcare...I think it started with employers offering health clinics for employee care and grew from there.  In any event, today it's a common part of benefit packages offered to employees.  I currently pay 30% of my family coverage, about $520 per month.  I'm very thankful my employer picks up 70%.  It's a PPO that offers me and my family the ability to go to basically any medical care provider we choose.  I recognize how very fortunate I am to have this coverage.  

More and more employers in my region are opting out of traditional healthcare plans and offering High Deductible Health Plans...HDHP's.  Given the high cost of medical coverage, I think we'll see much more of this.  

[Lion EA]

Unions brought more employer-paid (partial) healthcare into our lives via contract negotiations. A large corporation (think GE) picked up a percentage of healthcare for those union members and eventually had to do the same for their non-union employees to keep them. The same with teacher unions negotiating healthcare benefits, and then the towns had to offer healthcare to the rest of the town employees.

Now we have HDHPs and HSAs. I see employees paying ANY percentage toward their healthcare via payroll withholding, but still the group plan is usually a saving over trying to buy your own plan. Combined with a pre-tax flexible spending account, premiums are even less expensive via a group plan and guaranteed to each employee participant. That in itself can be worth any amount of money to a family with a member with diabetes, heart issues, or other chronic issues.

Have your client start with reading his company's plan and bringing you a copy. It may give you cites for how his plan is regulated.

[Max W]

If the client is married, the employee will pay more.  If there are dependents on the plan the employees share would be even higher.   Also, so other insurance may be thrown into the total, such as LTC, dental, acccidental.       We need the facts. Just the facts , sir.!

[Catherine]

6 hours ago, Lion EA said:

Unions brought more employer-paid (partial) healthcare into our lives via contract negotiations.

It started during the Depression when FDR put wage controls in place.  It was a way to give "more" to employees without going over the limits.  So the entire health insurance industry (which was brand new at the time) grew up around this employer-sponsored model.

[Lee B]

Actually, our health care system first began during and after the Civil War, when our government provided health care for Civil War Veterans, their families and their widows.

[Catherine]

1 hour ago, cbslee said:

Actually, our health care system first began during and after the Civil War, when our government provided health care for Civil War Veterans, their families and their widows.

That's different from private health insurance.

[Terry D EA]

18 hours ago, Max W said:

If the client is married, the employee will pay more.  If there are dependents on the plan the employees share would be even higher.   Also, so other insurance may be thrown into the total, such as LTC, dental, acccidental.       We need the facts. Just the facts , sir.!

In NC and being a State employee the first part of this is correct. However, due to some unknown magical scenario, a State employee with kids pays less premium than the employee with just a spouse. I know, my premium for my wife is $700.00 per month. She is just now receiving Medicare and we have her on a supplement plan that I was happy to pay for. Getting that $700.00 per month back was a blessing and was just a bit under my monthly mortgage payment. 

On another hand, her receiving that red, white and blue card was the official symbol that we are now old and have reached that plateau. I say we as I am only 9 months behind her. I kinda struggled with that for a while. Thank God we are both healthy.