Thursday, August 7, 2014

Benefits: a favorite small company memory

So there we were, some years and some moves back, gathered for an all-hands meeting in the conference room with the new CEO and our local health insurance provider's representative. And he starts off with announcing some Great News! for the company: now, instead of employees paying 50% of their health insurance tab, the company would cover the entire cost except for $50.

Great news!

And then there's something mentioned about changes to the company's willingness to pay for health insurance for dependents... [insert record player scratch here] And suddenly people realized that while the company was willing to pay for their employees, this company full of late-20-somethings and early-30-somethings with families was pulling support for spouses and children.

Mass panic!

The best part was, the poor health insurance rep didn't have any of the new pricing information. So employees had just been told:
  1. If you don't have a family, your health insurance costs are going down! 
  2. If you have a family, your health insurance costs are going up. 
  3. We don't know by how much! 
That was a good day. It's nice to be able to laugh about it now. What's your favorite company-wide announcement disaster story?

[Of course, there's the conversation about the fairness of basically having single folks basically subsidizing the cost of other people having families. I think that's totally a legitimate conversation. Also, there's the whole mess of employer-based health insurance, which is a historical anomaly pretty much unique to the United States. Plenty of other places to argue about the latter on the internet, don't you think?] 

24 comments:

  1. 1) You can cover families without explicitly (or perhaps implicitly) transferring costs to single people by how much you charge for the insurance; if people can get it cheaper elsewhere they will, but in the absence of the ability to get it, you just hosed everyone with families (because it was probably harder to get health insurance independently, and at the drop of a hat). If you don't cover them at any cost, you're saying pretty explicitly "I want young cheap people.", which seems analogous to Circuit City's "We're firing all our salespeople who make more than $X/hr" move during their death throes. I wonder how many people decided to find other employment.

    2) It seems really dumb to have decided on a major shift in insurance and have the rep on site without having any details of what it was going to be or cost. Did the CEO think his move through before he announced it?

    I don't have any catastrophe stories like this, but Derek Lowe's (http://pipeline.corante.com/archives/2007/09/24/good_news_from_the_hr_department.php) was pretty good.

    ReplyDelete
    Replies
    1. I should note that there were different outcomes, some worse, some better. For us, it wasn't a big deal, because Mrs. Chemjobber was able to sign up for health insurance with her employer and cover our (very cute) dependents as well. But there sure as hell was a little bit of panic there for a while.

      Delete
  2. I can relay a current clusterf**k of a situation that is currently ongoing in a large R1 university on the East Coast.

    If you've ever been a postdoc at a research university you know what that means: you're not exactly a student, you're not exactly a FTE either, and nobody in HR that you talk to seems to know how to deal with you.

    So, said university decides to move all postdocs on campus from their current health insurance (which is the same as the student's) to a new health insurance which is similar to the employee's health insurance. This switch over is scheduled to happen on Aug 15th.

    On Monday July 28th the first official announcement of any kind about this switch-over is announced to postdocs via an email to the postdoc email listserv. This listserv is the postdoc association listserv, is entirely voluntary to join, and is in no way official. This means only a fraction of the postdocs receive this notification.

    In this notification, they say we need to sign up for this new insurance by Friday the 1st, and stress how important it is to get these things in on time. Included with this message is a minuscule 2 page pdf that outlines only the barebones of what the new plan is. What is not included is how much said plan will cost for your dependents. Turns out dependent costs are going up by over 50% on this new plan. If you don't like that, tough cookies, you have a little over two weeks to find a new plan to put your dependents on!

    In addition, once the Dean finally responds to the postdoc outcry, we get a corporate-level wording which states "we initiated this process over two years ago with the post-doc association". Well, the vast majority of postdocs only have one or two year contracts and then move on. The majority of postdocs who are here now were not here two years ago, and had absolutely no idea that this was coming, and have had essentially no aid from the university in figuring out what to do and what our other options are. Said staff of university itself is giving out conflicting information, or even has no information about the new health insurance.

    Anyways, just had to vent. Fun times being a postdoc!

    ReplyDelete
    Replies
    1. I am so sorry to hear that, Anon. That seriously bites.

      Delete
    2. You should not be protecting the identity of said university.

      Delete
    3. I agree with Anon11:00pm, if you'd like, I can help you publicize this.

      Delete
    4. Yes, you will be doing a favor for FUTURE post-docs at this same university.

      Delete
  3. Well, I know this will sound cold -- but, another way of looking at it is that single folks without dependents or non-working spouses would no longer be subsidizing the life choices of their coworkers. Just a thought.

    ReplyDelete
    Replies
    1. An anticipated one, even! See footnote.

      Delete
    2. My apologies! That's what I get for not reading the footnotes. Plus, I'm sure my attitude would change if I had kids of my own...

      Delete
    3. None needed. (I think it is reasonable for people to notice the subsidization when it happens; I also think it's smart for employers to 1) try to avoid it, 2) try to avoid intranecine arguments when it does happen and 3) try to be discreet about policy changes, as opposed to the above example.)

      Delete
    4. It's interesting one from the viewpoint of someone who lives in the UK with its state-run free-at-the-point-of-access healthcare system to see these sort of wrangles in the corporate world in the US.

      As you have health insurance as a benefit, it is entirely up to the company (within the law) as to how they structure that benefit. I would strongly wager that many of the more senior, high-value, hard to replace people have families and so if you are interested in staff retention then you make your offering attractive to them. If that means making the few singletons in that postion pay a bit more than they would have otherwise (and all those in junior, more easy to replace positions) then that's the risk for the benefit.

      Delete
    5. It isn't clear who is subsidizing whom. There was an NYT Economix article a while back that discussed research indicating that a newborn American baby has an average NPV to the government of around $200,000. In other words, the average American will pay more in taxes than they consume in direct government benefits. This figure is a lot higher, I would expect, for the average child of someone with employee-sponsored health insurance, who is highly likely to be in the upper half of the income curve and thus have children who are likely to be the same. So while you are subsidizing those kids now, they are going to be subsidizing you someday in return.



      Delete
    6. @ Chad Brick,

      Couldn't agree more, but thought I'd try a different argument as pissed of singletons tend to dismiss the NPV argument as 'apples tomorrow' thinking.

      Btw I have kids so I'm probably biased!

      Delete
  4. Not that I would like to brag about being an ogre, but I once made a representative from Aetna health insurance cry on a company meeting, just by asking her polite questions about how our new upcoming compared to the previous one... They are trained to give an upbeat pitch to the employees, how fantastic everything is gonna be, and if you draw direct side-by-side comparison that speaks for itself the incongruity becomes too hard to bear.

    ReplyDelete
  5. Big company.

    Email late in the afternoon for early morning meeting. Met with areas of research in morning. Either told your research will be staying at this site or transferring to another location (without you). Immediately after a site wide meeting was held (at the same time as almost all other sites). There was a slide with all the R&D sites of the company. An X was through Michigan and another X was through Japan.

    ReplyDelete
  6. "I think that's totally a legitimate conversation. Also, there's the whole mess of employer-based health insurance, which is a historical anomaly pretty much unique to the United States"

    Many other nations use employer-based health insurance as a core element of their system. France, S. Korea, and Japan come to mind. I am sure there are more. The difference is, of course, is that these nations all have their ways of extending coverage to everyone.

    ReplyDelete
    Replies
    1. Fair enough, Chad. Once again, you were right and I was wrong. ;-)

      Delete
  7. Back in the late 1990s, I worked for ‘Mega Chemical Co.’, at a 400-person site 25 miles from the headquarters. One year in Oct. we were told that we had to wait until the next January to have any elective surgery or other expensive treatments for non-life threatening conditions. This was due to our small site going through all the annual funding allocated by the company for that year’s medical care in 10 months, due to some several very serious illnesses amongst site employees or family members. When I asked why our corporation of 80,000 employees couldn’t just give our site more money because it all came out of the same large corporate-wide insurance pool anyway, I was told that they couldn’t (or wouldn’t), and that was that. Of course, for years that our site didn’t use up all the site-allocated annual funds, we weren’t allowed to ‘bank’ them to use against a difficult year. So much for working for Mega Corp. with its billions in assets.

    Sometime around 1997, I was leafing through the new medical benefits summary booklet, and saw a notice that kidney transplants would no longer be covered by the company. HR at Mega Corp. had figured out that if a person did not have this type of coverage, they were immediately eligible for Medicare – and their family, too! This was cost-shifting, not to employees, but to the American Taxpayer. Way to go, Mega Corp! Apparently this is all legal, too.

    ReplyDelete
  8. I didn't get this line that If you don't have a family, your health insurance costs are going down, can you explore it more?

    ReplyDelete
    Replies
    1. If you don't have a family, your health care costs would be: premiums + $50 * number of uses (as opposed to premiums + 50% of health care costs).

      If you did have a family, your costs would be above + premium costs for family insurance + costs for family insurance (versus premiums for insurance + 50% costs for everyone). If you couldn't get better insurance or insurance at all for the family, then you'd have to pay more for service. If you could get better coverage for them, then it would depend on the cost of that coverage and the relative amounts and distribution of health care coverage. Cost of independent family coverage is generally a lot (what would COBRA for a family cost? Probably > $1K/month).

      Since the coverage wasn't great, it's possible that people with families could pay less, but with the lack of forewarning, you would have a hard time comparison shopping for coverage (if you could) and thus increasing the chance that you would pay more for coverage.

      Delete
  9. I live in Canada and my company has a plan for ancillary benefits (drugs, dental, vision, chiro, etc.) not covered by our health care system. Employee pays 50%, company pays 50%. Single plan is $120ish a month (each side), family plan $270ish each side.

    Two unfair things about this policy is a) company money is subsidizing families since the company pays a larger 50%, and b) childless couples are subsidizing couples with children, since there is no childless couple option with an intermediate price.

    ReplyDelete