Employers Shift Increased Healthcare Cost to Tier-Based Payment Structure

by: Nichole Gunn March 24, 2011

U.S. healthcare costs are steadily rising, burdening companies and employees alike. And, they have climbed even more than usual for the 2011 premiums.

Normally, a portion of health insurance increases were passed on to employees through higher premiums and deductibles, no matter what the employee’s status. But, with the slow economy and the hefty increases, this year many companies feel the need to pass most of the burden, if not all, onto the employees.

In an article by the New York Times, it is noted that the average share of a worker’s family healthcare plan is close to $4,000 a year.

In recognition of the troublesome load these increases are adding to lower paid employees, and the fact that employees are objecting to having to contribute more and more, some companies are creating a tiered-based payment system that will provide some relief by passing more of the increases on to higher paid employees.

A tiered payment system allows for high-salaried employees to contribute more toward premium payments, while employees making less pay minimal or no increased insurance payments.

One such entity to adopt a wage-based benefit program for 2011 is Vanderbilt University. Under its program, employees earning $50,000 or less will not see an increase, but everyone else will have increases up to $75 per month.

“We’re trying to help those lower-paid employees cope with hard economic times,” noted Jerry Fife, a vice chancellor of Vanderbilt.

Companies initiating this type of payment structure are taking the initiative and recognizing their employees, unfortunately only 17 percent of U.S. workers are benefiting from a tier-based structure.


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