Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Health Insurance Tax = Higher Wages?
Old 11-09-2009, 01:24 PM   #1
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
easysurfer's Avatar
 
Join Date: Jun 2008
Posts: 7,902
Health Insurance Tax = Higher Wages?

Interesting article.

Health insurance tax = higher wages? - Yahoo! Finance

The wheels are turning...where it lands, no one knows
__________________

__________________
easysurfer is online now   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 11-09-2009, 01:42 PM   #2
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,613
It wouldn't surprise me at some point if employers (particularly in the private sector), assuming significant health care reform is enacted, begin to phase out health insurance benefits (like they did with pensions) and give all their covered employees a one-time "raise" to use in buying health insurance on the open market (presuming no underwriting or exclusions are allowed under the reform).
__________________

__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 11-09-2009, 01:51 PM   #3
Dryer sheet wannabe
 
Join Date: Nov 2009
Location: Washingtonville
Posts: 12
If universal healthcare is to pass, who is going to do all the hard labor jobs? The only reason to take some of these jobs is for the benefits. No one would join a union. I am union myself, and only joined the union for the benefits. Why pay union due, deal with union politics, and have all the headaches that come along with unions if you can get the same without them. The unions aren't going to pass that saving onto their members either, so anyone thinking that can kiss that idea good-bye. I'm a firefighter. I am union. I think universal healthcare will kill the unions.
__________________
hugo121175 is offline   Reply With Quote
Old 11-09-2009, 02:04 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Quote:
Originally Posted by ziggy29 View Post
It wouldn't surprise me at some point if employers (particularly in the private sector), assuming significant health care reform is enacted, begin to phase out health insurance benefits (like they did with pensions) and give all their covered employees a one-time "raise" to use in buying health insurance on the open market (presuming no underwriting or exclusions are allowed under the reform).
I wouldn't be surprised by that outcome either. Not being responsible for people's medical insurance would be a huge plus for employers. No HR staffing to answer questions, take care of problems, etc. No pissed off employees blaming the company when medical insurance doesn't work out the way they expected when claims are filed. Etc., etc.

I would be surprised if companies give a one-time "raise." I think they're more likely to just drop it, after a warning period, as they did defined benefit pensions and even 401k matches.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 11-09-2009, 02:21 PM   #5
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,613
Quote:
Originally Posted by youbet View Post
I would be surprised if companies give a one-time "raise." I think they're more likely to just drop it, after a warning period, as they did defined benefit pensions and even 401k matches.
I suspect on average most will give some base pay increase (to reduce the outrage and temptation for politicians to "intervene") but not enough to compensate for the loss of medical benefits, making it a net pay cut.

If they spend $10K on someone's health insurance benefits, it wouldn't surprise me if they goosed pay by (say) $5-7K and let the other $3-5K go straight to their bottom line.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 11-09-2009, 02:22 PM   #6
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,613
Quote:
Originally Posted by hugo121175 View Post
If universal healthcare is to pass, who is going to do all the hard labor jobs? The only reason to take some of these jobs is for the benefits. No one would join a union. I am union myself, and only joined the union for the benefits. Why pay union due, deal with union politics, and have all the headaches that come along with unions if you can get the same without them.
Most of the unions still have defined benefit pensions, right?
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 11-09-2009, 02:25 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,616
Since the article indicated employers will be cutting the level of health care benefits in policies, the headline should have read "Health Insurance Tax = Higher Wages (which you'll need to pay for the health insurance cuts)".


- Employers may reduce insurance benefits in order to avoid the tax on "Cadillac" plans. If they do, I'd expect they'll increase pay, too (only because they are in competition for workers, and they'd need to pay more). But, more fundamentally I think they'll first decide whether to offer insurance at all. The penalty tax for not providing insurance+any higher pay needed to keep employees might end up costing less than providing medical coverage. The employees can then purchase individual policies (with a big "freebee" of subsidies from other taxpayers). Voila'! The goal will have been met--Americans are now dependent on the government instead of their employers.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is online now   Reply With Quote
Old 11-09-2009, 03:04 PM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Quote:
Originally Posted by ziggy29 View Post
I suspect on average most will give some base pay increase (to reduce the outrage and temptation for politicians to "intervene") but not enough to compensate for the loss of medical benefits, making it a net pay cut.

If they spend $10K on someone's health insurance benefits, it wouldn't surprise me if they goosed pay by (say) $5-7K and let the other $3-5K go straight to their bottom line.
Maybe. But I think most companies that "froze" defined benefit pensions did so without a corresponding salary increase. Same kind of thing, no? You just have more faith and confidence in MegaCorp than me!
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 11-09-2009, 03:15 PM   #9
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,613
Quote:
Originally Posted by youbet View Post
Maybe. But I think most companies that "froze" defined benefit pensions did so without a corresponding salary increase. Same kind of thing, no?
Actually, a lot of them replaced the DB pension with a new or increased 401K match. So taking away something worth $2X and giving you back something worth $X is not unprecedented...
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 11-09-2009, 03:18 PM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Quote:
Originally Posted by ziggy29 View Post
Actually, a lot of them replaced the DB pension with a new or increased 401K match. So taking away something worth $2X and giving you back something worth $X is not unprecedented...
As I said, you have more faith and confidence in MegaCorp than me! Perhaps you are correct and my skepticism will prove to be unfounded.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 11-09-2009, 03:21 PM   #11
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,613
Quote:
Originally Posted by youbet View Post
As I said, you have more faith and confidence in MegaCorp than me!
Actually, what I have is a belief that they don't want to cause people to scream bloody murder to the point where Congress gets involved. It has nothing to do with corporate altruism.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 11-09-2009, 05:04 PM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
harley's Avatar
 
Join Date: May 2008
Location: Following the nice weather
Posts: 6,441
Quote:
Originally Posted by ziggy29 View Post
I suspect on average most will give some base pay increase (to reduce the outrage and temptation for politicians to "intervene") but not enough to compensate for the loss of medical benefits, making it a net pay cut.

If they spend $10K on someone's health insurance benefits, it wouldn't surprise me if they goosed pay by (say) $5-7K and let the other $3-5K go straight to their bottom line.
You have WAY more faith in corporate America than I do. I suspect they would goose pay by $3-5K, add $2 to their bottom lines, and use the rest as a performance bonus for company execs.
__________________
"Good judgment comes from experience. Experience comes from bad judgement." - Will Rogers, or maybe Sam Clemens
DW and I - FIREd at 50 (7/06), living off assets
harley is offline   Reply With Quote
Old 11-09-2009, 06:56 PM   #13
Thinks s/he gets paid by the post
Rustic23's Avatar
 
Join Date: Dec 2005
Location: Lake Livingston, Tx
Posts: 3,624
This is going to be a case of the rich get richer. Companies will do what they always do, however, now they will not be fettered by benefits rules. They will cancel health benefits, and give some employees raises enough to cover their expenses and others less, depending on the needs of the corporations. As time goes on this difference will become greater.
__________________
If it is after 5:00 when I post I reserve the right to disavow anything I posted.
Rustic23 is offline   Reply With Quote
Old 11-09-2009, 07:26 PM   #14
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,820
If I believe that the US has a reasonably competitive market for labor, then I agree with SamClem, with a minor mod. "Wages go up as health benefits drop below the 'Cadillac' level. Workers may use the wage increase to replace the top-end health benefits, or they may spend them on something else."

If I believe that the US labor "market" is very inefficient, with employers basically making unilateral decisions and workers never moving for a better deal, then I conclude that the drop in health care costs will be captured by the owners.

But, if I believe the market is that inefficient, I have a problem explaining why employers provide these benefits today. Why don't they just drop them, with or without a tax?
__________________
Independent is offline   Reply With Quote
Old 11-09-2009, 07:54 PM   #15
Thinks s/he gets paid by the post
Rustic23's Avatar
 
Join Date: Dec 2005
Location: Lake Livingston, Tx
Posts: 3,624
I am not an employment expert, but I think if a firm offers benefits to full time employees it has to offer benefits to all full time employees. That is why many large corporations have so many part-time employees. I see no reason to believe they will not take advantage of a new law.
__________________
If it is after 5:00 when I post I reserve the right to disavow anything I posted.
Rustic23 is offline   Reply With Quote
Old 11-09-2009, 08:17 PM   #16
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,613
Quote:
Originally Posted by harley View Post
You have WAY more faith in corporate America than I do. I suspect they would goose pay by $3-5K, add $2 to their bottom lines, and use the rest as a performance bonus for company execs.
I don't think they would be that greedy in one fell swoop, as I already mentioned in this thread. And it has nothing to do with caring for the employees, but rather that they may think giving the ultimate shaft will lead to a government smackdown.

I'm as cynical about corporate motives as the next guy, but I think being *too* opportunistic here would really do more harm than good.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 11-09-2009, 08:46 PM   #17
Thinks s/he gets paid by the post
Rustic23's Avatar
 
Join Date: Dec 2005
Location: Lake Livingston, Tx
Posts: 3,624
ziggy I agree, It will happen over time. For the most part business does what business does, it maximizes profit. If that means lower labor cost they will do it, to the extent that labor allows. That's what capitalism does, no complaint here.
__________________
If it is after 5:00 when I post I reserve the right to disavow anything I posted.
Rustic23 is offline   Reply With Quote
Old 11-10-2009, 07:15 AM   #18
Dryer sheet wannabe
 
Join Date: Nov 2009
Location: Washingtonville
Posts: 12
Quote:
Originally Posted by ziggy29 View Post
Most of the unions still have defined benefit pensions, right?

To tell you the truth I'm not sure. My pension is handled by the state. I do pay into a union fund, but no one knows where the money disappears to. Most of my friends, that are not government employees, are layed off so long that they don't even get credit tward their pensions. For their pensions system, they have to work 180 consecutive days for their time to be creditable.
__________________
hugo121175 is offline   Reply With Quote
Old 11-10-2009, 11:10 PM   #19
Full time employment: Posting here.
 
Join Date: Nov 2009
Location: VA
Posts: 923
Most employers could easily offer their employees a high deductible policy that is compatible with a health savings account, contribute half the deductible to the HSA for employee use each year, and increase their salaries substantially, all instead of offering benefit-rich policies that most companies do.....but what do I know....
__________________

__________________
Disclaimer - I am an independent insurance agent. If the above message contains insurance-related content, it is NOT intended as advice, and may not be accurate, applicable or sufficient depending on specific circumstances. Don't rely on it for any purpose. I do encourage you to consult an independent agent for insurance-related advice if you have a question that is specific in nature.
dgoldenz is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
McCain's proposed health insurance tax increase Zoocat FIRE and Money 22 08-02-2008 06:35 PM
Mike jackson, CEO of AutoNation Calls For Higher Gas Tax at the Pump haha FIRE and Money 13 05-31-2008 05:37 PM
health history for health insurance vic Health and Early Retirement 22 10-26-2006 10:07 AM
health insurance and effect on increased health care costs Martha Other topics 9 08-08-2006 02:54 PM

 

 
All times are GMT -6. The time now is 09:30 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.