I was fairly incensed the other day when The President appeared to state that small business employers who did not pay a substantial part of both the employee and family health care were not doing The Right Thing and if the new system cost them then tough. Now I don't have the exact text of the statement so if I heard it wrong I apologize but it has rankled me greatly. Here is why I don't believe a solution where the employer pays for total healthcare costs is fair to the employee.
Let's take two employees both age 30. One is single and one has a wife and two kids. The single persons health care coverage is approximately $280 a month because of age and lifestyle choice. The married with kids person is around $1,100 a month. They do approximately the same job and provide the same value to the company. So let's say I paid full healthcare or a high percentage. The married person would get a compensation benefit of over $9,500 a year more than the single person simply because they made the choice to be married and have kids. Ok, so let's say I modify the pay rate between the two to compensate equally and fairly such that the overall compensation is the same, remember they are theoretically providing the same value to the company. Now the two are getting compensated fairly for the equal job they do, one in case and the other in cash and healthcare for wife and kids. But what happens when the single person marries the love of his life, who has 2 kids. Suddenly I either have to take away regular pay from that person or the company is now disadvantaged by an extra $9,500 a year because of this employees lifestyle change. For a small company with say 15 employees this penalizes every other employee in the business because now there is less money for bonus's raises etc.
Compensation, whether in benefits or actual compensation should be tied to job performance not lifestyle choices.
I solve this by putting a flat amount that any employee can use towards our healthcare plan and they pay the rest. Frankly I think that is, at the very least, one of several "Right Thing" to do.
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