Health care: Microsoft ending 100% coverage for employees(techflash.com)
techflash.com
Health care: Microsoft ending 100% coverage for employees
http://www.techflash.com/seattle/2010/10/health_care_microsoft_employees_to_share_in_their_costs_in_2_years.html
12 comments
An out of pocket maximum of $1k ($2.5k for families) is still a very good deal.
Bottom line - If you're generally healthy it won't make that much of a difference. If you or a family member require expensive care, or you're unfortunate enough to be in a serious accident, you'll still be very glad you're covered by MSFT.
Bottom line - If you're generally healthy it won't make that much of a difference. If you or a family member require expensive care, or you're unfortunate enough to be in a serious accident, you'll still be very glad you're covered by MSFT.
If you're generally healthy and have health costs < $1000/yr, then this could mean going from 100% coverage to 0% coverage, depending on how they set it up. Still a great deal for accidents, though, compared to what most people have.
An out of pocket maximum is generally not the same as a deductible. My wife and I have a similar plan now. It's $1500 (I think) maximum, but we still only pay the routine $20 co-pay for normal visits... $75 for emergency room.
I don't think we've ever actually spent more than $100 out of pocket over and above the monthly premiums. If something went terribly wrong, however, that cap would mean we'd owe at most $1500/yr. That worked out well for my father when my mom had cancer. 4 years of treatment totaling WELL over $1M, and I think he paid like $3500 total.
I don't think we've ever actually spent more than $100 out of pocket over and above the monthly premiums. If something went terribly wrong, however, that cap would mean we'd owe at most $1500/yr. That worked out well for my father when my mom had cancer. 4 years of treatment totaling WELL over $1M, and I think he paid like $3500 total.
Out-of-pocket maximum means that $1k is the maximum that you'll pay for anything. It probably scales up to the point where your portion is $1k, and after that MSFT picks up the rest of the bill.
I highly doubt its 0% covered until $1k/year out of pocket-Probably something like 80%.
This may have an impact on recruiting senior hires. It didn't come up often, but when recruiting folks with families and getting on in years -- especially with pre-exiting conditions -- this benefit helped close people who had salary and stock package offers from other companies that I couldn't match. It's really hard to argue with 100% coverage for even things like autism treatment and visits to naturalists/homeopathic-care, which was quite unusual at the time.
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I don't know any other companies this generous even after the change in two years.
Almost a year ago IBM announced they were going to cover Health Care for employees at 100%.
Press Release source: http://www-03.ibm.com/press/us/en/pressrelease/28728.wss
Press Release source: http://www-03.ibm.com/press/us/en/pressrelease/28728.wss
Interesting, I was there when they went from full coverage to the co-pay PPO/HMO model, as well as when they went from pensions to 401K retirement.
Some of this seems to be in line with healthcare reform, i.e. no-copay preventative care.
Some of this seems to be in line with healthcare reform, i.e. no-copay preventative care.
Goldman Sachs if not in parity, very close.
The healthcare coverage was something that drew me in when I started work at Microsoft. It showed a pretty serious level of respect to their employees.
I wonder why they would make this announcement now? Why not a year ago, or a year in the future? My first guess would be there margins are slipping, or they expect there margins to be thinner in the next few years. Thus, they are starting to look for some minor cost savings.
I think its nice that they're telling employees about the change this far in advance. Most employers will tell you about this a couple weeks before the prices get jacked up or the benefits get slashed. It shows a lot of respect for their employees.
I would suspect that some of the timing may have been based on the outcome of the Obama health care bill. With additional requirements like insuring until children are 26 and things like that it makes it more expensive to provide health care.
The announcement was timed to coincide with Microsoft's Open Enrollment period - which opens in November.
Nope, the changes don't take effect for two years.
If you're switching to an HSA and anticipate good health in the near term, you could benefit from switching early and saving the unused portion of Microsoft's contribution to the HSA in your account, or otherwise contributing and allowing it to appreciate as savings.
So yes, it could be helpful information for future planning.
So yes, it could be helpful information for future planning.
Incidentally, how is it that Mary Jo Foley has her name spelled wrong on her blog heading?? (with a hyphen)
http://www.zdnet.com/blog/microsoft/microsoft-to-tweak-emplo...
http://www.zdnet.com/blog/microsoft/microsoft-to-tweak-emplo...
While MS's health care coverage had been very "generous" previously, make no mistake: this is a pay cut for every MS employee.
I am already on an HSA so this actually is a pay increase for me.
I've heard of people who've worked at microsoft for exactly their chosen childbearing years. It's equivalent to 2x+ salary, and a nice paragraph on the resume.
When you're taxed heavily by the government for having 'premium coverage', it kind of gives you the incentive to make the coverage crappier.
Nice try, but the the excise tax on "premium" plans doesn't go into effect until 2018. So if their only motivation was taxes, they'd have waited.
Furthermore, I'm not losing any sleep about the government taxing only the portion of the value of a health plan that exceeds $27,500/yr -- in other words, the first $27,500 remains tax-free -- when the average employer-sponsored health plan is valued at $13,375/yr (2009). And here's what a $20,400/yr plan looks like:
For the secretaries and environmental engineers, game wardens and van drivers who work for the state of New Hampshire, surgery is free, even at Boston’s top teaching hospitals if it’s necessary. So are MRIs, CT scans, and X-rays.
Pregnant women pay nothing for prenatal care; alcoholics aren’t billed for short stints in rehab. Seeing a therapist costs just $10, as many as 20 visits a year, and prescription drugs top out at $30 for a three-month mail-order supply. New Hampshire state employees get $450 annually toward gym memberships, if they go regularly, or $200 toward their own treadmill - and there’s a $150 annual reimbursement for yoga classes, diabetes clinics, and nutritional counseling.
http://www.boston.com/news/nation/washington/articles/2009/0...
Yea, cry me a river if well-paid employees now have to buy their own treadmills or pay for their own rehab.
Furthermore, I'm not losing any sleep about the government taxing only the portion of the value of a health plan that exceeds $27,500/yr -- in other words, the first $27,500 remains tax-free -- when the average employer-sponsored health plan is valued at $13,375/yr (2009). And here's what a $20,400/yr plan looks like:
For the secretaries and environmental engineers, game wardens and van drivers who work for the state of New Hampshire, surgery is free, even at Boston’s top teaching hospitals if it’s necessary. So are MRIs, CT scans, and X-rays.
Pregnant women pay nothing for prenatal care; alcoholics aren’t billed for short stints in rehab. Seeing a therapist costs just $10, as many as 20 visits a year, and prescription drugs top out at $30 for a three-month mail-order supply. New Hampshire state employees get $450 annually toward gym memberships, if they go regularly, or $200 toward their own treadmill - and there’s a $150 annual reimbursement for yoga classes, diabetes clinics, and nutritional counseling.
http://www.boston.com/news/nation/washington/articles/2009/0...
Yea, cry me a river if well-paid employees now have to buy their own treadmills or pay for their own rehab.
So if a company (or state government in your example) wants to provide health care benefits to be competitive in the marketplace, they should be penalized for that?
Additionally, your statement about "well-paid employees" doesn't seem to fit with the article you quoted. Secretaries and van drivers aren't generally highly paid positions.
Additionally, your statement about "well-paid employees" doesn't seem to fit with the article you quoted. Secretaries and van drivers aren't generally highly paid positions.
So if a company (or state government in your example) wants to provide health care benefits to be competitive in the marketplace, they should be penalized for that?
I don't accept your premise that taxes = penalization.
Employers who pay their employees $35,000/yr have to pay more in federal taxes than if they paid their employees $34,000/yr. I don't consider that a penalty either. Its progressive taxation.
Additionally, your statement about "well-paid employees" doesn't seem to fit with the article you quoted. Secretaries and van drivers aren't generally highly paid positions.
"Well-paid employees" referred to Microsoft employees.
The government positions (secretaries & van drivers) mentioned in the article, I would agree, probably aren't highly paid. They have a great health plan because of the unions that represent them and fight for those benefits. If they were non-union, they'd probably have much crappier health plan options.
But as the article said, the value of their plan is $20,400/yr. The excise tax is on whatever amount exceeds $27,500/yr. So they, and the state government they work for, will not be subject to any new taxes under the Health Care and Education Reconciliation Act of 2010.
The reason I quoted the article was to show how great a $20,400/yr health plan is. Just imagine the benefits you'd get from a $27,500+/yr health plan. The people who have plans that expensive, most of them executives and other highly paid employees, are not hurting and I could care less if they have to go with a slightly less lavish plan that doesn't cover things like rehab, treadmills and gym memberships or choose to pay what amounts to income taxes on the portion that exceeds $27,500/yr.
I don't accept your premise that taxes = penalization.
Employers who pay their employees $35,000/yr have to pay more in federal taxes than if they paid their employees $34,000/yr. I don't consider that a penalty either. Its progressive taxation.
Additionally, your statement about "well-paid employees" doesn't seem to fit with the article you quoted. Secretaries and van drivers aren't generally highly paid positions.
"Well-paid employees" referred to Microsoft employees.
The government positions (secretaries & van drivers) mentioned in the article, I would agree, probably aren't highly paid. They have a great health plan because of the unions that represent them and fight for those benefits. If they were non-union, they'd probably have much crappier health plan options.
But as the article said, the value of their plan is $20,400/yr. The excise tax is on whatever amount exceeds $27,500/yr. So they, and the state government they work for, will not be subject to any new taxes under the Health Care and Education Reconciliation Act of 2010.
The reason I quoted the article was to show how great a $20,400/yr health plan is. Just imagine the benefits you'd get from a $27,500+/yr health plan. The people who have plans that expensive, most of them executives and other highly paid employees, are not hurting and I could care less if they have to go with a slightly less lavish plan that doesn't cover things like rehab, treadmills and gym memberships or choose to pay what amounts to income taxes on the portion that exceeds $27,500/yr.
I don't accept your premise that taxes = penalization.
Employers who pay their employees $35,000/yr have to pay more in federal taxes than if they paid their employees $34,000/yr. I don't consider that a penalty either. Its progressive taxation.
The two aren't mutually exclusive. Just because it's called "progressive taxation" doesn't mean it isn't penalizing. I consider any tax at all penalizing. It's the exact reason politicians raise taxes when they want to discourage certain activities or lower them when they want to encourage more of a certain activity.
Employers who pay their employees $35,000/yr have to pay more in federal taxes than if they paid their employees $34,000/yr. I don't consider that a penalty either. Its progressive taxation.
The two aren't mutually exclusive. Just because it's called "progressive taxation" doesn't mean it isn't penalizing. I consider any tax at all penalizing. It's the exact reason politicians raise taxes when they want to discourage certain activities or lower them when they want to encourage more of a certain activity.
I consider any tax at all penalizing.
Heh, so all taxes should be abolished because the government shouldn't be penalizing us for making money, right?
Heh, so all taxes should be abolished because the government shouldn't be penalizing us for making money, right?
I suppose if your goal was to let people keep as much money as possible, then sure -- don't tax them on anything. However, voters have accepted a certain amount of self-inflicted pain in exchange for services that the private sector can't or won't provide. However, generally speaking I don't believe the government is a particularly efficient means of reallocating society's capital, I'd rather give entrepreneurs in the private sector the chance to do it better.
Yea, those crazy voters...engaging in a little self-masochism because they want things like police officers, firefighters, armed forces, potable water, roads, education, and social security.
In general, I agree that the private sector can do better than the government in many areas. The problem is, when it comes to health care coverage they haven't, not when the #1 cause of bankruptcy in the United States is medical bills.
Furthermore, entrepreneurs still have the chance to do it better. Nothing in the health reform bill prevents them from doing so. So if you think you can do better d2viant, more power to ya. There are tens of millions of Americans with no health care coverage who are waiting for your better & more efficient solution.
In general, I agree that the private sector can do better than the government in many areas. The problem is, when it comes to health care coverage they haven't, not when the #1 cause of bankruptcy in the United States is medical bills.
Furthermore, entrepreneurs still have the chance to do it better. Nothing in the health reform bill prevents them from doing so. So if you think you can do better d2viant, more power to ya. There are tens of millions of Americans with no health care coverage who are waiting for your better & more efficient solution.
It doesn't matter that the tax takes effect in 2018. The "premium" plans are increasing their costs as soon as next year in anticipation of that eventual reality. Companies which have open enrollment coming up soon are seeing these increased costs and dropping plans or reevaluating the type of coverage they offer.
Hilarious...
Fact #1: The only increase in cost for "premium plans" is the new excise tax which doesn't go into effect until 2018.
Fact #2: The companies who provide these benefits will have to pay the taxes, not the insurance companies.
Fact #3: Since the insurance companies are not paying any new taxes on the "premium plans", any rate increases cannot be blamed on taxes they will never be required to pay.
This is, in effect, a payroll tax on benefits provided as compensation to employees. But only the value of the plan that exceeds $27,500 is taxed. So if the plan costs $28,000/yr, they will be taxed on a whopping $500 of the plan.
$27,500 is more than twice what the average employees' employer-provided health plan is worth. So yea, I don't think there's anything unreasonable about taxing whatever exceeds that amount.
Health insurance companies have been raising premiums at ridiculous rates and finding excuses to avoid providing coverage for decades now. I find it hilarious that people are now trying to blame it on a bill that was just passed this year. They only dislike the bill because they dislike who's responsible for passing it.
Fact #1: The only increase in cost for "premium plans" is the new excise tax which doesn't go into effect until 2018.
Fact #2: The companies who provide these benefits will have to pay the taxes, not the insurance companies.
Fact #3: Since the insurance companies are not paying any new taxes on the "premium plans", any rate increases cannot be blamed on taxes they will never be required to pay.
This is, in effect, a payroll tax on benefits provided as compensation to employees. But only the value of the plan that exceeds $27,500 is taxed. So if the plan costs $28,000/yr, they will be taxed on a whopping $500 of the plan.
$27,500 is more than twice what the average employees' employer-provided health plan is worth. So yea, I don't think there's anything unreasonable about taxing whatever exceeds that amount.
Health insurance companies have been raising premiums at ridiculous rates and finding excuses to avoid providing coverage for decades now. I find it hilarious that people are now trying to blame it on a bill that was just passed this year. They only dislike the bill because they dislike who's responsible for passing it.
Goodbye last conceivable reason to ever go back to Microsoft.
Wow, this is a gonna be a $2.5K pay cut for us, straight up. We used to take our kids to the doctor whenever they were showing signs of sickness - fever, cough, runny nose, skinned knees. Now we're going to have to weigh whether they're sick enough to shell out $20 to take them to the doctor. And I guess this is the end of lollipop Tuesdays.
Wow, way to make it sound more ominous, corporate PR person. You could have just said you were knocking your benefits down a peg, but no, it's only the beginning of Microsoft's benefits turning into... well, what? Something much less generous, I guess.
Here I thought Microsoft was just bowing to the enormous costs of health benefits, but with that turn of phrase, it seems like Microsoft has some kind of new attitude.