Healthcare is Employee Compensaiton

The practice of employers paying for healthcare services on behalf of their employees is not new. There was rapid growth of this when a wage freeze was implemented during the second world war, and even more since 1954 when it became a pre-tax benefit.

What CEOs and CFOs have forgotten is that employee health plans form an important part of the overall employee compensation package.

The cost of “healthcare” has a large range, but the satisfaction of those benefits does not. In other words, a health plan that has a $250 deductible, and costs twice as much as one with a $500 deductible does not have double the approval rating among employees. Most of them would rather have extra money paid to them in wages, 401(k), or even disability insurance.

With rapid inflation of healthcare costs, it is time for employers to re-think compensation models and reduce healthcare costs so they have more funds to pay wages and other benefits.

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