Payroll Contributions & Age Band Rates

Many benefits professionals recognize that non-discrimination rules for benefits coverage merit an update. Government planners will have a heavy task ahead to develop rules that make sense due to ACA premium rates that increase with age. Basic thinking has always been that more highly compensated employees should be allowed financial benefits coverage no better than the lower paid.

And yet, if for the same insurance plan the premium rate for lower paid workers is three times less than the premium for the senior management team simply due to age, is this discriminatory?

And what about payroll contribution amounts for health insurance coverage? Logic again supports charging the same deduction per pay based upon status whether single and covering dependents.

In reality, a vice president covering herself, her spouse and three children could result in a $20,000 annual premium if they started having children late and both parents are now in their fifties. And the same size family of a warehouse supervisor where he and his spouse are in their thirties could result in a $15,000 annual premium. Is the vice president receiving a discriminatory advantage since their family premium is 35% higher? These are “wait and see” realities caused by the new health care law. Proof of discriminatory practices results in higher taxes and financial penalties so time will tell what the government believes is “fair.”