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Benefits November 11, 2004
Wachovia Switches to Salary-Graded Health Care Premium System
November 11, 2004 (PLANSPONSOR.com) - In a move that
some say signals a significant trend with health care
benefits, the nation's fourth-largest bank, Wachovia Corp.,
has given workers with lower salaries a cut in their health
care premiums and will subsequently raise the premiums for
employees hauling in a larger paycheck.
Reported by Kip McDaniel
Some, however, say that this could be used against the bank and other institutions that use such salary-graded systems – a group that includes 18% of US employers, according to a Hewitt Associates survey – by competitors hoping to lure away top executives, according to the Associated Press (AP). Companies have to weigh the benefits of lowering costs for low-income workers with losing top executives, analysts say.
This new tier-priced system replaces the older flat-payment one in which all employees paid the same premium for health care coverage. It is a move that is meant to reduce health care costs for low-income employees, and it has been seen in other large institutions as of late. Davidson College, situated near Wachovia in Charlotte, NC, last year chose to adopt such a program. The program will be altered slightly next year to base premiums on household income, however, after it was noticed that some lower income workers receiving premium cuts actually had high-income spouses.
A Wachovia spokesperson would not comment on how the premiums at the company actually were altered, but the company is asserting that the plan has been met with approval, according to the AP.