Tuesday, February 20, 2007

Does Health Insurance Pay?

I have been offered a job that offers health insurance but I do not need it because I am covered under my spouse's plan. I'm wondering what is a fair compensation for leaving health insurance on the negotiating table. For instance, if the HMO plan the prospective employer offers costs them $5K per year, is it reasonable to expect at least 50% compensation for declining that costly benefit? After all, the employer stands to gain substantial money by not having to pay for my health insurance.
-- Frustrated Negotiator

by Townsend Belisle, former professional headhunter

The cost of health benefits is a slippery subject. Benefits (and taxes) tend to be the largest factor in cost of employment to a company, so companies keep a close watch.

You are correct to assume that an employer would not compensate an employee the entire cost of providing their health benefit (it is their choice). But asking for a percentage of their cost savings to be applied to your salary is very reasonable. And it is common. People with spouses and partners are typically not employed by the same company as their partner – so the couple will naturally assess the health insurance benefits of both employers and choose the one that suits them best.

Just make sure these negotiations are with the HR or personnel department, and not your direct boss (unless you’re being hired to monitor costs or some other super detail-oriented position). You should be careful that you’re making the right impression with those to whom you will directly report. Your negotiation should stay within the tact of “finishing the final details” rather than “potential trouble-maker.”

Health insurance, to you, is equal to nontaxable income. Health insurance, to your employer, is a benefit for employees (both as an option potentially required by law and to promote employee retention), a cost efficiency (the more employees, the lower cost per employee) and a tax break. So it is not necessarily a full-cost benefit.

Taking these into account, it is fair to leave health insurance on the negotiating table, but don’t expect too much. As a benefit, you may need to understand that most companies see benefits as privilege, an “added bonus,” for your employment - not a right or “sure-thing.” There are no laws to govern this – a company could shut the door on such conversation by simply stating that they have a “policy in place.” Some of the folk at FastWeb feel stronger about this.

You have the right attitude - it never hurts to ask. Saying something in a professional manner, like “I do not intend to take advantage of the health benefits you provide, and for this I would be pleased to receive a modest increase in my salary, given such cost savings to you.”

Bottom line – yes, the health insurance benefit is negotiable. So shoot for the moon and ask for as much additional compensation as you like, just manage your expectations that companies rarely compensate more, and if they do, the increase will not likely be equal to their cost of the benefit.

“He is great who confers the most benefits.” ~ Ralph Waldo Emerson

Townsend Belisle is a former advocate for hundreds of talented people. Having played the roles of a recruiter, agent and headhunter, he championed the salary and benefit negotiations that landed all sorts of New Yorkers their dream jobs. This aside, he is not terrifically excited about the benefits package at his day job. His current employer (his favorite to date) seems to have inside knowledge that Townsend and his coworkers are truly enjoying their work and Townsend feels they could be the victims of the classic maneuver, “swindle-the-happy-campers.”

From Susan Ireland
Job Lounger, do you have a question? Email it to me and I’ll post your question and an expert’s answer here in The Job Lounge.

1 comment:

Anonymous said...

I've said for 20 years that any assumption that business had an obligation to provide health care was a joke and counterproductive.

I am all for socialized medicine, as long as there is also a choice for private medicine and insurance..a two-tiered system, where everyone has a right to be treated, but if you want the best you pay for it. Imagine a system where the government pays you to go to med school (say through the armed services) and you pay it back by serving 4 or 6 years in the public medical sector at a reasonable salary...then you can choose to stay there or move into private practice. As far as I'm concerned ANYONE with an IQ of 120 or more can be a doctor of some sort. It's all specialized anyway, so why not have "trade school" docs, where you learned a little of general med, then you specialize in a field. Since almost all diagnoses are made today via blood, stool, urine, MRI, X-Ray, CAT, etc being compared to a statistical norm, it's no longer rocket surgery. Then most docs prescribe a drug anyway.