Will people now notice how much their employer is spending on their “free” medical insurance, since it is now in box 12 of the W-2 forms (code DD)?
I did
I did, but only because I had to look up the actual amount to use in a debate on cc, and I wanted to be accurate.
However, I sincerely doubt the reason it is now on the W-2 so people will notice what their employer is spending. It’s on there so it will be easy to tax us on the benefit.
It has always been on my paystub
It was on the w2 last year too.
It is just another form of compensation. The reason we have employment based healthcare is rooted in the wage and price controls of World War II. Employers could not raise wages to attract workers, but they could offer employer paid health insurance, so it became a back door way to raise wages, with the added benefit that the extra “compensation” was not taxed as income to the employee but was a tax deductible expense for the employer.
Employer paid health insurance is usually much more comprehensive than the ACA “Silver” plans, so it is not surprising that it might cost more than what people might be quoted on the exchanges.
This also includes the portion the employee contributes to the premium. For example, I pay in $6000/yr, my employer pays $16,000, thus the DD box shows $22,000.
My employer has for years had a policy where once a year each employee is given a breakdown of their entire compensation, every penny that the company pays to the employee in any form - salary, health insurance, pension, 401k matching, everything. They started it as a way of driving home the employee’s “worth”.
It’s been on the W-2 for as long as I can remember. At least on most of them.
I have always known that I am not overly compensated as a community college professor, but that I have solid retirement and health care benefits. A significant benefit for me is that I will have retirement healthcare for minimal out of pocket cost.
I have a colleague whose position is being terminated at the end of this academic year because of new credentialing requirements for her discipline. She was promoted to professor last year and given a terminal contract at the same time. She refuses to return to school to get the requisite degree and hopes to get some kind of other position at the college, perhaps in the advising center where we both work in the summers. I have begged her to take anything they offer her, even if it involves a pay cut, since she is only 3 years from becoming retirement eligible. She could then leave for another position and escrow that benefit until she needs it. It is so valuable to her, particularly since her husband’s job doesn’t have retirement healthcare. I’m not sure I got through to her, but I hope it works out for her as she is a nice person and a great teacher.
I say all of this because I think that the vast majority of our population, including those who we consider highly educated, have no idea of the value of this benefit both in the current period and the future for those of us who have post-retirement healthcare. And they certainly don’t realize what they would have to earn to pay for healthcare with after-tax dollars.
@VU0609: As a former Benefits Director for over 30 years, I thank you for acknowledging that those benefits are important and extremely valuable.
The W-2s for tax year 2011 were the first to have a code DD as a result of the 2010 health care legislation. I’m not sure that employers were required to provide the info that first year, but I think did have to starting with 2012. It’s possible some employers previously included the cost of insurance in box 14 prior to that. My employer starting around 2003 or so did give employees a summary of the employers cost of all benefits and salary each year.
We always had both pre-tax and post-tax health care on the pay stubs - it was all wonderfully confusing!
I don’t know if people really pay attention…I have heard far too many people, white and blue collar both, who when someone mentions the cost of a family health insurance policy through a group plan (that is around 25k a year), I hear “nonsense, I have family health insurance, and it only costs me 300 bucks a month”…people tend to see only what they pay, not what the real cost is. It isn’t all that much different then when I hear people who are on medicare complaining about ‘socialized medicine’, lack of understanding for what they don’t see (like, for example, that medicare premiums are on the total amount someone makes, there is no limit to the income they tax for medicare).
as far as private health insurance through employers, there is a contradiction there, employers of course are not happy about the cost, but a lot of them, especially big companies, still use it as a recruitment tool, and as a result would fight tooth and nail any attempt to get rid of employer paid insurance.
A deductible recruitment tool!
^^ It’s all deductible
From Seinfeld episode “The Package” (Sorry, I hear this in my head whenever anyone says " It’s deductible.")
Jerry: So, we’re going to make the post office pay for my new stereo, now?
Kramer: It’s a write-off for them.
Jerry: How is it a write-off?
Kramer: They just write it off.
Jerry: Write it off what?
Kramer: Jerry all these big companies they write off everything.
Jerry: You don’t even know what a write-off is.
Kramer: Do you?
Jerry: No, I don’t.
Kramer: But they do - and they are the ones writing it off.
@ veryhappy-
Making it tax deductible was the carrot the government used to try and get employers to offer health insurance, I believe the fact that it is deductible and not taxable to employees dates back to the 1930’s…health insurance originally came about through collective bargaining, and once they gave that benefit to the union workers they had to extend it to blue collar workers. Employers only saw it as a way to attract employees once it arrived via collective bargaining, they did not look around and say “how do I attract good talent, let me give my white collar employees insurance”, it was “hey, I have to give it to my blue collar employees, I can use that to attract white collar employees” and the competition wasn’t so much offering insurance, as much as what the plan itself offered.
I used to work for a major benefits consulting firm doing personalized benefit statements that calculated pension and projected 401(k) balances using various assumptions, as well as the cost of all of the employee benefits. Bennies were 30-35% of total compensation.
I’ve know for a long time what my H’s benefit package is worth. We have needed to know when H was offered other jobs to figure if job was worth taking. No one ever came close to offering comparable package.