Health Insurance Premiums: Who Pays What?
19 02 08 - 14:27
February 19, 2008 - 2:30am
Companies all over the nation, places as different as General Motors to The Washington Post and LA Times, are trying to cut current/future costs by offering buyouts to high-salary workers. They figure they can save money in pay and perks by replacing some of those workers with lower-paid individuals, contract workers (who don't get fringe benefits) or by not replacing them at all.
In strict numbers Uncle Sam remains the buyout king (in volume if not in generosity). Tens of thousands of retirement-age feds were paid pre-tax buyouts of up to $25,000 during the early 1990s. Many of them were not replaced, or their work was consolidated and farmed out to the private sector. The government is still offering both early-retirement and buyouts (sometimes both) on a limited basis in parts of some agencies.
But while buyouts are often welcome by long-time employees as a nice cash nudge for doing what they planned anyhow, other cost-cutting ventures are not as welcome.
One of the proposals in President's budget would trim the government's share of health insurance premiums for workers retiring in the future. He made the same pitch last year and Congress ignored it. Currently the government pays an average of 72 percent of the total health premium for both federal workers and retirees.
Federal unions say that in reality the government pays "only" about 70 percent of the total premium. Either way, that's 70 to 72 percent more than most companies pay if they even offer health insurance to retirees! Most don't.
It's unlikely Congress will act on that prospective change this year. But anything can happen in an election year Congress. For details click here and check out the Retirement Life Magazine article "How Will Feds/Retirees Fare in the FY 2009 Budget".