Due to pressures from the local market and to remain competitive, we are considering pay a higher percentage of the health insurance premium for officers. Do other banks have different health insurance benefits for exempt vs. non-exempt?

Also, so this change does not have a large effect on our bottom line, we are considering reducing the salary increases at the end of the year to help compensate. In other words, if the reduction in the health insurance premium for an officer amounts to 5% of their salary, they would not get a 5% raise or their raise would be reduced by that amount. What is everyone's opinion on this?

Yes to #1 and Bah Humbug to #2.

So you're not really paying the insurance rate increase, they are.

And when they figure it out, how will you "remain competitive"?

Yes, to 1 -- that is common.

As to 2 - expect some backlash; it won't take long for them to figure it out!

They tried #2 at my previous employer. It's been mass exodus ever since.

Now, if you're trying to reduce your FTE's . . .

Unfortunately health care costs will go up each year, even if you had favorable experience in your claims. The cost of new technology, medicine, and hospital operating costs in general drive this trend.

As an alternative, look at adjusting co-pays, deductibles, and maximum out of pocket expenses, and absorbing the net increase in premiums. Put in a fexible spending account if you don't have one already. These can keep your costs down, and not jeopradize pay increases to offset premium increases, which is never a wise decision. Also if you use a broker (who is working for you and not the carrier), put pressure on them and demand a reduction in the rate increase. Many times that has worked for me over the years and I have dropped anticipated increases from 20%+ to less than 10% in some cases.

I am the individual who originally posted this and I don't think I explained very well what I am referring to. Yes, our insurance premiums did go up this year. However as a separate issue, the bank is considering paying a higher percentage of the premium for officers in an effort to stay competitive in the market when hiring in the future. So this does not effect the bottom line of the bank, the proposal is to reduce officer raises by the amount they are receiving in an insurance decrease. The net effect to take home pay is the same. How do you think employees will respond to getting a smaller raise or no raise in exchange for decreased insurance premiums?

Actually, since premiums are a before-tax benefit, while salary is after tax, assuming that the bank reduces their expense on one dollar-for-dollar for the amount it increases another, the take home result to the employee should be positive.

Whether you can make them understand that is another issue.

I am certainly not an HR person, but if given a choice, I would pay the higher premiums. While as Jokerman said, initially take home pay would likely be higher with the other option, other benefits are based on gross pay. Such things as retirement contributions and future raises are generally based on your gross pay.

good point.

Another thing to consider, what about the employees that don't enroll in your health insurance program - but have coverage through a spouse, etc. instead? They wouldn't be getting the insurance coverage or the raise.

Also, a situation in which certain officers get more of their insurance costs paid than other employees and NOT forego a wage increase is not uncommon at many banks, so the fact that you are reducing the wage increase by the amount of the additional insursnce payment is actually less of a benefit than the officer(s) may receive at another institution. So you are not really making a move that might help you be more competitive with certain other companies.

Actually the employees not enrolled in the health plan would get any raise they would have normally. Just those employees who see a decreased premium payment would have a decreased or no raise.

It seems as though the only people who will benefit from the change are new officers. Is that fair to the current officers?