I know I know, it sucks. It really does. First of all, as I explained in my own post, managing insurance policies that are offered by employers is becoming more complex and more time consuming. In addition, those policies end up covering less than what they used to. This affects health insurance mainly but also disability insurance, life insurance, etc
How It Used To Work At Many Such Companies
–Companies would offer employees coverage on XYZ.. With employees paying for parts of it
How It Is Going To Work
-Companies will give employees X$ to spend on insurance which they can manage however they wish to
Why The Change?
Just take a look at this chart and you will see how costs have been exploding.
For businesses, it has became a major challenge to increase profits while bleeding more every year on insurance costs. The only way to manage these costs was to make major changes. These companies have been quick to point out that they are not cutting costs, they are allocating the same amounts. That is surely true. Also true though is that they are doing this to make sure they can control how those costs will increase over time. If they increase your “insurance budget” by 2% per year while costs increase by 5%, you can be sure that it will become a lot more challenging for employees to get decent coverage.
So yes, as of right now it means the same coverage but I would bet that 5 or 10 years from, it will be a very different story.
Just Like Retirement Benefits
If you think about it, this is also what happened for retirement benefits. Companies quickly moved away from defined benefit pensions to defined contribution pensions because it takes away a lot of the uncertainty from the business and puts it in the hands of its employees. Unfortunately, that looks like the direction most big companies are headed these days.
Stay Informed About Your Insurance Needs & Policies
Because your employer is less likely to take care of your insurance needs, it’s important for all of us to get better information about our needs, the products that we own in order to make better decisions.
What are your thoughts? Has your employer made any changes to its insurance coverage?