

Why Employee Benefits Will Become Irrelevant - prostoalex
http://blogs.wsj.com/experts/2015/04/28/why-employee-benefits-will-become-irrelevant

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markbnj
>> giving way to an alternative where employers simply pay employees in full
for services rendered, and employees are left to make their own decisions –for
better or worse–about where and how to allocate those dollars for their needs.

That is so completely disingenuous. I think we can assume that blog writers at
the WSJ are aware that wages have been stagnant for the majority of workers
for over two decades, despite significant gains in productivity. So, really,
what they meant to say was "giving way to an alternative where employers stop
paying for benefits."

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DamnYuppie
Currently employers get better rates for their benefits then an individual can
on the open market. As such this will open the flood gates for even higher
insurance premiums, seems like a wind fall to the insurance providers.

This is similar to the push away from pensions to 401k's in the 70's and 80's.
It was supposed to be great for the individuals, more flexibility and control,
can take it from job to job. Yet instead it was great for the financial
services industry as they got to charge a higher service fees on their mutual
funds to more people. The only people to lose out where the employees as the
companies got reduced liabilities and payouts and the financial services
sector go a large bump in service fees....

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nulltype
Could employees of different companies form a group that could get better
rates? One of the problems with 401ks is that they are still related to your
employer.

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ibealexm
Yes - it's called a government. Pretty much all other countries already have
such healthcare plans in place.

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mauricemir
Author doesn't seem to have a clue about how benefits are taxed or that an
employer can buy insurance or other benefits for 1000 people cheaper than any
of the individuals can.

And are not Employer DC pensions better because that contributions on both
sides are pre tax - let alone if you go in for sacrifice schemes where you can
save the NI (social security) as well.

and this guys supposed to be a partner reads like some summer interns work to
me

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prostoalex
> an employer can buy insurance or other benefits for 1000 people cheaper than
> any of the individuals can.

Does that still hold true with the exchanges, which in large states supposedly
pool millions of individuals?

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dzdt
I think so, and here is why it makes sense. Maintaining a steady employment is
a pretty strong indicator of not having debilitating health problems and of
having enough income to avoid poverty-driven health problems. The employee
pool of a major corporation is probably a healthier pool than the one
exchanges serve.

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matthewowen
Obviously I wish we lived in a world where health care wasn't coupled to
employment, but I don't think the USA is adopting single payer any time soon
so I don't really have high hopes.

However, one practical thing that I find infuriating is the 401k/IRA system.
It's absurd to me that if your employer doesn't offer a 401k there's a whole
category of tax advantaged retirement saving that's off limits to you, and
you're stuck to the IRA contribution limits (and income limits).

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danans
If done well, this could empower employees to decouple critical life needs
(health insurance, retirement) from their employers. If done poorly (i.e. the
non-employer options and tax benefits are not good), then it will just create
a 2-tier system where you have a class of workers with great benefits, and
those with terrible ones... Oh wait, that's what we have now, right?

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nsxwolf
Take away the tax incentives and let the market readjust. Imagine if employers
provided our food directly and all the issues that would result from that. And
then imagine what would happen if someone suggested ending that - we'd hear
about how employers can buy food at a bulk discount, tax breaks, everyone's
going to starve, etc.

Getting employers out of the health insurance game also conveniently dispenses
with controversies like the HHS contraception mandate/Hobby Lobby etc.

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scott00
Employee benefits will become irrelevant if and only if (1) the government
removes the tax advantage of providing certain benefits to employees over
providing the value of those benefits to employees in cash, and (2) the
government resolves the market failures innate to certain types of insurance.
The ACA went a long way to resolving (2) for health insurance, but similar
forces are at play in the life insurance and disability insurance markets.

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Jtsummers
> All it really means is that instead of an employer paying $X on behalf of an
> employee for a certain benefit, the employer pays the employee that same
> dollar amount and allows him/her to use the dollars as desired toward their
> own selection of benefits, from retirement to health insurance and more.

This money is usually pre-tax. Let's say an office worker is making $80k/year
+ benefits and pays about 25% to taxes. If those benefits amount to $10k
(feasible between 401k matching, insurance and other things) the employer
needs to come up with an extra $3.33k to pay the employee to compensate for
the tax owed on the extra income.

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prostoalex
"If you paid your health insurance premiums with your own after-tax money,
they’re deductible."

[http://healthinsurance.about.com/od/savingmoneyonhealthcare/...](http://healthinsurance.about.com/od/savingmoneyonhealthcare/fl/Is-
Health-Insurance-Tax-Deductible.htm)

With a bunch of caveats, of course.

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Jtsummers
Ah, thanks. This would still be an issue with some other benefits unless they
also are tax deductible or made tax deductible for individuals. My 5% matching
on my 401(k), in particular, would be an issue without increasing the tax
deduction limits on 401(k)s.

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prostoalex
It does make sense for the government to (a) allow for insurance premiums to
be paid out of flexible spending accounts, (b) decouple pre-tax FSAs from
employment and make them available to anybody.

Not sure why it's not part of the ACA, perhaps there are some unintended
consequences (a) would cause.

