Addendum to Bargaining Report #4
concerning health care premium increases
Another way of looking at the cost increase in health care premiums is as follows:
The UVM cost structure for health care premiums is progressive (in the sense of “progressive tax rates”) in that the more one earns, the larger percentage of the premium one pays, and thus those with higher salaries help to defray the health care costs of those with lower salaries. However, because the cost of the health care plans is a fixed amount, the percentage of the premium that one pays does not mirror the percentage of one’s income that goes towards health care costs. Moreover the cost that is defrayed is always a cost to the University.
Take the following example: a family plan that costs $20,755 annually.
Someone earning $45,000 currently pays 12% of the premium cost, or $2,490.70, which represents 5.5% of his or her gross income.
With the premium hike, the same person would now pay 16.6% of the premium, or $3,445.33, which represents 7.67% of his or her gross income.
Someone earning $145,000 currently pays 29% of the premium cost, or $6,019, which represents 4.15% of his or her gross income.
With the premium hike, the same person would now pay 38% of the premium, or $7,886.90, which represents 5.4% of his or her gross income.
While the person making $145,000 pays a larger percentage of the premiums (and a larger dollar amount), he or she pays a smaller percentage of his or her income towards health care. Even after the proposed premium hikes, the person who earns $145,000 would pay a smaller percentage of his or her income than someone making $45,000 pays under the current contract.
ANOTHER REASON BENEFITS CATEGORY D MUST GO
If a bargaining unit member is bumped below 1.0 FTE, he or she falls into benefits category D, which has a different payment structure for health care premiums. Anyone below 1.0 FTE pays a percentage that is equal to the percentage below 1.0 FTE at which he or she is appointed (e.g. someone at 0.75 FTE must pay 25% of the premium costs).
Let’s take the same family plan that costs $20,755.
A bargaining unit member whose 1.0 FTE salary is $50,000 would earn $37,500 at 0.75 FTE and his or her health care premium cost would now be $5,188.75, which represents a whopping 13.8% of his or her gross income. (Additionally, his or her gross income after health care costs have been deducted would go from $47,509.30 to $32,311.25, which is a decrease not of 25%, but of 32%. Thus the person is working at 0.75 FTE but being paid at a rate equivalent to 0.68 FTE, which is not even full-time.)
Meanwhile, in order for someone at 1.0 FTE to pay this same $5,188.75, or 25% of the premium, he or she would have to earn about $110,000. (“About” because there is no pay band that pays exactly 25%, only 24% or 26%.) These two employees are paying the same absolute amount towards health care, yet for the 0.75 FTE faculty member, this is 13.8% of income, while for the FT faculty member it is 4.7%, making the contribution structure in fact regressive.
And here’s the incredible thing: under the existing cost structure for health care premiums, a full-time, non-represented UVM employee earning $37,500 – the same as our .75 FTE faculty member – currently pays 10% of the premium cost, or $2,075, which represents 5.5% of his or her gross income.
Why are bargaining unit members being penalized twice – once by reduced salary and then by increased health care costs?
Category D must go!