Tuesday, February 8, 2011
There are very significant cost differentials for health insurance depending on the plan design and deductibles of the health policy you purchase. My former employer was a state government with extensive benefits and low co-pays for office visits and prescriptions. There was no standard deduction. Until the end of 2008, retirees were offered single plan coverage with no cost sharing. Starting in 2009, new retirees were offered 80% of the cost of a single plan and the cost of the plan was based upon the experience of the retiree pool rather than the cost of the total employee and retiree pool. Retirees are still given the opportunity to purchase the family plan at the retiree pool cost. The family plan costs around $24,000 a year (compared to the active employee plan of $18,000). The single plan for retirees costs around $8,000. Thus, the state would pay around $6,400 for me and I would have had to pay almost $18,000 a year for my wife and two sons. Fortunately, I had another job with good coverage but 20% cost sharing on the premiums.