There’s a serious but little talked about issue with the new health care provisions that go into effect January 15 that all employers need to know about now.
Under these new provisions, the cost of group health care coverage will be largely determined by age and family size. These changes will have a significant impact on those who are not self-insured – in other words, employers who are paying to offer health insurance to their employees.
Under the new rules, employees in their 20s will be far less expensive to cover on the company’s group health insurance plan than employees who are in their 60s. These “age bands” mean that premiums for an older individual can be up to 3x more expensive than what a younger individual pays for the same plan.
This is not hypothetical! As a small business owner myself, I just received our renewal notice from our health insurance provider that outlines these specific changes. For example, in 2014, the month premium for a 27 year old employee and a 59 year old employee were the same. Beginning in 2015, the premium for the same 59 year old increases by 138%! How does an employer explain this to an employee?
In addition, family coverage in 2014 includes all family members for one rated cost. In January of 2015, that changes, and insurance premiums are now calculated per person. For example, a current employee with four children will receive an increased premium of $422.47 per month – that’s a 63% increase!!!!
Aside from the financial ramifications of this change (the employer will likely need to cover much of the additional costs lest the employee go broke!), the potential issue of age discrimination is blatant. These new Obamacare rules are almost forcing employers to look at age as a hiring factor, when for years organizations have tried to be fair to all generations.
We already see many misconceptions about Baby Boomers in the workplace. This age group often has to fight to prove their worth in an era where younger workers are quickly making a name for themselves in the professional space.
Within recruiting, this change could be detrimental to the hiring of this older age group or those with larger families. Employers, whether they are conscious of this bias or not, may choose to hire a younger employee because paying for their insurance will do less damage to their bottom line.
According to Gallup, Boomers still make up about 31% of today’s workforce. The health care changes are becoming a hiring liability – having one more reason to shy away from recruiting this generation could lead to a final push out the door for this group of workers.
What can we do to combat this discrimination? How can recruiters be more aware of the dangers of age bias when finding the right fit for a role?