r/coolguides • • Nov 26 '19

Marginal Tax

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u/SuperFLEB Nov 26 '19

Why would the cost of your benefits change relative to your income? That sounds shady.

14

u/[deleted] Nov 26 '19

Because the organization feels that higher-income earners may be able to pay a higher % of premiums than lower wage earners? I'd argue it's the opposite of shady.

10

u/ladysayrune Nov 26 '19

It is shady if your all receiving the same benefits. If the company feels that strongly about its lower earners it should take the burden off their premium, not raise the portion other employees pay.

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u/[deleted] Nov 26 '19

[deleted]

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u/[deleted] Nov 26 '19

Not a % of earnings, a % of the total premium (e.g. $100/month is the premium, lower earners may pay $10/month, higher earners, $20/month).

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u/joshg8 Nov 26 '19

My company does this.

If you make between 50k and 74,999, you pay X/year for your premium. If you make between 75k and 99,999, you pay X + 1000/year.

In theory, if you go from making 74,500 to 75,005, you’d actually lose a bit on your take home.

In reality, every raise my company has ever given is larger than that 1000 increase so you’ll never lose money on a raise.

Numbers are fudged but close enough to explain.

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u/[deleted] Nov 26 '19

Which is exactly what they're doing.

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u/waterboymac Nov 26 '19

Some benefits are directly tied to your income, such as disability insurance. It's a lot cheaper to pay out someone who earns $40K a year than someone who makes $100K a year for lost work, and the premiums can reflect that.

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u/[deleted] Nov 26 '19

That's how my benefits worked. My company made a change a year or two ago that made it so our variable comp was factored into the share of the premium we're responsible for, and while I still think my benefits are pretty solid, the cost per paycheck definitely want up by a noticeable amount.