Posted by Karl Denninger
A post on the forum jogged me on this Ticker that I was writing months ago and never finished…. and pushed it back to the top of the line. This is an echo of a topic I’ve raised a couple of times on Blogtalk as well, from my experience as a CEO and the “negotiator in chief” with health insurance companies during that time.
First, let me tell you how health insurance actually works from the employer perspective, because most people simply don’t understand this.
You probably have a line on your pay stub that says something like “Health Insurance: $100” or similar. You think that’s what it costs on your “group plan.”
The rules for deductibility of insurance expenses provided to employees are relatively simple but have profound implications. Specifically:
- Employers cannot charge differential deductions. That is, if I am going to hit your check for $50, I must hit everyone’s check for $50. (I can have two deductions – one for “individual” and one for “family” coverage, but I can’t charge two individuals different deduction rates.)
- The majority of the actual expense for any particular person must exceed half of the total for the premiums to be deductible by the business from a tax perspective – that is, for the business to pay them with pre-tax dollars.
But in point of fact employees are individually rated. That is, a 20 year old male with no medical problems – that is, in excellent health – might cost $200 a month in premiums. The same policy with the same coverage for a morbidly obese 60 year old woman on multiple medications for chronic conditions might cost $1,000 – or more.
The law says I cannot deduct more than $100 a month or I can’t write off the cost of the insurance against gross income (that is, I can’t take the expense pre-tax.) The law also says I can’t discriminate. Therefore, if I want to deduct the premium expenses (in total) pretax I cannot deduct more than $100 monthly for “health insurance.”
Now consider the 20 year old kid. He costs me, the employer, $100 for health benefits (he pays the other half.) But the obese woman costs me $900 – nine times as much!
The law says that I cannot ask you certain questions when you come in for an interview. For instance, I cannot ask if you have dependents, I cannot ask about your intention to have children (if you’re a woman) and a whole host of other topics. It is explicitly unlawful for me to make such inquiries, as they evidence potential for me to engage in illegal discrimination in hiring.
But if you think this sort of decision-making doesn’t go on – when the impact is over $8,000 per year between two employees in cost to the employer – you’re nuts. It most certainly does.
The law in this case is outrageous. What many call “discrimination” is in fact nothing more than a cold economic calculation. If I am hiring someone to do a job that pays $20/hour, that is, $40,000 in gross wages for 2,000 man-hours of work annually, a “hidden” embedded cost differential in hiring of $9,600 ($800/mo in embedded health insurance cost!) is a 25% increase in the cost of employing one person .vs. the other. To make it “unlawful” for employers to consider legitimate costs that one employee imposes .vs. another is ridiculous – but it is, in fact, the law.
So here’s the deal folks: While I can’t ask you about your health status nor if you have dependents, nothing prohibits you from putting that information on your resume if it is to your advantage – and it is, if you are in excellent health and have no dependents.
Will this matter?
In this economy you better believe it. This has been true forever, but it has become even more true with the passage of Obama’s “Health Care” law.
So if you’re unemployed and have these cost-impacting facts in your favor, make damn sure you list them.
An employer cannot ask about this, nor can you realistically discuss this in an interview, but absolutely nothing prohibits you from listing this as a “personal attribute” on your resume.
If nothing else, in a tie-breaking circumstance it will get you the interview you need to have a shot at the job.
PS: Whatever you do, don’t lie. Prohibited topic of discussion or not, any false statement on a resume is a perfectly-legal cause for you to be fired for cause, and not only does that cost you your job it also makes you ineligible for unemployment!