Are You and Your Employer Paying Too Much for Health Insurance? Here’s How to Find Out
Want to know what your employer is paying for your health insurance and find out if they (and consequently you) are paying too much?
Just check out your W2, box 12, code DD. I’ll show you what to do with it in a bit…
If you have signed up for your employer’s sponsored health insurance plan, you will see a dollar amount listed next to the “DD” code.
The DD code reporting is a requirement of the Affordable Care Act and first started being reported in 2012. Note that this code is for reporting purposes only. It is not a taxable amount.
What is included in the DD code total?
The DD code is not only what your employer payed for your health insurance plan, but it includes your share (your premium payments) as well, as the IRS points out.
The total listed could also include the required reporting of applicable:
- Health FSA values for the plan year in excess of employee’s cafeteria plan salary reductions for all qualified benefits
- hospital indemnity paid through pre-tax deduction
and optional reporting of:
- the coverage for a dental or vision plan
- Health Reimbursement Arrangement (HRA) contributions
Some surprising items that are not reported include:
- Health Savings Arrangement (HSA) contributions (employer or employee)
- Archer Medical Savings Account (Archer MSA) contributions (employer or employee)
On to the important stuff – what does this $ amount mean?
Are you & your Employer Paying Too Much for Health Insurance?
I was very surprised to find that the total listed for box 12, code DD on my W2 was $11,880.17!
Now, this is for a high deductible health plan (HDHP), where my cut is only $936 in annual premiums. There were no FSA contributions or hospital indemnity deductions. I can’t say for sure whether my dental and vision plans were included, but if so, I would expect that to be a minor addition.
So really, what’s left is just under $900 per month or $11,000 annually, for my wife and I for combined premiums.
Why do I find this so shocking?
It’s an HDHP! When I researched pricing on the new healthcare.gov plans for 2014 (which you should also do to compare), I found a better plan than my own (Blue Cross Select Silver) to only cost $455/month, or $5,460/annually. Less than half!
What makes this more surprising is that I work for a very large (meaning big pool of employees) and well-run corporation. One would think negotiated rates would actually be lower than what could be found through the public insurance exchanges.
What’s concerning about this is that if my employer ever decided that it needed to start shifting more premium expenses to employees because the cost was too high, it’s more cost out of my pocket. That and… shoot, if they were paying less on health care, maybe they could pay more in income. They are clearly paying too much for health insurance, and as a result, I am too.
If my well run employer is having this issue, I am willing to bet many of yours are too – which means higher premiums and less pay for you.
The major benefit of employer sponsored health insurance plans (outside of the premium sharing) was that they did not discriminate for pre-existing conditions. But now with the ACA, no insurance plans can.
I’m really curious to see what price differences everyone else is seeing between what your employer is paying for health insurance and what you could buy on your own through the exchanges. Is your employer paying too much for your health insurance?