Workplace Demographics Impact More Than Health Care Costs
Benefits pros are very familiar with providing census data to health insurers. These census include demographic factors such as age, gender, and geographic location. Insurers use this data to project anticipated health care costs for the upcoming year. Insurers will project higher cost if the data shows that the population is older or has a larger number of females than the general population. Other factors impact the rate insurers charge for health insurance coverage, but demographics play a significant role in setting rates.
On its face it appears that using demographic factors such as age and gender to determine health insurance rates is fair. Older workers and women on average do use more medical services and incur more health care expenses than younger workers and men. However, benefit pros need to be aware that an innocuous practice of determining benefit rates can have legal consequences. They need to understand that discrimination against older workers and women is illegal. And they need to make sure that they advise management not to use insurance data in making employment decisions that negatively impact certain groups.
If you think that these two issues have nothing to do with each other, you’re wrong. Management does factor in health care costs when making hiring and firing decisions. Remember, the primary reason for offering employee buyouts is to entice older workers into retiring. And there is nothing wrong with this practice. It is when management starts communicating back and forth with insurers about how changing its demographics may improve its rates. A seemingly innocent email about an expectation that a female employee will not return to work after giving birth. Or an email listing a group of workers approaching retirement age that may retire in the near future. These innocent transactions may look like gender or age discrimination to a judge or jury.
During this open enrollment season benefit pros will provide lots of census data to insurers. This data is important and helping the insurer project future health care costs. But it is more than that… Innocent communications about employee age and gender between an employer and insurer can lead to claims of age and gender discrimination. Benefit pros should carefully discuss these issues with insurance representatives and employers to prevent unfair treatment of some workers and lawsuits.