Why is insurance so much cheaper at low-wage jobs?
I’m a 24-year-old female who used to jump from job to job, but I’ve finally found the right career path. However, my experiences across various workplaces have raised a question. Currently, I work for a huge airline, and their cheapest insurance option costs $190 with a $7000 deductible and a $200 copay. It’s hard for me to understand why my older colleagues rave about the insurance when it seems so expensive.
In contrast, I worked at minimum wage jobs before, like Amazon and fast food, and their insurance was less than $20 a month with nearly everything covered. At Amazon, my copays and prescriptions were free, and there were minimal paycheck deductions. This was during 2020-2022. Now, my spouse works at a casual restaurant and just signed up for a BCBS gold plan, which only costs $70 a month with $20 copays and free coverage on pretty much everything.
I can’t help but wonder why a so-called “legacy” company with plenty of resources charges more than these minimum wage positions for health coverage. How is it that flipping burgers or packing boxes could get me insurance for $30 a month, while my corporate job is $200 before considering the deductible, specialists, and copays?
Question 2: If my partner and I, both in our twenties without any major medical needs, want to take advantage of cheaper coverage, would it be wise to pick up a part-time job at a fast food place just for the insurance? This feels like an obvious hack, but I may just be missing something.
Thanks in advance for helping me understand!
This is a great question, and it’s definitely something that many people wonder about when comparing different employment situations and their associated benefits. There are a few factors at play here that might explain the difference in insurance costs between low-wage jobs and larger corporate employers.
Plan Structures and Bargaining Power: Large companies typically provide health insurance plans that may not be as favorable as what smaller companies offer. This can be due to a variety of reasons including how they negotiate with insurance providers, the plan structures they choose, and the workforce demographics they have. A large airline may have a broader variety of employees, including many who are older and may require more comprehensive coverage, which can increase the costs of the plans they offer.
Cost-Sharing Models: Small employers, like some fast food chains or Amazon warehouses, may also offer plans with different cost-sharing models that can be more appealing on the surface. They might subsidize employee premiums more heavily or offer plans that have lower out-of-pocket costs to attract and retain workers in those roles, especially in competitive job markets.
Minimum Coverage Requirements: Depending on the size of the company, they may have different obligations under healthcare regulations like the Affordable Care Act. Some smaller companies provide plans that meet minimum requirements but could be more generous in ensuring basic coverage without high out-of-pocket costs, while larger corporations may offer “premium” options that, due to their comprehensiveness, come with higher deductibles and costs.
Health Needs and Risks: The population of employees can also impact the cost. If a company covers many young, healthy workers, they might have more affordable, less comprehensive plans. However, a larger company with a more diverse age range and potentially higher health care needs may have elevated costs associated with their plans.
Regarding your second question about getting a side job for cheaper coverage, it’s definitely an option worth considering! For young, healthy individuals with minimal medical needs, taking advantage of more affordable insurance from a part-time job could save money, especially if you can get comprehensive coverage at a lower premium. Just make sure to assess the work commitments alongside your main job and ensure it fits into your lifestyle without adding too much stress.
Overall, insurance can be perplexing, but it’s great that you’re doing your research and looking for the best options for your health needs and budget!