The Salience of Numbers: W-2s Now List Cost of Employer-Sponsored Health Insurance

By: Katie Booth

Beginning in 2013, W-2s for firms who file at least 250 W-2 forms will list the amount of money that employers and employees spend on health insurance premiums. As the New York Times reports, “[t]o some, it will be a surprise, perhaps even a shock.” Many people insured through their employer have no idea how much health insurance actually costs. The W-2 provision will change this, providing a yearly reminder about how much employer compensation goes into health insurance rather than wages. This gives employees exactly one salient number about health care: the yearly cost of their employer-provided health insurance.

More information for consumers about the cost of health care is a good thing, but making the cost of health insurance more salient may have some unintended consequences. Employees will be better able to compare the benefits of jobs with higher salaries but no health insurance to jobs with lower salaries and health insurance. This may lead employees to opt for lower salary jobs with health insurance, which could help decrease the number of employees who seek government-subsidized health insurance. The W-2 provision could, however, have the opposite effect. Now that employees can easily compare the cost of employer-sponsored insurance to government-subsidized insurance, employees eligible for government-subsidized health insurance may buy insurance through an exchange and then opt for a higher-paying job that does not offer insurance. Employers may be willing to pay the tax penalty, which is much less than the cost of insurance.

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