Most companies feel they're stuck when it comes to health-insurance benefits. Annual increases leave them with less and less latitude for offering employees decent coverage at a decent price.

Shorebank, an economic-development bank in Chicago, came up with a simple idea to help employees shoulder the cost: charge workers according to their ability to pay. Under this "progressive charge" policy, Shorebank's 211 employees pay either 1% or 1.5% of their annual salary, depending on which plan they choose, rather than a flat monthly fee. "The old practice of charging a set premium was unfair to many of our employees. Our lower-paid people, who were usually the ones with all the kids, were paying these big premiums," explains Leana Flowers, director of human resources.

At the low end of the pay scale, workers' charges for family coverage were reduced from $82 to $24 per month. At the upper end, workers began to pay $117 per month, 43% more than they had been charged previously.

Although the prospect of higher charges could have been difficult to sell, Flowers -- who was one of the employees to be penalized by the new policy -- convinced colleagues that it was the fair thing to do. Moreover, says Flowers, "nobody complains, because the rate is extremely low."

Any company that offers its employees health-care coverage could emulate Shorebank's approach. Along with analyzing how much of the insurer's premium it will subsidize (normally an annual exercise), it simply needs to reexamine how to charge its employees fairly. -- Ellyn E. Spragins

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