AGE & GENDER ADJUSTMENTS
There will also be adjustments based on the age and gender of the employee population. Older individuals tend to have higher health costs than younger individuals and women tend to have higher healthcare costs than men until the age of sixty (Figure 1). A plan that surpasses the $10,700 self-only threshold may be justifiably considered overly generous for a twenty-five year old, but is potentially appropriate for someone who is fifty years-old.
Figure 1: Aggregate Commercials Costs by Age (2002 and 2010)
For the development of age and gender adjustment factors, IRS will be formulating tables to facilitate and simplify the calculation based on the i) average cost for Federal Employees Health Benefits Plan’s (FEHBP) Blue Cross and Blue Shield’s (BCBS) standard option ii) average cost for each age and gender group iii) group ratios iv) group premium cost v) national premium cost and vi) employer’s premium cost. Many are concerned about this approach since the BCBS’s standard option claims cost data may not be representative of the population. BCBS is made up of two fee for service plans, standard and basic, and local health maintenance organizations (HMOs). It is likely that the population who did select the standard option coverage is relatively older and has higher percentage of women because they tend to have a higher healthcare costs. Only including the standard option, may skew the healthcare costs. Treasury and the IRS should expand the FEHBP options to include all BCBS options since there will be a greater and more diverse population represented. This will allow for a more accurate representation of the population's demographics.