(Dow Jones) Top executives may soon have to cope with the same health-care coverage as their employees or pay on their own for some of the extras their companies used to provide them.
Marie Dufresne, a senior consultant at the Hay Group, a global management consultancy, says it was not unusual for a company to have a second policy that covered the out-of-pocket expenses for its executives-typically the top person and those that reported directly to the CEO.
Those perks often include free extensive physicals examinations at top medical institutions like the Mayo Clinic. The programs usually run a day or two with examinations and screenings for about $2,500 to $3,500.
Now, she says of the VIP coverage, "We're not sure it'll last." The new health care legislation may require companies to curb such imbalanced practices. Some of those provisions go into effect by January 1, 2011.
"You will not be able to discriminate in favor of the highly compensated," she says.
Many details of the new legislation's impact will only be clear as the precise rules are defined. Still, it's not unreasonable to expect some big changes in how companies manage executive health care benefits.
The new law does appear to allow some of existing benefits to be considered grandfathered. However, it's unclear how long that protection might last, because changes in a company plan could invalidate that special status. Some consultants believe that something as simple as promoting an existing employee to the executive suite could be enough to end the extra coverage.
Jim Winkler, U.S. health management practice leader for Hewitt Associates, offers this advice to companies: "If you don't have it (extra executive coverage), don't put it in now, and if you do have it, you may need to make plans because there is a chance that it will be eliminated."
Most executives clearly could afford to pick up the tab themselves for out-of-pocket costs and physicals, but they like the fact that they don't pay taxes on the expense and often have come to consider them a rightful executive perk.
At some companies, executives also get retiree health care insurance, even when it's not available to other employees. That's been a nice benefit because many of them don't need to or can't wait to retire until they're 65 and eligible for Medicare.