Human Capital & Careers

Humana Puts Tax Savings Into Worker Benefits

The insurer is raising its minimum wage, joining other companies that have announced some form of bonus or wage hike resulting from the new tax law.
Matthew HellerJanuary 17, 2018

Healthcare insurer Humana is offering additional benefits including a minimum wage hike to employees as a result of the new tax law.

The GOP tax package reduces the corporate tax rate from 35% to 21%. In response, Humana will raise the minimum hourly rate in the continental U.S. for full- and part-time employees to $15. The company did not specify the current rate.

Humana also intends to accelerate the timeline for workers to enroll in an annual performance-based incentive program, bringing the starting date forward to this year instead of 2019. Employees will have a minimum incentive target of 4% of their base salary for 2018 and will receive payouts in March 2019.

“Like many U.S. companies, Humana will begin benefiting this year from a lower corporate income tax rate,” the company said in a note to employees. “This provides Humana with the opportunity to make an investment in our employees, using the proceeds from tax reform to further the long-term financial health and well-being of our employee population.”

According to the conservative group Americans for Tax Reform, more than 100 U.S. companies have said they will provide some kind of financial benefit for employees resulting from the tax cut. Around 20 large companies have announced some form of bonus or wage hike.

“For most large companies, experts believe that the proceeds of the big tax cut will largely go toward paying for companies to repurchase their own shares, a tactic that tends to boost stock prices,” The New York Times said.

“Economists and analysts expect much less of the tax winnings to go to permanent pay increases for employees, who, as a whole, have endured stagnant wages over the past decade,” it added.

Humana said it was also considering passing some cash back to shareholders.

“The company is still flush with cash, and has been looking for acquisitions,” the Louisville Courier-Journal said, noting that Humana announced in December it would partner with two private equity firms to buy an $800 million minority stake in Kindred Healthcare.