The Benefit Gap

An example of “The Benefit Gap” or “Reverse Discrimination” is shown below. The typical group benefit design provides for benefits as a percentage or multiple of salary only. Bonuses and other monetary compensation are not applicable to employee benefit programs. As the individual earns more income, the percentage of income replacement provided by the employee benefit plan reduces. Thus, artificial benefit ceilings discriminate against the executive. Furthermore, as the benefit plan has fixed costs per employee, the percentage of income spent on benefits decreases as the executive’s compensation increases.