Btukfyl

At my company, per-year health-insurance premiums increase by $1044 once a salary is greater than or equal to A. A does not seem to change with time, and it is the highest value where a premium increase occurs. The premiums are piece-wise constant with respect to salary.

I currently make B, such that, if I received a 2.28% raise, I would make A. I expect my new salary to be between A and (A+$1300), with the latter being a 3.3% increase.

The only other factors that come to mind that would be affected by salary are 1) 10% company match for 401(k), and 2) raises are expressed in terms of percentages of existing salary; these percentages are functions of performance category and ratio of current salary to midpoint. Therefore, there is compounding, but the percentage can be reduced if the current salary is higher.

Based on some crude calculations that consider the premium increase and the 401(k) matching, it seems it would be better to make (A-$0.01) than it would be to make between A and (A+$950).

Therefore, if my new salary is between A and (A+$950), should I request (A-$0.01)? Are there other factors I should consider?

Therefore, if my new salary is between A and (A+$950), should I
request (A-$0.01)?

Assuming you are able to request raises, it would seem to make a lot more sense to request (A+$1300).

You can use your argument about the net loss due to higher insurance costs to bolster your request.

Last time that happened at my company, we have negotiated to officially raise the salary to A - 0.01, but keep track of the intended salary C (being A < C < A + 950), so next raise would be based on C instead of A - 0.01.

That way, the affected employee kept the best salary they could, as the company couldn't pay A + 950 or higher, but the employee didn't miss the C - (A - 0.01) raise permanently - they only refused it while it wasn't a benefit for them.

This only works if there's trust between both parties - I don't think there's a legally binding instrument to agree on this.

Consider that the raise is forever. If you get 1% less salary this year (and are happy about it), you will also get 1% less salary next year, and the year after, and the year after that. You gain a bit this year, but you will lose out all the following years.

Take the raise that you can get.

Your company has a perverse incentive in place, and it would be a more constructive response to lobby for it be changed than to engage in shenanigans that simply perpetuate it rather than addressing it. You're proposing responding to one form of dysfunction with more dysfunction, which is bad for the company and likely for you. If you really can't get the policy changed, you'll have to decide whether $1000 is sufficient compensation for contributing to the dysfunction of the corporate world (and the risk of looking like an employee trying to game the system).

Health Premiums are pretax. They (a) reduce your tax liability, and (b) do not affect 401k contributions. Because of the effect on your tax liability, you will pay less in taxes in trade for more premium cost. The $1,300 more to your gross means you'll be saving more retirement, and get a larger matching 401(k).

Even if it may seem outrageous upfront, it is pretty typical that crossing from A-$0.01 to A will still result in a slightly larger paycheck (or, at least, not significantly smaller, usually just a few dollars) as well as not negatively affecting your 401(k). Even more so, A+$1,300 will be a larger check than A-$0.01 upfront and over time.

Of course, without knowing A, your salary, your tax liability, marital status, property ownership, premium differences, and so on, it's hard to say for certain if A or A-$0.01 would be beneficial, but A+$1,300 will definitely be beneficial overall, because it'll have a smaller tax impact because of the increased premiums, yet still be a boon for your 401(k). There's no good reason for pursuing a smaller salary in the hopes that it will produce larger paychecks, especially since it will have a negative impact on your retirement.

Instead of refusing or downgrading the raise, why not ask for it to be deferred? Then you have not given up the rights to it while still keeping your pay below the all important threshold. It may also be easier for the company to implement than anything else.