Humana, which like other health insurers will benefit from the new tax law, will share some of that windfall with its employees.
Senate Majority Leader Mitch McConnell, who hails from Humana’s home state of Kentucky, first shared the news in a speech on the Senate floor this week that highlighted the effects of the GOP’s Tax Cuts and Jobs Act.
“Just yesterday, I was pleased to announce that Humana—which employs more than 12,000 Kentuckians—is accelerating pay incentives and increasing its minimum hourly wage because of tax reform,” he said.
In a statement to FierceHealthcare, a Humana spokesman confirmed McConnell’s remarks.
“Like many U.S. companies, Humana will begin benefitting this year from a lower corporate income tax rate,” he said. “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.”
Specifically, the company plans to raise the minimum wage that it pays its employees in the continental U.S. to $15. It was unclear, however, what the minimum hourly rate was previously.
Humana will also allow employees to take part in an annual performance-based incentive program starting this year, rather than in 2019 like it originally planned. Employees involved in the program will have a minimum incentive target of 4% of their base salary.
In addition to those moves, the insurer is considering passing some cash back to shareholders as well as making investments designed to benefit its health plan members and the communities it serves, the spokesman said.
Humana is not the only insurer that is making plans for what to do with the extra cash coming its way now that the corporate tax rate has been cut from 35% to 21%.
On UnitedHealth Group’s fourth-quarter earnings call on Tuesday, CEO David Wichmann said corporate tax reform is expected to improve earnings and cash flows by $1.7 billion in 2018. The company plans to use some of that money to accelerate existing initiatives in areas like data analytics, digital health and community-based health programs, and it will invest in new initiatives aimed at growing and diversifying its business in the long term, he said.