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Companies, staff face double-digit premium hikes

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When Ashley Furniture Home Store was facing a 26 percent renewal rate for its employee health insurance next year, management knew it had to do something to help control coverage costs for the company and its employees.

David Swensen, regional manager for Ashley Furniture, which has 60 employees and three stores in Springfield, Joplin and Springdale, Ark., said he’d talked to managers of other companies facing premium increases in the 20 percent to 30 percent range. But even knowing that the company wasn’t facing coverage affordability challenges alone didn’t change reality.

“We knew we couldn’t absorb all of the costs, so we knew we had to get aggressive to find a better plan,” Swensen said.

Ashley Furniture enlisted Employee Benefits Design to solicit bids, and two options with a new provider were identified. Employees could choose a plan that was comparable to what they had, but a little less expensive, or a plan that had lower deductibles but a slightly higher cost, resulting in a 10 percent cost increase for the company.

Swensen said total average premiums range between $250 and $280 a year per employee, with the company picking up 70 percent. He said Ashley Furniture spent about $168,000 on premiums in 2010. That total will be an estimated $198,000 in 2011, partly because the company has an additional store and more employees.

The company’s rationale for keeping benefits in place is twofold, Swensen said.

“It’s a great recruiting tool to draw our employees. It also helps our employees take care of themselves,” he added.

Premium hikes aren’t limited to Ozarks companies and employees, according to the 2010 Employer Health Benefits Survey released by the Kaiser Family Foundation and Health Research and Educational Trust.

Survey data show that on average, U.S. workers are paying $4,000 this year for family health coverage, a 14 percent increase compared to what they paid a year ago. The study also found that employers’ contributions for employee coverage rose 3 percent, to the tune of $13,770 on average.

Since 2005, workers’ contributions have gone up an average of 47 percent nationwide, as overall premiums have jumped 27 percent, the survey said. As companies struggle amid economic pressure, many companies have been forced to adjust, with 30 percent reporting reduced benefits or increased cost sharing.

Dan Ruggeri, a partner with Employee Benefits Design, said although average U.S. health premiums have gone up as much as 15 percent, the local average is slightly lower, at about 13 percent.

EBD is an independent firm with brokers and consultants specializing in benefits solutions for companies. Springfield Business Journal is among its clients.

Those increases are driven by several factors, he said, citing rising costs of new medical technology and treatment and health reform.

Local employers, he said, have been looking at ways to maintain their existing levels of coverage.

“They might take on one half of the cost and pass the other half to the employee,” he said.

Andrea Croley, co-owner of Croley Insurance, an independent agency with nearly 200 group clients, agreed that many employers don’t want to offer their employees a lower level of coverage – but they also don’t want to see double-digit increases.

“They will either make the adjustment to pass along the cost to the employee to keep the same coverage or they will change carriers,” she said.

Ruggeri said there is also another way to help companies save money.

“Lifestyle choices account for 70 percent of health care costs,” Ruggeri said. “With wellness prevention screenings, people must take personal responsibility of their health care and lifestyle choices.”

Wellness has become a key component in Dameron Color Labs’ longtime commitment to pay 100 percent of employees’ health premiums and half of premiums for dependents.

“For two or three years, we had worse than normal claims with some cancer and heart attacks among our employees,” Vice President Robert Rueter said. “Our health insurance premiums increased 20 percent over that period.”

Two years ago, Dameron instituted a wellness program and told its employees the company would continue to cover 100 percent of premium costs if they participated in weekly educational events and monthly webinars. Employees are required to fill out forms quarterly, and they’re rewarded with incentives.

Of 60 participants, only seven declined to participate in the wellness program, which costs Dameron about $170 a year per employee. The program, combined with a plan to raise deductible costs absorbed by the company, has kept premiums relatively flat for the past year, Rueter said.

Rueter declined to provide exact costs, but he said on the whole, employees are learning to manage their health more proactively – some through smoking cessation or weight loss – with fewer doctors’ visits.

“I think the program keeps health issues in the front of the employees each week,” he said. “If engaged every week, we’re bound to come out on the winning end.”[[In-content Ad]]

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