Companies tweaking health-care plans, benefits

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While industry sources say medical coverage plans are perhaps the most common benefit employers offer employees, they aren't the only benefit available. After a medical plan, the most common benefits are dental, disability and vision insurance, said Darren Coffman, president of Benefits Unlimited. |ret||ret||tab|

Dan Ruggeri, a partner at Employee Benefit Design, added that the most common benefits are group health and a minimum amount of group life.|ret||ret||tab|

"Most employers can't afford a dental program or long-term disability," he said. "So, we're setting up voluntary dental, additional life and short- and long-term disability, which can be set up on a group-rated basis. The employee purchases them through a payroll deduction. |ret||ret||tab|

The employee has access to good products and it's easy for them to get."|ret||ret||tab|

Fringe benefit costs|ret||ret||tab|

Ruggeri said most employers spend 25 percent to 45 percent of their payroll on fringe benefits including group health, group life and dental insurance, a retirement plan, short- and long-term disability, long-term care, vacation and tuition reimbursement.|ret||ret||tab|

The challenge an employer faces is illustrating the cost of benefits to the employees, he said.|ret||ret||tab|

"Employees shouldn't just look at the salary when determining whether or not they're going to take a job or stay with a company," Ruggeri said. "Do an employee benefit statement at merit review time to show the hidden costs of the benefit plan."|ret||ret||tab|

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Long-term care plans|ret||ret||tab|

A lesser-known benefit is the group long-term care plan, Coffman said.|ret||ret||tab|

"An employer can purchase long-term care at a group rate, and it's a business expense," Coffman said. "The employer can discriminate on who it's offered to. The population is aging, and the baby boomers are nearing retirement, so there's a growing need for this type of insurance. Sometimes, the employee's parents and grandparents can purchase the insurance, as well."|ret||ret||tab|

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Medical coverage|ret||ret||tab|

Medical coverage, in addition to being the most popular employee benefit, might also be the most expensive. The growing costs, according to industry sources, are attributable to several factors, including over-utilization of health plans and the fact that people are living longer. |ret||ret||tab|

Joe Martin, a senior benefit consultant with Gallagher Benefits, said that "for the fourth consecutive year, large employers will experience a double-digit increase in their health-care costs. A recent survey by Towers Perrin found that large employers' health benefit plans will increase 15 percent on average in 2003. This is the highest year-to-year percentage that has been noted since 1989."|ret||ret||tab|

Coffman said the economy has had an impact on companies' willingness to provide benefits for their employees.|ret||ret||tab|

"It's had a dramatic effect, at least in the companies perceptions of their ability to provide employee benefits," he said. "There are measurable economic impacts employers are feeling that's keeping them from initially providing benefits or maintaining a health plan." |ret||ret||tab|

"We've seen increases of 15 to 40 percent in many employer groups over the course of the last two years. I foresee a leveling off in health premiums over the next year."|ret||ret||tab|

Ruggeri added that the economy is "making it tough for employers to pay the higher premium rate increases."|ret||ret||tab|

While the rates are increasing, employers are still trying to provide health benefits for their employees, he said.|ret||ret||tab|

"Employers are purchasing a core benefit plan and then allowing the employees to buy up to a richer benefit program," Ruggeri said. "Employers want health care to be a personal choice."|ret||ret||tab|

Martin said, "The slowing economy coupled with double-digit increases in health care costs has forced many employers to take a number of actions to control escalating costs. One of the more notable steps will be additional cost sharing by employees. Employees will be paying more out of pocket this coming year. Cost sharing will come in the form of increased monthly contributions, as well as higher deductibles and co-payments."|ret||ret||tab|

Coffman believes the cost of premiums is causing employers to look more at catastrophic coverage.|ret||ret||tab|

"Employers are raising deductibles causing the employee to have a higher out-of-pocket expense," he said. "Catastrophic plans weren't designed to pick up every nickel and dime."|ret||ret||tab|

Coffman said one of the reasons the cost of benefits ia increasing is because of the over-utilization of health-care benefits.|ret||ret||tab|

"But catastrophic plans curb use by requiring the employee to share a larger part of the risk. Employers are requiring employees pay more of the cost of the health benefit plan," Coffman said.|ret||ret||tab|

According to Coffman, the most common benefits employers provide are "a medical expense policy, such as a health maintenance organization, preferred provider organization or an indemnity plan. Indemnity plans are showing a resurgence in the marketplace. However, indemnity plans may be limited in the amount they will cover for a particular service."|ret||ret||tab|

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