Senn Dunn :: News

THE RISING COSTS OF WORK-RELATED BENEFITS
GREENSBORO NEWS & RECORD
December 5, 2004

THE RISING COSTS OF WORK-RELATED BENEFITS
EMPLOYERS REACH DEEPER INTO THEIR POCKETS TO HELP COVER SOARING COSTS FOR THEIR EMPLOYEES.

AMY JOYNER Staff Writer

Every time employee benefits specialist Bill Fleming asks for questions, Katrina Wilkerson's hand pops in the air.

She's full of questions about her company-sponsored insurance plan, which will be changing in January.

For Wilkerson, who is diabetic, the answers to these questions are key to her quality of life:

What will happen when I go to the eye doctor?

Is there a waiting period to enroll in the new life insurance policy?

"I don't want to have any hassles when I go to the doctor," Wilkerson said.

With the days of 2004 numbered, many employees will find themselves in similar meetings, deciding among new options for health care and other work-related benefits.

Most businesses - and their employees - this year must reach deeper into their pockets to cover rising insurance premiums.

"I don't think people have had a very clear understanding that they are using more health care services than ever ! before, taking more medication than every before (and) that drives the increase in health insurance," said Bob Greczyn, president and CEO of Blue Cross and Blue Shield of North Carolina.

At Medi USA, where Wilkerson works, the company was facing a 30 percent increase in premiums for its 130 employees had it kept the same two insurance carriers, chief financial officer William Inabnit Jr. said.

The company truly was in a conundrum, Inabnit said.

"You either pass more of the cost on to the employees or you change the benefits and make them weaker and weaker," he said.

Instead, Medi, with the help of Senn Dunn, an insurance brokerage in Greensboro, shopped around and switched to a new insurance carrier that could offer similar benefits but at a cheaper price. The company will still pay 16 percent to 17 percent more in 2005 to insure its employees.

Medi is paying most of the premium increase. Wilkerson's bi-weekly contribution for health insur! ance is increasing by about $5, yet overall her benefits are getting s tronger. In fact, some doctor's visits will be completely covered; Wilkerson won't even owe a co-pay.

"You all do have a very rich plan," Fleming, an employee benefits specialist for Senn Dunn, told Medi employees during open enrollment meetings last week.

But many employees nationwide and in North Carolina won't be as lucky as Wilkerson and her co-workers.

Nationwide, health insurance costs are projected to rise 7.8 percent to 11.3 percent, according to estimates from various human resources consulting companies.

These price hikes come on top of double-digit increases in 2003 and 2004.

And many companies are passing on at least some of the burden to their employees, either in the form of higher co-payments, bigger deductibles or larger payroll premium deductions.

Hewitt Associates, a human resources consulting firm in Illinois, projects that the average employee will pay $1,481 in health care premiums in 2005, an increase of 15 perc! ent or $193.

"Rapidly increasing health care costs continue to be a major burden for employers and employees," said Jack Bruner, Hewitt's national health care practice leader.

In North Carolina, the increases may be more moderate, according to a survey by Mercer, an HR consulting firm with offices in Charlotte.

Mercer, which surveyed businesses nationwide about their health insurance plans, projects that North Carolina companies will pay 6.7 percent more this year to provide coverage for their workers.

The average employee in North Carolina will pay $57 a month in premiums for enrollment in a health-maintenance organization and $59 a month for coverage under a preferred-provider insurance plan, according to Mercer.

Though health care costs continue to rise, the increases aren't as steep this year as in the past. The explanation is that during the last several years employees have been required to pay a greater share for insurance and their! medical treatment, either through their paychecks or at the doctor's office, said Randy Taylor, vice president of employee benefits at Senn Dunn.

"When you start the year with a $1,000 deductible and don't see any major expenses ahead, you think twice about going to the doctor if you have a cold," said Don Hardin, a senior health care consultant in Mercer's Charlotte office. "The downside, of course, is that you may also put off getting necessary care. And that's not good for anyone."

In addition to raising premiums, co-payments and deductibles, more companies are encouraging their employees to fill their prescriptions through mail-order companies instead of the local pharmacy.

Mail-order pharmacies typically offer a 45 percent discount on drugs, said Angela Brooks, an account executive with Senn Dunn who works with large employers.

As the trend toward cost-sharing continues, more companies may begin offering health savings accounts as an alternative to traditional insurance.

These plans typically charge a h! igh annual deductible, usually $1,000 or more, but are linked with a medical savings account that the company funds. Employees are able to make tax-free contributions to their account, and they can choose to pay for doctor's visits themselves or use the money in the savings account to cover the deductible.

Money left over in the account carries over each year. The goal is to keep enough money in the account to cover the full deductible in case of an expensive illness.

These types of plans are still new, and in fact, many insurance carriers in North Carolina don't offer them yet.

In fact, Blue Cross on Thursday announced that it will begin offering health savings accounts in cooperation with Mellon Financial Corp.

"We know that many consumers want more ownership and more control over their health care dollars," said John Roos, Blue Cross's senior vice president of sales and marketing. "We're giving them that option by combining our most popular h! ealth plan with the wide variety of consumer-focused investment produc ts Mellon offers."

Contact Amy Joyner at 373-7075 or ajoyner@news-record.com

< BACK