Dear Besieged:
First, take a bow for continuing to provide employees with health coverage at a time when many other companies have chosen not to do so. Properly administered (and communicated), this decision gives you a competitive distinction in the labor market that should directly enhance your bottom line.
It is a healthy sign that your employees are complaining to you (instead of others) about the added cost. It suggests that they are interested in the matter and looking for a response. Here are a few facts and ideas that may help.
The number of Americans without health insurance coverage in 2003 increased by 1.4 million to 45 million, about 16 percent of the population, according to the U.S. Census Bureau.
Also, Managed Healthcare Executive recently reported that employer-sponsored health care premiums rose about 11.2 percent in 2004–continuing the double-digit growth rates of the previous four years. Covering a family under a PPO-type plan now costs about $10,000. As a result, many employers–especially smaller ones–have dropped health benefits altogether, leaving about 5 million more employees (plus their families) without health coverage. We don’t know of a single organization that has not raised premiums or taken other cost-saving measures in recent years. You have nothing to be ashamed of regarding your cost-sharing formula. It fares extremely well against the norm.
According to the Bureau of Labor Statistics, seventy-six percent of covered participants in health care plans are now required to contribute to single coverage ($67.57 per month), and 89 percent are required to contribute (an average of $264.59 per month) to family coverage.
This is bitter medicine, perhaps, but we’re convinced that one of the best things you can do is share the facts with your employees. Be open and honest with them about the options you have considered, including the cost of providing current levels of coverage. They will still be unhappy about having to pay higher premiums, but they should at least understand why.
While the big picture on health care costs is pretty bleak, there are a number of things you can do to lessen the impact on your organization. For example:
1. Consider setting up a plan whereby employees pay a portion of their premiums with before-tax dollars. Additionally, employers can provide employees with flexible spending accounts that enable employees to pay for copayments, deductibles and certain items not covered by insurance with funds set aside before taxes. Both of these plans will put a little money back in employees’ pockets.
2. Adopt an audit feature that offers employees an incentive to audit their health care bills and to report medical billing errors. Consider sharing half of any savings with the employee.
3. Show both the employer and employee portions of health care premiums as a line item on every pay stub.
4. Seek employee input as you contemplate future changes in benefit plans. If the consumer was neither educated nor involved, that could have contributed mightily to the backlash.
SOURCE: Richard Hadden and Bill Catlette, co-authors,Contented Cows Give Better Milk, www.ContentedCows.com, Dec. 29, 2004.
LEARN MORE: Information about onlineRx tools;health-risk appraisals; consumer-driven health care;Leapfrog;clinics;Union Pacific’s tough love;case studies;disease management;battles with employees; and auditing forineligibles.
The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.