Employers Staying Put With Health Benefits

Jackie Mitler, managing partner, Health Insurance Solutions L.L.C., Stamford, said that due to escalating health-care costs, employers have flocked to health plans that have their employees paying higher deductibles and co-pays.

The result is that workers who used to pay S10 might have to fork out a $30 co-pay for medical services, Mitler said. A $500 copay for surgery can be twice or triple that amount now. In the long run, “employees have the benefit of having less taken out of their paycheck, but it affects a bit more of their out-ofpocket expenses,” Mitler said.

But the trend in companies switching to different plans to cut back on costs may be slowing.

In a 2005 survey of employer benefits conducted by the Society for Human Resource Management of Alexandria, Va., 69 percent of 386 human resource professionals said their organization’s voluntary benefits, including health care and retirement, remained about the same compared with 2004.

At the same time, 28 percent reported that the costs of benefits had increased. Despite the increasing costs, organizations did not eliminate health-care or prescription drug coverage, which often account for most of the cost increases to benefits.

Michael Watts, chief executive officer of Pierson & Smith Inc., an insurance agency in Norwalk, said the company’s clients have not been making changes to their plans for two reasons.

Firstly, employers are taking a break from many of the plan changes they made over the last two years. Secondly, many are finding that increasing co-pays is having a relatively small impact in what they save.

Instead, “the number of employers interested in consumer directed health plans has increased,” Watts said. He expects 5 percent of the company’s 250 clients to make the switch to these plans in the next two years.

Why not more and sooner?

“Employers seem overwhelmed with the complexities of these programs,” Watts said.

Health Savings Accounts, which falls under the category, allows employees to pay for medical expenses from an account they contribute to. If employees deplete the fund, they have to pay a deductible before a traditional insurance program takes over.

“Once you get employees engaged to make decisions you take a historically passive consumer and engage them in decisionmaking as to how to spend his money. He’d become a better consumer,” Watts said.

Copyright Westfair Communications Jul 04, 2005