Businesses Pay More Than $8,000 Per Family for Health Care, Report Finds

By Debbie Kelley, The Gazette, Colorado Springs, Colo.

Nov. 8–Health care alone costs employers an average of $8,167 this year per enrolled family and $3,412 for single-worker coverage, according to a recent report by the Kaiser Family Foundation.

Add other salary add-ons including retirement plans, life insurance and disability insurance, and benefits become a major line-item for which employers often have to make cuts elsewhere in the budget to provide.

Costs of benefits are topmost in the minds of employers at this time of the year, when many re-enroll with their benefits carriers and employees sign up for next year’s offerings.

“It’s been tough to keep our level of benefits,” said David Hollenbach, managing partner with DSoft Technology Inc., a 13-year-old local company that designs computer software and provides systems engineering.

Medical- and dental-insurance premiums have increased by as much as 20 percent in some years, Hollenbach said, and now eats up about 10 percent of his company’s annual revenue.

Many employers continue to absorb the majority of the costs of benefits because they want to remain competitive in the marketplace, said Linda Johnson, a business consultant with Pikes Peak Workforce Center in Colorado Springs. The federally funded center assists job seekers with a variety of services.

“It’s important for employers to pay for benefits to maintain a healthy and dependable workforce,” said Geri Westberg, human resources coordinator for CareCore National in Colorado Springs.

Prospective employees look closely at her company’s benefits, she said. The local call center’s 100 employees review preauthorization requests for outpatient radiology procedures. “We’re trying to provide as competitive a benefits package as possible,” Westberg said, “and we use that as a recruitment tool.”

The cost of benefits for El Paso County employers has risen approximately twice as fast as the cost of wages, according to the Southern Colorado Economic Forum annual forecast, which was reported last week. Nationally, wages are expected to increase by 3.2 percent next year, while benefit costs will increase 7.1 percent in 2006.

Hollenbach said before every annual benefits renewal period in the fall, his company conducts “an exhaustive review of options and vendors to see if there’s any way to lower our costs and still retain a better-than-industry standard.

“It hasn’t been easy, and we don’t see any relief on the horizon.”

Employers still need to “get that bottom line,” Johnson said, so they may cut costs elsewhere to keep a good benefits package. Those cuts could include not filling a position when someone leaves and requiring employees to be more accountable regarding health care.

For example, DSoft Technology used to pay 100 percent of medical and dental coverage for its 18 employees but two years ago cut the amount to 85 percent.

“No one was too happy about that,” Hollenbach said, “but we figured we still provided a lot more in benefits than other companies.”

The company upped its share to 90 percent for 2006, but employees will pay higher deductibles and co-payments as an offset.

“We’re taking less out of their paycheck, and the employee is shouldering some of the burden of going to see the doctor,” Hollenbach said.

CareCore also is encouraging employees to be more accountable in seeking health care as a way to keep a lid on costs. It offers health savings accounts, tax-sheltered method of earmarking wages for medical expenses.

“Employees are more apt to go to the doctor for a more serious-type illness, not just a cold,” Westberg said, “because unused money rolls over to the next calendar year.”

The increasing costs of health insurance, which local employers expect to rise by 10 percent for 2006, also have negatively impacted retirement accounts. Only 11 percent of employees in firms with less than five employees have access to retirement plans, according to a recent survey by the U.S. Small Business Administration.

Job seekers, however, also keep the bottom line in mind.

“They have their eye on the hourly wage and will go for the better bill-paying ability — even if it means not having a better health care package,” Johnson said.

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