- Announcing VSRA Association Dental Plan
In response to the overwhelming success of the VSRA Association Medical Plan, we are launching an association dental plan for January 1, 2012 start dates. The plan is insured by Assurant Employee Benefits, a national top ten dental insurance company with approximately 1000 network dental providers in Hampton Roads. - Read More
Virginia Businesses are Shifting Health Insurance Burden to Employees as Costs Continue to Rise
by Gregg Kennerly | Published Friday, December 10, 2010
By: Health Care Cost Expert Gregg Kennerly
September 28, 2010
The economy remains weak. Employers are wary of adding staff too quickly in an uncertain environment. Add the significant financial requirements of Health Care Reform (ARRA) to the mix of obstacles facing business and it´s no surprise that employers are reluctant to absorb additional health care cost increases.
The 2010 Employer Health Benefits Survey by the Kaiser Family Health Foundation was recently released and found that while premiums for family coverage rose a modest 3% this year, employers did not increase the percentage they contribute. According to the study results, the average total cost of family medical benefit coverage stands at an astounding $13,770 per year, or $1147.50 per month. Of this total, employees on average are paying $4000 per year through payroll deduction for family coverage. This means employers are still carrying about 30% of the family health insurance cost burden.Although the study claims to be based on a cross section of all employers nationally, the anecdotal and other evidence suggests that employees are, on average, paying a much higher percentage of family coverage at smaller companies. In Virginia, it´s estimated that less than half of employers with less than 25 employees contribute anything toward dependent coverage.
The average cost for employee-only coverage stands at $5,049, or $420.75 per month. Of the total, employees are contributing an average of $899 annually, or about 18% of the cost of coverage. On a monthly basis, the $74.91 contribution is about 14% higher than 2009.
Fully 30% of the firms responding to the survey indicated they had either reduced the scope of benefits or increased employee cost-sharing over the past year. In addition to changing contribution schemes, employers are raising deductibles and co-pay levels in an attempt to stem the tide of increases in health care costs
Many billions of dollars are wasted on unnecessary visits to emergency rooms and doctor´s offices for treatments that would not have been sought if it wasn´t cheap and easy to utilize. It is a thin line to tread between discouraging unneeded care and encouraging essential care.
Physician visit co-pays were a consumer hit when introduced on HMO plans 20 years ago. Now that employees have come to expect this low cost of utilizing health care, it has proven difficult to move in a more reasonable direction. An analogy I have frequently used is: “You don´t expect your car insurance to pay for an oil change, do you? Then why have we come to expect our health insurance to pay for every treatment? That is where we have been over the past 20 years with health insurance.”
Out of necessity, employers are being forced to make changes that aren´t popular with workers. However, there are strategies that, when thoughtfully implemented, can reduce premiums without completely “gutting” a plan. For instance, Health Reimbursement Arrangements (HRAs) are an excellent tool for companies to use in combination with higher deductible plan designs to provide essential coverage while retaining co-pays for some services.
Consumer-driven health plans such as Health Savings Accounts and Health Reimbursement Arrangements are proving to be an increasingly important tool for employers to use in the battle against rising costs. The percentage of employees covered by such plans has increased from 8% in 2009 to 13% in 2010.
Smart employers are having success embracing consumer-driven plans and implementing wellness programs with heavy disincentives for non-participation. Emerging statistics indicate that strong wellness programs are producing dramatic results for the relatively few employers that have plunged into the world of essentially mandated wellness programs.
While it is understandable why businesses are passing along health cost increases to employees, the pace of rising costs is unsustainable. The burden of Health Care Reform falls largely on employers and offers no real help with controlling costs. Until government and private industry get serious about cutting waste instead of simply shifting costs, employees will continue to see their benefits erode and contributions increase.
Gregg Kennerly is a Principal with Advanced Benefit Strategies of Virginia, LLC and can be reached at (757) 536-4554.
In his career, Gregg has developed specialized expertise in “consumer-driven” and high deductible health plans with HSA and HRA strategies, and sold the first HSA plans issued in Virginia through Assurant Health. He is an expert in analyzing plan design data and has served as account executive for national accounts such as Coca-Cola Enterprises and Tenet HealthCare. Gregg utilizes a strategic approach to establish goals based on each client’s unique culture and competitive environment, and measuring results against jointly established criteria.
Gregg Kennerly is a Principal at Advanced Benefit Strategies of Virginia, LLC.
