BusinessReport.com

With today’s employee focusing intensely on benefits, area employers are juggling rising costs with creativity to attract and keep workers in a tight market.

“It’s a major factor in where employees decide to work, and it should be,” says Chris Jaques (right), president of the Greater Baton Rouge Society of Human Resource Management.

“At one time, employees didn’t appreciate them, but they’re becoming aware that they’re a critical part of their compensation. Today, people do their homework—and the math—and factor that benefit into deciding what job they will choose. An employee might choose a lesser paying job that offers better benefits because they’re realizing how catastrophic health care problems can be. Those who do not have this coverage are at a serious disadvantage.”

Benefits are a critical draw, especially in the area’s tight employment market, says Danny Miller, benefits salesman with Wright and Percy Insurance. At the same time, employers are struggling with rising health care costs and whether to absorb them or share them. But Miller says he’s seeing more employers passing them on for ancillary benefits like dental, life and disability insurance to employees so they can continue covering a larger portion of health insurance.

In the hope of at least making benefits packages more effective, Lloyd Dubuisson, owner of Dubuisson & Associates in Prairieville, says more employers are asking employees what they want and need in benefits.

As another measure toward controlling costs, Jaques says many companies are offering HMO (health maintenance organization) insurance or PPO (preferred provider network) insurance plans. But more rate increases are anticipated for both plans, which are translating into higher co-payments for medical specialists (aimed at encouraging use of a primary care physician) and higher monthly premiums for employees. Some employers, particularly larger ones, are moving to self-insured plans.

Walter King, owner of Employee Benefits, also in Baton Rouge, adds the self-insured option can help control monthly and annual premiums, as well as possibly avoid raising deductibles or eliminating co-payments. Businesses with 125 or more employees are self-insuring while some with as few as 50 are partially self-insuring.

Dubuisson says some employers let workers choose from two health insurance plans: one with a high deductible and no co-payments and the other with a lower deductible and co-payments for doctors, prescription drugs and, in some instances, for hospital stays. Some employers offer “voluntary group employee pay plans” for benefits such as dental, short- and long-term disability or life insurance at a lower cost to employees and little to no cost to the employer.

“Everything has gone up,” King says. Deductibles are rising as high as $1,000 to $1,500 aimed at lowering premiums. He says the trend is reminiscent of the 1960s and ’70s, when deductibles could be as high as $1,700 to $2,500 per person.

Jaques says mounting benefits pressures also have lent to the emerging use of flexible spending accounts (FSAs). Employees can make pre-tax dollar contributions to these funds for health care expenses such as doctor visits, prescriptions or over-the-counter medications, and dependent care. In this case, the employee, rather than an insurance provider, decides how and where this money is spent. He says the government grants FSAs as tax relief from rising costs.

Wellness programs are gaining popularity in hope of lowering costs with a preventive approach.

While Miller agrees these programs are “the next big advent with employers,” he questions whether people will participate in them. They can require blood analysis, a health risk assessment that includes an employee history and lifestyle coaching based on that assessment to promote healthier living. Tentative industry data suggests every dollar invested in a wellness program can result in a $3 to $5 savings.

King also says this alternative can help hold medical costs down through measures like on-site flu shots, annual physicals and prenatal programs. These programs are currently offered by a minority of employers, but he foresees them gaining popularity, especially if they’re coupled with educating employees on their advantages.

Jaques foresees a dramatic restructuring of health care in the next 10 years or possibly sooner, especially in how it is funded. “Employees have realized their cost has gone out of sight on this, and we’re about to, unfortunately, reach the situation where health care is a privilege instead of a right in this country. It begs the question, ‘Is health care the basic right of an individual?’”

Additionally, he says cost pressures are eroding the quality of benefits packages and the benefits themselves. While an employer may offer a vision plan, it may actually be a “non-benefit” because it offers minimal coverage.

Miller adds there’s no doubt there’s increasing political pressure for discussions about a national health care system, although he doesn’t agree with it. “We’re at a crossroads. With all the costs a family is looking at today, they all of a sudden want the government to pay for health care, but you’re still paying for it. … The question is, ‘Who will manage it?’”