Communicating Rising Insurance Premiums
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.
According to the Bureau of Labor Statistics:
- 76% of covered participants in health care plans are now required to contribute to single coverage (average of $67.57 per month)
- 89% are required to contribute to family coverage (average of $264.59 per month)
As an employer, how do you communicate these rising costs to employees? 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.
Other ideas to deal with this issue:
- 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 co-payments, 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.
- 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.
- Show both the employer and employee portions of health care premiums as a line item on every pay stub.
- Seek employee input as you contemplate future changes in benefit plans. If the consumer was neither educated nor involved, this can contribute to employee backlash.