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Offering Medical Benefits?

In this economic slump we are looking for ways to cut costs without letting more staff go. We are contemplating employee contributions to medical benefits. What would your reaction be (or your staff), if you had to make this decision?

Poll:

Is your company funding medical benefits 100%, and if not, how much do you have employee contribute?

Roxanne Cowan
Rutherford Bolen Group Integrated Marketing

We faced a pretty big increase in insurance rates last year. We did two things:

1. We continued to pay the whole cost of insuring the employee, but asked them to pick up 50% of any spouse or child coverage. 2. We told them we would cover this year's increase. But in the future, we would cover only half the increase, and pass the other half along as a cost to the employee.

We didn't have a single complaint. Everyone thought it was pretty darn fair.

Fred Wszolek
The Sterling Corporation

Medical and Dental -100% - all employees (17.5 hours per week minimum) Dependent coverage is paid by employees.

Joanne Hanson
Cappelli Miles Wiltz Kelly Ltd. Advertising/Public Relations

We fund 50% of the employee's medical insurance cost and they pay for all of their spouse and/or children that they add to the plan. We've never had a problem with this.

Diette Crockett
Freeman Melancon Bryant Advetising

We fund 75% of health and dental coverage, we ask our employees to fund the rest.

Shanny R. Morgenstern
Chief Operating Officer
Morningstar Communications Company

It's a very difficult decision to make as most professionals today will not work without the health insurance "benefit". I quote it, because it's almost become a standard, not a benefit. You can always start an EZ125 premium only policy plan so if you decide to have employees contribute for insurance expenses, at least it would be pretax. Most people today understand the economic crunch. What's worse...loosing your job or paying more for the benefit your employer is trying to maintain for you? Of course you'll receive different responses from people. It will depend whether or not they really get "it' or not. In my opinion, those who complain, don't get it and if the economy turns even worse, they would have to be the first to be considered for cuts. Good luck. This is NEVER an easy situation on any of us.

Staci
GreenEggz no ham, Inc.

We pay 75% of individuals, 66% of employee and 1 family member and 50% for family coverage.

Alice Mathews
The Tombras Group Street Smart Advertising

Our company does pay 100% of medical benefits. Recently we opted to reduce employee's hours rather than having them contribute to the medical. We approached it as a temporary "fix" and when business increased their hours salary/hours would be restored. We emphasized the fact that this reduction was across the board and that everyone would be affected including the owner. We also emphasized that we preferred this "team" approach rather than having any one single person affected (ie., layoff). If the employee is salaried we reduced the salary but allowed the employee to take every other Friday off as a benefit. All responded in a positive manner. Benefits: the employee may save money in taxes, the employer will save money in payroll taxes and the employees will get a "break" with additional time off.

Terri Strobel
Sands Costner & Associates

We used to pay 100% of the employee's medical, dental, life AD&D premiums. In January of this year we pay 50% and the other 50% is a payroll deduction. It is standard procedure that companies pay 50% of the medical premium which is better than having to lay off people.

Deb Harrington
in10city

We changed last April to partially funded health care for our associates. Before this we paid 100% of single coverage and family coverage was paid by the associate less the single coverage.

We changed to 20% - 80% for single and 50% - 50% for family with a gradual decline to 20% 80%.

Our single people decided we were discriminating against them but we are just trying to make the change gradual. The single coverage pays a little more and family coverage pays a little less.

Ann Wissmueller
Versant Solutions

We subsidize only 60% of medical insurance costs.

Pam Brosch
Chief Financial Officer
HSR Business to Business Inc.

We contribute 50% of the premium. The employee contributes the other 50%, however, we do have a section 125 plan in place which allows those premiums to be withheld on a pretax basis.

Carol Stano
Drone & Mueller and Associates

We contribute 50% of the premium. The employee contributes the other 50%, however, we do have a section 125 plan in place which allows those premiums to be withheld on a pretax basis.

Carol Stano
Drone & Mueller and Associates

Here is our breakdown for health that we offer (minimum 90 days employment, 32 hours per week):

# of years as employee % Paid by Employer % by Employee
1 50 % 50 %
2 60 % 40 %
3 70 % 30 %
4 80 % 20 %
5 90 % 10 %
5 + 90 % 10 %

Dave Winslow
Shark Communications

We are a 14 person firm. We pay 100% of the employee medical benefit (which is around $225 per employee-per month), the dependents costs are the responsibility of the employee and deducted from the paychecks.

Jean Klundt
Klundt Hosmer Design

We have always paid 50% of employee health insurance benefits only. We do offer a SEP- IRA which allows us to deduct prior to taxes so both the employee and employer save on SS and Med. taxes. We do match this at 100% to allowable maximum which at least puts a ceiling on our expenses and rewards employees for saving. Plus owners can save for themselves AND deduct it as a business expense. It is always hard to take anything away and I'm sure they will not be happy, but that is the real world today. We are always very careful on permanent benefits for that reason. For example, it is a lot better to bonus than give salary increases. This way you can get out of it without really taking anything away.

Jody M. Freeman
Vice President, Finance
Freeman Melancon Bryant Advertising

We've recently requested employees contribute 10% for their medical coverage.

Diane Elliott
Bookkeeper
Deardorff Associates, Inc.

We pay 100% for the employee and 40% for dependents (lowered from 50% recently, and probably going lower in the future). We don't have a formal employee contribution to their own costs, but with the 30%+ increases over the past year we have lowered the plan benefits so that employees are paying more for the co-pays and medical services if they're on the PPO. We feel that this is more palatable to the employees. We offer an option of PPO or HMO. A few employees choose the HMO to get 100% coverage, most prefer the flexibility with the PPO. The HMO hasn't increased significantly in cost so we haven't increased any co-pays there. We're with Blue Cross of CA, who I can't particularly recommend, although we haven't had any truly major issues, just annoyances like late processing of terminations, world's worst voice mail system, etc.

Brent A. Byrd
Point Zero, Inc.

We went through this recently. Benefits (drugs, dental, life insurance, LTD insurance) premiums were paid 100% by the company. But we realized that under the circumstances we either had to let some people go or cut costs elsewhere. I strongly recommend that you keep your staff involved right from the beginning. Tell them what is happening, where your company stands, what/why you need to do this. Most people will understand and co-operate. Few will oppose and complain. Its a tough job.

Johnson Paul
Controller
Campbell Michener & Lee Incorporated

This could be a tough one for you. We made the mistake two+ years ago of a small pay cut across the board including the partners who took a 50% cut. It was our intention that it would be short term and would keep our "family" together and intact. We also at the time paid 80% of medical coverage including dependent coverage. We have always been flexible and easy people to work for but within a month over half our staff left. We have since re-built and are strong again. My point here is simple, your staff will probably see this as cost to them and an unstable environment regardless of your past and will probably leave. It's difficult when you are trying to do the right thing but go ahead and cut your weakest links and move forward. We currently provide 100% coverage for employees and 0% for dependents. The perception from our employees is this better. Even when we were covering 80% of dependent coverage the perception was we cover 80% the other guys offer 100%. Most don't realize the comparison is apples and oranges.

Sonny Goodall
Lighthouse, Inc.

We pay for health, dental 100%. I'm not sure how they would react. Probably not with a big old happy face that's for sure.

Suzanne Bourlier
Kern Direct

We were able to offer a Cafeteria Plan, where the base paid by the employer is an HMO, but the employee has the option to pay to "upgrade" to a PPO with pre-tax dollars. We were honest with the staff about the cost increases, and stressed the benefits of the pre-tax advantage, and it went well.

Ann Marie Tullo
Ph.D

We pay 80% of the employee and 00% of spouse and children. This is what it has always been and doesn't represent a cut.

Dawn Jaworski
Accounting Manager
Gabriel deGrood Bendt (Advertising Agency)

We had to consider this decision last year on our health/dental insurance. Our employees pay 20% for individual coverage and the agency pays 80%. The employee pays 100% for dependent coverage.

Marilyn Power
Operations Director
Stuart Bacon

Up until about 4 years ago our company paid for medical benefits at 100%. Since then our company has grown from about 12 employees to 30 and quite frankly it was getting very expensive. We now have our employees contribute between 20-25% of the monthly premium for our PPO but also offer an HMO at no cost to the employee. Our staff, although sigh at each renewal period at the rise in costs, understand the importance of having excellent medical coverage and would rather contribute to the monthly premium than have the company pay 100% for cheaper coverage.

Kathi Sheehan
Coyne Communications

We currently fund 100% of our employees medical and dental coverage. They pay 100% of spouse/family coverage. I've contemplated the same option, and wondered what the reaction would be. I have to think that, in these economic times, they would understand the need to take this step. If the situation were explained well ¾ in essence, "If we don't take this step, we will have to reduce staff," what choice would they have? They don't know who would be let go, if such a move were necessary. It's not a time to be thinking the grass is greener elsewhere. They know times are tough on the other side of their front door. I can't believe they'd choose no paycheck over a smaller paycheck! We are only 12 people. We fluctuate between 12 and 16 as a rule. Our insurance runs about $2250 - $2500 per month for full PPO medical and dental. Per year, that is easily the cost of a junior staff member. BUT, how much would you ask them to contribute? And at what price point is it worth playing the card of layoffs as the alternative. At most, you will save $1000 per month if you ask for a 50% contribution. Is the $12,000 per annum worth the repercussions? If so, go for it. But remember, if your effort really is to reduce costs until times get better, I believe you need to assure them the move is temporary, and as soon as the company can afford it, they will re-assume the responsibility of payment.

Shelley W. Holloway
General Manager
Young Isaac, Inc.

50%

Jon Glass
Nonbox

We fund single coverage only and those with spouses/dependants pay for the amounts exceeding single premiums.

Janice Young
Strategic/Ampersand Inc.

The Agency funds 75% and the employee is responsible for 25% of the medical insurance premium. This applies to full time and part time employees. The employee is able to have their portion of the premium paid for with pretax $$ through a flexible spending plan. I am curious if any one is treating medical, dental, disability or life insurance benefits different for full or part time staff.

Amy Norkus
Director of Finance

I want to thank everybody for their responses regarding employer provided medical benefits. Very helpful, and the sentiment shared was touching. I'm smack dab in the middle of Silicon Valley, thus hit very hard with economic slow-down. Cost cutting measures included: down-sizing, not re-hiring due to attrition, cut training & seminar budget, no more free cokes!, cutting salaries 10%, no bonus or pension accruals, forced vacations (not a cash saver, but helped the financial statement), closing an annex office, just-in-time supply purchases (vs stocking to a par level), sourcing cheaper vendors (hated this, as we had many higher priced but loyal suppliers), and now reviewing medical benefits.

But I didn't drop my C&P support agreement! The user group has been a life-line.

Roxanne Cowan
Rutherford Bolen Group Integrated Marketing