Employers, once poised for big changes, settle for tweaked benefit packages

In Annandale, Minn., a manufacturer is offering an extra $750 toward employee benefits next year for workers who participate in an expanded wellness program.

In White Bear Lake, a title company that already stocks workplace kitchens with food at no charge to employees is adding on-site chiropractic care.

And in St. Paul, the health plan for city workers is looking at essentially flat premiums thanks in part to the first switch in insurance vendors in nearly 20 years.

As open enrollment comes to many workplaces this fall, Minnesota employers are tweaking 2018 benefit offerings in hopes of competing in a tight labor market while also addressing the relentless rise in health insurance costs. They are stopping short of bigger changes, benefits experts say, due in part to the political stalemate over the federal Affordable Care Act.

"I think employers were very much in a wait-and-see mode, watching what would be coming from Washington," said Deb Krause, vice president of the Minnesota Health Action Group, a Bloomington-based coalition of large employers focused on health benefits.

"So, they focused on what they could control — issuing RFPs, wellness programs, voluntary benefits — vs. making broader changes in the overall structure."

Employer costs for worker compensation averaged $35.28 per hour worked in June, according to the U.S. Bureau of Labor Statistics. Wages and salaries accounted for 68 percent ($24.10) of the costs, with 32 percent ($11.18) going toward benefits.

About one-third of employers increased benefit offerings between 2016 and 2017, with many citing the need to stay competitive, according to annual survey results released this summer by the Society for Human Resource Management. Fast-growing benefit offerings include standing desks and free coffee, according to the trade group for HR professionals, while fewer firms are providing subsidized on-site cafeterias and paying shift premiums.

Going forward, benefits experts said open enrollment for 2018 will include more examples of firms increasing opportunities for flexible work hours, changing health plans to control medication costs and offering what are called "voluntary benefits" — a broad category that includes pet insurance.

The changes, while not insignificant, are a far cry from the flurry of activity that some employers were contemplating this summer, when it looked like Republicans in Washington might fulfill their campaign pledge to dismantle the federal Affordable Care Act (ACA).

Among other things, the ACA set new rules for which workers should get access to employee health plans, so some firms were contemplating how they might return to tighter eligibility standards in a post-ACA world, said Bob Radecki, a principal with Benefit Comply, a St. Paul-based consulting firm.

"Something almost happened to have a huge impact on open enrollment — and didn't," Radecki said. "Instead, it's a little more: 'Same as last year.' "

Workers this open enrollment season are more likely to see a variety of supplemental insurance options available through their employer, but often without a financial contribution from the boss.

These voluntary benefits include policies for "critical illness insurance," which delivers a chunk of money in the event of certain serious health problems. The coverage is becoming more common as employees face bigger deductibles as part of their health plans. But consumer advocates note the policies tend to be very profitable for insurers, with payouts per dollar of revenue often falling far below regulated ratios with traditional health insurance.

Pet insurance, which is another type of a voluntary benefit, currently is being offered by 10 percent of employers surveyed across the country, according to the Society of Human Resource Management. Employees buying it through their employer can see savings of 10 percent or 20 percent off the retail price of pet insurance, said Janice Wilson, a vice president with Hays Cos. in Minneapolis.

She said employer interest in the benefit is growing.

"I have a client with approximately 1,500 employees that rolled it out [in January]," Wilson said via e-mail. "The employees seemed to appreciate the offering."

David Martin, an executive vice president with Associated Benefits and Risk Consulting, sees more companies considering programs that help workers handle college debt as a way to recruit and retain millennials.

"There seems to be a need," he said of loan repayment assistance. "As the workforce continues to harden and there's a greater competition for workers, I could see some of the front-running employers wanting to get into that."

As in past years, much of the activity in the world of employer benefits is concentrated around worker health plans, which continue to be the biggest single driver of benefit costs. Last month, the Kaiser Family Foundation reported the average annual cost of family coverage in employer health plans now stands at $18,764, with employers picking up about 70 percent of the premium.

Group health plans are still struggling with rising costs connected to pharmacy benefits, consultants said. So, employers are continuing to make changes that don't always sit well with workers who use medications — things like prior authorization requirements and additional co-payments.

Financial incentives for workers to use a subset of medical providers for certain services is a newer trend in employer health plans, said Martin of Associated Benefits and Risk Consulting. The idea is to steer patients to centers that deliver good quality, he said, but at a lower cost.

Health plans and employers continue to add coverage for virtual communication with health care providers, where workers can obtain certain basic health care services via telephone, online video services or an electronic exchange of information rather than visiting the clinic.

"I think there's a lot higher awareness," Martin said. He added that as awareness and access expands, "I think utilization will increase."

At Malco Products, SBC, in Annandale, workers are learning about increased financial incentives for the wellness program next year, so long as they complete biometric screenings, a health risk assessment and health coaching.

"We really need people to take ownership and accountability for their health," said Judy Starry, the company's human resources manager. "Otherwise our health care costs are going to continue to rise."

At TitleSmart in White Bear Lake, the company is now rolling out an on-site chiropractic care program. The employer pays a portion of the service, leaving $20 each time for employees, said Cori Lee, the company's HR manager.

The goal is to prevent health problems and reduce time away from work by making it easier to get care, Lee said.

In St. Paul, the city's decision to switch health insurance coverage to Minnetonka-based Medica is holding the premium increase to less than 1 percent, said Jason Schmidt, the city's labor relations manager. Competition among carriers helped deliver the lower rates, Schmidt said, adding that he hopes for more of the same in coming years as national health insurers Aetna and UnitedHealthcare make expansion plans for the Twin Cities.

"How can competition be bad?" Schmidt said.

Christopher Snowbeck • 612-673-4744

Twitter: @chrissnowbeck