Cost-Saving Strategies for the Benefits Balancing Act

Benefits continue to matter the most to employees. Employees again ranked benefits the No. 1 contributor to job satisfaction in a survey by the Society for Human Resource Management.

Even as health insurance remains the most sought-after benefit, costs continue to rise. According to the Kaiser Foundation, health insurance premiums have increased 47% more than wages since 2000 — requiring Starbucks and other companies to spend more on employee health insurance than on the coffee and other raw materials used to produce their products.

What can you do now? Here are a few ways to maintain the delicate benefits balancing act — providing the benefits employees value without going broke.

Mandatory generic drugs: If there is a generic available for a prescription, the plan pays nothing for the brand-name drug or the employee pays the difference. Generic drugs must meet the same standards for safety, purity, strength and quality as brand-named drugs. In fact, most are manufactured by the same company. One caveat: If your plan allows doctors to write “DAW” — dispense as written — on the prescription, you have recommended instead of mandatory generic replacement.

Spousal Surcharge: You’re subsidizing another company’s workers if your health plan covers a high number of your employees’ working spouses. About 11 percent of companies levy spousal surcharges to offset increased costs and to encourage spouses to select their own employer’s health insurance. Monthly surcharges run from $50- $100 per month (children are exempt). Some employers deny coverage outright to insured spouses.

Salary-based premiums: Salary-based premiums generally require those at the higher end of the pay scale to pay comparatively more than those at the middle and lower ranges hit harder by premium increases. Such plans typically feature 5-7 tiers based on salary, family status and household income. About 10 percent of companies with 500 or more employees use salary-based premiums; 14 percent of companies with 20,000 or more employees do. Wachovia and Davidson College are two with salary-based plans in 2005.

For more on these and other cost-saving strategies, contact Mary Kesel at (336) 721- 2029 or mkesel@benefitadvocates.net. Look for more ideas — including some for your retirement plans — this December in our winter 2005 issue.

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