St. Paul Companies will raise the cost of its workers’ family health insurance benefits by 38% and reduce contributions to its retirement plan in moves that are expected to save the firm nearly $ 50 million a year, according to the Star Tribune.
However, the insurer is upping its 401(k) matching level from 4% to 6% of worker contributions for the firm’s 9,500 employees, effective January 1.
Employees hired before Dec. 31, 2000, will be able to choose between the traditional pension plan and a cash-balance plan. Those hired after that date will only be eligible for the cash-balance plan. Joan Palm, director of corporate communications, would not disclose how much the pension plan contribution would decline but said, ‘I would not call it slight,’ according to the report.
Economies of Scale
The St. Paul pays ‘more than two-thirds’ of each worker’s health care costs, according to the Tribune. Under the new health program, family care will average $180 a month instead of $130, while to gain ‘economies of scale,’ officials said United HealthCare will be the firm’s only health carrier, with Blue Cross Blue Shield being dropped, according to the Tribune report. However, the company said only about 10% of its workers are expected to have to change doctors.
The company also axed its adoption assistance program, which offered cash help to workers who adopt a child.
The St. Paul pays ‘more than two-thirds’ of each worker’s health care costs, Palm said. If all 9,500 employees were in the family health plan, the company would have paid $ 30 million in premiums this year.
‘We analyzed every aspect of our program and what we determined is that we were quite rich in the pension and retirement areas,’ Palm told the Tribune. As a result of the changes, ‘we’ll be now just slightly above average’ in the industry.