Benefits July 16, 2004

Washington State Employers See Sharp Health-Care Cost Increases

July 15, 2004 (PLANSPONSOR.com) - As in much of the nation, employers in Washington state have experience with continued health-care cost increases and have responded by decreasing some benefits and shifting some benefits costs to employees.
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Last year, nearly three out of 10 (28%) Washington state employers saw health-care premium increases of between 11% and 15%. Further, 20% saw hikes between 16% and 30%, according to a study of 200 Washington state companies conducted by financial services firm Kibble & Prentice .

The rising health-care costs impacted the total cost of the total employee benefits as well. The cost of benefits as a percentage of payroll jumped to 21.5% in 2004, following 2003’s 11% and 15% reading.

In response, companies transferred a portion of these increases to employees. More than half (53.7%) of employers increased deductibles for plans. Additionally, 30% increased office visit co-pays and prescription drug co-pays and the same number increased employee coinsurance or out of pocket maximums.

Unfortunately for employees in Washington state, the outlook does not look good, as Kibble & Prentice found the cost shifting will continue next year. More than a third (35.4%) of employers say they will increase deductibles, 28% said they will increase prescription drug co-pays and 19.5% indicated they will increase employee co-insurance.

The prevalence of health-care is not the only employee benefit to see a decline due to cost increase, as the study found nearly a 10% decrease in employers offering 401(k) plans. In addition, the number of employers who match employee contributions in a 401(k) plan decreased by 5% and the number that contribute to plans based on profits also decreased by 5%. Not surprisingly, the percentage of employers who do not make any contribution at all increased by 6%.

However, there was some good news to be found amidst the doom-and-gloom. To try to take on the rising health-care costs, 22% of Washington state employers offered some form of wellness plans. Additionally, the percentage of companies offering bus passes nearly doubled, from 30% to 58% and parking subsidies also increased, from 24% to 33.8%. Also of interest, now almost 60% of employers offer coverage for Domestic Partners, up from 49% last year. Further, m any respondents have implemented (9%) or plan to implement (31%) a Health Savings Account (HSA) plan in 2004 or 2005.

The full report is available on request via Kibble & Prentice’s Web site www.kpcom.com.

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