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S&S Benefits.....Opinion, Hearsay & News Review

S&S Benefits Consulting, Inc. 219 Darien, Dundee, IL 60118 Phone: 847-428-5353, Fax:847-428-9876,

Email: jseiler@ssbenefits.net www.ssbenefits.net February 2005 Issue

Interesting material from the Met Life Benefit Trends survey. For 903 FTE’s participating, 64% value vacation days as their most important benefit, compared to 59% saying health insurance was most important. Only 40% of employees say they understand their benefits and 27% rely on friends and relatives for financial advice.

The Treasury Department has rejected a request to provide automatic rollover as part of the FSA programs. They have indicated that allowing rollover may harm the administration policy to increase enrollment in HSA’s.

A Deloitte survey of 350 benefit manager’s top priorities shows 90% want to control health care costs while 56% make their top priority providing compensation programs that attract and retain talented employees.

The Bush administration wants to raise employer-paid pension insurance premiums at least 57% to help shore up the PBGC. Employers with pensions in good standing currently pay $19 per participant (which hasn’t changed since 1991). The administration wants to raise that amount to $30, with higher contributions for those plans that are more at risk.

In a Watson survey, less than 1/3 of 1000 randomly surveyed employees had heard of HSA’s. When hearing the plans described, 66% said they didn’t like paying the full cost of Rx under the deductible and 57% didn’t like higher deductibles. Research from America’s Health Insurance Plans shows that of the 438,000 HSAs sold in 9 months last year, 79% were for individuals, while 18% were for small groups and 3% were for large groups.

In a Hewitt survey of 350 large employers, only 3% plan to offer HSAs. Also, frustrated by benefit costs, 7% say they are shifting responsibility for health care strategy away from Human Resources to finance and purchasing executives.

How much does it cost to say you are sorry? Marsh has agreed to pay $850 million over five years to settle insurance bid rigging allegations and they have issued an apology to their clients as demanded by Eliot Spitzer.

Apparently the BC/BS transition of pharmacy benefits to their own company (Prime Therapeutics) is not going as well as planned. BC/BS actually issued a letter detailing their plan to address customer service concerns. In other BC news, the AP reports the Texas branch will be "saving" the state of Texas $79 million in the management of the state employee plan. The company offered to slash administrative fees to keep the business. Remember when the Blues used to offer to administer business for what they were calling ‘negative retention"? Most likely, in our opinion, the same ploy is being used, where administrative fees are being subsidized by keeping a portion of the network discounts, rather than passing them through.

According to the AP, Merck has announced on January 14, they will stop supplying Canadian pharmacies that export medicine to U.S. patients. UnitedHealth Group announced that its quarterly profit jumped nearly 46% as medical costs stabilized and boosted their bottom line. MetLife has said it will buy Travelers Life and Annuity from Citigroup for $11.5 billion in cash and stock. Holy Cross, Ingalls and Louis Weiss Hospitals joined the PHCS Chicago network in January, taking some of the sting away from Adventist leaving in February. Beech Street PPO has acquired BestCare PPO in Baton Rouge, Louisiana.

Larger corporations appear to be switching to the coinsurance model for covering prescription drugs. This is a policy long advocated by S&S Benefits Consulting. Hewitt data shows 45% of larger employers are now using the coinsurance model, compared to 19% in 2002.

We would like to thank those of you who participated in the survey regarding the usefulness of an on-line web site product containing benefits and HR information for both employers and employees. If you received the survey, but have not responded, we are still interested in your opinion on the usefulness of the product. We thank you for taking the time to review the material.

Having tried to get hospital, surgical and anesthesia pricing and negotiate the costs of a hospital stay and surgery, we can tell you the average consumer has no chance to do the "driving" in CDHPs. Try for yourself or a family member (if you are HIPAA eligible to know anything). Knowing what you know is so much greater than what the majority of people know, you will also know that you are not going to "drive’ health costs for that necessary surgery and neither will your employees. Confused? So why don’t we be honest and just call them high deductible plans with health savings accounts (if you are lucky enough to be healthy, you may be able to save).

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