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

Why be like everyone else?

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

Volume 4 Issue 11 Street Talk March, 2003 Issue

Have you wondered if a Consumer Driven Health Plan with an HRA is something that will save you money? S&S Benefits has conducted a claim study of one group that illustrated the standard we have always preached. 20% of the claimants cause 80% of the claims. Would a CDHP pay off for them? Is your group different? Would a CDHP with an HRA save your company significant dollars? At what cost? What would be the reaction of employees to a plan where savings might be generated? If you want to know more or want a study done for your group before you put in a plan, have us take a look at your data.

A study by a consulting firm and the Wharton School of Business says that 21 out of the top 27 generic drugs cost less in the US than in Canada and that for all 27, Canadians pay 37% more. In the US, generics cost an average of 74% less than brand drugs, while in Canada the reduction in cost is only 38%. The study does acknowledge (no surprise) that some high profile, brand-name drugs are much less expensive in Canada.

A Towers study shows that in 2002, 96% of employers surveyed had 401(k) savings plans, 49% had defined benefit plans and 30% had hybrid plans such as cash balance and pension equity plans.

The name game continues. The PWBA (Pension Welfare Benefits Administration) has had its name changed to Employee Benefits Security Administration (EBSA). Duties have remained the same. The new web-site is www.dol.gov/ebsa

In 2001, the PBGC had a nearly $8 Billion surplus, but due to the number of failing corporations, the Pension Benefit Guarantee Corporation is now operating with a $3.64 Billion deficit.

According to the U.S. Chamber of Commerce, the cost for employee benefits has surged to the highest level ever of 39% of total compensation. Health care benefits totaled 11% of compensation for the average employee in 2001. Paid time off was second in cost (10% of payroll), followed by retirement and savings programs (8% of payroll). A 2002 Mercer study showed that paid time off and disability absences accounted for 15% of payroll in 2001. For an employee earning $40,000, $6,000 was paid for 39days of absence per year. Unscheduled absences cost 5% of payroll in 2001according to Mercer.

Thereís nothing like a new social program for Senator Teddy. Co-sponsored by Sen. Chris Dodd, on the 10th anniversary of FMLA, the two now want states to offer six weeks of paid leave (concurrent with the current 12). However, they also want to expand FMLA to employers with as few as 25 workers.

Aetna is finally giving some good financial news. The #2 U.S. insurer in terms of members reported earning a 4th quarter profit of $98.2M as opposed to last yearís 4th quarter loss of $187.6M. Aetna has cut nearly $8,500 jobs as it removed unprofitable membership and went from 17.1M members to 13.7M members. Wellpoint (Unicare) jumped past Cigna as the # 3 U.S. health insurer in terms of members (currently 13.2 M for Wellpoint). Wellpoint profits in the 4th quarter rose 64%. Great-West Life has announced a definitive agreement to acquire Canada Life for $7.3 Billion.

According to an EBRI survey, 19% of small employers (2 to 50 employees) modified their benefits in 2002 to lower costs. Of the 19%, 65% increased the deductible and 30% raised the premiums paid by employees.

There is a surprising new study from Aon says that employees at companies from 2 to 500 lives would rather increase their take home pay (54%) than improve or add benefits (44%). Previous studies had said the opposite, which goes to show that one can probably conduct a survey to say anything.

Itís a new kind of Wild Kingdom. Mutual of Omaha, once the leader in individual health policies, has announced that it will stop selling and renewing those policies for their 50,000 policyholders. They blamed government regulations and high healthcare costs. What would Marlin Perkins say?

Despite the intensity of managed care horror stories, JAMA reports a study of 2 managed care plans covering 4 million people over 2 years found there were only 15,000 appeals filed and 42% of those were decided in the patientís favor.

In a sign of the times, Bethlehem Steel is seeking bankruptcy court approval to terminate life and health benefits for 95,000 retirees on March 31. Their pension plan was under-funded by $3.2B and is being taken over by the PBGC at about 90% of the former level, while health premiums will jump from $6 per month to between $200 and $300 per month.

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