My GF just received a letter from her employer that sounds like they are essentially removing the 401k matching and using obamacare as a scapegoat. I am really concerned about these changes since she just started working for this company and has yet had a chance to contribute to the 401k. It also sounds like the heathcare costs are nearly doubling. Is this a similar trend across all your companies? What do you suggest she do?
Part of the email below:
There has been a lot of discussion in the media about the Affordable Care Act (ACA), otherwise known as Obamacare. Over the past several months, it’s likely that you’ve seen news stories profiling various companies facing rising employee premiums and making tough decisions in order to combat the escalating healthcare costs. As a large employer, [Company] and its affiliated companies, [Company], are not exempt from these challenges. However, through countless hours of diligent research and strategic planning, our benefits team has found solutions which will allow us to provide our employees with high quality health insurance plans at an affordable cost. We have also taken into account the results of the health insurance survey we conducted earlier this year in order to further improve your coverage options for 2014.
While this is certainly good news, it does not mean that [Company] hasn’t been impacted by the rate increases and fees levied under the ACA. As we began to prepare for the changes in the coming year, we were forewarned that our increase in total healthcare costs could be upwards of 40%. Through negotiations, our final rates came in better than anticipated although we will still be paying several hundred thousand dollars in additional rate increases over last year. As a result, there will be some changes taking place next year, so please review this letter and your forthcoming open enrollment documents in order to pick the plan that best suits your needs.
In 2014 [Company] will still offer health coverage through Blue Cross Blue Shield. One of the most frequent comments that we received in the employee survey was that you wanted more choices for healthcare coverage. Therefore, in the upcoming open enrollment period, you will have increased options. There will be two PPO (Preferred Provider Organization) options and two High Deductible Options with an HSA (Health Savings Account).
For employees who choose one of the High Deductible HSA plans, [Company] will make a monthly contribution to your account. While the amount is lower than what we were able to provide last year, it is still highly competitive. According to the Kaiser Family Foundation, the average employer contribution to an HSA is $653/year for single coverage and $1,150/year family coverage. For the HSA $3000 deductible plan, [Company] contribution will be in line with those numbers for the employee only plan and will be above average for the employee + spouse, employee + children, and family plans. For the HSA $5000 deductible plan, [Company] will offer contributions well above the national average for all coverage levels.
Another change in 2014 will be the addition of a spousal surcharge. If an employee’s spouse is offered health insurance through his or her company, but chooses not to take it and enroll on our plan, a $50 surcharge will apply per pay period. The employee surcharge is a provision that has become more common with the introduction of the ACA. Companies including UPS, Xerox and other top organizations have implemented similar policies in order to keep employee healthcare plans affordable.
Another part of our effort to manage increasing costs, [Company]’s 401k matching program will also work differently in 2014. The employer match will no longer be automatic; rather it will be discretionary, as it will be based upon company performance and funded upon board approval at the end of the year.
Dental, vision and disability coverage are not affected by the ACA. The rates for these plans have remained the same or decreased slightly and will remain with Guardian.
While the cost of employer-sponsored healthcare plans has risen, the goal of the ACA is to ultimately bring down costs by encouraging us to take a more active role in our healthcare decisions. In essence, it’s prompting us to become conscientious healthcare consumers. As we prepare to head into open enrollment, knowledge is power. The more educated you are about the options and choices in 2014, the easier it will be to minimize your out-of-pocket expenses and maximize the benefits you receive from each plan.