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Total compensation: benefits are important.

Many organizations are challenged by managing the cost of their health-care benefits while providing a competitive benefit package to their employees. It is important to understand that changes to plan design (higher prescription co-pays, adding deductibles, decreasing co-insurance levels) affect the overall employee compensation.

For example, according to Towers Perrin's 2003 Health Care Cost Survey, the average annual cost for family coverage in a PPO plan is $9,888. The average contribution for family coverage is 22.2 percent or $2.195. The expected cost increase for 2004 is 15 percent for PPO plans or $1,483. If your organization passed the entire increase on to your employees, it would cost each employee an additional 72 cents per hour to purchase the PPO plan in 2004. Each employee in 2004 would allocate $1.77 of his/her hourly wage just to purchase health coverage.

Even through the labor market has been flooded over the last few years, this trend is not expected to continue and retaining qualified employees will become a top priority.

Employers will need to share more of the cost of medical benefits with their employees over the next few years. To offset the negative perception of either benefit design changes or employee contribution increases, organizations can add other benefits that are low in cost but valued by employees, such as voluntary insurance and Section 125 plans.

Tips for good benefit decisions:

* Survey employees about benefits they value, ask which new benefit plans they would participate in if the plan were offered.

* Understand how your employees' view their compensation in relation to other workplace benefits (benefits plans, vacation, flexible work schedules, etc). If they focus only on salary, enhancing benefits will not be valued as much.

* Benchmark your competitors' plans. In the next few years, these organizations will be competing with yours for workforce resources.

Based upon the information you discover through the survey and benchmarking process, you may choose to enhance benefits that are important to your employees.

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This page is brought to you by the Detroit Regional Chamber's Health Care Central--the hub of all business-related health-care issues. To learn more about this exciting new initiative, visit www.detroitchamber.com or call (866) MBR-LINE.

RELATED ARTICLE: According to the Employment Policy Foundation's most recent study:

* Employers' contributions for health-plan coverage constituted 7.3 percent of employees' total compensation in 2002.

* By 2010, employer contributions to group health plan coverage will represent 16.5 percent of total compensation.

RELATED ARTICLE: right Ideas--Save Time

The Privacy Rule, which is part of the Health Insurance Portability and Accountability Act (HIPAA), recently went into effect for many health insurance companies. Your carrier's compliance steps may affect how you can assist your employees with claim issues, so it makes sense to teach your employees how to handle claim issues on their own:

Create a one-page "helpful hints" sheet for dealing with your providers. Include phone numbers, Websites and your group numbers. Also include these key questions for your employees to ask:

* Why was this service declined for coverage?

* Under what circumstances would this services be covered?

* Do I need to provide you with any additional information to receive coverage for my claim?

* What is the easiest way for me to have you correct the situation?

On your reference sheet include a brief description of the Privacy Rule to explain why it is important for employees to take the initial steps in resolving a claim issue on their own.
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Title Annotation:Healthcare Central
Publication:Detroiter
Geographic Code:1USA
Date:Aug 1, 2003
Words:578
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