Keep providing great benefits even during a down economy

"Companies are taking a strong look at their offerings, making sure they are covering only eligible employees and dependents," says Meryl Kaplan, a managing consultant in the health and group benefits consulting practice of Cleveland-based Findley Davies. Many companies are turning to dependent eligibility audits, which distinguish ineligible dependents enrolled in companies' benefit plans. The tool can yield cost savings in a short period of time, according to Kaplan.

Lane Transou, manager of benefits and compensation, at Parker Drilling, a provider of drilling services on land and offshore, says the changes in health plans he has observed involve "shifts" in cost sharing.

"The most predominant cost shift is a change in the prescription drug co-pay," says Transou. These prescription programs usually have a three-tier (generic, formulary brand name or non-formulary brand name options) co-pay system but now companies are introducing a fourth tier (multi-source brand drug).

"Cost shifting on contributions (what the employee pays monthly for medical coverage) is being moved to the employee. However this is only if the company was picking up a higher percentage of the cost as compared to the market," Transou adds.

"There is a trend to have spouse contribution levels at 50 percent where employee contribution may stay at 25 percent," Transou says.

Some employers are taking "stopgap" measures to modify their benefits programs for the short term. For instance, more companies are focusing on preventive care or wellness opportunities for employees to take better care of themselves.

Transou says there is an increase in the number of companies introducing consumer-directed health plans to employees. With these high-deductible plans, the company invests money into a health care account but employees are responsible for their health expenses.

Instead of dropping benefits, many companies are opting to provide a lower-cost option (to the employer) or high-deductible health saving accounts. Some employers may choose to eliminate or consolidate certain benefit plan options.

Interestingly, as companies modify their plans to ride the waves of the economic downturns, Kaplan says she expects the benefits modifications to become the new norm for healthcare options.

"If I had my crystal ball, I don't anticipate employers going back to old approaches to benefits. Companies recognize costs aren't going down. As we continue to evolve, we have to engage employees more in the cost of coverage. However, there is a point you don't do that anymore, because you won't retain employees," Kaplan says.

Transou suggests there is a "growing appreciation" for simply having a health plan. However, he notes that if an employer needs to adjust the cost sharing on a plan and does not communicate the business need for the change then it will be received as a negative to employees.

Kaplan agrees that springing cutbacks on employees is not the business savvy approach. "If it's a surprise and employees are not in favor of it, such circumstances will impact morale. It's up to the employer to ensure the message about benefits is as positive as possible," she says.

In general, medical coverage has "always been a source of frustration" for employees, according to Transou. "Primarily because the average employee does not understand how the plan works."

Kaplan says she's observed that employees do understand the issues involving cutbacks. She says, "If an employer is open and honest about their economic challenges, many people are willing to take a cut somewhere so they don't lose their job."

As for the potential national health care reform's effect on employers and benefit plans, Kaplan says it's all about "wait and see." "Employers obviously have concerns about losing their independence regarding coverage offered. For now, we'll continue on the path we've been proceeding on. The plan is not going to happen overnight."