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Employee benefits are disappearing before your eyes

Employers are slashing major medical plan options even more and shifting costs to employees, who must find alternatives such as opening HSAs.

By MSN Money producer Jun 16, 2014 11:07AM

Healthcare application & stethoscope © Steve Hamblin/Fuse/Getty ImagesBy Ellen Chang, MainStreet Main Street


Employers are slashing major medical plan options even more and shifting costs to employees, who must find alternatives such as opening health savings accounts.


Changes in benefits are occurring because 49 percent of companies said that controlling costs is their top business issue, compared with only 28 percent in 2011, according to a recent survey from Aflac, a Columbus, Ga., provider of voluntary insurance. The study surveyed 1,856 employers and 5,209 employees at small, medium and large U.S. companies and sheds light on how companies are dealing with health care costs and how it affects workers.


Employees found that they were paying a higher rate for health insurance with 14 percent of businesses that reduced the number of major medical plan options, 56 percent that increased employees' co-payments and/or employees' share of premiums in 2013 and 19 percent of companies that implemented a major medical plan with a high deductible (over $1,000) and a HSA as an alternative to a traditional medical plan.


"For four consecutive years, we have witnessed this growing trend and can foresee the possible ramifications for the U.S. workforce," said Teresa White, chief operating officer of Aflac Columbus. "When businesses make changes like delaying pay raises and increasing major medical deductibles and out-of-pocket costs, they can further destabilize the precarious financial position of many employees."


Companies are not only cutting back on medical plans, but also reducing other benefits with 32 percent of businesses who eliminated or delayed raises, 22 percent who eliminated or cut back on benefits and 21 percent who changed some full-time workers to part-time workers.

One option for employees is to purchase voluntary insurance policies such as accident, critical illness, hospital and disability for added protection, said Matthew Owenby, vice president of human resources for Aflac. Voluntary policies are designed to help pay for out-of-pocket expenses that can be associated with the rising cost of health care."The cash benefits of voluntary insurance can be used for rent, gas, groceries, child care or other out-of-pocket expenses," he said.

Since the trend of shifting health care costs to employees is not on track to slow down, employees need to be "accountable," said Owenby. Workers need to be more involved in managing their health care by making the steps necessary to start saving and reducing debt more, determine how health care costs and spending fits into an overall financial plan and meeting with an insurance provider to ensure all aspects of the policies chosen are understood, he said.


"Many employees will face benefits decisions later this year," he said. "Before they sit down and rush through the process, they first have to take a step back and do their homework."


Many employees are not prepared to pay for an out-of-pocket expense stemming from an unexpected serious illness or accident with 42 percent who say they are not at all/not very prepared to pay for those expenses. A majority of people cannot pay for a major expense with 49 percent who can pay less than $1,000 and 27 percent who can pay less than $500. Only 26 percent have enough savings to pay for out of pocket expenses ranging from $1,000 to $5,000 and 25 percent who can pay over $5,000.


In event of an unexpected serious illness or accident today, 56 percent of workers would pay for expenses from savings while 32 percent would rely on credit cards, 39 percent would borrow from their 401k or friends and 14 percent who are not sure.


Workers who do not have significant savings probably should not choose the benefit options with the highest deductible, Owenby said.


"It may make better sense to choose a slightly higher premium that is paid over time rather than a large, unmanageable lump sum," he said.


Cost-shifting to employees will continue with the number of workers covered by high-deductible health plans quadrupling from 5 percent in 2007 to 20 percent in 2014, according to the Kaiser Family Foundation.


Employees should check with their HR department to see which options are available since the company may provide its own private exchange or portal for employees to explore health insurance options, including accident, disability, dental and vision, said Carrie McLean, director of customer care at, an online health insurance exchange based in Mountain View, Calif.


If the employee share of the premium is increasing, your employer may be offering a HSA plan since those often have lower premiums.


"For younger, healthier employees, this may be a good option as you contribute money pre-tax into your HSA," she said. "Some employers may also match contributions to a certain limit. By building up funds in your HSA, you can cover that high deductible in case of an emergency or even everyday out of pocket medical expenses such as office visits, co-pays and prescription drugs."


The advantage of HSAs is that the unused funds roll over each year and any remaining money can be used for retirement after the age of 65. People who buy coverage on the public health insurance exchanges are especially good candidates, since most of the purchased plans (including silver and bronze plans under the Affordable Care Act) are high-deductible plans. A high deductible is defined as at least $1,250 for an individual and at least $2,500 for a family.


With the new healthcare reform, there are many free preventative services that consumers can take advantage of such as screenings, annual exams and vaccines, said Kim Davis, senior vice president at NFP HR Service, an Austin, Texas benefits solutions company.


Before signing up for a surgery, employees should research the procedure, medications, physicians, and even which hospitals should be used since it can "potentially save you thousands of dollars," she said.


"Just accepting what your physician says, you should do means you could be giving away money saving options," Davis said. "Things like X-rays or MRIs, knee replacements, and brand/generic drugs can cost you substantially less if you take the time to shop for the best deal with the highest quality care."

More from MainStreet

Jun 16, 2014 11:24AM
Employee benefits are disappearing before your eyes
"For four consecutive years, we have witnessed this growing trend and can foresee the possible ramifications for the U.S. workforce,.......". "When businesses make changes like delaying pay raises and increasing major medical deductibles and out-of-pocket costs, they can further destabilize the precarious financial position of many employees."

Yet we have seen an Massive increases in the Last Decade in the Trillions for Stock Buybacks and Dividend increases. We have also seen the pay Gap move from what was once 40 to 1, to 400 to 1, to now fast approaching 1000 to 1. We have also seen the move from Defined Pension to 401K where now the Worker instead of the Company incurs more Risk. Golden Parachutes to the CEO types have exploded. Meanwhile the Working Poor and the Fading Middle-Class are seeing the same or less in Wages of a Decade ago. Yet it's the Actual Workers whom have experienced Rampant Inflation. Welcome Back, to the New, Old World Order.

Jun 16, 2014 11:52AM
How's that "hope and change" working out for you now????
Jun 16, 2014 12:19PM
Hope and change is more like HOPE you have some CHANGE left.
Jun 16, 2014 11:59AM
This news should not surprise anyone.
Jun 16, 2014 12:53PM
If you like your health care plan, you can keep it - NOT !
If you like your doctor, you can keep it - NOT!

So this is the year in which most workers will lose that health coverage at your job. Is that 'moving forward ? Is that the hope & change you were expecting ? 

Jun 16, 2014 12:29PM
It's simple math. Health care costs are becoming CEO's pay, regardless of their company's performance, they take away millions, even when they lose their jobs.
Jun 16, 2014 12:51PM
Yet another example as to Why ObamaCare is wrong.   It does not resolve the underlining Medical Cost issue rather it only hides it even more.  If the Government truly cares about decreasing health costs, they would have conducted a detailed study to find out WHY costs are so high and then try to resolve that.  Forcing people to have insurance when some people can't afford it in the first place does not resolve the High Health Care costs.
Jun 16, 2014 1:07PM
We are a very small business in Central Pa.  We have always offered health insurance, and did so again this year. 
Health coverage offered by an employer is a deductible expense. Heath care paid for by individuals is taxable income.  By forcing employers out, the government gains a HUGE increase in taxable income. I'm sure this was part of the plan.
Jun 16, 2014 12:39PM
Well duh, those that are all in support of Obamacare are those getting subsidies primarily. In other words they go on Medicaid and increase the rolls. Anywhere there's a large number of medicaid recipients there's a lot of trips to the ER's for cold and coughs. 12 years in EMS on the ambulance and I had to tote more people to ER's that should have gone to a simple clinic POV. No medical necessity for a hospital ER. As one girl was told by her family on one call I did, "go on girl, it don't cost nothing." Which in reality it does cost, cost tax payers. That was some years ago for me and I can only imagine how the ER's have been swamped. And that takes away personnel and care from the real emergencies.
Jun 16, 2014 12:41PM

The US worker works longer for less than almost all the modern industrialized nations.  They get less time off, have no pensions and have the MOST EXPENSIVE HEALTH CARE IN THE WORLD.


But, take heart, you can watch Epic Yachts or Epic Homes on the cable channel and pretend that might be you one day.  You can visit the Vanderbilts mega mansion in North Carolina and drool, pretend you are  a maid or butler.

No where else to post, so here it goes:  "Obama to Sign Order Banning Federal Discrimination Against Gays".

My question is, when will Obozo sign an order to stop the war on the middleclass?  All he cares for are the illegal's, his own party, and the perverted.

Jun 16, 2014 12:00PM
Definitely a sad trend for the American workforce.  I fear additional government regulation on benefits and compensation would only drive corporations to relocate or downsize to remain competitive in a global market.  A long term robust economy that generates competition in the labor force would likely stall or reverse the trend.  But this is unlikely given the massive debt the country has accumulated in recent years.
Jun 16, 2014 12:07PM
This overall trend puts all of us on the losing end. We have allowed ourselves to be convinced by the healthcare industry that we are willingly dependent on a system that's sole purpose is to make money. We have been conditioned into fear-based thinking and have unfortunately quit taking responsibility for our own health. As long as we are unwilling to accept personal responsibility for our health by exercising, eating nutritional food, getting proper sleep, managing stress and doing whatever is required to be healthy, we will be subservient to this beast of a system created by greedy business corporation and a failed political system.
Jun 16, 2014 12:52PM

Hope most voted for Obama and now see how their premiums double, or higher, as the company paid portion is now to be paid by them.


Jun 16, 2014 12:22PM

If employees don't get raises how can they save in a HSA?  I guess they can not buy things at the shopping centers, cut off cell phones, don't travel...but what would that do to businesses?


The problem is NOT employees and their spending but the greed of corporations who talk bottom line concerns while giving the CEO a huge bonus.


What will happen is the collapse of the health care system.  I predict in 10 years the system will collapse like the VA system.


The solution is for employees to unionize and demand benefits.   That is what happened before to get benefits in the first place.


AFLAC is in my town Columbus, Ga. and they are known as supplemental health care people.  They pay cash to policy holders because the policy holders do not have any savings.


If you do not believe in unions or single payer provider for health care you better be saving a lot of money and quit spending.   Young people take heed, stay home, save, don't go to expensive movies, buy because pensions are no more, Medicare and SS are going to be questionable and we will be beholding to oil companies with no competition so expect gas prices to be ever higher.


Do NOT wait until you are 50 to be planning for retirement and NO you cannot work until you die, the boss will fire you at 65  and no one will hire you then.  You may have health problems too.

Jun 16, 2014 11:37AM
Also, The U.S. wars in Afghanistan and Iraq expected to cost taxpayers $4 trillion to $6 trillion, taking into account the medical care of wounded veterans and other liabilities. Meanwhile some Corporations in America are fleeing the Country to avoid paying their Fair Share of the Bill. But they have little problem shifting that Burden and other onto the Backs of the actual Workers. Meanwhile CEO types are seeing Record Payouts and Benefits, Regardless of their actual Job Performance. Again, Welcome BACK, to the NEW, Old World Order.
Well once this Healthcare debate is shown on C-SPAN we will all know what we are getting ourselves into. Oh wait..................
Jun 16, 2014 12:45PM
That's all a bunch of bunk!Employers have since the 90's used temp services specifically so they didn't have to pay benifits.I say,how's the union busting attitude workin for ya? It's ridiculious!They went overseas just so they didn't have to pay anything to help the workers that they should value greatly because if it wern't for them,those companies would have NOTHING!!! They are greedy nasty people some of them.It's pathetic!! Now,most don't even have a union to help them get thru this.One day those people are going to be so sorry they've done this to the american worker.The quality of the jobs outsourced isnt very good either.They've created their own headaches and I sure don't feel sorry for them today.They need to actually learn from this big mistake of theirs and treat the american workers decent.
Jun 16, 2014 12:47PM

Check the stats.....the US is not number one or even near in any category except military spending.  Health care?  Nope ranked anywhere from 19th to 37 th.   Education?  Are you kidding?   Income?  Nope , not top ten.


Income disparity?  Ranked 5th in world.


Longevity?  Nope  West Virginia  southern counties life expectency for a male is equal to a third world nation at mid 60s.  The total in US is well below most modern nations.


The middle class was built by unions.  Without them you will go back to the days of the early industrialization.   More like Bangladesh.

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