Credit union human resource professionals face the difficult task of reducing health care plan costs while keeping employee benefit packages robust enough to draw and retain top talent.
CUNA's recently released 2010-2011 "Credit Union Staff Benefits Report" found that as cost increases are projected to return to double-digit levels, 65% of credit unions provide health insurance to their employees and nearly all credit unions with $50 million or more offer it. According to the report, half of credit unions had 2010 health insurance costs increase at least 10% over 2009 costs.
Given the uncertainty about the full impact of health care reform on health care coverage as an employer-provided benefit, HR executives may have even more trouble understanding employee expectations and determining how the credit union can offer value to its employees through benefits while keeping costs in check.
"I know that many employers are not sure what the exact impact will be on benefits costs as they are trying to comb through all of the pieces of the bill," said Beth Soltis, senior research analyst for CUNA. "Most employers are concentrating on the items that have to be in place within this year or early 2011, and I think that credit unions are doing the same and are still watching for more information. They are in the process of determining the full impact of reform and what it will mean to their current benefits package."
Among credit unions that made changes to reduce their 2010 health care plan costs, 41% increased employee cost-sharing for health care coverage, 37% increased or enhanced employee communications, 34% studied health care data for cost of utilization patterns and 32% added or increased use of their wellness program.
In addition, 85% of credit unions still make contributions to employees' defined-contribution plans, although 5% of those who do so said the contribution is currently suspended.
Two-thirds of credit unions said they didn't know whether they would change their health plan to avoid the excise tax, also known as the "Cadillac" tax, on plans considered generous.
"This was certainly due to the uncertainty over what would actually pass, and this measure is included in the reform bill," Soltis said.
However, 11% said they would not change their plan, 15% would change the plan to avoid the tax and 5% would offset it through other benefit/reward programs.
Soltis said 19% of credit unions with $1 billion or more in assets intend to both change the plan to avoid the tax and offset the tax through other benefit/?reward programs, compared to just 16% of credit unions overall.
Robert Carmichael, senior vice president at Maine Savings Federal Credit Union, said the findings are no surprise as the top three hot button HR issues at his credit union are keeping benefit costs low, recruiting and retaining talent and compensation management.
"We are still assessing the health care reform but at this time I don't see it having a major impact as we already offered extensive coverage," he said. "The rising costs are always a challenge and it is possible that the increase in dependent child age eligibility may have some impact on costs going forward. We just started offering HSAs this year as one of our plan options and will continue to encourage that direction without making it mandatory at this point."
As an incentive, the Bangor-based credit union makes contributions to the HSA and has implemented a wellness program that encourages employees to be good consumers of health care by, for example, being diligent about their health screenings.
"Although it is difficult to gauge the direct cost benefits as there are not any hard savings on premiums for having a Wellness program, our hope is that wellness leads to better overall health and acts as a preventive measure to cut costs in the long run [and] increase productivity and attendance," Carmichael said.
Preliminary results from the CUNA 2010-2011 "Complete Credit Union Staff Salary Survey Report" show that slightly more than 10% of credit unions with $1 million or more in assets increased employees' contribution to benefit costs, and the same percentage expect to continue this trend in 2011.
"The percentage of credit unions taking this in action in 2008 is similar, so it is likely that if healthcare reform is impacting the action it is because many expects premium costs to rise as a result of the reform bill," Soltis said.
Another preliminary finding is that about 10% of credit unions reduced or eliminated benefits in 2009 and a similar percentage expect to do so in 2010, representing a jump from about 5% in 2008. If these figures seem small, it is because they are based on credit unions overall and smaller credit unions are not as likely to offer health benefits, Soltis said. The percentage of credit unions that reduced or eliminated benefits increases with asset size, she added.
Among credit unions with $200 million or more in assets, one-third anticipates increasing employees' contribution to benefit costs this year and roughly 20% anticipate reducing or eliminating benefits this year.
"It is clear that credit unions value their employees and are doing everything they can to offer their employees attractive benefit plans," Soltis said. "This is illustrated by the fact that they have persevered in offering health care coverage at a higher rate than employers overall around the country. Credit unions will need to continue the cost-cutting tactics discussed in the benefits report in order to continue offering health care coverage as well as to retain and recruit high quality talent."