New trends in employee benefits.

• Author: Holloway, Constance

It used to be so simple. Fifteen or 20 years ago, most corporations took a paternalistic approach to employee benefits. Human-resources departments (known as personnel departments then) handled employees' medical claims; contact between workers and benefits providers was minimal to nonexistent. Workers left the task of managing their retirement money to employers, who administered company pension plans. But the most attractive advantage for most employees was that companies picked up the entire tab for benefits, from medical coverage to life insurance.

These days, corporate paternalism is out; survival is in. As corporate costs escalate, never has there been more at stake for employers and employees when it comes to benefits. So what's ahead for workers and companies in North Carolina?

Many experts in the insurance, health-care and employee-benefits fields expect employees to continue paying a larger share of their benefits cost. "Because of rising medical-care costs, employers can simply no longer pay for that on their own, which is why the employee is now paying a portion," say Bob Rowell, senior vice president of W.E. Stanley & Co., a Greensboro-based employee-benefits consultant. His colleague Bob Inzetta, vice president/senior consultant, stresses that shifting more of these costs to employees is no easy task.

In fact, says Diana "B.G." Fewell, employee-benefits manager at Scott Insurance in Lynchburg, Va., "when too much cost is shifted to the employee,the employee may drop out of the plan because he simply cannot afford it. If this pattern continues in a business, the group plan can be canceled by the insurer for low participation."

How much more will employees be asked to pay? For medical costs, "it will vary by employer, by benefit plan, by employer segment," says Meg Sternberg, vice president of marketing for Greensboro-based PHP Inc. The third-largest health-maintenance organization in North Carolina, PHP announced plans last year to merge with United Health-Care Corp. of Minneapolis.

"Smaller companies are requiring much more cost sharing, many of them as much as 50% of the premium," Sternberg says.

Inzetta predicts that both the furniture and textile industries will be forced to require a 50% contribution from their employees in the near future. At Morrisville-based HMO Healthsource North Carolina, the goal is to get a "70/30 mix" of employer-to-employee contributions sometime over the next two years.

Not everyone agrees that employees will pay more for benefits. "Medical inflation is down in single digits and is in its lowest point in the last 20 to 30 years, so overall claim costs are going down," says Richard Breese, senior consultant with Cameron M. Harris & Co., an independent insurance agency based in Charlotte. "Most of our renewals to our current customers are showing no increase or actually decreases in cost, both in our insured plans and self-funded plans."

Gone, too, are the days when employers made...