Benefit Costs Shift to Staff

Nearly half of CUs plan to increase employee cost-sharing in 2013 to control health-care expenses.

January 30, 2013

While wages stagnate, health insurance costs continue to rise. That puts a pinch on employees who earn the same amount but are being asked to pay a larger share of their benefit costs.

Last year, credit unions’ health insurance premiums rose 11% on average, with 83% of credit unions paying more in 2012 than they did in 2011, according to CUNA’s 2012-2013 Credit Union Staff Benefits Survey.

And it also challenges credit unions as employers that promote competitive benefit packages and a “best place to work” reputation as selling points to potential employees.

What happens when those benefit packages erode a little bit each year? Or when they start to look like all the other benefit packages out there? At some point, credit unions could run the risk of losing their employee-friendly reputation.

Jeanette Keller, for instance, takes pride in paying 100% of health-care premiums for her two full-time employees at $7.8 million asset Blue Flame Credit Union in Mobile, Ala.

But that benefit was threatened when Keller considered the cost increases facing the credit union in 2012. Rather than ask her employees to chip in up front, she increased some co-pays and reduced some coverage so the credit union could continue to pay the entire premium.

“I just hated to ask them to pay any [premium],” Keller says.

Blue Flame is small, but the trend is big. One-third of credit unions introduced or increased employee cost-sharing to control health-insurance expenses in 2012, according to CUNA’s 2012-2013 Credit Union Staff Benefits Survey—and about 45% expect to do so this year.

Also, 28% of credit unions plan to enhance employee communications about health-care costs and planning. This can help credit unions manage the impact of benefits changes and reassure employees that you’re researching all available options, says Beth Soltis, CUNA’s senior research analyst.

So if you shopped around, solicited bids from other carriers, and negotiated a better deal, let employees know, she advises. “Make sure employees understand why you’re making the choices you’re making; that you really are trying to get the best deal for everybody.”

About one-quarter of credit unions plan to add wellness programs as data mounts supporting their value. Other credit unions plan to study health-care data for use patterns that might yield clues to savings.

Credit unions think of their benefits packages as a distinguishing feature enabling them to attract top talent and offer an attractive work environment, despite offering slightly lower salaries than for-profit competitors.

“It’s true that credit unions generally pay less than banks, but it’s also true that credit unions often compete for staff by offering quality benefit packages,” says Beth Soltis, CUNA’s senior research analyst, who notes the latter often puts credit unions at the top of many “best places to work” lists.

Soltis says the “people-helping-people” cooperative culture attracts people willing to accept marginally lower wages for more meaningful work.

But rising costs, particularly health insurance premiums, are making it more difficult for credit unions to compete primarily on benefits.

Soltis conducted CUNA’s benefits survey, and says the findings suggest credit unions’ commitment to benefit packages remains strong despite the pressures of the economy and rising health insurance costs. Eighty-eight percent of credit unions with more than $5 million in assets offer some sort of employee health plan.

Of those, 96% offer group health insurance. Those figures have held steady for the past five years, despite the recession.

Click here for more information.