Pressure on Your Health Benefits

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Companies are also saving money by cracking down on eligibility and raising costs for extended family coverage. Many have begun to impose a monthly surcharge of $50 to $200 to cover spouses and partners who could otherwise get coverage from their employer. Employees are now often paying more to cover their dependents themselves. Following the automobile industry's lead, many firms--about half of all businesses--are conducting audits, requiring marriage licenses or birth certificates to verify coverage for some spouses and dependents. Ford has cut more than 50,000 people from its rolls and Chrysler 26,000. That's a drop in the bucket when you expect to spend $2.3 billion on health care, Chrysler spokesman David Elshoff says, "but at that amount, you're looking at every option to bring costs down."

In addition to being less generous, businesses are being less paternal too, forcing workers to be more accountable for spending, a practice called consumer-driven health care. One immediate change has been a move away from fixed co-payments for such medical expenses as doctor visits and prescription drugs. That's being supplanted by coinsurance, under which the covered person pays a percentage of the expense. Nearly half of companies will have made the switch by next year. "The idea is to get employees to think before heading to the doctor for a cold," says Columbia University professor of health management Sherry Glied, "to shop around a little for the best price."

Another option growing in popularity: high-deductible health plans coupled with a reimbursement mechanism, most often a health-savings account. Younger and healthier workers increasingly select such coverage, which combines a deductible of at least $1,000 with a tax-deferred savings account to which employers sometimes contribute. Chicago-based accounting firm Blackman Kallick offered its more than 200 employees the plan this year. "About 10% chose it," says human-resources manager Suzanne Palombi, "many more than we anticipated." For Blackman, that equates to a 33% drop in premium costs for those workers.

Such savings from high-deductible plans, however, are most likely short lived. A study by benefits-consulting firm Watson Wyatt Worldwide found no correlation between high-deductible plans and companies with the lowest health-care costs. And a Rand Corp. report last week showed that people with such coverage more often forgo necessary care--which generally leads to greater expense later.

Indeed, most corporations are focused on giving employees incentives to stay healthy. Some 60% promote preventive care through wellness programs, including smoking cessation and health-club discounts. "More than ever before, companies are seeing the link between good health and productivity," says Beth Bierbower, vice president of product innovation for insurance provider Humana. "So they're engaging employees more on what their personal needs are."