As part of following up from the Texas Trucking Alliance (TTA) presentation on the 2017 Texas Trucking Industry Compensation and Benefits Study at the TXTA Annual Conference, we have been sending out write-ups to recap the key takeaways. Our first email covered employee stress and financial health, and the next was on compensation strategy and planning. The remaining pieces are listed here:
- Insured Options: High Deductible Health Plans (below)
- How Trucking Companies are Designing 401(k) Plans to Maximize Participation
- Workplace Financial Wellness
Insured Options: High Deductible Health Plans
By, Lynn Weirich and Kim Moore
Where is health care headed? That would be anyone's guess at this point. What we know is that efforts to modify the Affordable Care Act (ACA) so far have failed. It is a massive law, and there has been no consensus on an overall fix. Currently, there is some work under way to try to fix certain provisions both sides can agree on, but we're likely going to have the results of the ACA with us for a long time to come.
While all this occurs in the political realm, the truth of the matter is that most people want health insurance. The reality is that employer-sponsored plans are still the most cost effective way to get comprehensive coverage.
The 2017 Texas Trucking Industry Compensation and Benefits Study reveals the following benefit practices of large companies (those with 11 to 300 drivers):
- 91% provide health coverage
- 72% provide prescription coverage
- 80% provide life insurance
- 77% provide dental coverage
- 70% provide vision coverage
- 57% provide long term disability insurance
While our friends in Washington work to try to amend the law that affects our insurance, the costs of health care continue to rise. Health insurance is expensive because health care is expensive. Humans are living longer and need expensive care for longer than ever anticipated.
Insurance, at its basic design, is supposed to cover the catastrophic expenses. Car insurance doesn't cover our flat tire or oil change, but we want our health insurance to cover everything. We think, "If I'm paying high premiums, why doesn't it cover everything?" It can cover everything, but when we use it do to that, its costs will go up and could become unaffordable.
If we step back and think about using insurance like a financial tool (to protect against the big risks while we budget for the small stuff), it makes sense to consider the High Deductible Health Plan (HDHP)-Health Savings Account (HSA) concept. HDHP plans are designed to give you an insurance plan to cover higher cost medical care and catastrophic expenses with lower premiums. Then employees can use the savings account to pay for first dollar and budgetable health care expenses.
In fact, 16% of Texas trucking companies are utilizing an HDHP with 75% of those combining with an HSA option. The HDHP is coupled with an HSA that can be employer-, employee-, or jointly-funded and allows the employee to take their savings and put it in a tax-favored account in the employee's name. The unused dollars can be carried forward year after year, all the way into retirement to offset some of the high health care expenses we'll have in retirement. One thing that our friends in Washington do agree on is that HSA contribution limits should be increased-as much as doubled-to allow people to save for health care expenses on a tax-advantaged basis.
An HDHP will not be a fit for everyone, but employees like choice, so this is a great option to add to your benefit program. In addition, the costs associated with the HDHP will appeal to employees who traditionally have low health care costs.
OTHER EMPLOYEE BENEFITS TO CONSIDER
The 2017 Texas Trucking Industry Compensation and Benefits Study also shows that many other supplemental types of coverage are offered. Supplemental benefits are often provided on a voluntary basis, so employees get the benefit of buying through work at lower rates while the employer simply makes the benefit available but does not pay anything for it.
Interestingly, disability coverage can be overlooked: according to the 2017 Compensation and Benefits Study, only 30% of small companies and 57% of large trucking companies provided disability insurance. Most people don't think about what would happen if they were sick or hurt and couldn't work. About 62% of personal bankruptcies and half of home foreclosures in the US are due to a breadwinner getting sick and not being able to work (Council for Disability Awareness, July 2017).
Disability coverage is very inexpensive compared to what we pay for medical coverage for employees. In a 50-employee company, the total monthly premium for all employees, including coverage on the owners is typically equal to what you pay for 2 employees' monthly health insurance premiums.
Long Term Care Insurance
Long Term Care is also a huge need for employees. Long-term care is not just for the elderly. We are not dying as often from the things that used to kill us, such as stroke, heart attacks, cancer, and dementia. But we, or our parents, need help to function in daily life. There are 2 ways we can help: provide optional long-term care coverage and work with employees that need time to deal with aging parents. If your company qualifies for FMLA, this is a covered situation.