Aug. 25--M&amp;amp;amp;amp;amp;amp;amp;amp;amp;T Bank Corp., one of Western New York's largest employers, is making a major change to its health insurance for employees, completely replacing three traditional co-pay plans with a high-deductible health plan in a bid to make workers take more personal responsibility and get healthy.
The Buffalo-based bank told employees in recent days that it would switch exclusively to what's known as a consumer-driven health plan for 2013, marking a sharp move in how it will cover medical costs.
M&amp;amp;amp;amp;amp;amp;amp;amp;amp;T employs 15,000 in seven states and Washington, D.C., with 5,000 locally. Those employees and their families will now absorb significant medical costs they didn't see before.
Such plans are designed to shift more of the cost burden to employees, encouraging them to take a more active role in their health care, and to take ownership of the expenses. By making employees more aware of actual medical costs and encouraging them to change behaviors and live healthier lives, the goal of such plans is to reduce medical spending in the long run.
"What we're trying to do is to help get and keep our employees healthier, so that we can, with them, manage the growth of health care costs over time," said spokesman C. Michael Zabel.
High-deductible health plans are also very attractive to employers because the premiums are so much lower than those for health maintenance organization(HMO), preferred provider organization(PPO), point-of-sale(POS), or traditional indemnity plans, most of which have been rising at a double-digit percentage clip year after year for much of the past decade. That offers employers a big opportunity to cut costs.
But Zabel insisted that short-term savings are not the focus for the bank, which he said will actually spend the same amount or more on health care next year, because of the added services.
M&amp;amp;amp;amp;amp;amp;amp;amp;amp;T's adoption of a consumer-driven health plan may drive more growth of these plans locally, because of the bank's size and visibility in the area.
Such plans were touted as the next big wave in health care when they were first introduced several years ago, as proponents asserted that the high deductibles would provide an incentive for educated consumers to rein in their use of medical services when they weren't necessary. But employers and consumers nationwide were much slower than expected to try them, because of their complexity.
Adoption by employers locally is still somewhat less, but is growing, said Greg Leifer, director of life and employee benefits for Amherst-based brokerage Scott Danahy Naylon Co. "More and more employers are moving in this direction," he said.
"We continue to see the migration to the high deductible health plans," said Christopher C. Kempton, director of group benefits for Walsh Duffield Companies, another brokerage.
Zabel did not say how much the bank spends on health insurance now, but total salaries and employee benefits at the bank exceeded $1.2 billion last year. And 90 percent of the bank's health care spending last year was for chronic and catastrophic conditions, many of which were driven by health problems that could be prevented or managed, M&amp;amp;amp;amp;amp;amp;amp;amp;amp;T said. Such conditions often include diabetes, heart disease and strokes.
"The goal here for us is to help our employees get and stay healthier," Zabel said. "We're not going to spend one dime less on health care next year. We'll actually continue to pay more."
Zabel said M&amp;amp;amp;amp;amp;amp;amp;amp;amp;T will continue to share the same percentage of overall costs with employees. And while deductibles will rise, he said "the majority of our employees will see a reduction in their payroll contribution."
According to a national survey of 588 companies by human resources consulting firm Towers Watson, 66 percent of companies offered a consumer-driven health plan, as did 11 of 14 banks nationwide that M&amp;amp;amp;amp;amp;amp;amp;amp;amp;T considers its peers. M&amp;amp;amp;amp;amp;amp;amp;amp;amp;T worked with Towers Watson.
Indeed, there's an increased focus generally by employers on wellness services, health assessments and management of diseases and chronic conditions. "Employers are moving slowly but steadily toward an increased focus on wellness," Nicole Serfontein, senior international consultant at Towers Watson, said in a recent release.
M&amp;amp;amp;amp;amp;amp;amp;amp;amp;T's new plan, which includes a health savings account, provides full coverage of preventative care, with no deductible for such things as physical exams, well-child care, recommended cancer screenings and preventative prescriptions. The plan also includes a "health risk assessment" and health coaching by nurses, with cash incentives for doing the assessment.
With the health savings account, which allows employees to save pre-tax dollars for qualified medical expenses, balances can be carried over from year to year, and employees can take the money with them if they leave M&amp;amp;amp;amp;amp;amp;amp;amp;amp;T. Balances over $1,000 can be invested in a range of options to accumulate value over time.
And for most of its workers, M&amp;amp;amp;amp;amp;amp;amp;amp;amp;T will contribute to each employee's HSA, on a sliding scale based on the employee's base salary as of July 1, the type of coverage and whether the employee is part-time or full-time.
But the plan also features an in-network deductible of as much as $1,500 for individuals and $3,000 for families -- twice the current maximum for the bank's three plans. That must be met before full coverage applies.
And instead of just introducing it as another option alongside existing plans, as many companies start out by doing, M&amp;amp;amp;amp;amp;amp;amp;amp;amp;T will make the new plan the only health plan choice for next year, replacing its former "high," "mid" and "basic" plans that featured co-pays. The bank did not previously offer a consumer-driven plan, Zabel said.
Employers have shied away from such "full replacements" because the new plans are radically different from what consumers are used to. So most companies introduced them gradually to get employees adjusted. Even now, according to a Towers Watson and National Business Group on Health study, only 7 percent of companies have done a full replacement, and only 14 percent expect to have done so by 2013.
Still, "it's not all that unusual," said Howard Silverstein, CEO of Choice Employee Benefits Group. "More and more companies have embraced it and made a total replacement."
"This is a full-scale effort to focus on employee health," Zabel said. "We think that this is an issue that people do and should care a lot about, but it's not just about dollars and sense. It's about people's health."
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