OGDEN, Utah — Employee health benefits may likely see deeper cuts in the coming year, thanks to rising healthcare costs and the corporate rescue plan.
Kent Streuling, VP of HR at the $4.5-billion America First CU, said that while credit unions have been wrestling with employee healthcare costs for years, it's now become a much larger issue. "I think you're going to have to look at before and after (the corporate bailout) scenarios," he told Credit Union Journal. "The corporate assessment will have a big effect as people start to look at what to do to cut costs. Employee benefits may be one of the first things affected."
It's not an easy step for credit unions to move away from offering generous employee healthcare packages, acknowledged Streuling, who chairs CUNA's HR/Training & Development Council. "This is a big ship and it's not going to turn on a dime. For years credit unions have tended to say we are gong to offer really good benefits since we don't necessarily pay as well as everyone else. Now we just can't do that as much."
Health care for employees is also not an issue that credit unions mired in some of the toughest economic areas of the country feel comfortable discussing, as numerous requests by Credit Union Journal for interviews in states like Florida and California were declined. As one $30-million CU that requested anonymity explained, at the same time they are being challenged by the economy to grow and remain viable, the corporate rescue plan is making for some very difficult cost-cutting choices with "no clear answers out there."
In Arizona, Desert Schools FCU acknowledged that growing delinquencies and the corporate bailout are forcing the credit union to "revaluate all of our expenses," explained Jennifer Godel, AVP of human resources and training, who added that employee health benefits is one such focus of scrutiny.
The $3-billion DSFCU is looking at "typical" areas like greater employee cost sharing and deductibles, and to make sure their plan is driving consumer-driven healthcare, shared Godel, a member of CUNA's HRTD Council. But it's also weighing less mainstream choices, such as self funding.
In San Jose, Calif., the $1.2-billion Technology Credit Union's 15% capital position will help it weather the corporate assessment, explained LeeAnne Giblin, HR SVP, without impacting employee health benefits- today. "But we don't know how long we are going to be in this economic environment, and we certainly don't plan to be draining our capital for an extended period of time. We are taking proactive steps to make sure we are protecting that capital."
The corporate assessment is forcing the $305-million MaPS CU in Salem, Ore., to examine benefits as a cost-cutting area, shared Barbara Cecil, director of HR. The credit union's 401(k) was the first to take a hit. MaPS has "backed off a little bit" on its discretionary contribution to the retirement account, which indirectly helps the CU continue to provide healthcare benefits at its current levels, Cecil said. "We wanted to find a way to save money that had the least impact on employees as possible, and for now we think this is the best way."
In West Jordan, Utah, the $2.3-billion, Mountain America FCU hopes to be able to hold tight to its stance that reducing employee health benefits is bad for staff and business, explained Lynn Stephens, HR SVP. "When you start doing things that affect the rank and file, you are impacting members. There are things on our list we can do to cut costs, and we are prioritizing. We are looking for things that are not customer impacting."
