The high cost of healthcare - and what to about it - certainly has employers shaking their heads and searching for answers. It's a topic on the minds of CU execs, particularly with many of the Affordable Care Act regs kicking in next year.
Credit union CEOs and consultants weighed in on the effects skyrocketing premiums and the new healthcare rules are having on staff and the bottom line, talking about ways the CU is coping.
ACA Impacting Part-Timers
In Temple, Texas, Tony Hale, CEO of Texell CU is wrestling with the impact the Affordable Care Act is having on staffing. He explained the new rules now require an employer to provide healthcare coverage for anyone who works 30 hours or more each week, a change from the past. "About 25% of our staff is part time and many carry between 32 to 34 hours a week."
The new rules have forced the $225 million CU to cut back on part-timers' hours. "We don't like doing this because that takes hours out of paychecks and we know people need the money."
To compensate for the shorter hours, Texell has hired more part-time employees to cover the work. "Cutting the hours and hiring more staff both lead to greater turnover of our part-time employees," added Hale.
Spend Health Care Dollars Wisely
Carolyn Mikesell said rising healthcare costs have her full attention. The CEO of the $27 million Public Service CU in Fort Wayne., Ind., noted that her credit union's employee healthcare premiums jumped by more than 20% for the new policy period starting next year.
The CEO hopes to limit future premium hikes by encouraging staff to take better care of themselves and spend their healthcare dollars wisely. "When staff spend money on healthcare, not just their co-pays and deductibles, they should pay attention to all the dollars."
Mikesell said that means shopping around for medical services and prescriptions whenever possible. "Buy your prescriptions at Walmart instead of CVS. People should spend their health care dollars as if they were their own."
Searching For New Coverage
Count Greg Olmstead as another member of the CU community who is not fond of the Affordable Care Act (ACA). The CEO of North Alabama Educators CU in Huntsville, Ala., learned last month that the rules cancel his current plan when it renews next year, since the plan does not comply with new ACA guidelines.
That has sent the CEO of the $83 million credit union scouring healthcare options for his team, and not liking what he's finding. "I think the ability of the small employer to offer rich benefits to staff is slipping away," said Olmstead. "I see that pricing is not as bad for larger employers — but for the small guy I am not sure what is ahead."
Rooting For Obamacare Repeal
Gregg Stockdale, CEO of the $35 million 1st Valley CU in San Bernardino, Calif., is hoping that Obamacare may be repealed someday — but he is not holding his breath. Stockdale said he was against the new law as soon as it was proposed, and that he is not surprised many individuals and businesses are reporting that premium rates under the Affordable Care Act are high.
"I was not for Obamacare when it was first presented and I do not support it now," said Stockdale. "The new rules charge every policyholder through the nose to pay for the uninsured. Why not simply come out with a government program to help these people? These costs are a growing issue many credit unions, certainly smaller ones, will have to address in the coming years."
Operating At Same Benefits Expense Levels
Financial institution consulting firm Cornerstone Advisors says data from its latest Cornerstone Report indicates that despite skyrocketing health insurance premiums, credit union benefits expenses are stable.
Noting that the benefits expenses the report tracks include healthcare, payroll taxes and retirement, Sam Kilmer, senior director, said the report released this year shows that employee benefits expense as a percentage of salary expense was 27%, down from 29% in the last report that was published in 2008. "There is, as well, a tight range between the 25th and 75th percentile in the latest study. That tells us that most credit unions operate currently at about the same level of benefits expense."
But finding ways to continue to absorb health care costs is a big concern among CU CEOs, Cornerstone learned during recent strategic planning sessions. Kilmer said there is greater concern here today due to revenue pressures heading into 2014: margin compression, declining mortgage revenue as the refinance market ebbs, and checking fees and interchange growth slowing.
