Robust Medical Coverage and Generous Retirement Plans—Cornerstones of Cable Benefits Packages

Employee benefits are a critical component of compensation. In this era of economic uncertainty and spiraling medical costs, workers are very cognizant of company benefits, their value and their share of healthcare costs. Data just released from the Cable and Telecommunications Human Resources Association (CTHRA) 2012 Benefits Survey illustrates that industry employers offer very robust benefit packages. Sixteen companies (ten programmers and six MSOs) participated in the 2012 survey and provide generous benefits that include medical coverage, wellness initiatives, retirement plans, life insurance, accidental death and disability insurance, long-term disability insurance and severance pay. Offering such competitive packages helps companies differentiate themselves while simultaneously attracting and retaining top talent.

 

“Benefit costs represent a significant investment by cable MSOs and programmers,” said Tom Mathews, EVP of HR for Time Warner Cable. “The industry needs to design benefit programs that effectively and efficiently support our employees and their dependents yet mitigate future cost increases for our companies.”

 

“We use CTHRA survey results to benchmark how much we spend on healthcare and other benefits relative to our peers in the industry,” added Bill Strahan, EVP HR Comcast Cable. “Our executives are very focused on knowing what others are doing.”

 

All industry employers participating in CTHRA’s survey offer health insurance, the most prevalent forms being Preferred Provider Organization (PPO) and Point of Service (POS) plans, and a few Health Maintenance Organizations (HMOs) or Exclusive Provider Organizations (EPOs). On average, respondents spend about $10,000 a year on medical costs per eligible employee ($10,089 for MSOs and $10,655 for programmers). For MSOs, net medical cost translates to 19 percent of the average employee salary (payroll divided by the number of employees), while that figure is lower for programmers—9 percent.

 

Industry employers also pay the lion’s share of health insurance costs. Among MSOs, the employer’s share of medical coverage (for both employee and dependent contributions in total) averages 79 percent, and for programmers it averages 83 percent.

 

“We have a very particular focus on making sure that our employees carry a fair portion of the premium costs but that we are not over-burdening them,” said Strahan. “The CTHRA survey helps us pinpoint our relative position.”

 

Cost control is a top priority for everyone involved in benefits planning, as medical insurers estimate the inflation rate for healthcare coverage runs between 9 to 11 percent each year, reported Bill Danish, Senior Vice president of Willis, the human resource consulting firm and insurance broker that conducted the 2012 survey.

 

One new cost-control trend revealed in the 2012 survey is the growing availability of Consumer Driven Health Plans (CDHPs). These plans encourage employees to be better healthcare consumers. Typically, CDHPs have lower premiums than traditional plans, but higher deductibles. Preventive care is covered at 100%, but employees must first meet deductibles before other services are covered. CDHPs can also feature Health Savings Accounts (HSAs), which allow employees and employers to contribute money to cover deductibles and other healthcare costs. Funds left in HSAs roll over to the next year, and employees can move the accounts from one employer to another.

 

“Employees benefit from these plans because if they change their behavior and look for ways to improve their health, they spend less,” explained Danish. “Employers benefit because an engaged consumer can help ‘bend the trend’ and will ultimately lower the 9 to 11 percent medical inflation rate and its impact on the benefit plan.”

 

Of the 10 programmers surveyed, four now offer CDHPs, up from two last year. MSOs, however, have been slow to adopt CDHPs. Only one MSO surveyed offers a CDHP, the same as in 2011. However, that MSO says the CDHP is the company’s most popular medical insurance option. Among those offering CDHPs, plan deductibles range from $1,200 to $2,400 for single-person coverage to $2,400 to $4,800 for family coverage. Of the five companies offering CDHPs, four contribute to employee HSAs and one to a Health Reimbursement Account (HRA). Employer contributions for single-person coverage range from $500 to $750 and for family coverage $1,000 to $1,500.

 

Workforce participation in wellness activities such as tobacco cessation and weight loss programs can also help reduce medical plan expenses. To encourage participation, ten companies (six programmers and four MSOs) now offer employees incentives to take part in Health Risk Assessments (HRAs), biometric screening and behavior modification programs. Incentives include cash, gift cards, lower premiums, and, in one case, reduced benefits for noncompliance. In fact, in February, CableFAX published a CTHRA article about innovative ways that industry employers encourage healthy living among employees.

“We believe this interest in wellness incentives indicates more consumerism and better management of the health of the employee population,” said Willis’ Danish.

 

Retirement plans are also attractive to personnel, and 100 percent of the companies surveyed offer such benefits. Of participants, 67 percent of MSOs and 30 percent of programmers surveyed, offer Defined Benefits (DB) plans or traditional pension plans. In addition, all 16 respondents offer Defined Contribution (DC) plans, such as 401k plans. However, employers vary in the time they require employees to be on the job before they become eligible to participate in a DC plan. Of those surveyed, 33 percent of MSOs and 40 percent of programmers enroll new hires immediately in their 401k plans, while the remainder require a waiting period. This year the survey also asked companies if they offered auto enrollment and auto increase for their 401k plans. Half of MSOs provide both auto options, while 80 percent of the programmers surveyed offered auto enrollment and 70 percent offered auto increases.

 

CTHRA’s survey also reveals that cable employers match employee contributions to 401k plans—on average $3,700 per employee for MSOs and $4,600 per employee for programmers.

 

Healthcare reform is the big unknown in the 2013 benefits planning cycle. “Obviously the healthcare benefit environment is changing rapidly. The Affordable Care Act is on a timeline of full implementation, but it is concurrently being challenged in the U.S. Supreme Court,” said Comcast’s Strahan. “The CTHRA survey gives us context for the full range of choices that must be made.”

 

“We believe that healthcare reform and cost control in terms of plan design will be critical in this year’s planning process. The data we receive from CTHRA’s Benefits Survey is extremely valuable in helping us shape our plans,” concurred Anthony Amato, VP Global Benefits, Discovery Communications.

 

When compared to non-industry employers, Willis’ Danish says that overall survey data movement was “consistent” with general employer averages. “Other than the increase in Consumer Driven Health Plans and more interest in wellness initiatives, 2012 results were similar to 2011. However, based on responses, we believe 2013 may show more movement in anticipation of healthcare reform.”

 

In the coming months, industry employers can also look forward to the release of findings from CTHRA’s 2012 Human Capital Metrics and Annual Compensation Surveys. For more information about CTHRA’s surveys, please visit www.cthra.com/surveys.

 

 

 

* Metrics are listed as averages.