Companies Pass the Buck on Benefits
Wall Street Journal (11/26/02) Vol. 30, No. 23 p.D1; Lieber, Ron; Martinez, Barbara

According to the Kaiser Family Foundation, workers already pay for about 27 percent of their health insurance, and companies are being forced to decrease labor costs further through other benefit cuts. According to the U.S. Department of Labor's statistics, benefits are equal to 27 percent of labor costs for firms. The average deductible for a PPO health plan rose 37 percent, and many retirees are losing or being forced to pay more for health insurance benefits from their employers. Kaiser reports that the number of small businesses offering health insurance coverage dropped from 67 percent in 2000 to 61 percent this year, and some larger companies are borrowing from one set of benefits to pay for another. For example, Wal-Mart proposed that workers take funds from their 401(k) accounts to pay for the 30 percent rise in health insurance, but workers were not receptive. Employers are also reducing their matching contributions or contributing stock instead of cash, which reduces their costs considerably. According to the ProfitSharing/401(k) Council of America, 50 percent of small firms do not match employee contributions, but experts agree that employees can ease their burden by utilizing new federal contribution limits for pension plans and shifting flex-dollars into accounts that will pay for additional medical expenses above what their current policy covers. However, in order to placate angry workers, companies are turning to cheaper, more targeted benefits for workers, including pet insurance, butler services, and others.

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