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Region’s big banks to shift employees into high-deductible health plans

Big banks are leading a push to move employees into high-deductible health plans — a type of health insurance increasingly popular with employers in which workers must pay thousands of dollars in medical bills before benefits kick in.

Starting next year, PNC Bank, Bank of New York Mellon and Huntington Bank will shift their employees to the plans, which charge workers lower premiums in exchange for greater upfront, out-of-pocket costs.

The financial services industry, which has been hammered by costly new regulations, lackluster borrowing activity and big losses from the housing crisis, is looking at reducing employee benefits as a way to trim expenses.

“Financial services is definitely leading the way there,” said Lorin Lacy, a health care consultant with Buck Consultants, a Downtown benefits firm, referring to the move to higher deductible plans as a way to cut costs.

The push by companies to lower their health care costs by shifting more of the burden for coverage to employees is a growing national trend, but banks are seen as moving aggressively by eliminating low-deductible plans altogether.

In an average high-deductible plan, workers must cover the first $1,500 to $2,000 in medical costs before their insurance begins paying for their treatment, said Norman Kerr, also a consultant at Buck. Traditional health plans also are adding deductibles, but employees are typically required to pay the first $400 to $500 before insurance payments kick in.

Such shifts in the cost of medical insurance are eroding workers’ disposable incomes. According to a report Tuesday from the Kaiser Family Foundation, employee health insurance costs are growing faster than wages. Since 2003, premiums have jumped 80 percent, nearly three times faster than wage growth and the rate of inflation, the Kaiser survey found.

“What people pay for health care has so significantly eclipsed their increase in wages,” Drew Altman, the CEO of the California-based foundation said on a conference call with reporters.

Lacy, the Buck consultant, said the number of companies in the United States replacing their traditional health plans with high-deductible offerings is up 50 percent in the last two years.

While growing quickly, high-deductible plans covered only 20 percent of workers with employer-provided coverage this year, according to the Kaiser survey. That’s up from 4 percent in 2006.

The average deductible for a single person is $1,135 this year, compared with $584 in 2006, according to Kaiser, which surveyed more than 2,000 U.S. companies. The average annual premium this year was $16,351 for a family, with the employee contributing $4,565 toward the premium.

Higher deductibles are just one strategy companies have employed to push more health care costs onto employees. Kaiser found that premium contributions, co-payments for office visits and prescription drugs, and cost-sharing for hospital visits are all increasing.

PNC, the nation’s seventh largest bank, will switch its 56,000 workers to high-deductible plans starting Jan. 1, spokeswoman Marcey Zwiebel said. The Downtown-based bank is finalizing details of its offerings and Zwiebel wasn’t able to provide specifics on how much deductibles would be. She said rising health care costs factored into the bank’s decision.

“This is an opportunity for us to streamline and simplify our plan offerings,” she said.

PNC has been working toward cutting $700 million in annual expenses this year, officials have said. It is planning to close 200 branches by the end of the year.

BNY Mellon, which is based in New York and employs 30,700 workers in the United States, is planning to offer only high-deductible plans next year, spokesman Ron Gruendl said.

“Next year we will offer medical plan options that put employees more firmly in charge of the health care dollars they spend,” he said in a written statement.

The bank, which declined to provide specifics about the plans, is trying to cut $700 million in expenses.

Columbus, Ohio-based Huntington, which has 12,300 employees, refused to answer questions about its intention to move workers into high-deductible plans.

In a written statement, spokeswoman Maureen Brown said, “Huntington has announced to our colleagues that we will be offering account-based health plans in 2014 as well as health savings accounts. We have not yet finalized the details of those plans.”

Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or [email protected].


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