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5500 Preparer's Manual for 2012 Plan Years

5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.

CCH® BENEFITS — 5/8/08

Employee Contributions For Health Care Are Nearly One-Month’s Salary

From Spencer's Benefits Reports: Employees’ median annual contribution for family health care coverage is now $3,120, a 15% increase from 2007 and a 22% increase from 2006, according to Aon Consulting’s 2008 Benefits and Talent Survey. This annual contribution represents nearly one-month’s salary, based on the median household annual income of approximately $48,000, Aon noted. In comparison, the 1,100 U.S.-based organizations responding to the survey experienced approximately 10% annual health care cost increases since 2006.

Aon found that employees’ median monthly contributions in 2008 averaged $66 for employee-only coverage, $160 for employee-plus-one or employee-and-child coverage, $186 for employee-plus-children coverage, $189 for employee-plus-spouse coverage, and $260 for family coverage. Employer contributions averaged $326 for individual coverage, $574 for employee-plus-child coverage, $628 for employee-plus-one coverage, $633 for employee-plus-spouse coverage, $641 for employee-plus-children coverage, and $863 for family coverage.

According to Aon, employers are moving past the traditional cost shifting to controlling costs through health and productivity promotion measures: nearly two-thirds (64%) of the respondents reported that they have such a benefits strategy. The most common health and productivity promotion strategy is offering wellness programs to prevent development of chronic illnesses. The proportion of employers implementing specific wellness programs has tripled from 2007 to 2008. Among the most prevalent wellness programs are exercise promotion (68%, up from only 19% in 2007); disease management (60%, up from 18% in 2007); health risk appraisals (48%, up from 12% in 2007); biometric screening (47%,up from 12% in 2007); and telephonic health coaching and smoking cessation programs (46% each, each up from 14% in 2007).

To stimulate employee participation in these wellness programs, employers are offering a variety of incentives: 23% do so for health risk appraisals, and 20% do so for completion of health risk programs such as smoking cessation or weight management. More than one-fifth of employers offer noncash awards such as gift cards and gifts, and 10% provide a premium contribution reduction.

However, the majority of employers do not have a formal tool to measure data and results of wellness programs, including return on investment. The most commonly tracked data is for disease management participation (31% of employers), while the least tracked is data on overweight employees (only 8%).

“These figures show that employers now recognize the link between employee lifestyle behaviors and medical spending,” said Tom Lerche, Aon Consulting’s health care practice leader. “Chronic conditions, for example, are influenced by smoking, obesity, poor nutrition, and leading a sedentary lifestyle, and account for more than 60% of health care costs. Through stress management, weight management, and smoking cessation programs, employers can focus on the root causes of these chronic conditions to reduce health risk factors among employees and dependents, which lead to a lower rate of increase in health care costs.”

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For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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