Thursday, September 26, 2013

You may pay more of your real med costs in 2014; employee share reportedly rising to 50% from 40%

Gannett's newest campaign to rein in health care costs stems partly from something thousands of employees and retirees don't fully understand: The company pays more of your actual medical expenses than you do.

With its self-funded plan, Gannett covers all medical claims over and above what employees pay in monthly insurance premiums, co-pays and deductibles. Historically, you've been paying about 40% of your actual costs for doctor visits, hospital stays and the like. Gannett paid the other 60%.

So, for example, if you had $15,000 in back surgery this year, and your annual premiums, deductible and other out-of-pocket contributions totaled $6,000, Gannett paid the remaining $9,000.

The insurance company or HMO you choose simply helps manage the process.

Now, it's changing 
Starting with the new 2014 plan, the split will be closer to 50%-50%, according to one of my readers. That's one reason your costs are jumping.

The dollar amounts are staggering. Gannett's medical spending in one recent year totaled around $110 million, according to my reader. Of that, the company paid around $66 million and employees paid $44 million.

That's crazy. After all, Gannett's in the business of selling news and advertising. It shouldn't be forced to also be a health care provider. But this is the screwed-up health care system we've got.

In my 20 years at Gannett, the company never did a very good job of explaining this more-or-less hidden benefit -- and I'm someone who always paid close attention to the company's inner workings. And it's still doing a lousy job: I don't see any of this mentioned in the new FAQ.

Getting the word out
This won't change the fact you're shelling out an enormous amount of money. But it could explain the real impact of rising medical costs on Gannett's finances -- whatever the true role of Obamacare -- and smooth employee relations a bit.

I've written about this before, starting three years ago, after I obtained company documents outlining medical costs in 2008. To be sure, they were much higher vs. the $110 million I mentioned above. That year, Gannett paid out $172 million, but collected only $70 million from employees.

Of course, the company had many more workers: 42,000 vs. around 31,000 today. And it took in a lot more money: $6.8 billion in ad sales and other revenue. (It lost $1.8 billion after writing down the value of assets.) Last year, by comparison, revenue totaled $5.4 billion, but net income was $551 million.


  1. Jim, you shouldn't have laid off your copy editors. Take it from one who got laid off by Gannett. Your lede says "reign in." You mean "rein in."

    1. Thanks, and I've fixed that.

      But maybe it was subliminal: After all, Corporate exists in the Crystal Palace.

  2. Just got out of HR presentation of new 2014 plan...lordy, they didn't even buy us a drink before they screwed us.

    1. This wouldnt smell so bad if Gannett was spending umpteen times as much on stock buybacks and hiking dividends. Thats on top of freezing pension plans for older employees.


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