Saturday, September 28, 2013

In new med plan, a worker named Maria suffers; little-publicized shift hurts the most vulnerable

As employees dig deeper into Gannett's new health insurance plan, it's become clear the sweeping changes will have potentially devastating financial consequences for many of the company's 31,000 employees and thousands more retirees.

To be sure, some may benefit. For example: younger workers earning $35,000 or less with no dependents and few if any health problems. Under the plan, they could build tax-free health savings accounts with $500 annual contributions from Corporate. They'll own those HSAs outright, and can take the accounts with them if they leave the company.

But for most, last week's plan will significantly boost medical costs in just three months, after it goes into effect Jan. 1.

We already know about a particular glitch in Obamacare, one that affects Gannett families in certain income brackets. Now, here's another significant wrinkle in the company plan that many people may have missed.

Under the current one, monthly premiums are based partly on how much an employee is paid. Those earning less, pay less. Those earning more, pay more. It's a feature similar to our system of progressive income tax rates.

But in the new plan, that feature goes away. (It's disclosed on Page 8 of this FAQ.) And that will be brutal for many thousands of lower-income workers. They'll soon spend a far higher percentage of their pay on premiums compared to better-paid colleagues. Here's an example, using employees I'll call Maria and Phil.

A clerk and her boss
Maria is a TV station ad sales clerk earning $10 an hour, or $20,800 a year. Her boss, Phil, is the station's ad sales director, making $120,000 a year. They both have employee-only coverage.

Under the current plan, Maria's monthly premium for the same benefits would be lower than Phil's because she earns less. But in the new plan, they'd both pay the same premium: $90 a month, or $1,080 a year.

For Phil, that's less than 1% of his annual income. But for Maria, it's more than 5%.

And it gets worse, because that doesn't reflect the impact of the new deductibles. Under the current plan, employees are only responsible for co-pays when they visit doctors. But in the new plan, co-pays go away. That means employees will be on the hook to pay hundreds and even thousands of dollars in up-front medical expenses right out of their pocket before any coverage kicks in.

In employee-only plans, the deductible is $1,500 a year. For lower-income employees like Maria, who earn $35,000 or less, Gannett covers the first $500.

Big bite, little bite
Even so, Maria would have to spend at least $1,000 of her own money before her plan starts covering any of her doctor's visits or prescription drugs. That would eat nearly 5% more of her pay, bringing the total bite to almost 10% of her annual income.

Gannett doesn't cover any of the deductible for employees making more than $70,000 -- like Phil. He'd be responsible for the full $1,500. Still, that would cost him only about 1.3% more of his annual pay. So, his total bite will be just about 2.2% of his annual pay.

To recap: Maria barely makes $21,000. Phil earns $120,000. But unlike under the current insurance plan, they'll soon pay the same monthly premium.

Lougee
Now, let's carry this up to Gannett's highest echelons. Dave Lougee, president of the TV broadcasting division, got paid $1.1 million cash in salary and bonus last year. (That doesn't include another $1 million in stock awards, pension gains and other pay.)

Under the new plan, Lougee would pay the same monthly premium as one of the lowest-paid employees in his division. (And it's doubtful he pays even a dime.)

To be sure, employees with more skills and responsibilities have always done better financially than those with fewer. That's true at every company across the country. It's a bedrock on which Corporate America was built. But at least Gannett's health plan recognized the special hardships for frontline workers like Maria as costs soared into the stratosphere. The new plan takes that away.

Martore signs off
CEO Gracia Martore announced the new plan in a letter to employees last week. I doubt she wrote the letter herself. These crucial communications are drafted by many people, including especially attorneys.

Still, the letter doesn't offer so much as a hint of the enormous new medical costs she's shifting to the backs of employees -- many of whom have received only tiny raises in recent years, if they've gotten any at all. It's a strange omission for a woman whose childhood was marked by hardship.

Indeed, Martore doesn't express a whit of remorse for what she's decided to do. In fact, the way she closes her letter is worse than if she'd said nothing at all.

It's signed, "Best regards, Gracia."

Related: Here's the company's FAQ about the new employee health insurance plans. And here's a document showing examples of how the plan will work for individuals and families. They are stored on Google Docs, where you can download copies anonymously at no cost.

Got a personal healthcare story to share? Please post your replies in the comments section, below. To e-mail confidentially, write jimhopkins[at]gmail[dot.com]; see Tipsters Anonymous Policy in the green rail, upper right.

30 comments:

  1. In other news, Maria will be spending a higher percentage of her income than Phil on food, shelter, heat, utilities, transportation, underwear, newspaper subscriptions — as well as any health insurance she may elect to purchase from Obama.

    If you think medical services should be offered on a sliding scale, you need to talk to the providers, not the bill payers.

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    1. Until now, Corporate believed medical premiums should be paid on a sliding scale according to income.

      Now, it no longer does. That's a huge change in costs for employees -- and in the company's values, which include: "we’re better together" and "do the right thing."

      And that's something worth discussing here.

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    2. Damn right Jim. I feel sorry for their withered little hearts and their plastic little see-through values....

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  2. I feel that part of the problem is that high-income executives are so out of touch with reality and what it's like to live on a lower wage income that decisions they make are based on how the changes effect them. Which in this case doesn't have much effect because they make significantly more than the average employee.

    Another thought is what if the changes are designed to make employees so miserable they leave on their own? Freezing salaries for years may have had some effect but by throwing these medical changes at everyone it could be the tipping point. Employees that leave of their own accord don't cost the company as much as say a layoff would. Maybe this will be the wake up call many need to get motivated to find a much more employee friendly employer.

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  3. It's purely a function of public policy handed down by our brilliant politicians, who have decreed that taxpayers should be on the hook for low-income health care consumers. Employers are responding as expected and intended.

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    1. For years, Gannett and other employers have wanted to reduce or eliminate costly employee medical care. And why not? Gannett is in the business of selling news and advertising; it shouldn't also be required to serve as a healthcare company. But this is the crummy system we have in the U.S.

      Nevertheless, Corporate hasn't provided a shred of evidence backing up its claim Obamacare is principally to blame for this expensive new medical plan. Not. One. Shred. To continue doing so is disingenuous at best -- and just plain cowardly at its worst.

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  4. Some thoughts on the health insurance issue.

    1. Blaming the changes on Obamacare is a crock of shit but it works to deflect blame away from the company.
    2. As I understand Obamacare rules, a person offered health insurance through their employer can opt out and sign up for Obamacare but if they do, they will not qualify for the subsidy, which may make it unaffordable for many.
    3. What is not clear is this scenario of the employee taking the shitty company plan as an individual and then signing up the rest of the family under Obamacare complete with the subsidy.
    4. Also, what is not clear is if an employee is put into a substandard company plan, which this appears to be, would he or she then qualify under some other provision for subsidized health insurance under Obamacare? If so, then this could be a plot by Gannett to force its employees out of their plan and into the health exchange marketplace while they can make the claim they have employee insurance and remain exempt from the tax penalty. They couldn't possibly be that cynical, could they?

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    1. Point one is a "crock of shit" as to ignore the sweeping changes and taxes Obama Care extracts is naive at best.

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  5. One way to test those theories, 10:11, would be to go to your state's healthcare exchange website (assuming your state has one; not all do).

I've done that in California, and it provides an easy form to complete with your age, income, etc., to see what you might or might not qualify for. And it includes a link where someone will contact you with more information.

    Here's the link to the California health exchange site. At the top of the coverage calculator, it says prominently:

    "If you currently receive affordable health insurance through an employer or public program, unfortunately, you won’t receive premium assistance to help you afford insurance purchased through Covered California. Covered California is primarily designed to help individual Californians get coverage, many of whom will get financial help."

    The key, then, is whether your Gannett benefit will meet the affordability test.

    In the FAQ, Corporate says: "For public exchanges: ALEX is a virtual benefits counselor that will walk you through the exchange and health care reform process based on your individual needs. It will be available via the Education tab on benefits.gannett.com starting Sept. 19."

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  6. There is another side to this, at the smaller properties, where most of the lowest paid employees work, my guess is when these people get sick they will simply try and get better on their own instead of visiting a doctor's office to get medical attention and medication they need. So instead of getting better in a day or so, it takes them a week or worse, they land in the hospital ER. Let's forget the poor employee now on short-term disability, but look at her/his property that must now get by without the employee in an environment where everyone is understaffed. So what this all tells me is that GCI really doesn't give a crap about its employees or any of it's smaller properties. I know, I know...I didn't need this to let me know that.

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    1. Plus, a hospital stay could cost that employee-only plan holder $5,000 out of pocket -- the maximum annually. Only after that does the plan pay 100%.

      You see, even with the $1,500 deductible, employee-only plans still cover just 80% of expenses. The employee's 20% share applies to a hospital stay could easily take them to that $5,000.

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  7. 9:17, I thought the same. Just another way of forcing employees to leave on their own initiative.

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  8. I have a co-worker who has a child with a birth defect. His family has collection agencies after them for his current medical coverage. Now he's looking at $7,000 a year for family insurance coverage plus $10,000 a year for family deductibles. Needless to say, they're looking at Obamacare, which is probably what Gannett management wanted.
    It looks like they carefully worded the presentation to suggest they had to do this because of Obamacare, but stopped short of committing to it out of fear of a shareholder lawsuit for misleading information.

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  10. Defined benefits have been changing for years in favor of a contribution model. First, employers eliminated defined pensions and began offering 401ks. Now, employers are demanding that employees and retirees assume more of their health care costs. I do wonder whether Gannett bargained as hard as it could have with its insurers to get better group rates. Or Gannett could do what other companies, like Walgreen's, are doing, and that's give employees subsidies to buy insurance on the exchanges. Regardless, we're in for a rough transition towards what ultimately will be a single payer system in the United States.

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  11. Gannett is getting rid of higgh paid older types for cost. Now its screwing their lower costs replace,ents. You cant win with this company unless you are considered senior management.

    When is it going to be enough, Gracia? What would you say about thos company if one of your kids worked here and she told you some of the crap management does.

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  13. On another note, no real info on what will happen to ex-employees who are currently on COBRA, and paying the full (with Gannett discount) cost of insurance.

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    1. Good question. My immediate thought is that as go the plans for current employees, so go the plans for those on COBRA.

      Ditto for people who have taken buyouts where they continue receiving health benefits at discounted company rates until their severance periods run out.

      9:32, I gather you haven't received anything in the mail from Corporate?

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  14. So Gannett, a liberal company, is USING Obamacare as the excuse to change medical coverage to only what they legally NEED to spend on its employees. I've heard for years that the benefits the company gives its employees is far more expensive than their salaries! If I retire before 2014, will I be locked in to the current health plan?

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  15. Get ready for more employees taking sick days or dragging their contaminated asses to work and infecting you because a doctor's visit and the accompanying prescriptions may be out of financial reach. Obama care may be the obvious scapegoat, but the real culprit here is corporate and individual greed, Shame on you all!

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  16. I'm a retiree, paying $1,239 a month for myself and spouse for medical only retiree benefits - not COBRA. I have assumed this was the whole discounted Gannett cost, with Gannett paying nothing towards the premium. The new health plan sounds like it should be costing Gannett less, since the benefits are so much less, and they are just forcing active employees to pay more. But is the premium cost to Gannett going up? Sounds like it might be going down, since the plan is so bad. If it is, my retiree premium should go down. But I won't hold my breath for that.

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    2. My understanding of Gannett's retiree medical is that the retired employee's rate is a Gannett discounted rate but when added on to retiree medical, the spouse is at a full COBRA rate.

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  17. Retired folks pay more than COBRA rate. Actually they told me its double. And although are benefits have been degraded to less, we are going to pay more for less. It's the Gannett way, not Obama's way. I'm disappointed that a liberal company like Gannett shows the greed over and over. I'm afraid Gannett has a dim future

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  18. Only $125 is what G puts in to the HSA of employees, unless you're lower end and then it's $500. 125 is pathetic. Won't cover but one doctor bill if you're lucky. Wellness visits covered, but you don't get but one.

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