Many local businesses altering employee benefit plans

Results from a national survey of human resource managers showing changes in employee benefit plans reflects what John Lyon is seeing with his clients in the Fort Smith region.

A survey by Stamford, Conn.-based Towers Perrin suggested that tough economic conditions are forcing 53% of companies to consider “new benefit strategies they would not have considered otherwise.” Of the 500 human resource and benefit management executives surveyed, more than 60% have or will tighten benefit provisions in prescription drug plans, and 52% are increasing or planning to increase employee cost sharing. Also, 40% are introducing or expanding the use of account-based health plans, and 18% of employers plan to tighten and/or increase the enforcement of dependent eligibility provisions in 2009 or 2010.

The Towers Perrin survey also found that 50% of the respondents have or will increase the use of wellness programs in 2009 and 2010, and 45% of the companies will increase penalties for employees not participating in wellness activities.

“I’m seeing a lot of companies make changes to those (employee benefit plans),” said Lyon, owner and chief financial officer of Van Buren-based SPMI, a human resources service company. “The reason being is that we are in a global economy, and when you start dealing competitively in national and global markets then the (local) company owners are saying, ‘I’m forced to go to with higher deductibles or higher premiums.’”

With health care costs expected to rise 9% in the next 12 months, Lyon said all companies — irrespective of employee size and annual revenue — are getting hit. He said 75% to 80% of his clients have had to adjust benefits, and on the health care front, higher deductible plans and health savings account are some of the options they seek.

Lyon also said some local companies are dropping matching funds for retirement costs.

Employees of Stephens Media, the Las Vegas-based company that owns the Times Record in Fort Smith, were informed in February that their 401(k) retirement contributions will not be matched by the company for the remainder of the year. Other regional newspapers owned by Stephens Media includes the Press-Argus Courier in Van Buren, The Greenwood Democrat, The Charleston Express, The Paris Express and the Booneville Democrat.

“Until the economy starts turning back around, I don’t see this getting any better. Really, I expect you will see more of this,” Lyon explained.

Lyon said he encourages employers to be up front as possible with the cost structure of benefits  so as to help employees “understand the true cost their employer pays to keep them employed.”