Medical Coverage and Generous Retirement Plans Are Cornerstones
of Cable Benefits Packages
Employee benefits are a critical component
of compensation. In this era of economic uncertainty and
spiraling medical costs, workers are very cognizant of
company benefits, their value, and their share of healthcare
costs. Data just released from CTHRA’s 2012 Benefits
Survey illustrates that industry employers offer very
robust benefit packages. Sixteen companies (ten programmers
and six MSOs) participated in the 2012 survey and provide
generous benefits that include medical coverage, wellness
initiatives, retirement plans, life insurance, accidental
death and disability insurance, long-term disability insurance,
and severance pay. Offering such competitive packages
helps companies differentiate themselves while simultaneously
attracting and retaining top talent.
“Benefit costs represent a significant investment by cable MSOs and programmers,” said Tom Mathews, EVP of HR for Time Warner Cable. “The industry needs to design benefit programs that effectively and efficiently support our employees and their dependents, yet mitigate future cost increases for our companies.”
“We use CTHRA survey results to benchmark how much we spend on healthcare and other benefits relative to our peers in the industry,” added Bill Strahan, EVP HR Comcast Cable. “Our executives are very focused on knowing what others are doing.”
All industry employers participating in CTHRA’s survey offer health insurance, the most prevalent forms being Preferred Provider Organization (PPO) and Point of Service (POS) plans, and a few Health Maintenance Organizations (HMOs) or Exclusive Provider Organizations (EPOs). On average, respondents spend about $10,000 a year on medical costs per eligible employee ($10,089 for MSOs and $10,655 for programmers). For MSOs, net medical cost translates to 19 percent of the average employee salary (payroll divided by the number of employees), while that figure is lower for programmers—9 percent.
Industry employers also pay the lion’s share of health insurance costs. Among MSOs, the employer’s share of medical coverage (for both employee and dependent contributions in total) averages 79 percent, and for programmers it averages 83 percent.
“We have a very particular focus on making sure that our employees carry a fair portion of the premium costs but that we are not over-burdening them,” said Strahan. “The CTHRA survey helps us pinpoint our relative position.”
Cost control is a top priority for everyone involved in
benefits planning, as medical insurers estimate the inflation
rate for healthcare coverage runs between 9 and 11 percent
each year, reported Bill Danish, Senior Vice President
of Willis, the human resource consulting firm and insurance
broker that conducted the 2012 survey.
One new cost-control trend revealed in the 2012 survey is the growing availability of Consumer Driven Health Plans (CDHPs). These plans encourage employees to be better healthcare consumers. Typically, CDHPs have lower premiums than traditional plans, but higher deductibles. Preventive care is covered at 100%, but employees must first meet deductibles before other services are covered. CDHPs can also feature Health Savings Accounts (HSAs), which allow employees and employers to contribute money to cover deductibles and other healthcare costs. Funds left in HSAs roll over to the next year, and employees can move the accounts from one employer to another.
“Employees benefit from these plans because if they change their behavior and look for ways to improve their health, they spend less,” explained Danish. “Employers benefit because an engaged consumer can help ‘bend the trend’ and will ultimately lower the 9 to 11 percent medical inflation rate and its impact on the benefit plan.”
Of the 10 programmers surveyed, four now offer CDHPs, up from two last year. MSOs, however, have been slow to adopt CDHPs. Only one MSO surveyed offers a CDHP, the same as in 2011. However, that MSO says the CDHP is the company’s most popular medical insurance option. Among those offering CDHPs, plan deductibles range from $1,200 to $2,400 for single-person coverage to $2,400 to $4,800 for family coverage. Of the five companies offering CDHPs, four contribute to employee HSAs and one to a Health Reimbursement Account (HRA). Employer contributions for single-person coverage range from $500 to $750 and for family coverage $1,000 to $1,500.
Workforce participation in wellness activities such as
tobacco cessation and weight loss programs can also help
reduce medical plan expenses. To encourage participation,
ten companies (six programmers and four MSOs) now offer
employees incentives to take part in Health Risk Assessments
(HRAs), biometric screening, and behavior modification
programs. Incentives include cash, gift cards, lower premiums,
and, in one case, reduced benefits for noncompliance.
In fact, in February, CableFAX published a CTHRA article
about innovative ways that industry employers encourage
healthy living among employees. (read it at www.cablefax.com/cfp/just_in/50594.html)
“We believe this interest in wellness incentives indicates more consumerism and better management of the health of the employee population,” said Willis’ Danish.
Retirement plans are also attractive to personnel, and
100 percent of the companies surveyed offer such benefits.
Of participants, 67 percent of MSOs and 30 percent of
programmers surveyed offer Defined Benefits (DB) plans,
or traditional pension plans. In addition, all 16 respondents
offer Defined Contribution (DC) plans, such as 401K plans.
However, employers vary in the time they require employees
to be on the job before they become eligible to participate
in a DC plan. Of those surveyed, 33 percent of MSOs and
40 percent of programmers enroll new hires immediately
in their 401K plans, while the remainder require a waiting
period. This year the survey also asked companies if they
offered auto enrollment and auto increase for their 401K
plans. Half of MSOs provide both auto options, while 80
percent of the programmers surveyed offered auto enrollment
and 70 percent offered auto increases.
CTHRA’s survey also reveals that cable employers match employee contributions to 401K plans — on average $3,700 per employee for MSOs and $4,600 per employee for programmers.
Future Benefits Planning
With the future of the Affordable Care Act still uncertain,
despite the recent Supreme Court ruling, healthcare reform
is the big unknown in the 2013 benefits planning cycle.
“Obviously the healthcare benefit environment is
changing rapidly,” said Anthony Amato, VP Global
Benefits, Discovery Communications. “We believe
that healthcare reform and cost control in terms of plan
design will be critical in this year’s planning
process. The data we receive from CTHRA’s Benefits
Survey is extremely valuable in helping us shape our plans.”
When compared to non-industry employers, Willis’ Danish says that overall survey data movement was “consistent” with general employer averages. “Other than the increase in Consumer Driven Health Plans and more interest in wellness initiatives, 2012 results were similar to 2011. However, based on responses, we believe 2013 may show more movement in anticipation of healthcare reform.”
In the coming months, industry employers
can also look forward to the release of findings from
CTHRA’s 2012 Human Capital Metrics and Annual Compensation
Surveys. For more information about CTHRA’s surveys,
please visit www.cthra.com/surveys.
2012 CTHRA Benefits Survey
Charter Communications, Inc.
Comcast Cable Communications Inc.
Time Warner Cable, Inc.
Crown Media Family Networks
Home Box Office
Scripps Networks Interactive
The Weather Channel
Turner Broadcasting System, Inc.
2012 CTHRA Benefits Survey
cost per eligible employee*
Total medical cost per covered employee*
Net medical cost as a percent of salary*
Employer share of medical contributions*
(employee and dependants)
Offers a DB retirement plan (pension)
Of those offering a DB plan, it is open to new participants
Offers a retirement savings plan (401k)
Offers immediate entry to 401k
Retirement (401k) matching contribution*
401K auto enrollment
401K auto increase
* Metrics are listed as averages.