CFOs 2Go Partners Releases Results of Its Survey of Employer Paid Health Care Costs for Venture Capital Funded Businesses
CFOs 2GO Partners (" CFOs 2Go") released results of its survey on how venture capital based businesses are changing their cost sharing formulas with their employees for health care coverage. The trend seems to indicate a significant cost transfer to employees particularly companies in the pre-revenue stage. The study also revealed other techniques being used by employers to control increasing health care costs.
Walnut Creek, CA, July 30, 2010 --(PR.com)-- CFOs 2Go released results of its study surrounding the sharing of increased health care costs between employers and employees in venture capital funded businesses. The study identifies trends in the cost sharing relationship that have occurred since the health care changes enacted by Congress in March of this year.
As background, businesses backed by venture capital have historically been very generous with employer paid health insurance benefits. This was deemed necessary to compete with larger companies that could offer more amenities for top human capital. There was a time not too long ago where these companies paid 100% of health care costs for their employees and dependents. Those days appear to be over.
The CFOs 2Go study revealed the following:
- Employers seem to be trending towards 90/60 or even 90/50 where the employer pays 90% of the premium cost for employees but only 60% or even 50% for dependents. The current average was 93%/66%. The range was 85% to 100% of employees and 50% to 75% of dependents.
- Employer contributions are often being capped at an amount equal to the mid-high level PPO/HMO plan premium in an effort to motivate employees to get off the high cost/low deductible plans. When determining the cap to apply, employers are usually looking at plans with “competitive” benefits as their benchmark.
- For HSA plans with high deductibles, most employers are now limiting deductible reimbursements to their employees. It used to be common to see employers picking up to 100% of the deductible however employers are offering as little as 50% reimbursement due to the particularly high premium increases associated with these plans.
- Many employers have introduced benefit waiver allowances ranging from $175 to $250; paying employees to opt out of their plan in favor of a plan offered by the employer of their spouse or domestic partner.
- Finally, there is a trend to a flat dollar amount per employee without requiring any employee participation as long as total cost stays below the fixed dollar amount. Any overage would be 100% paid by the employee. Under this scenario, the employer’s cost is fixed and measurable and it is insulated from future uncertainty. Such arrangements seem to be growing, particularly in pre-revenue situations.
According to Bob Weis, CEO and President of CFOs2Go, “Although the results of the study are not scientific - they show meaningful trends. It is not at all surprising employers are finding it necessary to pass on to employees a portion of their health care cost increases. Even large name brand technology companies are requiring employees to participate. The uncertainties surrounding the administration of health care on a national level will continue for some time and we expect to see growth in the use of limits to funding on a percentage basis or the use of a fixed dollar approach as a means for employers to obtain some stability in their income statements.”
About The 2GO Group
The 2GO Group is a specialty financial service provider that includes CFOs2GO, Accountants2GO, CFOs2Go Partners and IT2GO. We provide interim, part-time, or full-time CFOs and finance-related personnel. These same services are offered by our IT2GO group on an interim, part-time or full-time basis. The services offered by the 2GO Group are custom-tailored to meet the specific needs of its clients. The 2Go Group is headquartered in Walnut Creek, CA and has served clients across the USA, Asia and Europe. For more information please visit www.CFOs2GO.com.
Contact Information:
The 2GO Group
Robert Weis
John Luttrell
(925)299-4450
###
As background, businesses backed by venture capital have historically been very generous with employer paid health insurance benefits. This was deemed necessary to compete with larger companies that could offer more amenities for top human capital. There was a time not too long ago where these companies paid 100% of health care costs for their employees and dependents. Those days appear to be over.
The CFOs 2Go study revealed the following:
- Employers seem to be trending towards 90/60 or even 90/50 where the employer pays 90% of the premium cost for employees but only 60% or even 50% for dependents. The current average was 93%/66%. The range was 85% to 100% of employees and 50% to 75% of dependents.
- Employer contributions are often being capped at an amount equal to the mid-high level PPO/HMO plan premium in an effort to motivate employees to get off the high cost/low deductible plans. When determining the cap to apply, employers are usually looking at plans with “competitive” benefits as their benchmark.
- For HSA plans with high deductibles, most employers are now limiting deductible reimbursements to their employees. It used to be common to see employers picking up to 100% of the deductible however employers are offering as little as 50% reimbursement due to the particularly high premium increases associated with these plans.
- Many employers have introduced benefit waiver allowances ranging from $175 to $250; paying employees to opt out of their plan in favor of a plan offered by the employer of their spouse or domestic partner.
- Finally, there is a trend to a flat dollar amount per employee without requiring any employee participation as long as total cost stays below the fixed dollar amount. Any overage would be 100% paid by the employee. Under this scenario, the employer’s cost is fixed and measurable and it is insulated from future uncertainty. Such arrangements seem to be growing, particularly in pre-revenue situations.
According to Bob Weis, CEO and President of CFOs2Go, “Although the results of the study are not scientific - they show meaningful trends. It is not at all surprising employers are finding it necessary to pass on to employees a portion of their health care cost increases. Even large name brand technology companies are requiring employees to participate. The uncertainties surrounding the administration of health care on a national level will continue for some time and we expect to see growth in the use of limits to funding on a percentage basis or the use of a fixed dollar approach as a means for employers to obtain some stability in their income statements.”
About The 2GO Group
The 2GO Group is a specialty financial service provider that includes CFOs2GO, Accountants2GO, CFOs2Go Partners and IT2GO. We provide interim, part-time, or full-time CFOs and finance-related personnel. These same services are offered by our IT2GO group on an interim, part-time or full-time basis. The services offered by the 2GO Group are custom-tailored to meet the specific needs of its clients. The 2Go Group is headquartered in Walnut Creek, CA and has served clients across the USA, Asia and Europe. For more information please visit www.CFOs2GO.com.
Contact Information:
The 2GO Group
Robert Weis
John Luttrell
(925)299-4450
###
Contact
CFOs 2GO
Michael C. Webb
925-299-4450
www.cfos2go.com
Michael C. Webb
925-299-4450
www.cfos2go.com
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