Human Resources

CUs Grapple with Rising Benefit Costs

Is CUs’ ‘employee-friendly’ image being eroded by smaller, pricier benefit packages?

January 14, 2013
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The wellness factor

Oregon Community Credit Union (OCCU), with $1.1 billion in assets in Eugene, Ore., found a way to ease pressure on both wages and benefits without shifting costs or cutting the quality of coverage.

Four years ago, OCCU developed a formal wellness program, which it runs via a committee that meets once a month. The program includes general health education (along with strategic events and incentives including race fee reimbursements—up to $50 a quarter), an on-site health fair, live-instructor Zumba classes, annual fitness challenge, and more.

While there are obvious cultural reasons for offering the wellness program, Tracey Keffer, HR manager, says the financial side is even more compelling. Health plan usage and medical loss ratios declined soon after launching the formal wellness program, she says.

“The first year our medical loss ratios came in low. At first we were thinking it could be a fluke. Then the second year we were even lower, and the third year they were lower still,” Keffer says.

This enabled OCCU to negotiate a 15% cut in premiums and increase its dental coverage maximum by 20% while also exempting routine dental exams from that total. This year the credit union will add an orthodontia benefit, and it will continue to provide 100% health-care premium coverage for employees.

Last year OCCU rewarded plan participants with a $250 contribution to employees’ medical flexible spending accounts for additional wellness activities such as fitness classes or more race fees.

The credit union also negotiated a $2,000 contribution from its insurance carrier to the wellness program. In 2013 it will receive a $5,000 contribution.

The carrier has seen how low our medical use has been, Keffer says, so OCCU will receive a contribution to implement more program features.

While being among the 17% of credit unions to actually lower insurance costs last year is a feat in itself, Keffer believes a wellness program has far more merit than simply the premium savings. “It’s not only controlling costs,” she says. “The healthier [our employees] are, the more they’re going to produce for us.”

That echoes the argument made in “Credit Union Wellness Programs: Good Health Is Good Business,” a CUNA HR/TD Council white paper, which states healthy employees not only save money due to lower insurance costs but they also generate greater revenue because they’re happier, more productive, and higher performing.

Currently, 13% of credit unions with assets of $5 million or more offer a formal wellness program, CUNA’s benefits survey reports.

Other credit unions have made some changes to encourage healthier choices. Tampa Bay Federal doesn’t have a formal program, but it does offer employees a free fitness room at its headquarters and it discounts bottled water in vending machines to make it a more attractive choice than soda.

Wellness programs have emerged as a solid strategy to blunt increasing health insurance costs. And OCCU has taken its wellness program even further, using it to drive its culture of personal and organizational health.

The more successful the program is, Keffer says, the more money the credit union saves and earns, and the more money that comes back to employees by way of flexible spending bonuses, regular bonuses, and wage increases. 

“Employees understand that one of our goals is generating income,” says Keffer. “They realize that the less we spend on insurance, the better the bottom line, which in turn goes back into their pockets.”

It also enables OCCU to remain competitive with wages as well as benefits, which helps the credit union attract and retain employees. They’ve had merit increases in both of the past two years, due in part to their substantial health insurance savings, says Keffer.

NEXT: The self-insured option

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