Bearing the health care burden
The energizing aroma of roasting coffee beans fills the air at the cozy little java joint on Frisco’s Main Street. A happy buzz prevails among the clientele, fueled in part by caffeine, in part by the fat flakes starting to pile up on the tables outside.Fingers flip through the pages of the local paper and fly across cell phone key pads as young skiers and snowboarders try to line up the perfect job and the ideal living situation for the season. It’s a familiar scene, not only in Frisco, but in Vail, Steamboat, Stowe and anywhere else people congregate to slide down snow-covered hills.One of the hot topics this year at least for some are changes to the benefits package offered by Vail Resorts, the largest private employer in the area. Some employees, like seasonal full-time workers like ski instructors and patrollers, will pay more in some cases significantly more – for their year-round insurance.The biggest changes are in the area of off-season bridging costs, for people who want to continue coverage during the times they are not working. While some of the changes are minimal, some young families will be scrambling to make ends meet. For people with several children, the cost of maintaining health care during the off-season will climb dramatically. VR officials estimated that bout 700 employees are most affected by those changes.When the company announced the changes several weeks ago, there was some grumbling on the streets, especially given the fact that around the same time, CEO and chairman Adam Aron was picking up a hefty executive compensation package, reported to be worth at least on paper about $8 million. And while the timing may have triggered some dissatisfaction, Vail Resorts officials point out that Aron’s package was set up several years ago, under different economic conditions.The increase in premiums and other changes reflect the general trend of higher health insurance costs, says Pat Donovan, director of corporate human resources for Vail Resorts. For VR, those costs will jump about 14 percent, from $20 million last year to about $23 million this year, Donovan says, pointing a finger at a "broken" health care system and the challenges of managing those costs in a highly seasonal industry.So far, the changes haven’t affected VR’s ability to hire, Donovan says. "Some people have expressed frustration, but they’re still coming back and trying to make it work," he says.In the end, the company hopes to cover its increased health care costs by passing them on to employees while still making health care available with "predicable monthly premiums and low out-of-pocket expenses," he says. At the same time, he explained that VR is one of a few ski companies if not the only one that still offers bridging. Steamboat, for example, just dropped a similar program. VR still subsidizes the program to the tune of 50 percent, he says.Overall, the company still offers a competitive package, with decent basic coverage even for new employees. As an example, Donovan says that an insured employee facing a $10,000 surgery would end up paying only $400 out-of-pocket.VR employees are also seeing an across-the-board two percent pay increase showing up in their most recent paychecks, unlike some other companies that have frozen wage increases in the still-sluggish economy. A performance-based bonus program is also still in effect for line-level managers for fiscal year 2004, Donovan says, with bonuses for FY 2003 showing up this week.Donovan says VR took a four-pronged approach, including negotiations with providers, changes to vendor contracting (which netted savings of about $250,000), premium increases and what he characterized as plan design changes. The fact that VR has work force that is healthier than average also helps control costs to some degree, he says.Monthly premiums for an average single returning full-time employee will go up from $75 to $84, while the monthly cost for a family of three will climb from $222 to $249 per month. The biggest jumps are for the bridging costs, enabling seasonal full-time workers to maintain health benefits while they are not actually working for VR. For a single person that rate will jump from about $70 to $170 per month, with proportionally bigger increases for the cost of keeping dependents covered in the off season.Another change involves the minimum hourly requirements to qualify as a full-time employee. Donovan says that, after studying the numbers, decided to tighten up those requirements, enforcing hourly thresholds for full-time status. Essentially, employees must work 30 hours per week, a benchmark that is generally in line with those found in other industries. And emergency room co-pays will also climb from $100 to $150 per visit.Other adjustments include changing eligibility dates for employees, with a new 90-waiting period for new full-time workers. As previously reported, the company also instituted a mandatory time off policy, with a certain category of employees required to take a two-week vacation at half-pay. Donovan says some workers have no problem with that, while he’s heard from others that the change will squeeze an already tight month-to-month budget.In another change, VR has also restructured the amount of half-price ticket coupons for employees, based on past abuse of the program. According to Donovan, some employees have fraudulently abused the program by selling the coupons. As a result, full-time returning employees will receive four full comp coupons and 12 half-price coupons which can’t be combined any longer. Part-timers will get two full-day coupons and six at half price.
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