Vail Resorts makes cuts to health plan
Citing rising health-care costs and an uncertain economy, Vail Resorts recently announced significant changes to its employee health plan. As of Oct. 1, employees will face higher premiums, some higher co-pays and narrower eligibility requirements.
According to memos sent to Vail Resorts employees and COBRA participants on Aug. 11, the company expects health-care costs to climb by $3 million in fiscal 2004, relative to last year.
“There are a lot of factors driving up our costs,” said Matt Kochman, human resources generalist for Vail Resorts. “Our average employee age has increased, for one. Also, medical technology is a lot better, which leads to higher costs. Prescription drugs are another reason. There are more drugs out there, they are more expensive, and there’s really no regulation on cost.”
Vail Resorts’ director of human resources, Pat Donovan, added that increased use of health care has also played a role.
“There is an expectation in our culture now in terms of what you need in the way of health care,” Donovan said, adding that chronic diseases such as diabetes and cancer were rising among employees.
Part of the reason Vail Resorts is so hard hit by these rising costs is that the company is self-insured.
“Any claim that comes in we pay directly. It’s handled by a third-party administrator, but we’re not paying into an insurance company’s profits,” Donovan said.
Among the changes employees will see: monthly premiums will increase by $9 per month for employee-only coverage and by $58 per month for a family with three or more dependents. A trip to the emergency room will now cost $150, compared to the previous $100 co-pay. An MRI, which used to be provided at no cost, will carry a $100 price tag.
Many employees say they find the new eligibility requirements that took effect Sept. 1 the most burdensome changes. During the eight peak months of the year, those in full-time, year-round positions must work at least 120 hours in any two consecutive pay periods to be eligible for health care.
If an employee works less than 120 hours, he or she is dropped from the health plan and must pay COBRA rates for three months to maintain coverage, during which time, full-time status must be re-established.
Any overtime hours in a given pay period do not carry over to pay periods that are short the requisite hours.
During the shoulder season, comprising two months in the spring and two in the fall, there is no minimum hour requirement for full-time, year-round employees to retain their status.
Full-time winter seasonal employees must meet a minimum of 240 total cumulative hours by Feb. 25 or they will be dropped to part-time status and will have to pay COBRA rates for the remainder of the season in order to receive coverage.
For employee-only coverage, monthly COBRA payments are $342 – compared to the $84 premium paid under the health plan. An employee with three dependents who loses full-time status would go from $280 premiums to a COBRA payment of $1,099 per month during the three-month period.
“I think it’s ludicrous,” said Keystone Food and Beverage employee Nick Wallace, who recently lost his full-time status. “You can be more than full-time during some stages, and then you don’t have business for 10 days and your health insurance is gone.
“A few stretches I worked 70 hours a week, so I had 130 hours on just one pay stub, and then we didn’t have business for a while. I picked up some dishwashing shifts just to get my hours, but it wasn’t enough,” he said. “I was only a couple hours short.”
Now strapped with a $342 monthly COBRA payment going into the slow season, Wallace estimates that 25-30 percent of his pay will go straight toward maintaining his health insurance.
Eligibility has become stricter in other ways as well.
Prior to Sept. 1, any seasonal employee who worked more than 750 cumulative hours for the company was moved from the Silver Plan to the Gold Plan, which offers significantly reduced co-pays and premiums.
Now, the Gold Plan is off limits to seasonal lodging employees, regardless of the total hours worked.
“We came to the conclusion that we didn’t have to offer it to remain competitive,” Donovan said. “When we started looking at the competition, we found that it’s very uncommon to offer any kind of health insurance to seasonal employees. At Heavenly and all the resorts around Lake Tahoe, seasonal employees don’t receive health-care benefits.”
According to Donovan, lodging employees make up a very small percentage of the seasonal workforce. He estimated that 30 people would be impacted by the change.
Another component of the health-plan overhaul is dental coverage. A dental network will be instituted, within which coverage will be greater than if care is sought from an out-of-network provider.
An early draft of the plan included a fee schedule for Summit County dentists that was about 10 percent lower than the one for Eagle County dentists, meaning dentists here would receive less compensation for the same services.
Several dentists in Summit County contended that the difference was unjustified, as their cost of operations does not differ from practices in Eagle County.
After looking into the matter further and considering the input from providers, Donovan expects the final dental plan, due out Oct. 1, will have one uniform fee schedule for the two counties.