United Parcel Service - Important Changes To Benefits Plan The New Trend

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UPS (United Parcel Service): Important Change To Benefits Plan The New Trend? …

UPS (United Parcel Service): Important Change To Benefits Plan The New Trend?

UPS announced in August, 2013 it would not allow spouses of employees to enroll in the UPS benefit plan if they could obtain insurance through their own employer. This policy applies only to the salaried workforce of UPS and not to union/represented workers. Is this the beginning of a new trend in employee benefits?
Through this change, UPS is seeking to reduce sharply rising benefit costs which it publicly attributes to Obamacare and healthcare reform. UPS employs about 322,000 persons in the United States, about 250,000 of them are union employees -primarily members of the Teamsters. The decision is estimated to affect 15,000 employees with spouses/partners that presumably may obtain healthcare insurance through their own employers.

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John G. Baresky




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  • 1. United Parcel Service: Important Changes To Benefits Plan The New Trend? UPS announced in August, 2013 it would not allow spouses of employees to enroll in the UPS benefit plan if they could obtain insurance through their own employer. This policy applies only to the salaried workforce of UPS and not to union/represented workers. Is this the beginning of a new trend in employee benefits? Through this change, UPS is seeking to reduce sharply rising benefit costs which it publicly attributes to Obamacare and healthcare reform. UPS employs about 322,000 persons in the United States; about 250,000 of them are union employees -primarily members of the Teamsters. The decision is estimated to affect 15,000 employees with spouses/partners that presumably may obtain healthcare insurance through their own employers. It's a forward-thinking decision... This arrangement allows UPS to offload the benefit costs of spouses/partners. UPS will only need to cover the primary beneficiary and select dependents (children). Not only does it lower their costs, it reduces administrative time and resources required to manage their benefits. Conceivably, it may also encourage some employees to look more closely at the benefit offerings of the spouse/partner's plan and perhaps join it instead or at least shift their dependents to it as well. UPS does provide pension and retirement healthcare benefits to their employees. As more employees enter retirement and their healthcare costs rise as they age, UPS incurs a higher cost burden. The company has significantly grown in personnel number --and success. UPS is seeking to manage its long term costs closely. For the future, if they seek to continue pension and healthcare retirement benefits for its employees, the company needs to make assertive adjustments along the way. Inevitable cost increases may outrun them and they will be forced to take more drastic measures such as cancelling retiree benefits and pensions altogether. There are potential issues... First, there is the matter of employee morale and the intrinsic value of the benefits program for present and prospective non-union UPS employees. It's divisive as it features a "have" and "have not" between groups of beneficiaries that work for the same company. If differences in the benefits already exist, the distinctions between them will be wider. For employees with spouses/partners and dependents, it means managing two benefit providers within the same household. This includes re-enrolling in another plan and providing physician offices and pharmacies with the new information. It is much more convenient for a household to be uniformly covered under one plan provider. A significant concern is the level of coverage transferees may or may not continue to have once they move to another plan. This applies to their medical and pharmacy benefits. If the care/service coverage they are utilizing through the medical and/or pharmacy benefits is expensive, they may be affected immediately. Considerations include if they are hospitalized late in the year and into 2014 or if they are on a regimen of higher cost, advanced prescription therapy. When the plan they transfer to does not cover what the UPS plan did or they are responsible for paying considerably more, the change in plans/costs will financially affect the spouse/partner and the UPS employee within the household. Healthcare plans ... UPS offers a variety of plans to its employees, it's likely not all 15,000 employee spouse/partners will be exiting one plan with a potential loss of premium revenue for the provider. However, the plans will have to manage the eligibility changes and some revenue loss for their share of the employees no longer covered under the new terms of the UPS benefit program. If the members leaving the plans were high utilizers of the benefits and their care costs were high, then the plans and UPS come out ahead. Conversely, other plans will be enrolling these members as they transfer from the UPS plans to their own employer's plans.
  • 2. Outlook UPS is a widely known and admired company due to its household brand identity, its investor stock status, industry leadership as the world's largest package handler and the high level of service it provides its customers. Such a significant benefit change by a major global corporation will be highly scrutinized by its competitors and employers around the world seeking to reduce costs. Actuarial firms, employee benefit consultants, health plans, MCOs, PBMs and risk management professionals will be tasked with assessing this option on behalf of other employers wanting to know the values and pitfalls of such a change were it to be applied to their own organizations. Looking ahead, how many companies will quickly move to follow the lead of UPS this year? How many will begin the groundwork for 2015 when employers with over 50 employees will be required to offer healthcare insurance to their workers? www.healthcaremedicalpharmaceuticaldirectory.com