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Iowa employers are generally finding it easier to make adjustments to their benefits plans during the recession than during a tight labor market, but they should still carefully communicate the reasons for the changes to their employees, says Lori Wiederin, senior vice president with Holmes Murphy & Associates. In most cases, employees will accept some reduction in benefits better if they understand that it means retaining the overall benefits for all employees or allows the company to shift more dollars into payroll, she said.

Wiederin recently spoke with the Business Record about how Holmes Murphy’s clients are responding to the current economic climate.

BR: With the markets going nuts last fall, did that influence how some companies looked at their benefits renewals?

Wiederin: For some I think it did. Unfortunately, for larger companies, they have to make their decisions by August or September; the market was going down all year, but October-November was when it really took a fall. So they may not have had that play into their decisions as much as smaller companies.

BR: Are companies still doing a lot of price-shopping for insurers?

Wiederin: I think it’s wise to go out to market every few years, but you don’t see people doing that every year. A big focus that Holmes Murphy has is that more employers are going to see a stable population; there’s not going to be as much turnover. So now we can really have an impact on those people from a wellness standpoint to reduce chronic conditions to help reduce claims, because those people will still be employed a year later.

BR: Has there been progress yet in lowering claims through wellness programs?

Wiederin: I think there is greater awareness; I would say 2008 is when a lot more employees started doing health screenings. It’s probably still too early to tell whether they’ll have a reduction in claims because of that. But I think it’s created an awareness in the company if somebody’s at risk; a lot of people never knew what their numbers were.

BR: Did employers that have had layoffs also make benefits reductions?

Wiederin: When companies are laying off people, they’re looking at every single expense they have. They still want to have a benefits plan that’s of value, but they might offer some of those benefits now on a voluntary basis, where it’s strictly employee-paid and it’s strictly the employer’s choice whether they want to add a contribution to that. Employers maybe will get back more to what insurance is for, by offering more catastrophic-type medical plans with higher deductibles.

BR: How would the legislation that Congress is considering to subsidize 65 percent of the cost of COBRA coverage for laid-off employees affect employers?

Wiederin: It’s a positive from the standpoint that (former) employees will have access to health care. But from an employer’s standpoint, they keep that risk of claims on their books, and especially for self-funded clients, it could be a big exposure for them.

BR: What about the trend of employers not offering coverage to an employee’s spouse if the spouse is employed and can get coverage through his or her employer?

Wiederin: Quite a few employers are talking about it, and after Principal (Financial Group Inc.) did it, more employers have implemented it to help reduce their costs. In those cases, the spouse may not be eligible for the plan, or they may pay a much higher cost to be on the spouse’s plan. With more and more dual-income families, it’s easier to do that.

BR: Are reduced benefits likely to be restored after the recession?

Wiederin: I think if they reduce benefits, they’ll never go back and add them. I don’t see that happening. But if we get to a really tight job market and unemployment is really low, they may offer other benefits.