US company health costs up 6 pct in 2009 -- survey

By Bill Berkrot

NEW YORK, Sept 24 (Reuters) - Average U.S. corporate health benefit expenses are expected to rise 6 percent to $9,660 per employee in 2009, according to results of a survey released on Wednesday.

The findings from the 20th annual Towers Perrin Health Care Cost Survey marks the fifth successive year of single-digit percentage increases in corporate health benefit expenses, with the employee share of costs rising steadily.

The average annual cost of medical coverage for an active employee is expected to hit $4,860 in 2009, while the corporate bill for family coverage is expected to reach $14,244, the survey found.

Total health care expenses have risen 33 percent since 2004, Towers Perrin said, with the employee share rising 42 percent during that time, as out-of-pocket costs, such as co-pays and deductibles, add to the burden of benefit plan related increases.

In terms of actual dollars, "the increase in employee contributions has been astronomical compared to what they're taking home in their paychecks," Peter Allison, managing principal for Towers Perrin, said in an interview.

Employers will continue to shoulder the lion's share of health care expenses in 2009, taking on an average of 78 percent of premium costs against 22 percent for employees, Towers Perrin found.

The survey included 321 companies with health plans that cover 6.6 million U.S. employees, retirees and dependents at an annual cost of $32 billion.

Based on a variety of criteria involving meeting health benefit objectives, such as managing costs, efficient purchasing of health care services, enhancing employee engagement and satisfaction, Towers Perrin divided respondents into high performers, average performer and low performers.

It found that the high performers will pay on average 14 percent less in 2009, a difference that can add up to millions of dollars in savings.

"Employers who get it right and achieve their objectives are really capable of realizing a significant difference in their costs, a healthcare dividend," Allison said.

Helping employees make better use of the health care system and a focus on preventive care and the health of workers rather than just managing the cost of illness, all play a part, Allison said.

As more and more companies cut retirement health benefits, retirees under the age of 65 who are not yet eligible for Medicare will face skyrocketing health care costs, Towers Perrin found.

Sixty-three percent of survey respondents believe it is important to the company that employees are financially prepared to retire, yet only 44 percent were confident their programs give employees opportunities to prepare.

Total annual cost per pre-65 retiree in 2009 will be $13,308, with the former employee expected to pick up 52 percent, or just under $7,000, the survey found.

Towers Perrin forecasts that, within five years pre-65 retirees could be picking up as much as 80 percent of the cost of their health care coverage.

That assumes there will be employees who feel they can afford to retire prior to 65 over the next five years.

Health care costs are "having a fundamental impact on employees' ability to retire and people just aren't leaving jobs they'd just as soon get out of," Allison said. "It's presenting real issues in terms of work force planning." (Editing by Andre Grenon)