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Wehco Media Drops Insurance Bombshell

4 min read

Wehco Media — the parent company of the Arkansas Democrat-Gazette, cable TV operator Wehco Video and other media properties in and out of state — dropped a bombshell on its employees two weeks ago: Effective Sept. 1, one week after the announcement, they had a choice of having their annual health insurance deductible triple to $3,000 or paying 100 percent of the cost of keeping a policy with a $1,000 deductible.

In the case of family coverage, keeping a $1,000 deductible would cost an employee more than $18,000 a year, according to a letter sent to employees and obtained by Outtakes.

The angst was palpable among employees, some of whom have not had raises in their base pay since a salary freeze was implemented in the newspaper division six years ago. A caseworker in U.S. Rep. Tom Cotton’s El Dorado office sent an exclamatory email to the Arkansas Insurance Department on behalf of “constituents that are priced out of health care by WEHCO,” although it’s not clear if more than one constituent actually called her congressman for help.

“Their premiums are going from $500/month to $1400!!” Patricia Herring wrote. “That is more than the employee’s checks!! Does this qualify them for the exchange and if so, what does she need to do? They only have until Sept. 12 to make a decision. Thanks!”

The AID responded with information about the Health Care Marketplace and about the definition of “affordability” under the Affordable Care Act. Wehco does still offer a plan that would meet the affordability requirement — no more than 9.5 percent of salary for individual coverage — for any nonsmoking employee making more than $22,300 a year. That’s the plan with a $3,000 deductible per person.

Wehco is continuing to pay 60 percent of the premium for employees who accept the high-deductible plan. For employee-only coverage, the employee will pay about $2,100 a year divided into 26 biweekly paychecks. For family coverage, the employee’s share is about $6,300 a year. Smokers pay 20 percent more.

According to the letter from CEO Walter E. Hussman Jr. and President and COO Nat Lea, 1,270 employees have been participating in the plan and 2,659 individuals, including family members, have been covered. The company has been self-insured for years, with administration provided by Arkansas Blue Cross & Blue Shield and commercial reinsurance for claims that exceed $100,000 in a given year.

So what prompted such a dramatic change in Wehco’s benefit plan? In short: enormous claims, both individually and as a group.

For the 12 months that ended July 31, total claims reached $10.5 million, which was $300,000 more than the company and employees jointly contributed to the plan. The two largest claims exceeded $775,000 and $636,000, and 28 people had claims exceeding $50,000, the letter said.

In an emailed response to questions from Outtakes, Lea also shared this: “Blue Cross Blue Shield has told us that we are averaging twice as many prescriptions filled per person than they experience in the average account with Blue Cross.”

Meanwhile, only 43 percent of employees had claims that even reached $1,000 during that 12-month period.

New coverage requirements under the ACA — full coverage for preventive and wellness care, dependent coverage to age 26, unlimited benefits — have also contributed to higher costs, Lea said.

To get the plan back to health under the old terms, the company and employees would have to jointly contribute $2.4 million — a 24 percent increase — to be split 60/40 between the company and the insured employees. “In short,” the letter told employees, “our company can hardly afford another $1.45 million in expenses, and it’s hard to see how those who work for it can shoulder another $960,000, especially given the pay freezes and other cost containments in recent years.”

By tripling the deductible, the pain could be reduced to about $573,000, or 6.6 percent of the total cost.

By only sharing in the cost of the high-deductible plan, Wehco can presumably steer most employees into it — or out of it completely. But leaving for a spouse’s plan also has some complications: Most have calendar year plans, so it will be Jan. 1 before a Wehco employee could switch to a spouse’s plan. And an employee who intends to leave the plan before next Aug. 31 can’t choose to pay the premiums pre-tax in the meantime under Section 125 of the federal tax code.

“Employees and outside observers should recognize that WEHCO Media has a management team that is willing to make difficult decisions to maintain the overall health of the entire company,” Lea said in his email to Outtakes.

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