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Employee benefits Q&A

Q: Were employee benefit packages better 10 years ago than they are now?

Benefit packages allow individuals a little more specific plans tailored to their needs than the general one-size-fits-all from 10 or 15 years ago. They're different enough to reflect two-income living styles. You have the range of younger workers that don't need health care as much to older ones with chronic situations. Older workers are dumping a lot of money in their retirement and younger ones are letting interest rates work for them. That's probably the biggest difference in last 10 years.

Q: Why do employees rank medical insurance as their most-valued benefit?

It's a matter of access to quality health care. If you don't have insurance, you're going to be stepped down in your care. Provider access has become an increasingly significant issue.

The cost of health care in the Northwest is higher than in California and the reimbursements are less than in California. The physicians have passed on the costs, which have risen double-digits. Employers have had to reduce benefits and maintain costs in order to maintain a sound package. But if they're wanting to keep quality employees they have to stay competitive.

Q: Is the cost of benefits making it more difficult for companies to attract and keep quality employees?

If an employer feels there is a shortage of workers, it's not going to play around with a health and welfare plan. In order to attract the best people, a company may feel a little more inclined to increase its benefits. Health care costs an employer from &

36;4,000 to &

36;5,000 per employee or more per year. In industries such as oil and chemical, with older or more experienced employees there are traditionally higher benefits.

Q: In the past seven years, paid vacation has climbed from No. 7 on your list to No. 2. What's driven that change?

My personal opinion is that people are aware they're running at a faster pace than ever before and they value time they can take with their family more than they used to. They're more inclined not to let a vacation slide and not use it during a specific year. It's a lot more anecdotal than statistical, but I see a lot more professionals around us adhering to vacation plans. When you have two-income families and kids in schools, it's harder to plan. It's not something you can just flip on and off.

Q: How have retirement plans changed?

With traditional plans, you worked so many years at so much salary and your benefit was based on those parameters. That kind of retirement favored individuals with long tenure. But the work force has been a little more mobile. You can now take a vested retirement and take it with you from employer to employer. Now, you direct your own investment. But if your account is dissipating, you're in for a significant surprise of not having enough money to take you through a meaningful retirement. It's been a function of a changing work force. Baby boomers can see there is a possible retirement on the edge of the horizon. 401(k)s have marked a transition from a defined benefits plan that began changing in 1974. Employers began terminating and freezing plans in 1979 when employees could begin putting contributions into plans on a pre-tax basis. Companies thought if employees were not concerned about it, they didn't have to put anything in either. Obviously, it's a good opportunity, because it leverages pre-tax dollars.

With the old programs, primarily the employer was responsible for setting benefits and making sure the money was properly invested and funded. With a 401(k), the responsibility is primarily with the employee and more education is required.

Q: Do employees do a good job with 401(K) investment?

Quite frankly, rank-and-file employees really pay attention to retirement plans, while white-collar workers don't pay as much attention because they are too wrapped up in their careers. You roll out a 401(k) and more white-collar than blue-collar employees will stick it into a money market fund. It's the blue-collar workers who study the thing and make a decision and move on. The Internet has been a phenomenal source in keeping funds up.

Q: Why has the ranking of sick leave and short-term disability declined during the study period?

I don't know if they're dropping or that the other ones have just become more important. Dental insurance would become more important, if employers are allowing less choice. I think all of the elements are pretty important.

Q: What are the long-term benefit issues?

People are living longer and they are going to need assisted living. After a certain point people are coming to the realization that long-term living care is not covered by Medicare in most situations. There are families paying out &

36;3,000 to &

36;5,000 a month to a nursing facility or home and round-the-clock care is the same amount.

There are voluntary long-term care plans people can purchase for themselves or parents, and I see that coming more into the consciousness of employee benefit planning.

To suggest a subject for this column, please contact business reporter Greg Stiles at 776-4463 or e-mail