MEMPHIS – In a move likely to be repeated at large companies nationwide, FedEx's 400,000 employees and family members will shoulder a larger share of health-care costs next year, partly to protect against coming penalties on overly generous plans.
The changes are designed to slow one of the company's fastest-growing expenses, expected to top $1.5 billion next year, and to protect against Obamacare's penalties on overly generous plans in the future.
Premiums will hold steady or rise slightly, but employees no longer will have an option with relatively low deductibles. FedEx is easing into the change by providing Health Reimbursement Accounts, but the cash won't come close to covering 80-140 percent increases in deductibles.
The company began rolling out information about the changes in July, well in advance of re-enrollment Oct. 15-Nov. 5, to give employees time to adjust.
FedEx currently has one plan that's considered high-deductible and one that isn't.
"This new plan offers the best combination of benefits and incentives to address the rapid increase in health care costs," FedEx spokesman Patrick Fitzgerald said. "Currently, more than 70 percent of large U.S. companies offer consumer-type health care plans, and many have slowed the growth in health care costs while still offering quality coverage and affordable premiums."
Officials don't think the change will harm FedEx's reputation for taking good care of employees. The company will continue to offer a $5-a-month plan for individual employees and coverage to part-timers.
"There's this tsunami of change that's going on, that's affecting everybody," said Tim Finnell, a certified health care reform specialist and president of Group Benefits LLC in Memphis. "I would view this by FedEx as being on the leading edge of change and adopting it early. They don't want to turn people over to the government and the [health care] exchanges."
FedEx's costs for self-insured health care coverage have been rising at two to three times the rate of overall inflation, or by $90 million to $100 million a year, officials said.
