The REACH, Inc. Board of Directors decided to end employee health care plans in a vote last week, encouraging its staff to look to the Affordable Care Act health care exchange for coverage starting March 1.
Until the Dec. 5 decision, all full-time and three-quarters-time staff members — about half of REACH’s 400 employees — were eligible for low-cost health care through the nonprofit, which provides a range of services for adults and children with developmental disabilities in Southeast Alaska. About half of eligible employees were using REACH’s health care plan, Human Resources Director Brandon Cullum said. According to its website, REACH is the fourth largest private employer in Juneau.
Cullum said the decision was made “because of fast rising costs” and new requirements through the Affordable Care Act in a Dec. 6 email to employees. REACH experienced a hike in health care costs of 29 percent from 2013 to 2014, Cullum told the Empire. Ending coverage will save REACH about $2 million, he said.
“There was a level of growth we couldn’t sustain,” he said. “That body of money was becoming a bigger and bigger proportion of our wages and salaries, but only 25 percent of employees were tapping into it.”
Cullum said he thinks the benefits change “did come as a surprise for people.” He said he has heard strong responses from employees, both positive and negative.
Part of the $2 million saved will go toward a 9.5 percent pay increase for every REACH employee, he said. The pay increases represent a 4.5 to 5 percent increase in costs for REACH, rather than the 29 percent increase it would have seen had it continued health care.
“The board and our executive director will make other decisions to do things with” the rest of the money, Cullum said.
One REACH employee, who spoke on the condition of anonymity, said some coworkers have done the math and have found that a pay increase will probably not make up for the cost of a comparable health care plan.
The employee said they felt REACH’s decision was made to save money rather than out of consideration for its employees because of the way the organization seemed to push the change. A meeting introducing the health care switch was held the Tuesday before Thanksgiving, and was announced to employees two hours beforehand, according to the employee. Many REACH employees work out in the community and never heard from REACH about the meeting, before or after, the employee said.
Cullum said REACH would not have made this decision had the opportunity for coverage through the exchange not presented itself. REACH has never been able to cover spouses or dependents through its plan, he said. Now, entire families will be covered. REACH is also holding workshops to help its employees enroll, both this week and next, he said.
“REACH Human Resources will provide support to employees as they register on the Federal Healthcare Exchange by sharing information, providing computer terminals, and arranging visits from the Juneau Healthcare Navigator, Crystal Bourland,” Cullum’s Dec. 6 email states. “Employees eligible for REACH healthcare coverage will soon receive open enrollment notifications in the mail. REACH employees waiting to join the REACH healthcare plan are encouraged to enroll in REACH insurance, and then begin the process of enrolling on the Healthcare Exchange so that your Exchange coverage starts as REACH coverage ends and the pay increase takes effect.”
The REACH board made the decision to wait until March to drop health care so families wouldn’t have to worry about missing the Jan. 1 deadline for coverage mandated by the Affordable Care Act, Cullum said. Pay increases will also take effect March 1.
“We’re going to keep health care in place for January and February so people can take time to explore their options,” he said.