2021 changes include contribution hikes, HSA option

FedEx employees on the company’s health care plan will see their contributions increase again in 2021, one of several changes looming as the COVID-19 pandemic shakes up the health care landscape.

FedEx is not increasing deductibles or out-of-pocket maximums for current medical, dental or vision plans for 2021, according to a company newsletter for employees. However, paycheck contributions for medical, dental and vision benefits will increase the same amount they did for 2020.

For employee-only coverage, the monthly contribution increase will be $2. For coverage for an employee and children, the increase is $12. For employee and family coverage, the increase is $18. This applies for all FedEx operating companies, except FedEx Office, in plans with Cigna and UnitedHealthcare.

FedEx also detailed standard COVID-19 safety precautions in the newsletter, such as wearing a mask and social distancing. The newsletter said anyone showing COVID-19 symptoms or in close contact with someone who tested positive should quarantine for 14 days and follow company reporting procedures, too.

For FedEx medical plan enrollees whose provider has determined they need to be tested for COVID-19, costs of the provider visit and lab work will be waived during the 2020 plan year, the newsletter said. FedEx added that the deductible won’t apply and the member won’t be responsible for coinsurance.

“This will be retroactive for any COVID-19 testing conducted back to January 1, 2020,” the company said.

FedEx’s COVID-19 infection rate is about 1.7%, a company executive said in September, meaning roughly 8,500 FedEx employees have had the disease.

Whether COVID-19 will lead to long-term changes to employee health benefits at FedEx or elsewhere remains to be seen. Paul Fronstin, director of the Employee Benefit Research Institute’s health research and education program, said he didn’t get the sense from employers he’s surveyed that the pandemic has given them reason to do something different.

“If anything, they’re all spending a lot less money on health benefits this year than they expected to, because there was such a large drop in the use of health care services in the spring,” Fronstin said of employers. “In some ways, it seems like that reduced the sense of urgency to do anything.”

FedEx said it will spend about $2 billion for 2020 to continue covering roughly 70% of member health care costs. The company already implemented big changes this year to its employee health benefits plan to trim rising costs as it struggled during a global economic slowdown. FedEx added a working spouse surcharge, ended out-of-network coverage and began phasing out domestic and civil union partner benefits.

The working spouse surcharge, introduced for 2020, will still be in effect for 2021. This monthly $150 surcharge applies for spouses who have access to medical coverage from their own employer but are instead covered under FedEx’s plan.

With 2020 being a lower-cost year overall as patients delay elective surgeries, 2021 “could be a much more expensive year” for health care as hospitals see more business, said David Thornton, a member in Bass, Berry & Sims’ Memphis office and part of the firm’s employee benefits practice group.

FedEx spent roughly $25 billion in salaries and employee benefits in fiscal year 2020 ending in June, up from 2019’s $24.8 billion. A 2% pay bump for most FedEx employees goes into effect this month.

FedEx said 441,596 employees and dependents were covered by its health plan in 2019.

Telemedicine surges, other benefits changes

Many medical appointments have become virtual during the pandemic. FedEx has seen a 330% increase in year-over-year telemedicine usage, according to the company newsletter. FedEx added free telemedicine for non-urgent medical issues for 2020, which anyone covered by the FedEx Corporation Group Health Plan can use.

“The fact that you can get medical advice without actually having to visit a medical provider is pretty convenient and safe,” Thornton said of telemedicine visits.

Still, telehealth doesn’t provide patients all the benefits an in-person visit can, including tests that can catch ailments early, noted Kate Bronfenbrenner, director of labor education research and a senior lecturer at Cornell University’s School of Industrial and Labor Relations.

In other 2021 changes, FedEx employees will have a Health Savings Account (HSA) option, which has a higher out-of-pocket maximum and has members pay full price for non-preventative medical services and prescription drugs until the deductible is met. The company’s Health Reimbursement Account (HRA) option is still available.

Additionally, UnitedHealthcare is a new medical plan administrator for FedEx health care coverage, taking over Anthem for most of its current members beginning in 2021.

FedEx said the move was part of its process to provide “affordable health care options that offer both robust, and high performing, medical networks.” Employers switch administrators for a number of reasons, Thornton said, including cost, service quality and geographical coverage.

FedEx will also expand the “tiered network” concept it successfully tested with Anthem in the Indianapolis area, applicable to all UHC’s markets where available.

“In a tiered market, you pay lower coinsurance for services in Tier 1 and pay higher coinsurance and copays for other in-network care outside Tier 1,” FedEx said.

Enrollment for FedEx Express, Services, Corporation, Custom Critical, Logistics and Supply Chain employees began Tuesday and runs until Oct. 27. Enrollment for FedEx Ground, Freight and Office employees begins Thursday and runs until Oct. 29.

Max Garland covers FedEx, logistics and health care for The Commercial Appeal. Reach him at max.garland@commercialappeal.com or 901-529-2651 and on Twitter @MaxGarlandTypes.

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