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North Bay Business Journal

Monday, August 20, 2012, 6:30 am

Costs drive changes to winery health plans

Survey finds ongoing commitment to keeping coverage for employees

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    Wineries across Sonoma and Napa counties will keep employee benefits largely in place and, although they are increasingly resorting to consumer-driven health plans to keep costs in line, they contribute more to employee deductibles compared to other industries, according to  recent survey by insurance broker Woodruff Sawyer & Company. 

    The annual Wine Industry Health and Welfare Benchmarking Survey, part of a broader Bay Area survey on employee benefit trends, also found that wineries experienced premium increases to the tune of 11 to 12 percent over the year, a figure that is commensurate with other industries and with last year’s data.

    Fifty-two percent of wineries plan to make changes in plan design as a result of the Affordable Care Act. Some 53 percent said they were less likely to drop benefits, while another 47 percent said they don’t know if they would drop coverage altogether — a sentiment heard throughout several industries as one of the bill’s main features, the health insurance exchanges, nears implementation in 2014. The notion is that it will be more cost effective for employers to drop coverage and refer employees to the state-run exchanges.

    Chris Reiter

    But, according to Chris Reiter, vice president of Woodruff Saywer’s employee benefits practice in Novato, wineries view benefits packages as a key measure in retaining or attracting employees, particularly for some of the big-name wineries in the survey such as Opus One, Trinchero Family Estates and Sutter Home.

    “Most employers feel like if they terminate their plans they would have to compensate the employees in some other way,” Mr. Reiter said. “Employers in the wine industry … want to take care of their people. And you’re going to have to offer it to compete.”

    So rather than drop plans, wineries are instead opting for so-called consumer-driven health plans — health savings accounts or health reimbursement accounts, as they are commonly known — at a higher clip than some other industries. About 30 percent of the wineries had high-deductible plans, while another 20 percent said they were considering using such plans in the next year.

    By opting for the high-deductible plans — and by increasingly resorting to nuanced wellness initiatives — wineries were able to keep cost increases to a minimum, Mr. Reiter said.

    “Cost-wise, increases year-over-year ranged from 11 to 12 percent,” he said. But after making changes to the plans, increases are ending around 6 percent, he said.

    A total of 49 wineries, primarily from Sonoma and Napa counties, took part in the survey, a 20 percent increase over last year, Mr. Reiter said.  That represents approximately 10,000 employees from wineries of varying sizes. The median winery size is about 500,000 to 1 million cases per yer.

    Although high-deductible plans are a popular feature, on average wineries contributed about 75 percent of the deductible cost, compared to about 50 percent among other industries across the Bay Area, according to the survey. For example, an average deductible for wineries was about $2,000, of which the employer paid about $1,500. That compares to a $2,000 deductible in other industries, but for which the employer contributes only about $1,000, according to the survey.

    “The primary reason is to try to control cost, because it brings down premiums,” Mr. Reiter said.

    This year, the harvest appears to be better than the recent past, and that will ease the burden on wineries, allowing them to either maintain benefits levels or possibly even expand them.

    “Prices have stabilized a bit and it looks like a better crop this year,” Mr. Reiter said. “The last few years was really about belt-tightening and benefits are not immune to that. I don’t think you’ll as much pressure from the wineries to pass increases onto employees than in past years.”

    There is, however, still some apprehension surrounding health care reform, particularly what the classification of full and part time employees will be, which will determine who is eligible for employee benefits. That has a particularly acute impact on the wine industry, along with hospitality, because of the seasonal nature of the work.

    “There’s a lot of uncertainty and anxiety about that,” Mr. Reiter said.

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