Zack Hutchins
Director of Communications

For Release — Tuesday, August 31, 2004


ALBANY—For the fourth year in a row, a significant majority of employers in New York State were hit with double-digit increases in health-insurance premiums this year, and employers continue the struggle to minimize the damage this trend does to their competitiveness, The Business Council’s latest annual survey of employers’ compensation practices shows.

More than 70 percent of responding employers reported an increase in their premium costs for 2004; the average increase reported was 13.4 percent. In contrast, the state’s projected inflation rate for 2004 is 2.1 percent, according to the state Division of the Budget. This dramatic increase in costs continues a trend of many years. In 2001, 2002, and 2003, the same annual survey showed at least 70 percent of respondents reporting increases in their health-insurance premiums, with the average increase in each of those years at least 13 percent.

The Council’s annual survey of New York State employers’ compensation practices was conducted by Compdata Surveys of Kansas City, the survey company with the nation’s largest database on pay and benefits information. The results of the survey were published in Compensation Data New York 2004, a 566-page book compiling the results of the survey of New York State employers’ pay and benefits practices.

“Employers and employees alike are exceedingly aware of the effects of rising healthcare costs,” said Theresa Worman, director of business development for Compdata Surveys. “To cope with these increasing costs and remain competitive, employers are mixing new ideas with more common cost-reduction measures.”

Worman said employers again this year reported taking a variety of steps to ease the burden of these cost increases:

  • Nearly one in four employers (39 percent) increased the employee portion of the health-care premium. In each of the last three years, more than a third of New York State
    employers have taken this step.
  • Another 11 percent reduced the amount of benefits offered. Many employers simultaneously began offering employers more voluntary benefit options that workers may choose to pay for themselves.
  • The vast majority of employers (84 percent) reported offering workers a flexible spending account (FSA), an account to which employers may contribute pre-tax dollars that can be used to pay health-care costs. Workers have been generally reluctant to use FSAs for fear they would lose contributions they did not spend in the same year. But an IRS ruling effective last January allows reimbursements for a broader range of health-care costs, including many over-the-counter medications. This has made FSAs more attractive to workers, Worman said.

The survey showed employers taking the following steps to ease the burden of increasing health-insurance costs:

Employer action
Percentage of employers taking this step

Increased employee portion of health-insurance premiums

39 %
Switched insurance companies
19 %
Implemented a managed-care program for the first time
5 %
Increased deductible levels
30 %
Offered a choice of deductible levels
19 %
Increased employee co-insurance levels
24 %

The survey also showed that New York State employers in 2004 spent 19 percent of their total payroll dollars on voluntary benefits:

Voluntary benefit
Percentage of payroll dollars spent on this benefit

Health insurance

9.2 %
4.4 %
Other non-mandated benefits
2.7 %
Dental coverage
1.2 %
0.9 %
Life insurance
0.8 %


About the Survey: Compensation Data is an annual survey of compensation practices in New York and is conducted by Compdata Surveys. The survey is the largest of its kind, with 473 job titles ranging from entry-level positions to top executives. This is the eighth year Compdata Surveys and The Business Council of New York State, Inc. have partnered to conduct this survey and publish its results in Compensation Data New York.

To order: Compensation Data 2004 - New York is available for $729, with major discounts available for employers who agree to submit data in next year’s survey. Organizations interested in participating in next year’s survey can buy a two-year subscription and receive the 2004 survey for only $419. For information, or to order a copy, visit www.compdatasurveys.com or call Compdata Surveys at (800) 300-9570.