If you stop to enjoy a steaming latte or an ice-cold frappuccino at one of Starbuck's 800 coffee shops, you may be surprised that the part-time worker behind the worker is receiving one of most innovative healthcare benefits packages in the country.
Unlike most employers of part-time workers, Starbuck's and its provider Aetna were able to create a healthcare compensation package that not only satisfied its 1,000 part-time workers but was affordable to the company.
While the program was created more than five years ago, some say Starbuck's healthplan should be used as a model to market to other employers of part-time workers who in the past have offered none or bare bones health coverage.
The Washington, D.C.-based Employee Benefit Research Institute (EBRI), which tracks benefit trends, says that in 1993 (the latest year for which it has data), slightly more than half the nation's part-timers had employer-sponsored health benefits.
But that number is deceiving: Less than 20 percent had coverage in their own names. An estimated 40 percent of part-timers are covered indirectly through the employer of their spouse or dependent.
Part-time status is the leading cause of lack of health insurance among the nation's employed, says EBRI researcher Paul Fronstin. Nearly 60 percent of workers who were ineligible for or denied health benefits attributed the reason to their part-time status.
To keep costs reasonable, employers typically offer "bare bones" policies to part timers. But some are creatively tailoring benefits packages to keep them affordable.
Paul Cromar, president of the Detroit-based National Group Consultants, which markets health policies, has been selling plans to the 3,000 members of the Michigan Restaurant Association for the past six months. He estimates that 90 percent of the 17,000 MRA workers can't get health benefits elsewhere because of their part-time status. Cromar, who is beginning to specialize in selling plans to employers that hire part-timers, is also a restaurant owner. When he asked workers what they needed, he says, he found dental coverage, followed by vision care, high on the list.
One of the ways to get employers to pitch in is to create a ratio for them, said Cromar. Health plans should have employers pay half the cost of benefits for employees who work at least 30 hours a week. Employees can then choose from an indemnity package or from "alternatives" in the form of a HMO plan that lets them select vision, dental and limited medical care.
At Starbuck's, the subsidized health benefits package was started by CEO Howard Schultz, who has garnered national acclaim as a visionary and humanitarian. He bought the company for $4 million in 1987 and immediately extended a full, company-subsidized health benefits package to part-time workers.
Health benefits are available to anyone who works at least 20 hours a week, with eligibility beginning 90 days after an employee's starting date. Starbuck's pays about 75 percent of the premium; staffers pay most of the remaining 25 percent, although the actual amount varies according to salary level.
Premiums are based on six eligibility categories: partner only; partner plus child; partner plus children; partner plus spouse or domestic partner; partner plus spouse and child; or partner plus domestic partner and child.
Starbuck's extended health benefits to domestic partners of the same sex in 1993 and to unmarried heterosexual couples a year later. No proof of partnership is required; couples simply sign an enrollment form guaranteeing that the information they supply is true.
Employees and their dependents are offered a two-tiered managed care plan administered by Aetna, which Starbuck's switched to in 1993 when it began to self-insure. The deductibles, co-pays and benefits are the same for all Starbuck's employees. About 5,400 U.S. workers and 800 Canadian employees are enrolled, some 15 percent of them with dependents.
When it comes to health coverage for part-time workers, Starbuck's may be in a class by itself. Few firms have been as generous as the cutting-edge coffee house.
The Starbuck's Health Plan
Marketers looking to add to their product lines should look to Starbuck's' program as a guide to creating a cost-effective, part-time benefits program.
The Starbuck's gatekeeper plan has no deductible and a $10 co-pay for a doctor visit and for a brand-name prescription. Preventive care is fully covered, and 90 percent of inpatient care is covered after the first $100.
Out-of-network care has a deductible of $300 for an individual and $900 for family and covers 70 percent of physician fees and prescription costs. The point-of-service option also allows workers to see specialists without a primary care physician's authorization. Those who live out of Aetna's network area - only about 2 percent of Starbuck's' insured employees - are served by a more expensive indemnity plan. Dental care is also part of the package. Partners get 100 percent coverage for diagnostic and preventive care, 80 percent coverage for basic treatment and 50 percent for major procedures, up to $2,000 a year.
Starbuck's is likely to keep looking for ways to keep its insurance costs in check, although spokeswoman Jeanne McKay said, "We like to think we are a healthy company, and if healthcare costs are any measure, we're healthier than the average company." Even so, its benefits costs are steadily rising.
In fiscal 1994, the company spent $4 million on healthcare costs, or about 9.5 percent of its base payroll of $42 million. In 1995, Starbuck's spent about $1,800 per enrollee on health benefits - up from $ 1,500 in '94 - and will probably spend $2,200 in 1996, said McKay.
According to Mckay, while the coverage is extensive --the money is worth it. In industries of part-time workers, 200 to 400 percent turnover is common; however at Starbuck's the rate is just under 50 percent.
(Starbuck's, 800/782-7282; Employee Benefit Research Institute 212/789-9000, National Group Consultants, 312/217-8761)