AUGUST 21, 2000
HEALTH & SAFETY WATCH
Elite Health Perks for the Top Brass | On top of mind-boggling paychecks, some corporations give senior execs bigger and better medical coverage
| The press made much last month of the compensation package awarded to Gary Wendt, newly appointed CEO of Conseco, the troubled financial-services company. Particular attention was devoted to
goodies such as his $45 million signing bonus, 3.2 million shares, and options to buy 10 million more. Wade deeper into Wendt's contract, and you'll also find that the company will reimburse him up to $10,000 a year for any medical expenses that aren't covered under its health plan.
As it turns out, plenty of corporate bigwigs like Wendt don't have to worry about the mind-numbing details of life under managed care. Roughly one in five companies offers supplemental medical benefits to their top staff, says Izzy Kushner, vice-president at Compensation Resource Group, an executive-compensation and benefits consultancy.
ABOVE THE RULES. Many experts blame managed care, with its coverage rules and limitations, for creating such a two-tier system. "Companies are having to provide health-care insurance as a retention or recruitment device because standard plans do not cover all that is medically available," says Judy Fischer, managing director of research firm Executive Compensation Advisory Services. "As a result, executives are getting elite treatment."
Here are just a few examples culled from recent proxy statements. Last year, Pennzoil-Quaker State gave "excess medical coverage" worth nearly $25,000 to each of its five most highly paid officers. Office Depot shelled out roughly the same amount for each of its top five executives, while Beverly Enterprises, a nationwide nursing-home operator, covered expenses ranging from $1,500 to $9,600 in 1999. All of the companies declined to comment for this story. A Pennzoil-Quaker State spokesman says only that the company's medical-benefits program is in the midst of a "major overhaul."
At the very least, supplemental coverage picks up the tab for anything that's routinely charged to an employee, such as copayments, deductibles, and premiums for the employee and any dependents. "The concept is to keep the CEO whole," Fischer says. In some cases, companies might also
give officers an annual lump sum to pay for procedures or services that aren't covered under its health plan. That might include everything from gym memberships to cosmetic surgery. "Executives say: 'Look, I've earned my place in the world. I don't want to tell my wife that she can't get a face lift or a tummy tuck,'" adds Kushner.
An annual physical at a state-of-the-art facility is another common perk for people high on the corporate totem pole. Experts say it makes sense for companies to offer this benefit, given the hectic schedules of many CEOs and senior officers. "If [executives] travel globally, it can be extremely
stressful and physically demanding," says Helen Darling, senior consultant at Watson Wyatt.
HEALTHY BUSINESS. Indeed, the check-up biz is booming. Executive Health Group, a private company that specializes in executive exams, will treat 25,000 patients this year. Tests that would normally require visits to several different specialists can all be completed and reviewed the same day at EHG's plush offices. Its basic exam costs $610 and includes an electrocardiogram and extensive blood work. Additional procedures, such as a colonscopy, can raise the price into the thousands.
The Mayo Clinic in Rochester, Minn., books executive physicals a year in advance, says Dr. Donald Hensrud, director of its executive-health program. It will see nearly 3,500 patients this year, 40% more than in previous years, at an average cost of $2,000 each. Don't expect to make an appointment for your spouse, though. To make sure it can squeeze in all of its corporate clients, the clinic has closed the program to executive family members.
To be sure, supplemental medical coverage is just a sliver of what's doled out to the top brass these days. But average workers feel so passionately about health care that inequities in coverage could raise their hackles. In a study last year by the Employee Benefit Research Institute (EBRI), 65% of employees ranked health insurance as their most important benefit. And not everyone is satisfied with what they're getting. According to EBRI, 38% of workers enrolled in HMOs are dissatisfied with the cost of their insurance, and 31% are unhappy with their choice of doctors.
NOT COMPLAINING? Even so, Kushner argues that few workers would be miffed to learn that their boss isn't paying a $1,000 deductible. Employees realize that life at the top carries certain privileges, he says. "When they commute to work every morning, they're not thinking: 'Gee, there's somebody at my company who is getting picked up by a limo.'"
Maybe so. But a better health plan is one free ride that most employees would like to get.
By Jennifer Gill in New York
Edited by Robin J. Phillips
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Copyright 2000, by The McGraw-Hill Companies Inc. All rights reserved.
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