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Employers Save Money By Giving It Away
As
health care costs continue to climb, some employers are taking a novel
approach to saving money: They're spending more.
 These
companies are offering cash incentives and adjustments to health
premiums in the hopes of boosting preventive care, which they hope will
translate into big health care savings.
One
approach involves eliminating copayments on some prescription drugs for
chronic conditions, such as asthma, diabetes, high cholesterol and high
blood pressure.
Many
companies that have tried this tactic swear by it. Now, more employers
are starting to experiment with their prescription copayments. A recent
industry study notes that the number of employers waiving drug
copayments for maintenance drugs for chronic conditions increased to 18
percent in 2009, compared with 11 percent in 2007. Dr. Kevin Volpp,
director of the University
of Pennsylvania's
Center for Health Incentives, told CFO.com
that this "explosion of interest" is clearly fueled by
concerns about rising health care costs.
Midwest
Business Group on Health (MBGH), a consortium that purchases health
care benefits for 100 large employers, offers a program that eliminates
copayments for diabetes drugs. Larry S. Boress, the consortium's CEO,
said participant companies can save up to $3,000 per patient annually
because the no-copay arrangement encourages better drug compliance,
which reduces the risk of expensive hospital stays.
Despite
those savings, Boress said tweaking the copayments still doesn't go far
enough in boosting drug adherence. So MBGH gives patients access to a
diabetes "coach" to help them manage the disease. Employees
who don't keep in touch with their coach must go back to making
copayments for their drugs.
Other
employers are taking an even more direct route and are doling out cash
to employees who change their lifestyle. These companies offer cash
rebates or reduced medical premiums to convince workers to stop
smoking, lose weight and live healthier, according to a report in The Washington Post. For
instance, Safeway offers a medical premium discount to nonsmoking
employees who meet certain targets for weight, blood pressure and
cholesterol levels. After instituting the plan, the rates of obesity
and smoking among Safeway employees have dropped below national
averages, the company said.
Considering
that bad health behaviors account for as much as 40 percent of all
disease and premature death in the U.S., employers are wise to do all
they can to improve their workers' health, the University of
Pennsylvania's Volpp noted.
Monetary
and premium incentives "can not only help you reduce future health
care costs, but also improve the health and productivity of your
employees," he said.
Employers,
however, expect results for their cash. A recent Towers Watson survey
found that 65 percent of polled midsize employers expect to offer
wellness incentives in 2011. But 62 percent said that in 2012 they'll
only pay up if they see positive results from participants, according
to a report in the Los Angeles
Times.
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In 2011, Resolve To Keep Top Talent
The
New Year is a perfect time to shake off old habits, refocus and make a
fresh start. For employers who want to remain successful in 2011, that means
making a resolution to revisit their workforce retention strategies,
experts say.
 While the
country still struggles with a weak economic recovery, several signs
point to improvements in the labor market. The Society for Human
Resource Management expects December 2010 hiring by manufacturing and
service industries to increase for the 14th straight month. While it is
doubtful that this increase will make a big impact on the national
unemployment rate (9.3 percent as of November 2010), the Leading Indicators
of National Employment (LINE) report suggests that the hiring
environment is continuing to improve.
A
stronger wave of seasonal hires likely will contribute to that trend.
Chicago-based Challenger Gray & Christmas reports that the holiday
hiring trend for 2010 was the strongest since 2006, according to Human Resource Executive Online.
Even
more telling, the LINE report finds that salaries for new hires are
higher compared with November 2009 figures.
All
this positive economic news bodes well for employers and employees
alike. However, experts say many employees are eager to make their own
fresh start in the New Year -- by finding a new job.
"Disengagement
is higher than ever, historically," Joy Kosta of the Human Capital
Institute told Employee Benefit
News. "Some people, if they can, spend up to 50
percent of their time looking for another job."
That
disengagement stems from several years of layoffs, salary freezes and
benefit cuts. With the job market improving, some experts see a mass
exodus by top performers who are fed up and burned out.
"Even
though boomers have postponed retirement and everyone across
generations is holding on to their jobs for economic security, those
retained have been asked to do four or five jobs," Kosta said.
"The expression we've heard repeatedly is 'working like a water
bug' because all they can do at best is skim the surface of what
they've been asked to do. When the economy improves and people can make
a change, they will."
So
what can employers do? For starters, they can provide strong leadership
and make an extra effort to let their employees know they are
appreciated.
"The
top retention driver isn't necessarily salary," said Lauren
Herring, president and CEO of IMPACT Group, who cites a recent survey
by her organization that found that an inspirational manager,
advancement opportunities and a company's good reputation can go a long
way in keeping top talent.
Positive
retention starts with good management, and employers need to give
managers the right support, training - and especially, time - to boost
retention efforts, Herring told EBN.
"Now
you have managers with expanded duties, additional reports, and now
we're saying to them, 'Don't forget - we have to retain our talent as
well,' " Herring said. "Some people are naturally good at
developing talent and coaching, but most are not when they are incented
on business results and margins and things like that."
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Flu Season: Nothing to Sneeze At
For
employers, flu season can create a flurry of scheduling headaches,
higher health costs and lost productivity as workers stay home to take
care of themselves or loved ones.
 This year's
assault has already begun, with Georgia health officials
recently reporting the first regional outbreak of the season, according
to a HealthDay
report.
While
the season likely will bring lots of aches and pains, companies can
boost their immunity to the impact of influenza and protect their
workforce with a couple of simple solutions.
One
of the best ways to stave off a workplace outbreak is a flu clinic. A
recent study by the American Public Health Association (APHA) finds
that companies can save between $63 and $95 per employee by offering
vaccines to its workforce, according to a Los Angeles Times report. The
secret to maximize savings, the APHA says, is to hold the flu clinic
early. Any efforts after the end of December won't add up, according to
the APHA.
"Employers
are likely unaware of the potential savings" of flu clinics, said
Rachel Bailey, the APHA study's lead author. "They may view
employee vaccination as a short-term expense but may not be fully aware
of the savings that result later into the influenza season."
Other
HR tips for battling the flu, from Entrepreneur
magazine:
Tell sick workers to stay home:
In a rough economy, some workers might feel they can't afford to miss work.
But a sick worker who infects others can do a lot more harm than a few
lost days of productivity. Keep a close eye on your workforce and let
employees know they should stay home if they feel sick.
That goes for you, too:
HR and management shouldn't contradict the sick policy, either. Workers
who see the boss refusing to take sick leave may think that they must
do the same.
Keep it clean:
Offer sanitizer at work and impress upon employees the importance of
washing their hands. Emphasize the importance of cleaning office
equipment, such as computer keyboards and phones.
Plan for absences:
Inevitably, some workers will fall ill. Arrange for telecommuting
possibilities in advance and prepare schedules with some wiggle room in
case someone calls in sick.
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PPACA NOTES
Federal agencies recently released a series of regulations and decisions
related to the Patient Protection and Affordable Care Act. They include:
Tax credit for small businesses: The IRS
recently clarified that the small-business tax credit applies to a broad
range of employers, including those who pay for a portion of their
workers' health coverage through a wide range of contribution
arrangements, religious groups that provide coverage through
denominational organizations, and certain employers who provide coverage
through multiemployer plans.
Medical loss ratio: The
Department of Health and Human Services has approved a new rule that
states that insurers of individual and small group plans must spend at
least 80 percent of their revenue on direct medical care. Larger plans
(50 or more participants) must spend 85 percent on medical care. The rule
might make millions of Americans eligible for rebates starting in 2012.
Grandfathered plans:
Federal agencies in November announced that employers who switch
insurance carriers won't necessarily lose grandfathered status for their
group health care plans. Forcing an employer to stick with a carrier to
maintain grandfathered status for a health care plan would give the
insurer an unfair advantage, the agencies said. Self-insured
employers also can change administrators without automatically losing
grandfathered status.
2011 MILEAGE RATES
The IRS has issued the optional standard mileage rates for motor vehicles
in 2011. These rates are used to calculate the deductible cost for
operating a car or truck. The rates will be 51 cents per mile for
business purposes, 19 cents per mile for medical or moving purposes, and
14 cents per mile driven in service of charitable organizations.
STILL NEED TO SAVE
Despite some savings from recent health care reform, employees still need
to save a significant amount of money to ensure they can cover health
care expenses in retirement, a new Employee Benefit Research Institute
(EBRI) study finds. The research notes that a 65-year-old man retiring in
2010 will need from $65,000 to $109,000 to give him a 50 percent chance
of covering all health premiums and out-of-pocket expenses in retirement.
To increase his chances to 90 percent, he would need between $124,000 and
$211,000, the EBRI study finds. Because women have a longer lifespan,
they must have even more stashed away - between $88,000 and $146,000 for
a 50-50 chance of covering all health expenses in retirement (between
$143,000 and $242,000 for a 90 percent chance).
A LITTLE WEIGHT, A
LOT OF TROUBLE
Even a few extra pounds can translate into health troubles, according to
new research by the American Cancer Society. The study of 1.5 million
people found that healthy white adults who were overweight (but not
obese) were 13 percent more likely to die during the time they were
followed in the study than those whose weight was in the ideal range.
Two-thirds of U.S.
adults are either overweight or obese, according to a report by The Associated Press.
SOCIAL MEDIA SWAMP
The flurry of social media outlets can leave employees "scattered
and disoriented," according to a new report by People-OnTheGo, which
provides training on social media. While people are spending more than an
average of 4.5 hours daily on social media sites and email, social media
"is misused and contributing little to productivity,"
researchers said. Thirty-nine percent of respondents said they use social
media at work for personal reasons more than for work-related tasks.
EEOC CHARGES
The Equal Employment Opportunity Commission (EEOC) received a record
number of charges by workers in fiscal year 2010. The commission took in
100,000 new private-sector discrimination charges, an increase of 7
percent from 2009, the EEOC reported. The jump follows a slight decline
in 2009, when totals fell 2.2 percent from fiscal year 2008. In a report,
the EEOC attributed this year's increase to the expanded authorities of
the EEOC under several new labor-related laws, including the ADA
Amendments Act of 2008.
409A RELIEF
The IRS has issued a new notice (Notice 2010-80) that provides more
relief for nonqualified deferred compensation plans covered under Section
409A. This guidance provides another method of correction and transition
relief under Notice 2010-6. The latest notice clarifies that a
nonqualified plan linked to a qualified or another nonqualified plan is
eligible for the previous relief in Notice 2010-6, provided that the link
doesn't affect the time and form of payments under the plan.
401(k) TAX BREAK
The IRS has announced that the 20 percent withholding tax does not apply
to in-plan Roth conversions of 401(k) plans. This rollover feature was
included in a small-business jobs bill that was signed into law in September.
If employers add the option this year, employees who roll over funds into
a Roth (401)k will get a tax break.
DON'T SKIMP ON SPDs
The Department of Labor recently reaffirmed its policy regarding the
distribution of summary plan descriptions (SPDs) to plan participants.
According to the Nov. 15 issue of Deloitte's Washington Bulletin, the DOL
said "ERISA plan administrators cannot satisfy their obligations to
'furnish' summary plan descriptions simply by making them available to
participants." The DOL was responding to a question of whether SPDs
could be furnished by mailing a letter or postcard to participants
informing them that a new SPD is available and that they call a telephone
number and make a request. Such an action "is not a method likely to
result in actual and full distribution of the SPD," the DOL said.
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