In “Making Wellness Work for Small Business,” CNBC.com discusses why workplace wellness programs are worth the effort for small organizations even when it seems as if only a large company can show a sizable ROI on wellness programs because “the end result of fewer sick days, heightened productivity and fewer costly insurance claims has been hard to quantify, especially for cash-strapped small businesses.”
“When most small business owners think of initiating a wellness program to help employees lose weight or stop smoking, they conclude it’s a luxury they can’t afford. Others have concluded they can’t afford not to.”
Offering a wellness program can play an important role in a small business’s success because with fewer people, the impact is much greater when someone takes a sick day or feels sluggish and underperforms.
Plus, offering a comprehensive wellness program lets employees know that their well-being is important. While an employee is not likely to get lost among the many, a person can feel taken for granted in a small business where there is so much to be done.
Experts interviewed for the article point out that as a small business, you do not have to roll out an elaborate wellness program to start. In fact, it might be better if you start small and add more components over time. That way, you can get employee feedback and fine- tune your workplace wellness efforts as you go along.
If your small business is wondering just how to provide a robust health care plan and contain costs, join the other small business who have found that a self-funded health plan lets them offer flexibility to employees without skyrocketing costs.
As employee benefit budgets remain tight, employers in the U.S. are adopting plan design changes that reduce drug benefit coverage and improve pricing, according to findings from the 2011-2012 Prescription Drug Benefit Cost and Plan Design Report by the Pharmacy Benefit Management Institute (PBMI), a provider of education and research for industry professionals.
“Employers are implementing prescription management approaches consistent with their strategy for overall medical benefits. As a result, the complexity of cost-sharing continues to grow, driven by increased use of four-tier plans and co-insurance designs that require additional member education,” said Brenda Motheral, PBMI executive director.
The 2011 survey was completed by drug plan sponsors representing 5.2 million covered employees, spouses and dependents. Key findings include:
*Plans using a four-tier design increased from 17 percent to 25 percent from 2010 to 2011. Nearly 50 percent of large employers (more than 20,000 covered persons) now have a four-tier plan design, typically providing the most generous coverage for generic versions of brand-name prescription drugs.
• Specialty drug co-pays increased by 37 percent in 2011. The average specialty co-pay grew from $61 in 2010 to $84 in 2011. Nearly 1 in 4 employers now place specialty drugs on a fourth tier, requiring the most cost-sharing (to learn more, see the SHRM Online article “Employers Misunderstand Specialty Drugs and Costs”).
• Reduced coverage of specialty drugs is on the rise, as 24 percent of employers now restrict coverage of specialty pharmaceuticals under the medical benefit, up from 12 percent in 2010.
• Pharmacy benefits management (PBM) pricing pressure is mounting on mail delivery programs as the average discount from the average wholesale price (AWP) rose by 10 percentage points for generics dispensed through the mail, increasing from 58 percent in 2010 to more than 68 percent in 2011.
Business Week has suggested that the government “Make Health Insurance Cheaper for Small Employers” by requiring insurers to issue standard policies “or at least dramatically reduce the number of policy alternatives—so that businesses could better compare them.” This suggestion is certainly well intentioned but missing the mark. The issue is not that there are too many plans for employers to choose from but likely that none of the choices offered can really serve to address the particular needs oftheir organization. Instead of simply limiting the number of insurance policies offered, small employers should be encouraged to embrace self-funded health plans that will help keep costs in check because these employers can design plans to fit their employee population’s specific needs. As it stands now, the Centers for Medicare and Medicaid Services “requires policies to be compared across only three hypothetical patients.”
Business Week notes that:
“Small business owners tend to change their insurance plans often, as they search for more affordable insurance. Not only does this switching impose costs on the businesses, but it also motivates insurers to take short-term approaches to health coverage for small businesses.”
This does not have to be the case at all. Small businesses don’t have to jump from plan to plan, leaving employees feeling uncertain and in a continual state of re-adjustment. Today, smaller employers have some options that weren’t available to them just a few years ago. A third-party administrator can help a small employer craft a health plan that fits their particular needs. And a self-funded plan is not stagnant. It can be altered to accommodate changes in a small employer’s work population, providing much-needed flexibility.
When it comes to finding ways to continue health care coverage, employers continue to get creative. If you are looking for ways to give your employees flexible, comprehensive coverage and find that your current health plan is not satisfactory, you might consider high deductible health plans. Participation in these plans will also allow an employer put funds into a tax-deductible health savings account. When your employees withdraw from these health savings accounts (HSAs), they must use the funds for medical expenses that line up with the regulations outlined by the government. HSAs differ from flexible spending accounts in that your employees are not be required to spend all of the money within a year. Also, the balance in a HSA is not taxed, so the money in these accounts can grow and then be of benefit later, since many people will find that their medical expenses increase as they age.
With the rising cost of health care more employers across the country are choosing to offer different types of consumer driven health care, including HDHPs, as an opportunity to help keep plan costs down. The mayor of a city in Maryland, for example, recently proposed that his city offer high deductible health plans to all employees as a way to help solve a budget crunch. If the city council approves, “Ocean City will contribute an amount to an employee’s Health Savings Account (HSA), which the employee can utilize to satisfy deductible charges and allowable medical expenses” and this would apply to current and new employees.
Do you need help figuring out just how you will provide health care coverage to your employees since costs are rising and laws are changing? Third party administrator can help you navigate the health care system and relieve you of the burden of having to decipher health care reform on your own. We can work with you to design a health care plan that suits your budget and gives your employees the benefits that they need.
Deciding on a worksite wellness program, let alone finding a vision for it may sound like a daunting task. What should the goal be in defining the desired end results? Smoking cessation programs? Weight loss incentives? Lowering blood pressure and cholesterol? Reducing the risk for cardiovascular disease and stroke? Yes, in fact, to all of those and more.
U.S. health officials and the American Heart Association have put forth an ambitious set of goals for reducing deaths from heart attack, stroke and coronary heart disease in a new program called Healthy People 2020. While this program is a nationwide effort to reduce disease by lifestyle changes, it can also become the vision and focus for many worksite wellness programs. The vision of the Healthy People 2020 program that sets goals for specific prevention activities includes:
• Increasing the number of people who have had their blood pressure and cholesterol tested recently;
• Increasing the number of people who have taken preventive measures to reduce high blood pressure or high cholesterol, i.e. lifestyle changes;
• Raising awareness of the early warning signs and symptoms of heart attack and stroke.
A Vision That Includes the Bottom Line
There is a common misconception that a wellness plan for employer groups is an unnecessary benefit that has nothing to do with a company’s performance. Harvard Business Review defines workplace wellness as an “organized, employer-sponsored program designed to support employees (and dependents) as they adopt and sustain behaviors that reduce health risks, improve quality of life, enhance personal effectiveness and benefit the organization’s bottom line.”
The dramatic increase in health care costs is being driven primarily by increased number of employees (and dependents) with chronic diseases, including high blood pressure, high cholesterol, diabetes, and obesity. The challenge is to improve overall health while lowering costs.
While many wellness programs are still largely unconnected to health-plan strategic planning, design, communications and open enrollment, the top 10 causes of death in the United States remain directly related to lifestyle or personal behavior. Employers have endless opportunities (and should have incentive) to affect change in their employees’ personal health behaviors, starting at open enrollment time and continuing throughout the year. According to the Centers for Disease Control and Prevention, (CDC), 59 percent of next year’s high-risk population will come from this year’s low-risk population.
The recent trend of shifting more health care and benefit costs to employees is showing no signs of letting up, according to new industry research.
A survey displayed that 22 percent of employers had medical deductibles of at least $1,000 this year for in-network services for their most popular plans, according to a report in Business Insurance, compared with just 8 percent in 2008. Twice as many employers (44 percent) imposed that deductible level on out-of-network services this year, the survey found.
“The biggest change in the past two years has been the increase in cost sharing with employees,” said Michael Thompson, a principal. “Employers have been careful not to shift premium costs to employees, but have decided that the better way to shift costs is to require those who use health care services to pay more.”
A separate report by Milliman also points to an increase in cost sharing in PPO family plans. According to Healthcare Town Hall, a website sponsored by Milliman, the survey found that the average premium cost of those plans this year increased $1,319, or 7.3 percent. Of the total cost increase, employers paid $641, while workers picked up the rest, totaling an increase of $275 in additional cost sharing and an additional $403 in payroll contributions..
Many employers, however, are searching for solutions beyond deductible increases. More employers — especially midsize companies — are turning to voluntary benefits to reduce their burden while still offering valuable benefits to their employees, according to a new LIMRA study. While employers traditionally have used voluntary benefits as a morale booster, nearly 80 percent of polled employers said they are most interested in voluntary worksite benefits because they bring no direct costs to their business, an onlinePLANSPONSOR news report noted. Two-thirds said they offer such benefits because it boosts their overall benefits package and allows workers to receive services cheaper than if they tried to buy coverage in the marketplace.
Although the trend of cost sharing is growing, U.S. workers are starting to see improvements in their overall compensation, which is creeping back toward pre-recession levels, according to a recent survey published on the Society for Human Resource Management’s website. Only 9 percent of polled employers still have a pay freeze in place – down from 48 percent in mid-2010. More companies also are restarting bonus programs in an effort to retain top talent, the survey said.
Increases in administrative costs tops employers’ concerns about the new health care reform law, according to a recent industry survey. A large majority (93 percent) responded they were at least “somewhat concerned” about the new administrative requirements created by the Patient Protection and Affordable Care Act (PPACA). More than half (56 percent) said they expect the additional reporting and disclosure requirements to cost $1 to $3 per employee, per new PPACA notice.
Small businesses continue to face steep challenges with health care premiums, a release from America’s Health Insurance Plans (AHIP) states. In 2010, the average monthly premium for small-business group health plans was $426 for single coverage and $1,117 for family coverage. AHIP’s analysis found that the smaller the company, the higher the premiums, with companies with fewer than 10 employees seeing average monthly premiums of $446 for single coverage.
BREAD AND BUTTER: 401(k)s AND HSAs
A new analysis by Fidelity Investments links high 401(k) account balances with the presence of health savings accounts (HSAs). Fidelity found that the average 401(k) balance at the end of 2010 was $71,500. For those with HSAs, however, the average balance was a whopping $170,500. Fidelity found that HSA holders, on average, had larger 401(k) accounts regardless of their salary.
GOODBYE PENSIONS, HELLO SUITS
In a recent survey, the Society of Human Resource Management (SHRM) highlighted a number of once-popular benefits and perks that have shrunk under the pressure of a tough economy. SHRM pointed to traditional pension plans as one of the biggest losers. In 2007, 40 percent of companies offered this benefit, but only 22 percent continue to do so now. Retiree health care coverage also took a hit, with 10 percent fewer companies offering the benefit today compared with 2007. Even dress codes are tightening up, the survey found. Only 55 percent of employers say they encourage workers to dress casually once per week, down from 66 percent in 2007.
The Bureau of Labor Statistics has released data on employer-sponsored benefits for unmarried domestic partners for the first time. The data show that 33 percent of state and local government workers had access to health care benefits for domestic partners of the same sex, while 29 percent of full-time private-sector workers had access to those benefits. Part-time workers, however, rarely had access to such benefits, with only 9 percent having access to benefits for their same-sex partners, the report said.
New proposed rules springing from the Patient Protection and Affordable Care Act (PPACA) would drastically change how companies communicate information about their employer-sponsored benefits.
The new guidance would require fully insured and self-insured plans to supply a summary of benefits and coverage (SBC) to employees no later than March 23, 2012, according to a report by CCH. The SBC would have to include easy-to-understand language, a comparison tool that would use three real-life examples (having a baby, treating breast cancer, managing diabetes) and a glossary of commonly used health care terms, such as “deductible” and “copay.”
The rules call for the SBC to be distributed with enrollment materials and upon request within seven days. In addition, any updates to the SBC would have to be distributed 60 days prior to the change, according to the law firm Ogletree Deakins. Employers who do not meet these requirements could face a fine of up to $1,000 per failure.
“Employers and administrators that already provide summary plan descriptions [SPDs] are understandably concerned about the duplications and additional costs associated with elements of the new SBC requirement,” the CCH report said.
The Employee Benefits Security Administration, the IRS and the Department of Health and Human Services (HHS) are accepting comments through Oct. 21, 2011, on how this new communication should be coordinated with SPDs and other enrollment materials.
Prior to the release of the proposed SBC rules, the IRS announced it would create new rules to make it easier for employers to determine if their health plans meet the affordability requirements under PPACA, according to a Workforce Management report. Under current rules, plans with single-coverage premium contributions that top 9.5 percent of a worker’s family income would be subject to an annual $3,000 penalty in 2014. The new rules would allow employers to base their calculations on wages instead of income, ensuring a more accurate picture of affordability, the IRS stated.
Meanwhile, the HHS loosened some of the PPACA rules on annual dollar limits as they apply to stand-alone health reimbursement accounts (HRAs). HHS announced that sponsors of stand-alone HRAs are exempt from the annual limit requirements on coverage of essential benefits ($750,000 in 2011, $1.25 million in 2012 and $2 million in 2013). However, the exemption disappears after 2014, according to Buck Consultants.
After years of enduring a sour economy, many employers with 401(k) plans now are looking ahead and trying to sweeten their plans to increase their recruitment and retention power.
For many, the first ingredient involves restoring the matching contribution — a benefit that many employers dumped when the downturn hit. Most employers have already taken this step, according to a new industry survey reported in Business Insurance. Three-quarters of employers that suspended a 401(k) match have restored it, according to a poll by Towers Watson. Seventy-four percent of those employers bumped the match back to its original total. Nearly a quarter of companies (23 percent) restored the match but at a lower rate this time around.
In addition to bringing back the match, employers can mix up plan types and help provide information and support to get employees’ retirement savings back on track.
For example, Roth 401(k)s, which allow employees to contribute after-tax funds, are getting serious looks from employers these days. A poll by The Profit Sharing/401(k) Council of America notes that 46 percent of employers offered this choice in 2010, compared with 18.4 percent in 2006, according to Workforce Management.
The Roth option may be attractive to many workers because those employees’ current tax bracket likely will rise as they get older and make more money, the report said. Under that scenario, Roth participants would see savings through a lower tax bill in retirement.
Companies also can encourage their employees to fatten their retirement prospects by encouraging smart investing and finding resources to help them make the right decisions, experts said. A number of industry surveys have shown that advice from investment professionals leads participants to save more and diversify their portfolios.
Luckily for employers, many plans and benefit advisors now offer personalized, full-service advising in addition to educational materials about general investing, according to a report in The Wall Street Journal.
A recent survey by the Plan Sponsor Council of America noted that 58 percent of profit-sharing and 401(k) plans offered investment advice in 2010. Also, the Department of Labor recently relaxed a rule allowing providers to offer advising services directly to employees rather than having to go through a third party.
Unfortunately, employees have been slow to take advantage of either the Roth option or investment advice. For instance, only 16 percent of employees select the Roth plan when it is offered, the Profit Sharing/401(k) Council of America reports. As for investment advice, only a quarter of employees take advantage of that feature when it is available, according to the WSJ report.
Despite these challenges, most companies — including small businesses — are renewing their commitment to their retirement benefits and are working to keep the benefit attractive.
“A few years ago we’d have small-business owners who wouldn’t put [retirement] high on the list of things that attract and retain employees,” Rich Linton of Bank of America Merrill Lynch told Employee Benefit News. Now, however, companies of all sizes are crafting their benefits package to help their employees secure their financial future, Linton said.
More than three-quarters (76 percent) of American workers who make decisions about benefits coverage during open enrollment admit to making mistakes about their benefits decisions, new research shows. In addition, 42 percent of workers say they have wasted money each year because of mistakes they made with their insurance benefits.
These findings are part of a survey of 2,220 U.S. adults ages 18 and older conducted in August 2011.
“Far too many American workers are making avoidable mistakes in benefits coverage decisions—from not meeting deductible amounts to contributing too little to flexible spending accounts—and, as a result of their lack of understanding or confusion, they often pay a price in multiple ways,” said Audrey, the vice president.
American workers say that when thinking about their choices for health insurance coverage, for instance, they sometimes, rarely or never understand everything that is covered by their policy options (74 percent of respondents).
Of those who choose the same benefits year after year, most say they sometimes, rarely or never have a full understanding of the changes in the policies each year (59 percent).
“While workers certainly need to invest more time in making better educated decisions, employers can help by understanding workers’ most common mistakes, explaining their impact and offering best-practice solutions,” said Audrey.
Strategies to Improve Communications
Companies can reap significant rewards by developing more-effective benefits communications, including healthier, more-protected and more-engaged employees. According to some insurance companies, best practices to consider include:
• Survey your employees. Electronic communications have made it easier than ever to survey workers at minimal cost. Yet little more than half (52 percent) of organizations conduct surveys that increase their understanding of employees’ satisfaction with benefit offerings. Even fewer—43 percent—survey their employees’ understanding of benefits communications. Taking the time to understand the preferences and needs of their workforces can help employers increase employees’ satisfaction with their benefits packages.
• Communicate year-round. Many employers communicate their benefits programs to workers just once or twice a year, often overwhelming them with information at open enrollment or during the hiring process. Expecting employees to comprehend and retain large amounts of benefits information all at once is unrealistic and unfair. Instead, employers should present elements of their employee benefits programs to employees throughout the year. By doing so, they’ll help employees retain the information, making open enrollment a smoother, easier process.
• Consider retaining a benefits consultant or broker. Giving employees the opportunity to speak directly to a benefits advisor or a representative from an insurance carrier can be an effective means of education. In fact, 49 percent of workers agree that they’d be more informed about benefits if they sat with a consultant or broker during enrollment.
By SHRM Online staff