Posts from — July 2010

Many firms are still missing an opportunity to trim some medical plan expenses.

Generic versions of high-cholesterol drug Zocor have been on market for two years now, but a fair share of corporation drug store plans have yet to make the switch.

If your PBM gives generic Zocor favored status on the formulary, now’s a good time to remind employees -

• most people  on cholesterol-control meds will get the same therapeutic value from generic Zocor as from the label brand and the more potent - and still patented - Lipitor

•  they can save $10 to $50 (or more, depending on your drug plan design) on their co-payment by switching, but

•  they ought to ask their physician first. Individuals  with cholesterol levels over 200 and/or family histories of  ultra-high cholesterol could  be better off staying on Lipitor.

Reason -  It takes four times the amount of a Zocor-type medication  to equal one dose of Lipitor.

When it comes to health-coverage laws, there’s often a domino effect.

As individual states require insurers - and in some cases, businesss - to cover or offer coverage of specific individuals  and procedures, similar laws can spread rapidly to other states.

The effect on plan sponsors -  Some mandates can increase your costs by 20% to 45%.

Small firms targeted, too

States are no longer targeting  just the Wal-Marts and other giant businesses anymore. the pressure has increased on companys of all sizes.

That’s namely true for the new “universal coverage” laws passed in Massachusetts and Vermont.

The Massachusetts law requires every firm with 11 or more workers either to cover or contribute toward everybody’s health coverage, or else pay an annual fee of $295 per employee to a state fund.

Vermont’s similar version sets the each year fee at $365 per full-time equivalent worker. the Vermont law also requires all uninsured, low-income hourly employees to have access to a state-subsidized plan (called Catamount Health) sold through private insurance corporations.

It’s up to companys to deduct the monthly premiums - $60 to $135, depending on the person’s wages - and send it to the state.

There are rumblings in at least 10 states about lawmakers pushing for universal-coverage laws. A few have formed committees to study the Massachusetts law and see when a version could be adapted to their state.

Here are three proactive steps to consider now. These could potentially save money, time and compliance headaches later -

• look into offering mini-med or similar lower-cost programs to satisfy minimum coverage requirements for uninsured staff members. Monthly premiums range from about $25 to $200

• educate low-income staff members about the earned income-tax (EIT) credit the federal government offers. This can make a mini-med plan free or almost free to eligible staff members, and

• use flexible spending accounts to create a tax savings on premiums for other workers and your firm.

Required procedures

The universal-coverage laws draw national headlines, but far more companys are currently affected by state laws requiring coverage for certain kinds of procedures. Three of the biggies -

• diabetes self-management. Nineteen states require your health plan to cover all the steps workers with diabetes take to control their condition, including nutritional therapy (if prescribed by a doctor)

• in vitro fertilization. This big ticket service adds 3% to 5% to your premiums, and is now a required benefit in 15 states, and

• cervical cancer screenings. In the last year, four more states have required all company plans to cover yearly cervical cancer screenings for all covered female staff members, spouses and dependents age 18 and older. That brings the total to 24 states.

The good news about the diabetes management and cervical cancer mandates is they can reduce your  long-term costs, even if they increase them in the short-term.

Here’s a good resource  for keeping abreast of mandatory coverage trends around the U.S..  The site also features  state-by-state breakdowns of changes in insurance laws  mandating the coverage of different treatments and conditions.

For  instance, this report from 2006 is the most extensive coverage-mandate study that I’ve ever seen.

Who worries more about medical costs -  lower-paid or higher paid employees?

Answer -  Both groups worry equally about their out-of-pocket medical costs, according to a PNC Services Group survey of 1,485 staff members. Nearly 52 percent of all respondents - regardless of income -cited the unpredictability of medical expenses as their No. 1 financial-planning concern.

Other common financial-planning fears that affect workers of all salary levels -

• eldercare. Over half the respondents with kids were afraid their offspring may be forced to pay for the parents’ long-term care, and

• financial stability. 47% of mid- to high-salary staff members said they were concerned about sustaining or increasing wealth.

It might be easier than you think to eliminate a major reason staff members sue.

How? Well, roughly 75% of worker lawsuits happen because of accidental disconnects between an company’s internal policies and procedures, and what’s written in the plan documents.

Here are two areas where some the costliest errors lurk, and three steps your fim can take to catch and correct the mistakes before you’re ever sued.

1. Policy/coverage discrepancies

A lot of firms’ written benefits policies and plan documents are like siblings who start to drift apart as they grow up.

In the benefits realm, nevertheless, the plan sponsor has the “parental” power - and legal responsibility - to be certain written policies and plan documents remain close as they grow and change.

As a routine practice, firms should make certain changes in their benefits policies are also written into the formal plan documents, according to benefits attorney William Wright.

When push comes to shove in court, any inconsistency with plan documents can prove fatal for the business. Example -  Senior management passes a new rule that staff members must work 30 hours a week to be eligible for the health plan.

Benefits and HR then write the new coverage policy into employees’ benefits  handbooks and hold meetings with employees to explain the change.

Now suppose an employee drops to part-time status. Are you legally protected if the employee challenges the loss of benefits?

Not necessarily. for the policy in  the handbook to stand up in court, the plan documents must also say there’s a 30-hour-a-week eligibility requirement.

Same thing goes for disputes over run-out coverage.  Suppose it’s your firm’s policy to carry over coverage for a terminated worker during the COBRA election period, but the requirement was never written into the plan document.

Several weeks later, the staff member has a major health claim. the TPA denies it, saying coverage had expired. Reason -  the plan document says “active employees” are covered, but doesn’t specify that the insurer pay claims until the end of the month.

The likely result -  the ex-employee sues, saying the business is liable for the mistake.

2. Coordination of benefits

Watch out for cases where an employee’s claim might  be covered under two or more policies (e.g., your firm’s plan and one from a spouse’s company).

Make certain there’s a clear-cut coordination-of-benefits policy in all your plan documents. Ordinarily, when a plan contains no instructions for coordination of benefits, it’s expected to pay first. Two key areas to check -

1. Be sure there’s a statement that says only the amount actually compensated by each plan will be charged against the maximum benefit, and

2. Make sure that the order of benefits determination spells out which plan compensates first for a covered child if the staff member is divorced from his or her spouse.

Similarly, when your firm offers domestic partner coverage, be certain there’s a coordination-of-benefits statement for dependent and non-dependent partners.

Three best practices

On an ongoing basis, you are able to cut your lawsuit risk by 75 percent when you -

• gather all materials related to specific plans into a binder, including renewal letters from providers and materials distributed to employees

• perform a yearly self-audit, checking to see when plan-document wording matches your current policies, and

• pay special attention to keeping benefits descriptions up to date.

Reminder -  If you don’t have a formal plan document, your contract with the provider legally serves as the “control document” for the plan. By law, all employees must’ve access to the plan document and be notified in writing of any alterations, including minor ones.

Nine of 10 HR managers polled by Colonial Life feel that workers have at least a vague notion that benefits are a valuable part of working at a company.

However, the same study found that only 21 percent of those businesss believed their staff members had a strong understanding of the workings of their own benefits.  and 5 percent believed that their staff members didn’t know anything about their benefit options.

Implication -  the greater emphasis placed on staff member education, the more likely staff members understand the role of benefits in total compensation.

Incorrect billing from health insurance carriers is more common than you might think. the typical plan sponsor can get overcharged by 5 percent a year, as reported by brokerage and consulting firm Corporate Synergies Group.

Like most organizations, insurance carriers rarely keep perfectly up-to-date records on their clients. as a result, plan sponsors often get charged for people  who shouldn’t be covered on the health plan. Here are two areas to watch -

Claims versus enrollment

It’s common to have cancelled staff members still in the carrier’s claims eligibility system - even after they’ve been taken off your enrollment list.

Reason -  A lot of carriers use separate computer systems for tracking enrollment and claims - and the two systems use different technologies that don’t “talk” to each another.

Carriers have no incentive to upgrade their systems, according to CSG president Eric Raymond, because doing so would cost the insurers money.

Leaving things as is, carriers simply charge customers when they put through claims for ineligible employees and dependents.

That’s why an annual claims audit is a must -  That way, you won’t get charged fees for claims the carrier accidentally put through.

Even when your firm outsources the work (it’s a rather time-consuming task when performed in-house), you’ll generally see several percentage points of savings on your total health care costs.

Dependent eligibility

Poor carrier record-keeping also could be the cause for employees’ ineligible dependents not being taken off the enrollment files.

Few carriers have systems that automatically integrate with your Payroll department and your current enrollment forms (including the electronic “employee self-service” kind). Instead, data entry people  employed by the carriers input the information in the vendors’ system.

Human error by the carriers’ workers costs plan sponsors another several percentage points. Solution -  annual dependent audits.

With the downturn in the economy, it seems like most organizations are shifting their focus when it comes to worker benefits and compensation. the current situation is also very stressful on benefits managers.

In times like these, it’s vital for colleagues to share their concerns, experiences suggestions. Several weeks ago, HRBenefitsAlert.com ran a special report on calming employees’ 401(k) fears.

The reader comments revealed that many benefits pros were just as afraid as workers, and people ’s frustration led to some unfortunate carping back and forth between several readers.

The purpose of the comments section, apart from giving individuals  the opportunity to react to the story, is to provide a forum for benefits managers to interact.

It’s my hope that we can generate an exchange ideas that have (and have not) been working at readers’ corporations during the current situation. Specifically -

• What are you doing to manage health benefits costs as budgets are either frozen or shrink?

• Have you noticed a dip in morale or productivity with all the doom-and-gloom in the news?

• How’s your corporation trying to calm employees’ fears about salary freezes or layoffs, 401(k) losses, healthcare cost shifting and other issues that get a lot of mainstream media focus?

• What are you saying to staff members to deliver the news they need to know but also keep morale high?

Thank you in advance for your willingness to share your specialistise and personal experiences. Everybody benefits in the long run.

Few companys benchmark their flu programs, a research study  from the Disability Management Business Coalition finds. But those that do often discover room for improvement.

Almost 80 percent of companys provide employees access to flu shots, either onsite or at a local clinic. and 72 percent cover some or all of the cost (typically paying between $10 to $20). But -

• at 89 percent of firms, fewer than half of staff members actually get a flu shot

• at 38 percent of organizations, fewer than 25 percent of employees participate

• only 6 percent of firms are able to get at least 75 percent participation

• 87% of survey respondents said  they never measure absenteeism during flu season, and

• 75% never tracked whether employees who get flu shots are actually absent less often.

The firms that get best results are those that actively educate workers, track flu-related absenteeism and send sick workers home.

The fastest-growing use of EAPs since 2002 has been tied to employees’ financial worries.

Over the last five years, there’s been a reported 69 percent jump in employee employee assistance program (EAP) use related to personal financial concerns. the trend is not all that surprising.

Statistics show that, for the first time since the Great Depression, the typical American has negative savings - in other words, debt exceeds income - in a typical month.

With salaries frozen in many organizations and many staff members racking up higher and higher credit card debt, the problem may continue to get worse.

Troubling trends

Here are some ominous numbers from a recent worker survey -

• 27 percent of respondents said they were “one major setback away from financial disaster”

• 22% say they were “worse off than last year, with less take-home income and more debt”

• 40 percent say their company is “insensitive to their employees’ financial needs,” and

• only 6 percent said they felt comfortable with their current financial situation and ability to manage their debts.

The majority of personal-finance related employee assistance program use arises from concerns over debt management, household refinancing and/or failed investments.

The problem of presenteeism - workers showing up at work but taking a “mental vacation day” - isn’t going away any time soon.

A recent survey found the average employee has three unused vacation days after the year. But 33% admit that they sometimes take “unofficial” vacation days of a half-day or more.

Not surprisingly, the day after Thanksgiving, Christmas Eve day and December 26 rank one of the highest “presentee” days among businesses (especially in the white-collar realm) that remain open on those days.

In terms of the expanded question of presenteeism, what’s keeping people  from using their vacation time as it’s intended?  Top answers -

• supervisors frown on employees taking vacation time

• there’s too much work to make up after using vacation time, and

• people  want to “reserve” time in case of an emergency.

On the flip side, many folks who take vacation time have trouble leaving work behind. One staff member in four admits to checking work e-mail and/or voicemail while on vacation.

And 29% say they have trouble forgetting about work-related stress, even when they’re using paid time off.

Among all industrialized nations, U.S.  workers receive the fewest annually vacation days - 14 on average.