Posts from — July 2010

It’s tough to get staff members to participate in benefit programs that they don’t even know exist.

Seventy-one percent of workers lack basic knowledge of standard benefit programs, according to a new study by the American Payroll Association (APA).

Low participation rates

The ASA published study  focused on workers knowledge of their company’s pre-tax benefits. While almost three quarters of workers say they live paycheck to paycheck, and would like to stretch their current salaries -

• 52% don’t participate in available flex spending accounts (and 6% of had never even heard of an FSA)

• 17 percent didn’t know their business offered a health savings account or health reimbursement arrangement (46 percent of those aware of the benefit still don’t participate), and

• 18% are unaware of existing transportation benefits or subsidies their business offers.

Compliance with HIPAA non-discrimination rules is a large challenge for wellness programs. the old rules were unclear about which incentives passed muster.

That’s all changed, with the rules established earlier this year by the DOL and U.S.  Treasury Department. the rules themselves haven’t changed, but they’ve been clarified. Here’s what you need to know -

‘Participation incentives’ are fine

As long as you structure incentives as rewards for wellness participation, the new rules provide a lot of freedom. All of these are fine under HIPAA -

• reimbursing all or a portion of the cost of fitness club membership

• financial rewards for undergoing health risk (assessment|appraisal}s so long as the reward is based on participation rather than test results

• encouraging preventive care by waiving co-pays or deductibles for these services (i.e., well-baby visits or prenatal care)

• reimbursing employees for the cost of smoking-cessation programs without regard to the result, and

• offering rewards tied to workers attending a monthly health education seminar or working with a health coach.

Conditional rewards OK if…

But what if you want to make the reward conditional on participants meeting specific health goals? Example -  Workers who achieve a cholesterol count under 200 get a 20 percent reduction in the cost of their medical plan contributions pending results of an annual cholesterol test.

The feds say it’s OK under HIPAA to do this, too, but your plan must meet five additional requirements -

• the reward can’t exceed 20% of the cost of employee-only (or, if you allow dependents to participate, employee-plus-dependent) coverage under your health plan.

• the standards should be reasonable (e.g., you can’t limit rewards to folks who can run a marathon). the rewards also can’t be used as a backhanded way to negatively single out certain workers (e.g., rewards for all non-diabetics).

• Participants must’ve the opportunity to qualify for the reward at least once per year (e.g., a smoker who fails to quit this year gets another chance next year).

• Rewards must be available to all “similarly situated individuals.” In other words, you can’t make a company-compensated weight management program available to certain workers but not others.

When, for medical reasons, it’s unreasonably challenging for an individual to satisfy conditions that are otherwise reasonable, you must offer an alternative. Example -  A pregnant worker may not be able to meet certain standards, so you must offer her an alternative.

Negative incentives violate HIPAA

So what’s not allowed under HIPAA’s non-discrimination rules? Anything that punishes people  for their health conditions or health risks.

The rules prohibit employers from charging different premiums, contributions, co-pays or deductibles based on personal health factors such as obesity or smoking. Notwithstanding, it’s OK to reimburse these expenses based on someone’s participation in your wellness program, without regard to success.

In addition, the feds have added an important new non-discrimination rule -  Employers’ health plans can’t deny benefits for treatment of injuries resulting from a medical condition, even when the condition wasn’t diagnosed before the injury.

For example, some health plans have a “suicide exclusion” that denies payment for treating self-inflicted wounds from a suicide try. Now let’s suppose the staff member suffers from clinical depression. Even if the depression was undiagnosed before the suicide try, it’s illegal for your plan to deny benefits to this staff member.

Ever set out to organize and dispose of old worker files and paperwork in the office? the job is tougher than it seems.

Best practice -  Create a records retention policy as your first step. A host of federal and state laws specify how long you must retain pay- and benefits-related documents.

Compliance is essential when a current or former employee sues or the DOL, IRS or the state audits your records.

Here’s a records-retention schedule advised by employment lawyer Jacqueline McManus -

• Retain for two years staff member personnel files, including performance reviews and training.

• Hold these for three years -  wage records, including time cards, base pay and overtime wage-rate calculations and records explaining wage diferentials for employees performing the same job, and hold I-9 forms for three years from hire date or one year after termination, whichever is later.

• Keep these four years -  all Payroll documents, including - home address records, and all wage records, including weekly OT earnings, straight time pay, deductions, bonuses, pay period designations and payment dates.

• Use a five-year retention window for staff member health info such as medical and first-aid records from on-the-job injuries, and drug and alcohol testing records.

• Keep this benefits data for six years (or one year after plan termination) -  elections and enrollment forms, benefit change documents, and COBRA notices.

• Retain 401(k) files indefinitely.

A lot of companys attempt to reward workers during the holidays. But be cautious -

There’s a common misbelief that the IRS considers gift cards worth $20 or less de minimus benefits and, thus, they’re tax free. Unfortunately, that’s not true.  With few exceptions, the IRS considers almost anything with cash value a taxable form of compensation.

Practically speaking, the IRS is unlikely to go after your firm or an staff member over a few small-value gift cards for which you withheld no taxes. But they could, in particular if your firm regularly hands out gift cards.  

At some firms, those $5 to $20 cards can add up to several thousand dollars worth of unpaid taxes in several years. Each $15 gift card would ordinarily require about $5.55 withheld.

To be safe, you are able to use gift cards sparingly and pay the tax for the recipient. Or else you are able to educate folks proactively that Uncle Sam requires you to take out for taxes.

Read the fine print

Gift cards may be money-wasters or or morale-killers if employees have a bad experience trying to redeem them. Read the fine-print before you buy. Three common pitfalls to watch -

• expiration dates. Some retailers offer cards that last forever. But many have expiration dates, rendering the cards worthless after a period of time

• dormancy fees. A $50 card can end up worth only $40 at stores that deduct “dormancy fees” after a certain period of time, and

• redemption fees. Some stores charge a fee for redeeming cards that may be used in multiple locations.

The good news -  There are some good deals out there. Corporation use of gift cards has doubled since 2001, and related sales bring in $20 billion a year to retailers. With such fierce competition, it pays to shop around.

In recent years, it’s become increasingly common for businesss with as few as 200 employees to explore self-insurance. But beware of hidden traps.

If your organization is weighing self-insurance - or has already taken it - here are three pitfalls that can develop unexpected costs.

1. Unfavorable employee mix

It’s impossible to completely eliminate the risk of unexpected, high-dollar health claims. But here’s a guideline to lower your risk. Health claim stats suggest the “ideal” worker population for a self-insured plan is predominately young, non-smoking and male.

Be aware that stop-loss insurance carriers often “laser” those workers considered higher risk. Lasering means that your business would’ve to pay out much more in claims for these workers before the stop-loss coverage kicks in.

2. Loss of network discounts

Some firms learned after the fact that going the self-insurance route caused them to lose providers’ network discounts they previously received under fully insured plans. When reviewing  plan vendors’ administration-only choices, ask -

• Will the provider’s network alliances work in your best interests, cost-wise?

• Will the vendor only oversee claim payments or negotiate to build the best provider network, quality-wise, for your staff members.

Bottom line -  You should get the same types of plan designs, networks and discounts as a fully insured plan.

3. Wasteful reinsurance contracts

When the language of your reinsurance contract doesn’t match your health plan’s summary plan description, you could be compensating for coverage you don’t need and can never use.

It’s also key to be certain your firm has enough money in reserve to cover run-out claims and other costs that may occur before reinsurance will cover payments. Best practice -  annual audits of your financial reserves.

Evidence-based medicine has become a big buzzword in healthcare over the last few years. But certain non-traditional treatments, like chiropractic care, might also prove effective in certain cases.

The key -  Using these treatments and to - not instead of - conventional medicine may prove more cost-efficient in the long term.

What the latest research says

Do these five common complimentary treatments belong on your health plan? Here’s what recent research suggests -

1) Chiropractic care. Studies suggest these treatments may help cut absenteeism for workers with uncomplicated lower back pain, namely for people  who’ve had it for less than a month.

2) Acupuncture. Research shows acupuncture can help relieve osteoarthritis, chronic migraines, post-operative pain, low-back pain, fibromyalgia and carpal tunnel syndrome. There’s less evidence about its effectiveness as a tandem treatment for other conditions.

3) Acupressure. There’s no significant research to show this needle-free variation of acupuncture (a therapist applies pressure to specific points on the body) has the same medical benefits.

4) Biofeedback. According to the Mayo Clinic, there’s now some research to suggest this treatment can help with some kinds of chronic pain, particularly tension headaches and muscle pain.

How it works -  Monitors display a patient’s heart rate, breathing patterns, body temperature and muscle activity. A therapist then teaches the patient how to lower these readings via relaxation.

5) Aromatherapy. as yet, there’s no evidence of direct medical benefits. While it can be a relaxing treatment to reduce stress, few firms - when any - foot the bill on employees’ behalf.

When an staff member ignores directions from a doctor, who’s responsible if the staff member causes a serious accident on the job?

In some cases, it’s your firm that ends up on the hook - both for workers’ comp and for other people ’s injuries caused by misuse of a prescription drug.

Situations such as these raise three questions that even HR/benefits pros have trouble answering. How are you - or supervisors - supposed to know what meds people  are on and whether they’re taking them as directed by their doctors?

In most cases, you won’t.

Can you find out without violating health insurance portability and accountability act (HIPAA) or other laws?

You can’t, unless the worker volunteers the info or a physician notes the effects of medication being the reason for the accident.

So when you won’t know and can’t find out, how on earth can your firm be held responsible after the fact?

It all depends on the circumstances. Three key danger signs -

• A supervisor already has knowledge of an employee’s health condition, when not the meds themselves. Example -  the employee requested a schedule change and said it was due to a particular health problem

• the individuals has a history of erratic behavior that management suspects is medication-related, and/or

• the employee’s job involves potentially dangerous situations.

Spotting possible danger

A Florida case (Johnson v. Rentway) is a classic example of the two of the three large danger signs.

1. the supervisor knew an staff member had insulin-dependent diabetes.

2. the worker was under doctor’s orders to take insulin at specific times, which required the company to adjust the employee’s schedule.

But due to short staffing, the worker was often forced to work shifts that overlapped with times he was supposed to take injections.

What’s more, the employee worked a potentially perilous job (he was a expert truck driver).

Finally, the inevitable happpened. the worker suffered a diabetic blackout at the wheel, causing a serious crash that injured himself and another driver.

The staff member filed for workers’ comp, and the injured driver sued the business. the firm fought - and lost- both cases. Total cost -  $5 million.

Having even one problem drinker on your medical plan - including a covered family member with abuse issues - can cost your business big.

Some estimates place the potential cost as high as $35,000 a year per case. What’ your company’s risk?

A lot of wellness programs are geared toward managing employees’ health risks associated with illnesses like diabetes or asthma.

But unless the wellness program is integrated with an employee assistance program (EAP), chances are alcohol abuse-related risks go undetected. Here are two strategies that’re getting good results.

1. Include alcohol in health testings

If you already sponsor confidential employee health-risk assessments, it’s easy to screen for alcohol risks, too. This may be as simple as making sure three questions are added to the current appraisal -

• How often do you have a drink containing alcohol?

• How many alcoholic drinks do you’ve on a typical day? And

• How often in the last month have you had six or more drinks?

For male workers, more than 14 drinks per week, or one or more episodes of heavy drinking suggests a possible problem. for women, more than seven drinks in a week, or one or more episodes of drinking four or more drinks, is a red flag.

Alternative -  When you don’t offer appraisals, you can refer workers to a free, confidential internet based screening.

Benchmarking tools

Many professionals say drug-free workplace policies and employee assistance programs (EAPs) are the two most proven solutions within companies’ grasp for minimizing the risks and costs of alcohol abuse by medical plan enrollees.

To see if sponsoring an EAP makes financial sense, you can calculate your own firm’s current cost risk for free here. Plug in your company type, locale and number of employees.

You’ll get a customized estimate of yearly direct (absenteeism, disability, ER visits) and indirect (presenteeism, turnover) costs from alcohol misuse by a covered worker or family member.

To design a drug-free workplace policy - or check when your existing one is up to par and compliant with the law - more guidance is available here.

It’s easy to feel like your PBM holds all the power over you. In most cases, it does.

A landmark 2004 study compared what pharmacy benefits managers (PBMs) charge businesss’ plans to what they actually pay pharmacies.

Researchers found staggering overcharges - especially for generic drugs. Regretfully, four years later, the situation has hardly changed. All too often, PBMs improve their own bottom line at the expense of the plan sponsor’s.

Chances are, it’s your health insurance provider - not yourself - who contracts with the PBM to administer the prescription drug portion of your health benefits.

So how can you feel confident your firm is getting the best value and service? Start by asking your health-plan broker these four questions about the current or prospective PBM.

1. How does the PBM calculate price?

A lot of PBMs gain hidden profits off your plan through a practice called “differential pricing,” says consultant Gerry Purcell.

In other words, the PBM pays one price to drug retailers and then sets a lesser discount off the typical wholesale price (AWP) for your company’s plan. Example -

• the PBM pays the drugstore the AWP minus 18%

• your plan and workers pay AWP minus 15% for meds, and

• the PBM pockets the difference.

Now for some good news. You do have some leverage in this area. If your drug plan is covered below the ERISA umbrella, the PBM must disclose this info.

Ideally, you’ll find the rates are the same on both contracts. But if there’s differential pricing, insist your firm get the full discount.

2. What’s the PMPM?

One key cost figure PBMs can’t manipulate is the per-member-per-month (PMPM) cost of your plan. This number will show if your plan’s costs actually increased or decreased.

The PMPM is calculated by dividing the total costs spent by the number of staff members enrolled in the drug plan.

It’s also a great tool for comparing different PBMs to see which is the most cost-efficient for the size of your organization, says Peter Reed of Managed Benefits Strategies.

3. can we get rebates, too?

Some PBMs receive money from drug businesses that your brokers won’t tell you about - but might  be able to leverage to your plan’s advantage. Example -  A lot of PBMs get rebate checks from drug businesses (typically 50 cents to $1.25 per claim) for assisting increase the sales of their products.

If you push hard enough for it, your broker may able to work an arrangement where you either -

• split rebates from your plan evenly, or

• let the PBM keep the entire rebate in exchange for a price break on administrative fees.

Important -  Ask to find out all the payment kinds the PBM gets from the drug firms. Rebates are often couched in the form of grants or classified as access fees or formulary fees.

4. How do changes in the formulary work?

In most states, PBMs can change your plan’s list of approved medications without prior notice.

The problem -  PBMs often make mid-year switches that save them money, but may not save your organization or staff members a dime.

Example -  If the PBM adopts a mail-order-only coverage policy on a certain formulary drug, an staff member who needs same-day access to the medication could  be forced to pay full price for it at a drug store.

Meanwhile, your plan is still charged the formulary price.To avoid such unpleasant surprises, insist the PBM give written notice of formulary changes, including the addition of new generics.

The best employee recognition practices are often the simplest.  

Here’s one that’s recently been adopted at the publishing company where I work -  a progam called “See something good, say something good.”  It’s a way for employees to bring positive attention to things that their peers, managers and the company’s different departments do well.

How it works -  the corporation provides colorful index cards, placing them conspicuously in a few commonly traveled areas in the building. When workers and supervisors want to publically recognize someone else’s efforts, they can grab a card and fill it out. It takes very little time.

When the index card is filled out, the employee drops it into a wrapped box (there are two in the building). the boxes are later accumulated and the cards displayed in a room the company uses periodically for meetings, presentations and quarterly employee appreciation events.

In order to build awareness and participation in “Say Something Good,” management put up fliers around the building, so people  from every department can see them, in addition to visitors and job applicants who’ve come in for interviews.

The program, which was originally thought up by the head of our product marketing and advertising division, doesn’t cost anything apart from the cost of the index cards and paper. There’s minimal administration time, and it takes employees only a moment or two to fill out a card on a fellow employee’s behalf.

But the return is a lot of, and the recognition possibilities are endless. It’s a good way to improve morale, encourage productivity and differentiate the corporation culture from work environments where the negative things seem to get the lion’s share of the attention.