Health Wellness ProgramHealth and Wellness Programs and Wellness Program Consulting

Many companys try to reward personnel during the holidays. But be careful –

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

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

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

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

Read the fine print

Gift cards can be money-wasters or or morale-killers when staff have a bad experience attempting to redeem them. Read the fine-print before you purchase. 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 can 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.

When your business is weighing self-insurance – or has already taken it – here are three pitfalls that can create unexpected costs.

1. Unfavorable staff member 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” staff member population for a self-insured plan is predominately young, non-tobacco use and male.

Be aware that stop-loss insurance carriers often “laser” those workers considered higher risk. Lasering means that your business would have 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 evaluating  plan providers’ administration-only choices, ask –

• Will the vendor’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 workforce.

Bottom line –  You should get the same kinds 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 may be paying for coverage you don’t need and can never use.

It’s also key to make sure 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 health care 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 besides to – not in lieu 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 might help cut absenteeism for staff members with uncomplicated lower back pain, especially for individuals  who’ve had it for less than a month.

2) Acupuncture. Studies show 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 meaningful 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, namely tension headaches and muscle pain.

Just 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 – if any – foot the bill on employees’ behalf.

When an employee ignores directions from a doctor, who’s responsible if the employee 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 individuals ’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 individuals  are on and whether they’re taking them as directed by their physicians?

In most cases, you won’t.

Are you able to determine without violating HIPAA or other laws?

You can’t, unless the employee 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 medical condition, when not the meds themselves. Example –  the worker requested a schedule change and said it was as a result of a particular medical problem

• The person 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 employee was under physician’s orders to take insulin at specific times, which required the organization to adjust the employee’s schedule.

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

What’s more, the worker worked a potentially hazardous job (he was a professional truck driver).

Finally, the inevitable happpened.  The staff member 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 company.  The firm fought – and lost- both cases. Total cost –  $5 million.

Having even one problem drinker on your health plan – including a covered family member with abuse issues – can cost your organization big.

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

Many health promotion programs are geared toward managing employees’ health risks associated with illnesses like diabetes or asthma.

But unless the health promotion 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 biometric screenings

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

• Precisely how often do you’ve a drink containing alcohol?

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

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

For male workforce, 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 – If you don’t offer appraisals, you are able to refer staff members to a free, confidential web-based screening.

Benchmarking tools

Many professionals say drug-free workplace policies and staff member 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 employee assistance program makes financial sense, you can calculate your own firm’s current cost risk for free here. Plug in your business kind, locale and number of workers.

You’ll get a customized estimate of yearly direct (absenteeism, disability, ER visits) and indirect (presenteeism, turnover) costs from alcohol misuse by a covered employee 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 drug store benefits managers (PBMs) charge businesss’ plans to what they actually pay pharmacies.

Scientists found staggering overcharges – in particular for generic drugs. Regrettably, 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 medical 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. Exactly how does the PBM calculate price?

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

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

• The PBM pays the drugstore the AWP minus 18%

• your plan and staff pay AWP minus 15 percent 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 when 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 lowered.

The PMPM is calculated by dividing the total costs spent by the number of workforce 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 corporation, says Peter Reed of Managed Benefits Strategies.

3. can we get rebates, too?

Some PBMs receive money from drug corporations that your brokers won’t tell you about – but may  be able to leverage to your plan’s advantage. Example – Many PBMs get rebate checks from drug corporations (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 determine all the payment types 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. Exactly 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 might not save your organization or personnel a dime.

Example – If the PBM adopts a mail-order-only coverage policy on a certain formulary drug, an worker who needs same-day access to the medication might  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 staff member recognition practices are often the simplest.  

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

Exactly how it works –  the company provides colorful index cards, placing them conspicuously in a few commonly traveled areas in the building. When personnel 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 staff member drops it into a wrapped box (there are two in the building).  The boxes are later gathered and the cards displayed in a room the corporation uses periodically for meetings, presentations and quarterly staff member 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, as well as visitors and job applicants who’ve come in for interviews.

The wellness program, which was originally thought up by the head of our product advertising and marketing division, doesn’t cost anything apart from the cost of the index cards and paper. There’s minimal administration time, and it takes workers 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.

When it comes to health promotion programs, it could be tough to get past all the hype. Here’s how to avoid the three most common traps employers fall into.

Trap #1.  The “one-size-fits-all” approach

For good reason, your business does not simply copy other firms’ 401(k) plans or compensation designs. Yet, all too often, firms adopt ill-fitting wellness programs based on things that have worked elsewhere.

Your CFO might have seen data on the cost savings other businesss have achieved via certain wellness incentives. Or an old coworker of your CEO swears by the health promotion program at his or her own firm.

In response, the top brass pushes for a copycat wellness program – for example, offering tobacco use cessation incentives.

That could  be a good idea, if tobacco-related illnesses are a key driver of your company’s medical costs. But how can you be sure? is it good enough to have your staff undergo a health risk assessment?

Normally, the answer is no.

Health risk assessments are a great beginning place, but it’s often a mistake to stop there.  The assessments help you get a feel for what your employees’ baseline physical problems are before you attempt to design a wellness program around them.

This creates rough outlines of what your health promotion program objectives must be and where to target staff member initiatives. If you want the maximum bang for your wellness buck, you’ll have to dig a little deeper for information. Key places to look –

• your organization’s medical-claims breakdown for the last three years

• prescription-drug claims

• employee absence information

• employee assistance program use

• disability claims, and

• employee demographics (workers’ ethnic, gender, age and dependent coverage status points to greater – and lesser – health risks associated with each category).

Trap #2. Leaving the wellness program on autopilot

A lot of wellness programs often get off to a good start and then fizzle out. Corporations are left wondering what went wrong. Their mistake –  They failed to revisit the wellness program on an ongoing basis – at least every other year.

Why it’s vital –  Your cost-drivers can easily shift as workforce come and go from the company.

Example –  This year, emphysema and other tobacco use diseases might  be your biggest cost driver. But two years from now, it might be obesity and diabetes.

Unless you continuously track the wellness program and adjust your objectives as necessary, you may not be prepared to meet those new challenges.

Trap #3. Unrealistic expectations

Normally, it takes at least a year and a half for businesss to break even on the cost of a health promotion program.  As a rule of thumb, the average program cost per staff member per month to the business is about $3 to $5.

When, after three years, you still aren’t seeing results, something went wrong. Currently, the benchmark Return On Investment after the third year of a wellness program is $4 to $5 saved for every dollar spent.

Exactly how can you manage the cost in the short-term? In many cases, corporations pass the cost of the health promotion program on to the workforce. for example, let’s say you want to roll out a health promotion program effective January 1 (or no matter what your first day is of the new plan year).

You can roll that $3 to $5 per staff member per month cost directly into the employee’s monthly share of their healthcare premium. That makes the wellness program a budget-neutral expense for your corporation.

But remember –  You get what you pay for – both in time and money invested.  The less guesswork that’s involved in the planning and execution, the better the chance for success.

Variable compensation can be a great way to satisfy demand for higher pay while addressing upper management’s need to improve productivity and keep base salaries under control.

But there are some major pitfalls.  Here are two proven ways to avoid the most common legal and return on investment risks.

Non-exempt employees

Beware when you use variable comp as a pay-for-performance strategy for hourly workers. Reason –  It’s easy to inadvertently run afoul of the Fair Labor Standards Act (FLSA) overtime rules.

Under FLSA, you must recalculate employees’ hourly wages to include all variable pay (such as individual or departmental bonuses) when figuring overtime compensation.

Failure to do so could cost your organization more in penalties and back-wage payments than the variable comp plan saved on the front end.

So it’s a good idea to double-check with Payroll to make sure the department knows to make OT adjustments after hourly staff members receive bonuses.

Reward the right things

In order to make the criteria for bonuses easier for workforce to understand and management to measure, many firms prefer using strictly objective measurements. Example –  the plan may pay out based on how much money workforce save their department in a year.

But what happens if staff members cut corners – on safety, service, quality, etc. – to reach the goal?

At some firms, employees are still rewarded with additional pay, even though their actions potentially did more harm than good to the bottom line. for best results –

• set behavioral criteria for bonuses as well as economic ones, and

• consider using a mix of firm-wide, departmental and individual economic performance measures.

Shopping for healthcare plans through a broker is a fact of life for the vast majority of corporations. But how well is your broker meeting your needs?

And how can you work together better to minimize costs while getting maximum bang for your organization’s benefits buck?

What’s New in Benefits and Compensation conducted an exclusive survey of 195 subscribers to determine how they view their company’s relationship with their brokers. Here is what they said –

Half see room for improvement

The good news – Almost half of your coworkers rate their relationship with their current broker as “excellent.” But that means the other half see some room for improvement.

Thirty-nine% of respondents rated their broker relationship as satisfactory and said they were at least “reasonably happy.” the remaining 11% noted “unpleasant surprises” while 4% are actively considering a switch.

Tools for making buying decisions

Of course, the No. 1 reason any organization works through a broker is to find the best deals on health benefits. But many of your peers pointed to a few areas where their brokers could help make their lives a little easier.

First and foremost, your coworkers say they’d love for their brokers to provide user-friendly – but thorough – return on investment data they are able to use to benchmark different plans.

It’s worth discussing with your broker how much arm-twisting the broker can do with medical plan carriers to get key data in your hands. Two specific areas of data benefits pros say they’d like help from brokers –

• obtaining and sharing claims cost data to compare to premiums, and

• benchmarking your average plan costs against those of similar-sized firms in the region.

Regrettably, claims cost data is usually hard to pry loose from insurers, at least for smaller employers’ plans.

Reason –  Without this data, it’s tougher to judge if your premium rate adjustment at renewal time is fair. Fewer than half of respondents (46.3%) say they’ve ever discussed such information with their brokers.

Obtaining benchmarking data on similar-sized plans assists you see how comparably your costs and plan designs stack up in your area. Roughly 43% of respondents say they’re armed with at least some of this info when it comes time to decide whether to stay with the existing plan.

Earlier renewals

It’s worth talking with your broker about ways to push for the earliest possible renewals – and strategies for making sure your carrier doesn’t hit you with any unpleasant surprises.

One notorious game insurance corporations play with companys’ plans is to wait until the last moment to reveal the new premiums at renewal. That way, there’s less time for negotiation – or to shop around with the insurer’s competitors.

About 28% of respondents report getting their renewals about 30 days before the rate kicks in. Different brokers use different benchmarks for securing renewals. A minority of respondents (19.5%) have seen them as early as 90 days ahead.

Taking work off HR/Benefits’ plate

The benefits brokerage marketplace is highly competitive. Some brokers try to set themselves apart by offering customers so-called value-added services.

Among your coworkers, the most well-liked services are those which relieve the company’s HR/ benefits manager of time-consuming tasks. Some examples –

• analyzing  plan documents

• Auditing (and, if needed, reconciling) carrier bills for errors

• monitoring plans for compliance (HIPAA, COBRA, etc.)

• offering tech support for a benefits intranet and/or staff member self-service software, and/or

• helping with worker education.