EmSpring

Employee Benefits:

Savings & Cost Management Strategies 

July 11, 2011
Greetings!


Healthcare and other employee benefit costs continue to be a primary focus for our EmSpring clients. We keep an eye on trends and news that may be of interest to you in planning strategically to manage current and future costs.

Benefit Trends: Cost Management Strategies Shared

 

As we're well into 2011, you undoubtedly have first-hand experience with the rise in healthcare costs as forecasted by a number of reputable surveys and research groups. The predicted 5 to 11% was attributed to slow economic recovery, aging employee populations and increased healthcare utilization. Notably, costs for implementation of various healthcare reform provisions were included in all but one study. 

 

With these expectations of continued rising healthcare costs, employers are going deeper with benefit cost management strategies. I've summarized the major survey points for you: 

  • Offer financial rewards for good health, such as lower premiums for employees who participate in wellness programs. May also include penalizing employees for unhealthy habits like smoking.
  • Increase employee cost sharing.
  • Transition from copays to coinsurance and consumer directed accounts (HSAs & HRAs).
  • Conduct dependent audits and document eligibility.
  • Increase efforts to promote preventive care.
  • Enhance voluntary benefit offerings or shift programs to strictly voluntary.
  • Sponsor an on-site health clinic and/or wellness coaching.
  • Implement more incentive-based programs.
  • Increase employee health education and provide resources for managing their health care expenses.
  • Encourage or require use of generic medications.
  • Self-insure with a third party administrator if you have more than 100 employees and haven't already done so.

Sources: EmSpring, Hewitt Associates, Kaiser Family Foundation and Health Research & Educational Trust, Mercer, Milliman, Inc., The Segal Group, PriceWaterhouseCoopers  

 

On-Site Medical Clinics: The Latest Cost Cutting Strategy

A recent Los Angeles Times article focused on the jump in very large self-insured plans that are providing health centers for their workers. Walt Disney Co., Qualcomm Inc. and American Express Co. have implemented in-house medical care options for their workforce. Understandably, the executives felt that healthy workers are more productive, but also have realized the bottom line benefit of reduced absenteeism and avoiding costly emergency room visits. We've had a noticeable increase in discussions with our own clients over sponsoring on-site clinics with at least two employers ready to build.

According to a Mercer survey cited in the LA Times article, there was a 4% (from 11 to 15%) rise in the number of 500+ employee companies that had their own health centers, while those with 20,000 or more employees were "even more likely to have clinics."

While most focus on an Urgent Care model, others have gone beyond, with preventive care and wellness support, such as mammograms, prostate and skin cancer screenings, and smoking cessation programs.

Apprehension about medical privacy could prevent employees from utilizing such employer-sponsored centers, as could the fear that too much attention to cost control may pressure doctors to "understate" illness. Doctors interviewed negated such concerns, citing federal privacy laws.

Undeniably, cost issues and employee health will continue to drive employers to innovative strategies.

Source: "More employers are offering on-site medical clinics," Los Angeles Times, Duke Helfand, July 3, 2011

Avoiding the Cost of Non-Compliance: Benefit Plan Audits Pay Off

Continuing the theme of cost-savings, have you audited your employee benefit plan yet? The Department of Labor (DOL) requires many (those with 100+ participants) to do so as part of the annual Form 5000 filing. The DOL conducts its own audits, either randomly or as part of Form 5000 inconsistencies. It has the power to impose fines or penalties for inaccuracies or noncompliance issues found during its audit.

 

You can avoid the three most common mistakes plan sponsors make - just follow these tips:

  1. Define compensation plans correctly - KNOW your plan document.
  2. Follow plan eligibility requirements - self-audit periodically.
  3. Timely fund deposits - get employee deferrals and loan payments into the plan as soon as administratively possible.

EmSpring can help you get a clean bill of health on your next benefit plan audit!

 

Dan Head and Shoulder
"What the PPACA (health reform law) says and what people think it says
are often two entirely different things.
"
Dan Fisher

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EmSpring is a professional services firm; employee-owned and client driven. Please let us know if we can help you with your employee benefits, human resource technology, or payroll integration needs. We'll be here when you need us.
 
Sincerely,
Dan Signature

 

 

 

Dan Fisher, CEO
EmSpring Corporation