Amy Dison

Wednesday, 30 August 2006 11:55

Zoning ordinances

Since when is your local fast food restaurant or your car repair shop found in a plaza of nice identical brick buildings with nothing giving away what is inside besides a small sign in the front? Well, if you live in a community with highly regulated zoning ordinances, you may see these things daily.

Zoning laws are used to regulate development and reflect a community’s goals and standards, says Marci Reddick, a partner and director at Sommer Barnard PC.

Most land is regulated by local zoning ordinances. Therefore, when a company goes to purchase a property for its business, it is crucial to make sure the zoning laws permit the activities your business intends to pursue.

Smart Business spoke with Reddick about the affects zoning laws have on companies and what a company can do to file for variances or exceptions to the local zoning code.

How do zoning laws affect business development?
Local units of government work to develop a comprehensive plan for orderly and harmonious development. This means creating development standards that meet a number of goals, which include encouraging development in a community and protecting the natural resources and interests of the existing businesses, farms and homes.

Zoning laws benefit individuals, businesses and communities by providing an orderly way to develop and use property. It gives property owners assurance of how land may be developed and may be used in the future.

How do zoning laws affect the way companies do business?
Zoning laws regulate where a company can do business and the activities it may engage in within that area. For example, in an industrial area, there are four different zoning classifications designed for industrial use. This means you might not be able to run a certain type of company in one zoning area such as I-1-U, which allows for the lightest industrial use, but you might be able to perform the actions needed to run that company in an I-4-U district — the highest industrial level.

It is important for business owners to check the zoning laws of any property they are acquiring to make sure they are able to use the land for their purposes. Most government Web sites provide access to this type of information.

What does a company risk if it is found in violation of a zoning ordinance?
Local government authorities regulate code enforcement. These authorities should have inspectors who will look for zoning violations in a community and respond to a violation claim.

For example, if a company is found to be in violation of a zoning ordinance while it’s constructing the building for its use of business, the local zoning authorities will issue a stop order and the business will not be able to proceed with construction until the violation is addressed. This can be devastating to a company because it costs them both time and money.

Depending on the zoning law, a company may need to change its building design or remove a sign. Fines may be imposed on company owners found in violation of local zoning codes. Owners have the option of paying a fine and abiding by the law or filing for a variance. A variance is a change from something that is permitted within the ordinance.

Another option for a company is to request is a special exception to the zoning ordinance. This means one must meet more qualifications for the proposed land use. For example, if an industrial company wants to move into a distract which it is not permitted but can prove that it will not cause extra air or noise pollution and are monitored by a regulatory organization, a special exception may be granted.

How does a company qualify for a variance or an exception successfully?
Working with local zoning staff, neighborhood associations and the residents is critical to success in obtaining a variance or special exception.

It is important for business owners to meet with adjacent business owners or community groups to explain the proposed project and to answer any questions or calm any fears. Bringing any illustrations of future buildings or details you can share will help people understand your plan. It is better to meet with these adjacent business owners on an individual basis so you can focus all your attention on their specific questions. If a staff has been hired for the facility, taking the management staff to these meetings is a very good idea so other business owners can see who they will be dealing with on a daily basis.

MARCI REDDICK is a partner and a director at Sommer Barnard PC. Reach her at (317) 713-3435 or

Sunday, 30 July 2006 10:08

No chicken soup

Antibiotics and your grandmother’s chicken soup are no longer the only way to cure illnesses. Biotechnology is used today to create prescription drugs to treat or cure specific diseases and ailments. These drugs are not used to treat the common cold; rather they treat chronic or debilitating diseases, and their cost can be remarkable.

Employers who provide their employees the use of such drugs are implementing specialty pharmacy programs.

Smart Business spoke with Steven Marciniak, R.Ph. and director of pharmacy programs for Care Choices, about the importance of specialty pharmacy to employers.

What are the differences between specialty pharmacy and traditional pharmacy?
Specialty pharmacy typically consists of injectable medications that are very expensive. These medications average $1200 to $1500 a month per patient as opposed to traditional medications, which average from $50 to $55. Conventional medications are studied to see if there is a healing affect on an aliment. Specialty drugs are designed, created and built to treat a specific illness such as multiple sclerosis, rheumatoid arthritis and Hepatitis C.

How does an employer or employee benefit from the specialty pharmacy program?
The program not only provides medications but also patient care and counseling.

Enbrel is a self-injectable drug used to treat rheumatoid arthritis. Under traditional pharmacy care, a doctor prescribes a medication for a patient to use until the next time he or she sees the patient. Prescription drugs are an expensive benefit provided to employees, therefore employers should have reassurance that their employees are being prescribed and using the best possible drug to treat their condition.

Specialty program provide follow-up care. In the case of a patient taking Enbrel, the doctor would prescribe the medication and submit the request to a specialty vendor. The vendor would make sure the patient has tried other possible treatments on the market. Then he or she would make sure the patient meets protocol requirements for each drug prescribed.

The specialty program will have a trained medical consultant contact the patient directly before their next refill. The consultant will inquire about the patient’s reaction to the drug, how he or she stores the drug and if he or she is using it properly. If everything meets the requirements, the consultant will submit the patient’s next prescription request. If there are problems, the consultant will get the patient the help needed. For employers, specialty pharmacy can reduce the cost of injectables.

What should employers look for in specialty pharmacy providers?
It is important for specialty pharmacy companies to work with physicians to design a specialty program. Employers should ask if the program is mandatory or voluntary for employees and if it includes both self-injectables as well as office-based injectables. The number of vendors the health plan uses is also a key factor. The more vendors used, the more confusion there may be in the marketplace.

How can an employer determine if specialty pharmacy is right for his or her company?
Illnesses that are advanced need advanced medicine. Specialty pharmacy drugs are going to become mainstream. Eventually, all employers will have employees that need this form of medication. Specialty pharmaceuticals only make up about 8 percent to 10 percent of the total amount spent on drugs. However, costs associated with specialty drugs are increasing at an average of 20 percent to 25 percent because numerous types of drugs now in the (Food & Drug Administration) pipeline will be approved over the next few years. In addition, several drugs already on the market are being approved to treat more aliments than originally designed.

Should employers work this plan into their budget and company?
It is important for employers to look at the long-term investment instead of the dollar amount. The key to the program is better patient care. Hepatitis C is a condition where patients have to take a medication for a period of time to potentially rid themselves of the condition. If someone were calling a patient with Hepatitis C every month to ensure he or she continues regular use and to guide the patient through the process, the patient is are more likely to finish the treatment successfully; therefore the employer would save money because the patient would not require more serious treatments in the future, such as a liver transplant. It is the long-term quality care component that makes this program better than more traditional programs. In the long run, it saves companies money because they improve the quality of the care and the patient compliance, therefore improving the condition of employees’ health.

STEVE MARCINIAK is director of pharmacy services for Care Choices, a nonprofit health care organization and a subsidiary of Trinity Health. Care Choices HMO is ranked No. 12 among 257 commercial plans nationwide and is the top-rated plan in Michigan, according to U.S. News & World Report/NCQA “America’s Best Health Plans, 2005.”

Wednesday, 26 April 2006 10:39

Watch for warning signs

If a person who is not feeling well visits the doctor soon enough, most diseases are treatable. Michael O’Neil, director for Sommer Barnard PC, compares financial problems for a business the same way, stating that most financial troubles can be dealt with successfully if you recognize the symptoms early and visit a financial specialist.

O’Neil says early acknowledgement and a candid assessment of what needs to happen is the best prescription for the problem. Smart Business spoke with O’Neil about symptoms that may signal financial problems and how executives can successfully respond to troubles.

What are some symptoms that may signal bankruptcy or financial trouble for businesses?
One warning sign occurs when a company stretches its accounts payable in order to obtain more working capital. Another warning sign is a company’s relationship with its bank. One should be alarmed if a banker places their loan in a division called special assets. This means the bank thinks the company may be in financial trouble and have turned the company’s loan over from the relationships manager to people who specialize in turning a loan back into cash.

In some instances astute employees know what is happening before senior executives realize the financial troubles. If some of the company’s most talented people are heading for the door it may be a signal that there are problems.

How should a company and its executives respond to such warning signs?
They should create a short term forecast to figure out whether the problems are a short term issue. Such issues may occur when a customer does not pay the company because they are unsatisfied with a company’s work or they went into bankruptcy. If it is a short term problem, then it will solve itself if the core business is strong. If it is a more systemic problem such as the inability to price your product in the marketplace because of price lock, then it is serious and you need to speak to a professional with experience that can help executives think through problems and issues.

How do financial problems affect the individuals within a business?
Troubles become a total distraction away from the core business. Managers of the company spend all of their time shaking the bushes trying to collect money from customers or holding the vendors at bay so no one has time or energy left to focus on growing or strengthening the business.

Financial strain becomes a challenge for the leaders to maintain good morale and to get employees to work. If you believe in the company and the people you work with, these strains may become an opportunity for advancement. Their may be layoffs and more hours worked but it might be to your long term benefit to stay and seek advancement.

How can executives prevent their company’s financial strain from affecting their employees and productivity?
Executives should be honest with their employees, although it is not practical to tell every employee every detail of what is taking place. It is important to find a balance between openness and not causing panic. Employees will be worried about how the strain affects their life. An example would be if payroll is missed or if a bank bounces a payroll check. This would cause mayhem for a company.

How can executives avoid personal liability in connection with a business failure or bankruptcy?
Shareholders and top managers often guarantee debt within a company, making it difficult to help save a company and help managers deal with guarantees. These guarantees are not meant to be a collection device for the lender but rather to make sure the executive is the person worrying about how debts will be satisfied. These people can earn their way out of such debts by saving the company or helping the bank sell the company. Executives should not bank where they borrow. This is because the bank can freeze personal accounts to recover funds needed from the company.

It is a manager’s duty and challenge to do what they can to ensure the company succeeds while at the same time making sure they do not expose themselves to personal liability.

How can a company rebound during and after financial struggle?
The key is communication and confidence. You should communicate with your staff and let them know there is a plan. The lender in the situation will want a timeline and vendors and suppliers may be able to stand still or double down if executives are able to show them the light at the end of the tunnel and a plan to get to the light. Convey confidence that an end to financial strain is in sight.

MICHAEL O’NEIL is a director for Sommer Barnard PC which focuses on business workouts, insolvency law, commercial litigation and nonprofit entities. Reach him at mailto:// or (317) 713-5508.

Saturday, 26 July 2008 20:00

Chronic conditions

If an employee is diagnosed with a chronic condition, it can create anxiety for an employer. Often, a number of issues arise concerning the health, well-being and productivity of the employee. For employers, this may mean the possibility of a complex, long-running illness that could result in higher premium costs for the company.

In a delicate situation such as this, an employer must look at the needs of the employee and demonstrate patience and understanding. With chronic care management, available through the employer group’s health plan, the illness can be managed so the employee can lead the healthiest, most productive life possible. Chronic care management can benefit both the employee and employer.

“An employer needs to understand the chronicity of the disease,” says S. Ramalingam, M.D., MBA, the senior medical director for UPMC Health Plan. “You won’t see results right away from an effective chronic care management plan. First, one must invest in the plan; the payoff sometimes comes years later in terms of improved health and productivity from an employee who has learned how to live with a chronic illness.”

Smart Business spoke with Ramalingam about chronic care management and what employers should know about it.

What is chronic care management, and how does it differ from other care?

Unlike care for acute illnesses, chronic care requires planned, regular visits with caregivers and special emphasis on preventive measures. Care should be clinically grounded and tailored to an individual’s needs. Treating chronic illness effectively usually means the use of personal care managers. These managers (trained nurses employed by a patient’s health plan) can identify problems and work with the patient’s physician to develop treatment plans based on specific medical needs. The care manager can also provide educational materials through periodic mailings, online resources and regular follow-up phone calls. One of the most important things that care managers do is what a physician often cannot do, which is to identify and remove any barriers to care.

With the personal attention, the care manager may be able to answer important questions such as: Why isn’t a patient taking his or her medicine? Why isn’t a patient going to see the doctor as scheduled? A care manager may find that medication is too expensive and may be able to recommend a more affordable generic alternative. Maybe the patient can’t get to a doctor’s office because of transportation issues or conflicts at work. The care manager can help the employee find another doctor who is more accessible. Care managers help patients receive the best treatment possible.

Why is it necessary to invest in the help of a care manager when dealing with a chronic illness?

Chronic disease is not only the major cause of disability, it is the main reason people seek health care, and it accounts for more than 70 percent of all health care spending. Employers need to invest in the proper treatment. One area that is overlooked is the behavioral health element.

In recovering from a chronic disease, the mindset of the individual plays an important role. The biggest danger with many patients who have a chronic disease is depression. A care manager can see to it that the employee receives the behavioral health care that might be needed.

What role should an employer play when dealing with an employee who has a chronic illness?

If an employer has employees with chronic conditions, it must understand how important it is to make time available for the patients to do the things needed to manage their condition. An employee needs to feel comfortable and not ashamed for having a chronic condition. It is a fine balance because it is important not to foster a sense of unfairness among employees who see one of their colleagues missing work to treat their condition. Employers should work with their health plan provider to learn methods to keep things positive for everyone. Flexibility is most important for an employer.

What should an employer understand about treating a chronic condition?

One of the biggest things for an employer to understand is, with chronic care, you do not see the results instantaneously. Both the person with the condition and the employer should understand the chronicity of the disease. Chronic care management is an investment for an employer. If a chronic condition is treated aggressively through a disease management program, an employer gains an employee who will be more productive through the years and who is more likely to avoid more costly procedures in the future. The employer should also understand that caring for a chronic condition does not mean finding a cure for that condition but rather improvement in the person’s quality of life.

S. RAMALINGAM, M.D., MBA, is the senior medical director for UPMC Health Plan. Reach him at or (412) 454-5702.

Wednesday, 25 June 2008 20:00

Educated decisions

The health care industry is a fluid market. Business owners should be active members in managing their health care

options. Brokers and insurance providers offer guidance that is essential for keeping up with the constant changes in the market.

A business owner who remains active is likely to find better health care prices because plan designs are always changing, says David Fells, employee benefits consultant for Westland Insurance Brokers. With new cost-sharing designs, health care costs are decreased for employers, and employees are encouraged to become more active in their health care options.

Smart Business spoke with Fells about rising health care costs, methods employers can take to reduce costs and optional benefits employers can offer to enhance their health care package.

How do plan design changes and new innovations in the medical insurance market influence rising costs?

With the limited number of carriers in a consolidated medical insurance market, it is essential to compare competing programs. Comparing newly developed plan designs that will lower premiums by increasing cost sharing is necessary for any employer attempting to reduce health care costs.

Employers have the option to change plan designs during their renewal period to lower their bottom line. This is an effective way to substantially lower the premium amount by slight increases in co-pays, deductibles and co-insurance.

Employers can also introduce consumer-driven health plans (CDHP) or higher-deductible, HSA-compatible plans that give employees more control of their health care while keeping premiums in check.

What should business owners/employers be looking for when they sit down with a broker?

Business owners do not want confusing plan designs and benefits programs that basically become an expensive underutilized benefit because the employees don’t understand how they work. A good employee benefits broker is a consultant first and foremost who will take the unique company factors into consideration and devise a simple, affordable program that is easy to explain and administer.

Employers should look for a broker who brings true value to the table. A good broker is the employer’s consultant and advocate. A broker should have a broad knowledge of the industry and experience in dealing with medical insurance carriers and underwriters. You should look for someone with whom you can have a rapport and who is responsive and quickly resolves any issues that may arise. Brokers should diligently shop the market, keeping a business owner’s interests and concerns first, and genuinely ‘go to bat’ for the client.

How does the network of providers influence premiums?

Limited network programs are offered by most of the group insurance carriers at a substantial discount. Often when employers check their employees’ current providers, they will find that they do not need the more expensive expanded provider network. Premiums for these limited network programs are substantially less expensive.

To change to a limited network without affecting employee coverage, it is necessary to see if you are eliminating any of the physicians that your employees are currently using. A little homework before the change can make for an easy transition for you and your employees. Brokers should hold open enrollment meetings to educate the employees so they know how to effectively utilize their plan.

What should employers be looking at when they get their annual renewal?

For groups with less than 50 employees, the employer’s Risk Adjustment Factor (RAF) is a key element in calculating the premium. There is basically a 20 percent variance in the RAF, so potentially, as companies grow, there is a 20 percent discount a group can obtain given its size and particular situation. A good broker will shop the market for current RAF promotions and work to lower the RAF to its lowest possible number.

Choose only A-rated carriers and consider consolidating multiple lines of coverage with one carrier to qualify for premium discounts. Consolidating coverage will also lower the in-house administrative burden and enhance control of the policy by leveraging technology and online administrative services offered by the carrier.

How could the employer ‘sweeten the pot’ for employees when premiums go up?

Adding ancillary voluntary benefits to a group program, such as dental, vision or short-term/long-term disability coverage, that would normally only be available to company employees and not individuals sweetens the pot. This enhances the overall employee benefits package offered by employers, giving employees a menu of benefits to choose without adding to the overall bottom line. This gives employees control and allows them to buy up if they desire.

DAVID FELLS is an employee benefits consultant with Westland Insurance Brokers. Reach him at (949) 553-9700 x3235 or

Wednesday, 25 June 2008 20:00

Preventive maintenance

New trends in employee benefit and prevention plans have led many business owners to implement on-site health screenings. These screenings can range from finger-prick blood tests for cholesterol to sigmoidoscopy for colorectal cancer. Other screenings include tests for diabetes and even stress tests to check for heart disease.

“On-site health risk assessments and screenings are far more than just employee relations gestures,” says Sally Stephens, president of Spectrum Health Systems.

Smart Business spoke with Stephens about the benefits of on-site screenings.

What are the benefits of on-site screenings?

On-site screenings benefit both the employer and employee. It is well documented that early detection can help employees detect health risks of which they might not have been previously aware and avoid health-related complications, therefore saving health care dollars for potential long-term care. In most cases, the employer underwrites the cost of the screening so there is no cost to the employee. In addition, by offering these services on-site, the employer is removing at least two of the barriers for employees participating — cost and time. Business owners also find that they do not have to spend a lot of money to offer on-site screenings. In fact, costs vary greatly depending upon the complexity of the test and how much the company decides to underwrite. Often early detection is far cheaper than treatment.

Are employees usually willing to participate in on-site screenings?

If the screening process is well communicated and managed, on-site screenings can be very effective. Offering incentives to encourage employees to participate can increase participation rates into the high 80th to 90th percentiles.

Today, many employers are tying participation to their health plans by awarding premium discounts to those who complete the process. If the data is properly utilized, then the employer can base future programming on the results. This information can potentially reduce health care costs for a company in the future by reducing unnecessary coverage and increasing coverage in areas that may be lacking.

Why are on-site screenings valuable?

Research shows that screenings improve the health of workers and even improve worker morale. The idea is to detect high-risk employees and help them seek appropriate professional or educational attention. Identifying a health problem early leads to fewer complications, a faster recovery period and fewer health care costs both for the employee and the employer. For example, diagnosing diabetes in the early stages can help prevent complications, such as heart disease, nerve damage, vision problems and kidney disease. In addition, health risk questionnaires can prompt an individual to focus on other health-related issues that need attention, such as getting enough sleep and always using seat belts. Healthier employees lead to increased overall productivity and reduced health care costs.

Are employers permitted to require employees to have on-site screenings?

All employers must comply with the Americans with Disabilities Act (ADA) and Health Insurance Portability and Accountability Act (HIPAA) requirements. HIPAA ensures that personal health information (PHI) shared in a health assessment cannot be used against the individual for insurance coverage or employment consideration. The ADA requires that employers offer a reasonable accommodation to an employee with a known disability, and it prohibits employers from making medical inquiries or requiring medical examinations (unless job-related and consistent with business necessity). It is also unlawful under the ADA to take any adverse employment action based on an individual’s actual or perceived disability.

Offering employees the opportunity to voluntarily participate in health screening programs for high blood pressure and cholesterol monitoring are not likely to violate the ADA, as long as there is no penalty (economic or otherwise) for not participating.

Are there certain procedures of which employers should be aware during and after the screening process?

The most important factor is maintaining complete privacy of the participants and their personal health information. The facility in which the screening takes place should be designed to protect an employee’s privacy. The turnaround time for test results varies depending upon the tests provided. Today, there are simple finger-prick tests that can provide immediate results for cholesterol, glucose and other tests. Alternatively, tests that require blood work can take a couple of days for results. Well-designed programs provide the participant with detailed explanation of results and educational materials to assist them in making appropriate health changes.

Whom should employers contact if they want to implement on-site screenings?

There are numerous resources available to assist employers with implementing on-site health screenings. In addition to local hospitals and national screening vendors, there are also independent wellness companies that offer these separately or as part of a comprehensive wellness program.

SALLY STEPHENS is the president of Spectrum Health Systems. Reach her at

Wednesday, 25 June 2008 20:00

Better health plans

Consumer engaged or directed health care options are the most popular trend in the market today.

These consumer engaged programs help business owners offer complete coverage and encourage better overall employee health, thus reducing total health care costs.

“These options include reimbursement and health savings plans. Business owners should identify differences between consumer engaged health care plans and determine which plan best fits both their needs and the needs of their employees,” says Don Whitford, director of sales and client services for Priority Health. “With new technologies on the market, the benefit plan process can now be seamless for both the employee and employer.”

In part one of a two-part series, Smart Business spoke with Whitford to understand the difference between the most popular consumer engaged plans, how to select the appropriate plan and the new technologies on the market that enhance service. Look for part two in the August issue.

Which benefit design is more popular, the Health Savings Account (HSA) or the Health Reimbursement Arrangement (HRA)?

Each option has the opportunity to help business owners save significant dollars. One is not more popular or better than the other. However, business owners should understand the differences between the two to determine which option best fits their needs.

An HSA is owned by the employee, allowing the employee to decide how to spend money on medical care. This account allows both the member and business owner to contribute funds but only the member controls the spending decisions.

HSAs must have a high deductible health plan. The accounts are opened at a financial institution and, like other savings accounts, can earn interest. An individual can also invest the money into an account similar to a 401(k). This account rolls over investments to the next year and has triple tax savings, as contributions are tax free, the interest earned is tax free and the items you purchase with the account — provided it is for health care use — are also tax free. HSAs are portable, meaning the employees can take the account with them with no penalty.

The HRA is significantly different because the employer controls the funds. The HRA is not a pre-funded account. It is similar to a secondary claims system in that the business owner may decide to set a company deductible of $500 and tell the employees that the company will allocate $300, for example, to offset the deductible. If an employee’s deductible-related expenses reach $500, the employer will cover $300 and the employee is responsible for the remaining $200. HRAs have many features that allow employers to customize a plan to fit their needs. The HRA puts part of the financial responsibility on the employee and helps minimize the employer’s financial risk.

How is one reimbursed with the HRA plan?

The HRA process starts with the provider submitting a claim. The health plan processes the claim and sends a remittance notice to the provider and to the member. This process may seem cumbersome but with new technologies the entire process can be streamlined.

Claims are automatically transferred to the HRA. This takes the manual claims submission out of the hands of the member and reduces waiting time of reimbursement for all providers. The member receives only one statement, which shows the amount applied to the deductible and the HRA payment.

How does a business owner select the right plan?

Business owners should work with their agent or health plan representative who will help them answer some important questions. What are your long-term health care objectives? What are you trying to accomplish in the short-term? When these answers are determined, a professional can prepare financial comparisons of different plans and the effect they will have on the overall business. It is important for owners to fully understand each plan before making a decision.

How do you communicate plan choices to employees?

There should be ongoing communication when dealing with consumer engaged health care. These programs require participation from the employee and are new concepts for many. Education and understanding is a must for employees to utilize these programs properly. These plans have a success rate because once employees are engaged they make better health care decisions.

DON WHITFORD is director of sales and client services for Priority Health. Reach him at or (248) 324-4711.

Wednesday, 25 June 2008 20:00

A 401(k) for everyone

One of the biggest concerns Americans have today deals with future finances and retirement. People are concerned with whether they will have enough money to live on when they retire. This concern is especially troublesome for employees of companies that do not offer any type of 401(k) option.

Most employees of small businesses are not offered a 401(k) option because larger financial firms are not marketing to small firms. Until recently, if small business owners wanted to offer employees a 401(k) option, they had to invest in plans that were very costly to themselves and their employees, says Ron Hongosh, a business banking team leader for FirstMerit Bank.

However, says Hongosh, there are a few institutions offering new products that give small businesses the same 401(k) services as larger companies, but at a price they can afford.

Smart Business spoke with Cox about the value of 401(k) plans for small businesses and how offering such plans can help attract and retain employees.

How valuable are 401(k) plans today?

401(k) plans are more valuable today than ever. They are the most beneficial retirement plans on the market. Contributions are made on a tax deferred basis and investment earnings are deferred as well. In many instances, employers match at least a portion of the contributions you make. In the current economic environment, it is crucial to plan carefully and save to secure your future. Now, more than ever, is the perfect time to begin saving for your retirement.

How can small business owners use 401(k) plans to attract potential employees and retain current employees?

Small businesses typically do not offer 401(k) plans because they are too costly. With 401(k) programs structured specifically for small businesses, owners can afford to offer a plan to attract a new group of employees and retain employees. These same employees might otherwise move to a larger competitor who is able to offer retirement options. If retirement is truly the No. 1 concern for Americans, then offering such programs will make business owners much more competitive in their community.

For a small business, such as a family-owned carpet company, there is often no retirement plan in place. This means that employees must save on their own and do not have tax-deferred options. If a small business is able to offer a tax-deferred savings option, it should appear much more attractive as an employer, therefore attracting new employees and retaining those employees it values.

What 401(k) options are now available to small businesses?

Now, there is a program designed for small businesses that is very similar to other 401(k) plans on the market. It is a 401(k) program with the same contribution regulations and opportunity for employer matching contributions as are available in larger firms. But its design makes it more understandable to participants and owners and it is structured to be affordable. Each employee directs his or her own investments within a select group of funds. By offering such a plan to employees, business owners can save for their own retirement as well. The employer is often as excited as the employees because they too are faced with the challenge of saving and planning for retirement.

When should people start investing and how much should be invested?

People should start investing immediately. We are all living longer and plan to retire some day. Thus, starting early is critical. You can start small and defer only a small percentage of your income if saving is an issue. Contributions can always be increased as your earnings increase. Unfortunately, no one can guarantee that current government supported retirement plans, such as Social Security, will remain in effect. You can secure your own future by investing in a 401(k) to ensure you are able to maintain the lifestyle you enjoy during your retirement years.

What would you say to people who say they cannot invest in a 401(k) because they need the money for the increased cost of living?

This is a problem because a lot of people think that way right now. But the truth is, you really can’t afford not to save. It’s important to pay yourself first. That is what you are doing when you invest in a 401(k). In today’s market, many investment opportunities are on sale. Investing now means you are buying low and investing for the future, which will likely provide a much better payout than if you wait. You are using tax-deferred money to create a retirement nest egg.

What should individuals consider when planning for retirement?

Start by asking yourself when you plan to retire and what lifestyle you want to live in retirement. Then, evaluate your life plan and determine expenses you will likely have in the future, such as college tuition, housing and medical care. It is important to adjust your investment strategy as you age or market conditions change. Plans change as life changes, so it is important to update and adjust your financial plan often. However, as in just about everything, having a plan is the most important thing you can do right now to secure the retirement of your dreams.

RON HONGOSH is a business banking team leader with FirstMerit Bank. Reach him at

Monday, 26 May 2008 20:00

What’s in your plan?

As new vaccines and preventive medicines hit the market, employers and insurance companies are often hesitant to include these items in their plans. It is important for employers to work with insurance providers and weigh both sides of the equation to determine if investing in preventive measures may actually reduce overall health costs.

“The best thing you can do for high-price patients is prevent their problem,” says Bruce Niebylski, M.D., associate vice president of medical affairs with Priority Health.

While it may be difficult to directly measure a return on investment, the data collected by agencies, such as the Centers for Disease Control and Prevention (CDC) and the National Institutes of Health (NIH), is overwhelmingly convincing. Today, employers have options to design their benefits in ways that encourage employees to choose healthier lifestyles.

Smart Business spoke with Niebylski about benefit design and how employers can measure the return on investment for preventive measures.

How can benefit design encourage healthier lifestyles?

There are millions of vaccines, medications, treatments and simple lifestyle changes that individuals can implement to encourage healthier lifestyles.

When dealing with lifestyle, you are dealing with human behavior. People tend to do things that are simple, convenient and that other people are doing. By designing a plan that caters to such desires, employers and benefit providers can help reduce overall health care costs by helping consumers lead healthier lifestyles.

Today, some vaccines, such as the flu shot, are offered at grocery stores. This increases the likelihood of consumers utilizing the shot, therefore increasing overall health. A simple design change can have positive effects in an employer’s health benefit plan.

Do benefit plans cover preventive services?

Almost all preventive services are covered. About 10 years ago, screenings such as mammograms and colonoscopies were not covered by health plans. Benefit providers have since researched the value of preventive measures and determined a significant reduction in overall health care costs.

As new products are introduced to the market, there is still some hesitation as to whether they should be covered by a health care plan. Gardasil is a new vaccine on the market that is to be used to prevent human papillomavirus (HPV), a leading cause of cervical cancer. This vaccine reduces the risk of getting HPV by 75 percent. After research, many health plans realized it was far cheaper to invest in the prevention than to pay for the treatment of a cervical cancer patient.

How can one measure the return on investment (ROI) for preventive health services?

Many different organizations, such as the CDC and the NIH, realize the importance of showing the ROI of preventive measures to consumers. There have been many studies done to show that preventive methods lead to less absenteeism, therefore leading to greater productivity. Studies show that prevention decreases susceptibility to diseases that are in one’s environment. One company tested the theory of compliance of care by eliminating all co-pays on medicines that treated such diseases and ailments as diabetes, high blood pressure and depression. When the company eliminated the co-pays, it found that its employees followed their medication regimen much closer and were less likely to miss work for illness and their overall health care costs went down. By investing a little more money upfront, the employer saved money on health care costs because it had to pay far less medical costs.

Why are employers turning to preventive measures instead of treatment?

The evidence shows it is cheaper for an employer to take simple steps to improve employee health than it is to treat illness.

Employers can encourage employees to take short walks on their breaks, or redecorate stairwells to make them more inviting to encourage people to use the stairs. Vending machines that contain fatty foods and sodas can be removed and replaced with healthier food options. These changes may cost an employer upfront but can save the employer in overall health care costs.

Encouraging the use and regular visits to a general physician is beneficial to employers, as well. Too many people use the emergency room as their primary place for treatment. The ER should be used for emergencies only.

Is it ever too late to implement a healthier lifestyle and utilize preventive measures?

It is never too late. The earlier you make significant changes the better. There is always room for improvement. You don’t have to change your life; you just need to be smart about life.

Often, changes in behavior are tied to a social situation. It is important to recognize how you respond to life-changing events, such as children moving out or a loved-one passing away, and create healthy habits in response.

BRUCE NIEBYLSKI, M.D., is associate vice president of medical affairs with Priority Health. Reach him at (248) 324-2763 or

Friday, 25 April 2008 20:00

Generic solutions

One of the biggest drivers of health care costs is prescription drug spending. It is on the rise and is expected to continue in the coming years. An important key to containing rising health care costs is intelligent pharmacy benefit design.

Finding a way to manage prescription drug costs can help employers start to get a handle on health care costs. In fact, the best way to combat rising health care costs is through smart pharmacy benefit design, says Chronis Manolis, vice president of pharmacy services for UPMC Health Plan.

“Consumer acceptance of generic drugs has grown substantially and is continuing to grow,” Manolis says. “Generic drugs are cost-effective alternatives that offer the same level of safety and quality as their brand-name equivalents, often at a lower co-payment, and many consumers now understand that.”

Smart Business spoke with Manolis about ways to design pharmacy benefit packages that can help control health care costs.

Why should employers promote the use of generic drugs by their employees?

The evidence from the numbers is overwhelming. The average retail price of a brand-name drug is now approximately $111 compared to the average retail generic price at $32. That savings will really add up for employees, in particular those who are managing multiple medication regimens. Consumers can save even more by taking advantage of the growing number of drug programs that offer generics for $4.

Why is this an opportune time to promote the use of generic drugs?

Many consumers now understand that extensive media advertising not only raises the awareness of certain brand-name drugs, it also accounts for part of the reason those drugs are so expensive. Generic drugs have the same chemical makeup but have no expensive advertising campaigns behind them. Therefore, they can be offered at much lower prices. In turn, insurance companies can offer these drugs to members for a much lower co-payment. Consumer acceptance of generic drugs has grown substantially in recent years, and the current generic market landscape is extremely favorable. Over the next five years, 63 of the most popular drugs will be available in a generic version, as the patents on some of the most popular medications are due to expire. These include Imitrex, Fosamax and Risperdal in 2008, Prevacid and Topamax in 2009, Cozaar and Lipitor in 2010 and Actos and Zyprexa in 2011. In 2007, Ambien went generic. A 30-day supply of the generic version now costs $15, compared with $125 for Ambien.

How can generics help lower costs?

Employers need to work with their health insurer to develop a pharmacy benefit design that promotes the use of generic drugs by offering lower co-payments on generics. As an incentive to get your employees to start using generics, you may consider a waiver of co-payments as part of a trial run. Utilizing mandatory generic benefit designs will ensure rapid generic uptake amid the many new generic drugs that will be available throughout the next several years. To increase awareness and acceptance of generics, you could implement promotional and educational campaigns with your benefits administrator to educate employees. These programs can include educational materials, work-site promotional materials and pharmacist information sessions to build employee awareness and confidence in generics.

Are there other ways to use your pharmacy benefits to save on costs?

Keep your employees current on all aspects of their pharmacy benefits, including:

  • Making sure your plan includes utilization management techniques, such as step therapy, which is the practice of beginning drug therapy for a medical condition with the most cost-effective and safest drug therapy and progressing to other more costly or risky therapies only if necessary

  • Prior authorization and quantity limits, which also encourage the use of generics and reduce costs through safe, appropriate use of pharmaceuticals

  • Encouraging the use of a formulary guide, which is a list of Food and Drug Administration (FDA) approved medications that are covered by your insurance, as well as online tools that can educate employees about their pharmacy benefits and the availability of generic alternatives

What are some other cost-control methods?

You should consider using mail-order pharmacy fulfillment when appropriate. When a mail-order plan is used, prescriptions for maintenance drugs — such as those used for high blood pressure, asthma, diabetes and arthritis — can be sent directly to an employee’s home. In many cases, employees can receive a three-month supply of their prescriptions for a two-month co-payment. Be sure specialty medication management is included in your plan. Specialty medications are high-cost medications — usually injectables or biologics — used to treat complex clinical conditions. These medications often require close management by a physician or a specialty pharmacy because of their potential side effects and frequent dosage adjustments. Typical strategies include specialty pharmacy distribution and the application of utilization management tools.

CHRONIS MANOLIS is vice president of pharmacy services for UPMC Health Plan. Reach him at (412) 454-7642 or