U.S. employers are continuing to struggle with rising health care costs. To limit spending, many are shifting costs to employees while others are emphasizing wellness initiatives or controlling costs through health savings accounts and reimbursement arrangements.

“The biggest area of concern we are hearing from employers today is they can’t manage or predict the cost of health care benefits,” says Randy Narowitz, CEO of Total Health Care. “Having predictable, manageable cost increases is a real value to employers.”

Smart Business spoke with Narowitz about what to ask when choosing a plan.

What factors should companies consider when analyzing their employee benefits?

Typically, you start with the plan design that you offer today then decide if the company can maintain, improve or cut back on the benefits.

It’s important to evaluate alternatives in terms of cost and products offered. There are a variety of ways to differentiate carriers: size and strength of the provider network, plan design flexibility and premiums.

What questions should an employer ask a carrier when choosing a plan?

If you are using the benefits as a tool to attract or retain employees, then you want to evaluate the quality of the benefits and compare them to what else is out there in the marketplace. Features such as co-pays and deductibles are factors in the decision-making process and can be tweaked to be competitive. Also, access to care and a strong provider network are important components to consider.

If you are cost sensitive, then you want to ask about how to optimize the benefits at the lowest possible premiums and analyze the trade-off between the premium costs and the benefits.

What can a company expect from its relationship with its carrier?

Most employers use the services of a consultant or broker to assist them in the decision-making process, and their roles vary.

At one extreme, the consultant is your exclusive liaison to the carrier and can represent several health care plan options, helping the employer understand which products are best for its business. The consultant may also take the lead on administrative tasks including open enrollment, employee education, compliance and communications with the carrier.

At the other extreme, a consultant’s role is limited to the selection process. You can expect your representative to be able to differentiate the plans and the products depending on how you prioritize your decision-making criteria.

As an employer, you should expect your representative to be able to navigate through the decision-making process on your behalf.

Your plan representative, carrier and consultant also need to be able to educate you about the latest changes associated with health care reform.

How can companies save money when they are looking for a carrier?

Shifting the financial burden to employees by raising co-pays and deductibles, and having them pay a portion of the premium are ways to reduce and control your health care costs.

Savings associated with prescription drug costs can be achieved by raising co-pays or by restricting access to branded drugs when generics are available. Employees are very sensitive about changing medications, but there is a real opportunity to save money when you make these adjustments. Contracting with a restricted network, such as an HMO, and introducing wellness initiatives can also reduce costs.

What do employees need to know?

If you change a plan design in any way, it is important that the changes be communicated clearly.

Employees are very resistant to a change in their health care benefits. If you are planning to reduce benefits or shift costs to the employees, make a significant commitment up front to educate your employees.

Simplify the message and commit the time and resources to help them understand the changes before the new contract year begins.

Randy Narowitz is the CEO of Total Health Care. Reach him at (313) 871-2000.

Insights Health Care is brought to you by Total Health Care

Published in Chicago

According to The World Health Organization, the United States spends more annually on health care than any other country in the world. Many health problems are a direct result of smoking, lack of exercise, poor diet, excess stress and other unhealthy lifestyle choices.

An unhealthy employee costs U.S. employers an average of $670 per year and obesity accounts for about $400 of those costs, according to the Society of Human Resource Management.

“Through workplace wellness programs, an employer can raise awareness on leading health issues and offer options to help impact the overall health of their employees,” says Renay Gontis, communications coordinator at JRGAdvisors, the management arm of ChamberChoice.

Smart Business spoke with Gontis about how to create a workplace wellness program to lower health benefit costs over time.

What is a workplace wellness program?

Workplace wellness programs are made up of long-term strategies and activities geared toward reducing benefit costs through improved employee health. Wellness programs may include education classes, onsite health screenings, subsidized use of fitness facilities, healthier options in vending machines, and internal policies designed to promote and encourage healthier behavior.

Individual employee health is directly tied to employee morale, absenteeism and productivity — healthier employees are less likely to miss work, be more productive during the day and be happier overall. Improved employee health can also reduce health plan utilization, which will, in turn, lower health benefit costs over time and improve a company’s bottom line.

What are common wellness initiatives?

Common initiatives include onsite flu shots, general health and safety communications for employees, weight management programs, smoking cessation, health fairs, health risk assessments and walking programs. Learn about your employees to develop a program based on their goals, risks and needs. In addition, employers are offering incentives, as well as connecting participation to the medical premium cost.

How will the Patient Protection and Affordable Care Act (PPACA) impact health insurance and employee wellness decisions?

PPACA includes enhanced wellness incentives through health insurance plan designs that reward targeted wellness participation and the attainment of specific improvement in health outcomes.

How does PPACA encourage wellness incentives into health plan design?

Specifically, proposed regulations provide for increases in the maximum reward or penalty from 20 to 30 percent of the total cost of employee coverage and increase the reward or penalty from 30 to 50 percent for tobacco cessation programs in 2014.

How do you create a wellness program?

To develop a successful program:

  • Gain upper management support.  Management must understand the benefits for employees and the organization, and be willing to put funds toward development, implementation and evaluation.

  • Create a wellness team. The team — made up of all levels of employees — will be responsible for developing, implementing and evaluating the results of the program.

  • Tailor initiatives to employee needs. Gather data through internal focus groups or surveys to help assess your employees’ health interests and risks.

  • Establish an annual plan. An annual operating plan should include a mission statement for the program, along with measurable short- and long-term goals.

  • Create a supportive environment. It is important to provide ongoing encouragement, support, opportunities and rewards to keep employees engaged.

  • Consistently evaluate outcomes. Throughout the program, especially at the end, review whether goals and objectives have been achieved. It’s important to adjust as needed to achieve the most favorable outcome for the employee and company.

If an employer is interested in starting a wellness program, contact your adviser and insurance company for ideas on cost-effective wellness programs. Most insurance companies offer their own programs, which can be used individually or in conjunction with your company’s customized program.

Renay Gontis is the communications coordinator at JRGAdvisors, the management arm of ChamberChoice. Reach her at (412) 456-7000 or renay.gontis@jrgadvisors.net.

Click here for more resources about workplace wellness.

Insights Employee Benefits is brought to you by ChamberChoice

Published in National

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Now more than ever, companies need their employees to remain connected and productive. New, affordable cloud-based solutions enables companies to transform operations while trimming expenses and reducing the burden on IT support resources.

“An average 25-person business saves $11,556, or 82 percent, during the first year of replacing its premises-based email and messaging with a cloud-based one. This yields a two-month pay back period,” says Mike Maloney, vice president of business services at Comcast.

Smart Business spoke with Maloney about how to save money by moving your business toward cloud-based solutions.

What  challenges are businesses facing with setting up and managing email and messaging?

Small and mid-sized businesses have limited IT staff and must balance their IT expenditures against other corporate priorities. Setting up and managing various pieces, including email and messaging, is expensive. Not only are the initial equipment expenses sizable, but ongoing IT support, server maintenance, licensing and software updates also add costs in future years.

How can businesses decide if the implementation costs of a cloud-based solution are worth it?

In 2009, the Yankee Group researched the real costs of email and messaging operations in a 25-employee business for one year. Its cost results found:



Deployment   $0

Licensing, maintenance, support   $12,000

Security   $1,382

Backup   $638

Training   $0


TOTAL   $14,020


Deployment   $240

Licensing, maintenance, support   $1,761

Security   $0

Backup   $0

Training   $0

TOTAL   $2,001

The upfront migration and implementation costs of the Microsoft/Comcast cloud-based platform of $2,001 still resulted in savings. Additionally, the cost savings grew to 84 percent over three years, for a total savings of $36,042.

The study assumed there were no custom-built exchange applications; no unified messaging platforms; standard email and messaging security; and a server already capable of handling on-premises email and messaging. In addition, the features and functionality were replicated in both email solutions, even though cloud-based technology typically has more applications and features.

With the help of telecommunications and computer professionals, employers can explore the cost and feature trade-offs between hosted and on-premises email. A hosted solution even can be appropriate for a small business with 10 or fewer employees that generally has no IT staff and where an on-premises email might be impractical.

What are some of the additional features found in cloud-based email and messaging?

Features that are commonly found with both on-premises and cloud email are addresses with company domains, shared calendaring, shared contacts, email storage of 2 gigabytes per year, anti-spam, anti-virus, mobile email, and email archiving and retrieval. Even with these shared features, there still are cost savings with the cloud because anti-spam and server-based anti-virus, which companies are typically paying for with their premise-based email and messaging, are included as part of the cloud.

Some additional cloud features include a collaboration solution such as Microsoft SharePoint, secure email backup and document sharing. The cloud’s secure email backup is important because many small or mid-sized companies employ tape drive based storage for this service, which comes with a fairly low level of security as tapes easily get lost, stolen or damaged.

Based on research into cloud-based email and messaging, what steps do you suggest mid-sized business IT departments take?

  • Switch to cloud-based messaging and email platforms, empowering remote and mobile employees. A number of vendors, including Comcast, provide a compelling suite for businesses.

  • Take the opportunity to start using cloud-based collaboration solutions. A collaboration solution, such as Windows SharePoint, can be used for sharing documents where multiple people can access a document simultaneously and incorporate a number of comments and edits. This software also is useful for sharing files that are too large to email such as those with high-quality graphics, technical diagrams or photographs.

  • Budget a few IT days for training. Switching applications creates stress, so plan for training, even if these costs are only opportunity costs for your IT employees. Not all organizations will need this, but it provides a safety net for companies where the transition to cloud-based technology is more difficult.

  • Develop a good change-management plan to help alleviate end-user pains. Switching from premises-based email to the cloud can be less onerous than switching vendors’ products, if you stay within the same company. Therefore, the change-management plan can be fairly simple, but make sure it includes employee outreach, reminders, training services, online guides, printed guides and contingency plans.

A hosted solution can provide a level of simplicity, reliability and functionality while offering a more professional-grade solution to emailing and messaging.




Note: The Yankee Group is a leading source of insight and counsel trusted by builders, operators and users of connectivity solutions for nearly 40 years. For more information, visit http://www.yankeegroup.com.

Mike Maloney is a Vice President of Business Services at Comcast. Reach him at michael_maloney@cable.comcast.com.

Insights Telecommunications is brought to you by Comcast Business Class

Published in Philadelphia

Insurance touches the lives of all U.S. citizens, yet is still a fairly mysterious financial instrument even for the most sophisticated business leaders. To better understand the behavior of this insurance one must blend a mix of economics and social science to arrive at common sense explanations for what is happening and why.

“There are very meaningful financial impacts felt by those who purchase health insurance, and those impacts are largely caused by politics,” says Sergio Bechara, president and CEO of Millennium Corporate Solutions.

As an insurance broker, Bechara is well-positioned to understand the plight of health insurance companies and employers alike.

Smart Business spoke with Bechara about the ramifications of President Obama’s health care plan on the health insurance industry and how it will affect employers.

Why are health insurance costs rising?

Ask yourself what you would do if you owned a health insurance company facing a legislative tsunami known as ‘Obamacare’ with two potential financial threats looming.

1) The government might compete against you. However, because the government, unlike your other competitors, can print money when it needs more, you might be competing against a better capitalized opponent.

2) You might be forced to take on risks you did not calculate for as a condition of doing business. This is a very big deal.

How can the addition of new risks pose a financial threat to insurance companies?

How many banks failed in the last four years? More than 350. By contrast, how many insurance companies have failed? Only one.

Insurance companies have a major investment in actuarial analytics to help determine their risk and, therefore, their future pricing. They measure a large assortment of data such as cost of care, likelihood of disease, probability of use resulting from accidents, etc. These companies have years and years of data to improve their accuracy of assumptions leading to their pricing. However, the wild card with zero data to analyze is the complete unpredictability that ‘Obamacare’ might have on their business.

It creates a potentially tremendous unknown that has to go into their tried-and-true formula. There are no data points telling them how to predict their future cost, because nobody really knows how much it is going to cost.

So are insurance companies adapting, and what is the impact to employers?

As a smart businessperson, what would you do? Lowering rates in an uncertain economy never happens. Essentially, you have two choices: Begin to build a ‘war chest’ to protect yourself against the future unknown or continue business as usual and simply meet tomorrow’s challenges when tomorrow comes. This was, of course, a rhetorical question, but one that has a serious ripple effect because every dollar that goes into a war chest is one dollar that goes out of circulation from our economy.

Now how many other industries, companies, sole proprietorships are reacting the same way with their capital for the similar core reason: an uncertain economy? When capital exits circulation, the economy slows.

There is no greater or lesser wealth or money on this planet today than there was in 2007. As a visual example, if one were to look at Earth from space, and take ‘before’ and ‘after’ photographs, it would look the same in 2007 as it does today. There were no aliens that came to Earth and left with the planet’s wealth in 2008.

The flow of capital is the life’s blood of any business and any economy.

When capital flows like a river, businesses thrive like reeds on the river banks, when capital flows like oozing lava businesses suffer from atrophy — it is that simple.  All the dollars and financial resources that were on this planet in 2007 have not left the planet. They have just stopped flowing through our economic streams. This is either because of dams being built or streams being redirected to foreign countries or reservoirs.

How will employers be affected and how will they react?

They are going to have increased costs and increased overhead. Employers have three choices of how to handle the increases coming from the health insurance sector. They can pass them along to employees by asking them to participate more in their own health insurance through company plans, or the company can absorb the increase and try to pass it along to its customers. There is one other choice: avoid an increase in cost by decreasing benefits.

What is the outlook for the future, and how will our economic climate affect that outlook?

‘Jobs, jobs, jobs.’ This has been the battle cry from all corners of the nation and from all walks of life. However, for a job to exist or be created, an employer or a business of some kind must exist. That business will have shareholders and/or owners. That business must have a need followed by a willingness to hire. That having been said, let’s take a look at our climate:

1) Banks lending with considerable more restraint to not lending at all

2) Threat of higher taxes and of ‘unknown’ amounts

3) In California, new regulations giving employees more rights to unionize or threaten to increase the cost of doing business in an already suppressed economy leaving little room to pass along increases

4) Regulatory enforcement from various agencies, especially the Occupational Safety and Health Administration, becoming more present that ever. In fact, in our firm of insurance brokering and risk management, defending clients from O.S.H.A. has been the fastest growing part of our practice.

Sergio Bechara is president and CEO of Millennium Corporate Solutions. Reach him at (949) 679-7120 or s@mcsins.com.

Published in Los Angeles

Almost without exception, companies make the claim that they won’t make their auditor decision based solely on fees. While fees are important, those charged with corporate governance (typically the audit committee) should consider factors beyond quoted audit fees, which are only the tip of the iceberg.

“Of course you should select an auditor qualified to conduct the engagement according to professional standards. While the auditor must maintain independence, that should not prevent the auditor from being consultative. It is perfectly acceptable to talk to your auditor about business concerns such as improving access to capital markets, increasing revenue, using resources more efficiently, reducing costs and mitigating risk,” says Dickie Heathcott, partner at Crowe Horwath LLP. “An auditor with a deep understanding of the company’s industry and business concerns helps with the audit and can be helpful to management.”

Smart Business spoke to Heathcott about getting a return on your audit.

What should an audit committee consider in selecting an auditor?

Audit fees are a key consideration. Other important factors include internal cost, cost of capital and lost opportunities. For example, an efficient and effective audit can reduce the fee and the hours and energy spent by company personnel. In some cases, using a recognized audit firm can lower the cost of capital. Although management is responsible for preventing and detecting material misstatements, a qualified auditor can detect one that management missed.

How can the value of the audit be maximized?

It is important for the audit committee to understand the auditor’s approach, methodology and toolkit. An efficient and effective audit requires proper planning and design and as well as monitoring of its progress. An auditor should understand the company’s business, industry, customers and strategic plan as well as its company-specific IT systems, organizational charts and history.

The auditor’s approach to collecting information might involve technological tools for streamlining the process. Technology can provide clients with an efficient way to collect data, documents, spreadsheets and other material for the audit. It also can eliminate frustrating and time-consuming duplicate requests from the auditor.

How else can a well-run audit benefit a business in the long run?

An auditor who understands the company’s business can add value by pointing out risks that could result in accounting errors, internal control weaknesses and efficiency opportunities.

As an example, consider an undetected material misstatement. Restatement of previously issued financial statements can really jolt the capital markets and cause company-related uncertainty. As a result, the restatement might affect the cost of capital and result in fines and penalties. Furthermore, restating previously issued financial statements requires a lot of effort, not to mention filing, legal and auditor costs. A qualified management team, complemented by the right audit firm, is likely to get it right the first time, thus mitigating the risk and controlling this potential cost.

The choice of auditor can affect cost of capital in at least two ways. Investment bankers and capital markets typically want to understand the auditor’s reputation and whether the auditor is well-versed in the relevant industry. For example, having a successful initial public stock offering (IPO) might be difficult with an unknown auditor. Public companies and companies considering an IPO should consider whether the auditor is recognized and respected by those making a market in the stock. Similarly, terms on borrowed funds might be more favorable with a recognized auditor. The related cost of selecting the wrong auditor might be difficult to measure, but it has the potential to dwarf audit fees.

Whether your concern is growth, debt capital needs, equity capital needs, or simply building on an already solid reputation, an efficient and effective audit can help position your organization to move forward. Next time you are faced with a possible change in auditor, look beyond the audit fee.

Dickie Heathcott is a partner with Crowe Horwath LLP in the Dallas office. Reach him at dickie.heathcott@crowehorwath.com or (214) 574-1000.

Published in Dallas