Thomas Scurfield

Wednesday, 31 August 2005 12:49

Healthy options

Employer interest in consumer-directed health plans (CDHPs) continues to increase, fueled by the allure of potential cost savings as well as innovative new options that have made their way into the marketplace.

CDHPs, as offered by most health plan carriers, are comprised of three essential components — a health fund or account, a deductible-based health plan and Web-based education tools with information to help members make more-informed health care decisions. Below is an introduction to CDHP funding options.

Funding good health
When CDHPs first began appearing a few years ago, early adopters offered one account option: the health reimbursement arrangements (HRA). But employers now have four options — HRAs, HSAs, RRAs and FSAs. This increase in options is fueling the adoption of CDHPs. For example, a recent study by the industry group Americas Health Insurance Plans found that the number of people who have Health Savings Accounts (HSAs) —one of the newest types of CDHP —has more than doubled since September 2004 to over a million people.

So, what are each of the CDHP options?

HRAs
An HRA is a fund that the employer establishes and solely funds, and which employees can use to pay for qualified medical expenses. Account balances can be carried over at the end of the year. If the employee leaves the company, however, the account does not travel with them.

As the sole funder, this can work in an employer’s favor and may make the fund a useful retention tool. Another potential benefit to employers is that they might be able to deduct reimbursements of employee medical expenses made from the HRAs as business expenses.

HSAs
A health savings account is a tax-advantaged account created to pay for medical care expenses. But, unlike the employer-only funding feature of the HRA, you, your employees and their family members (or any combination) may contribute.

Your employees can contribute to the HSA on a pre-tax basis as part of a cafeteria plan offering or may use after-tax dollars. HSA funds can be invested for tax-free growth and withdrawals for qualified medical expenses are also tax-free. In addition, leftover HSA funds automatically roll over from year to year.

Note that, unlike an HRA, the money in an HSA is portable: any dollars an employer places into employee’s accounts become the employee’s money, traveling with them if they leave the company.

RRAs
Retiree reimbursement accounts are like the original HRAs, except they reimburse medical costs only after a worker retires. Employers create RRAs for active employees, then employers (and only employers) credit the accounts.

A key feature of the RRA is that the employer retains control over the plan design. This means, for example, that employers can put in a place a schedule for vesting of the credits.

Also, RRA contributions can be extended into an employee’s retirement years, potentially making it a flexible and valuable retiree benefit.

FSAs
A flexible spending account allows an employer, an employee, or both to make regular deposits to an account through salary reduction. For employees, this money avoids both income tax and Social Security tax. As with the other approaches, money in the FSA can only reimburse qualified medical expenses.

However, unlike HRAs, HSAs and RRAs, the balances in an FSA cannot carry forward. Employees forfeit any unspent funds in the account at the end of the year. This means that employees must accurately project their anticipated health care expenses to avoid a use-it-or-lose-it dilemma.

Understanding the details
Clearly, the opportunities in consumer-directed health plans are enormous — but accompanied by some complexity. The chart above is a brief introduction to CDHPs and is not exhaustive, so please consult with your insurance broker, consultant or tax adviser to assess the various consumer-directed plans — and their associated accounts and funds — in the context of your overall benefits strategy.

Thomas J. Scurfield is general manager and head of sales for Aetna’s north central east region and is based on Cleveland. He has more than 25 years of experience working in employee benefits and holds both the Chartered Life Underwriter and Certified Employee Benefit Specialist designations. Reach him at (330) 659-8020 or ScurfieldT@aetna.com.

Wednesday, 29 June 2005 07:44

Dental innovations

Employers today face tough challenges when it comes to benefits, striving to maintain and strengthen their offered benefits in an environment of rising benefits costs. Increasingly, however, they are finding a powerful ally in this quest -- access to dental networks and discounts at low, or even no, employer cost.

The inclusion of dental access in employers' health offerings may actually lower overall benefits costs and reduce absenteeism. The U.S. Department of Health and Human Services estimates that more than 164 million hours of work are lost due to employee dental disease or dental visits each year. Additionally, the connection between good dental health and good overall health is well-documented. In fact, according to the Academy of General Dentistry, as many as 90 percent of systemic diseases, which affect several parts of the body, also show up in the mouth.

To help employers offer attractive dental options, carriers are rolling out new, creative products that provide excellent value for employees while demanding little or no employer subsidy. These options fall into the category of "voluntary" benefits, in which the employer's chief role is to assess program quality and provide convenient access.

Discount cards

One of the new options available to employers is the dental discount card. Discount cards are not insurance -- there are no co-payments, claim forms, deductibles or annual limits. Rather, for a few dollars a month, an employee can possess a dental discount card that offers significant discounts -- up to 50 percent or more off of a typical dentist's charges.

From the employer's perspective, this is a very simple and inexpensive benefit to administer. The benefit is communicated to employees, enrollment is handled by the carrier and -- the best part -- the program doesn't generate dental claims or paperwork. Naturally, the employer may opt to offset some or all of the cost of the discount card --- a per-employee expense often only in the double digits.

This program can have an especially profound impact on employees who have been living without dental coverage. Even if they pay for the card themselves, the fee may be offset by the savings realized during their first dentist visit.

Offering a dental discount card to employees may be a viable option for employers who do not offer a dental plan or who no longer can afford to do so. Research indicates that dental discount programs have the highest participation rate among voluntary programs, indicating that employees appreciate the value of saving on dental services.

Many voluntary programs offer employers the flexibility to structure the discount card program to access dental services either through a preferred-provider organization or through a traditional indemnity structure. The programs can be adjusted to meet the employer's threshold of affordability, while remaining attractive to workers. Cost-sharing for the benefit might be as high as 50/50, and certain restrictions --such as waiting periods for major services and orthodontia - may be imposed.

Depending upon the carrier, employees may also have access to sophisticated online tools that help price procedures and manage benefits, and even offer tips on better dental care.

Moving forward

Whether you are planning to provide dental benefits for the first time, or are trying to manage your existing offering more effectively, dental discount cards can deliver an excellent value for you and your employees. Always consider your options in light of your overall benefits strategy, then seek the advice of your insurance broker or consultant to investigate emerging approaches. As you're assessing carriers, look for one with the following key characteristics.

A robust dental provider network with quality dentists

A range of programs and subsidy designs

Flexible billing options

Online tools to help workers manage their benefits

Whether you choose a no-cost or low-cost plan, you will be providing your employees access to services that will help them better care for their health and their family's health.

Thursday, 24 February 2005 10:48

Healthy savings

Like most new developments in employee benefits, the rollout of consumer-directed health plans a few years ago was greeted with a certain wait-and-see posture among many employers.

This was understandable. The new plans were built upon the reasonable, but as yet unproven, premise that employees who had in-depth health information and greater decision-making authority would ultimately make more effective and efficient health care choices.

Now that these plans have performed in the marketplace for a while, the validity of this powerful premise is clear -- consumer-directed health plans (CDHPs) can reduce a company's medical costs and improve employee access to wellness benefits.

CDHPs typically have two parts -- high-deductible insurance and some kind of fund or account. The insurance generally pays for preventive care and, after a deductible, handles big-ticket health expenses that limit what an employee might pay out of pocket in a given year.

The tax-advantaged fund or account, which may be funded by the employer or worker, is used for typical medical expenses such as office visits and prescriptions. The employee is in charge of how this money is spent and may, for example, opt for less expensive generic drugs or select the most cost-effective treatment suggested by a doctor.

But perhaps more important is that, through a combination of incentives, these plans encourage employees to adopt healthy behaviors and seek out early treatment for potentially serious conditions, both of which benefit their health and the company's claim experience.

Solid savings

As the first national health insurer to establish consumer-directed plan offerings across the country, Aetna has collected preliminary data that underscore the performance of these plans. In 2003, for example, the insurer's Aetna HealthFund product delivered significant savings for employers adopting the plan. While every company's results will be different, these results give an indication of what an employer may realize from a well-crafted and executed benefits strategy and plan.

The employers who adopted Aetna's consumer-directed plan experienced:

* Nearly flat medical costs. Monthly medical costs per member in the plan increased only 3.7 percent. Meanwhile, by comparison, medical costs per member in Aetna-administered Preferred Provider Organization (PPO) plans rose 16.2 percent over the same period.

* Lower utilization. Members in the consumer-directed plan visited primary care physicians 11 percent less than they had in the prior year. By comparison, PPO member visits increased 2.2 percent. Those in the CDHP also reduced their use of facility-based services, with 3 percent fewer emergency room visits and 14 percent fewer outpatient cases; this compared to respective increases of 4 percent and 6.6 percent for PPO members.

* Positive pharmacy results. Members in the CDHP experienced a 5.5 percent decrease in pharmacy costs, driven by a 13 percent reduction in overall prescriptions. This is compared with an aggregate increase of 3 percent for enrollees in all of Aetna's plans. Members in the consumer-directed plans increased their use of generic drugs by 7 percent, compared with 4 percent for all enrollees.

* Sufficient fund dollars. CDHP members, on average, used 69 percent of their fund dollars. In fact, 51 percent rolled over some of their 2003 fund dollars into 2004. Such rollovers are possible in these plans, unlike the flexible spending accounts with their use it or lose it restrictions.

Healthy behaviors

While these results are impressive, a greater benefit of consumer-directed plans may lie in their ability to improve employee wellness in the long term. The equation is simple -- employees who have a greater financial stake in their health will seek out ways to stay healthy.

For example, a smoker who now is spending his own money on treatments and medications for chronic congestion may finally join a smoking-cessation program. A borderline diabetic who is sharing more in the cost of drugs and treatments may finally take the doctor's advice and adhere to a beneficial exercise-and-diet plan.

Do the math

There are a variety of consumer-directed plans available, with a broad range of features and plan designs. So it's a good idea to seek the help of your insurance broker or consultant to find a plan that suits your benefits strategy and employee needs.

Taking the step into consumer-directed health plans may deliver both the cost management you need today and encourage a healthier work force in the future.

Thomas J. Scurfield is vice president of sales and service for the Aetna's north central east region and is based in Cleveland. He has more then 25 years of experience working in employee benefits and holds both the Chartered Life Underwriter and Certified Employee Benefit Specialist designations. Reach him at (330) 659-8020 or ScurfieldT@aetna.com.

Monday, 27 September 2004 10:16

Sound advice

As benefits costs continue to escalate, companies are faced with difficult trade-offs when they seek to provide quality employee programs. In their search for solutions, many have discovered and adopted the Employee Assistance Program (EAP). It's popular and inexpensive and can deliver as much as a 1,000 percent return on investment.

Yes, you read that ROI correctly. Depending upon which government or private study you read, a $1 investment in EAP services can yield between $4 and $10 (and in some cases more) in increased productivity. This beneficial result derives from reduced medical costs, turnover, sick time, accidents, grievances and substance abuse. The employer also sends a clear message that the company cares about the employee - not just the work the employee does.

An EAP is ideal for helping employees grapple with short-term stress or anxiety, marital discord, substance abuse or other issues likely to affect home life or workplace performance. While the EAP can address a multitude of issues, the focus is on work, family and wellness. For an EAP to be most effective, employees should use the program to help manage work and life issues before they become unmanageable.

Ready to hunt for an EAP of your own? Here are some considerations to keep in mind.

 

Flexibility and marketing. No two companies are the same, so select an EAP provider that offers an approach suited to the unique culture of your organization. Employees must understand how the program works and be comfortable that their confidentiality will be maintained.

A good EAP will have proven promotional and educational approaches that can be tailored to your work force to ensure that your employees understand the ins and outs of their EAP benefit.

 

* Soup-to-nuts services. Pick a provider that can offer you the full suite of EAP services and so-called work/life services, such as counseling sessions, management consultation, critical incident support and child and elder care referrals. You may even look for counseling for legal and financial problems, which also invisibly sap productivity from your organization.

 

* First-rate providers. An EAP network is only as good as the people in it. Look for an EAP provider that has both a track record of providing excellent service as well as a high degree of professional accomplishment among its staff.

For example, some EAP networks contract strictly with practitioners who have a master's degree or Ph.D. A quality network also may feature providers who have achieved Certified Employee Assistance Program (CEAP) status.

 

* Always-open support. Problems and family emergencies don't stick to a schedule. Make sure your EAP offers 24/7 telephone access and referrals, as well as Web-based information and resources.

 

* Data-fueled innovation. Employees reach out to an EAP for a broad variety of reasons, and your provider should be able to capture and analyze nonpersonally identifiable data to detect patterns that can help you refine your overall benefits programs. For example, if aggregate data show that many employees are struggling with caring for elderly parents, you may decide to sponsor lunchtime workshops on this topic. Without data, such opportunities could be missed.

 

There are many quality EAP service providers available, so you should consult with an insurance broker to select one that can deliver the programs and results you want. If you choose well, you will find - as many companies already have -- that your EAP program is a powerful ally in promoting the "complete health" of your employees.

They'll thank you for it.

Thomas J. Scurfield is vice president of sales and marketing for Aetna's east central region, based in Cleveland. He has more than 25 years of experience working in employee benefits and holds both the Chartered Life Underwriter and Certified Employee Benefit Specialist designations. Reach him at (330) 659-8020 or ScurfieldT@aetna.com.

Tuesday, 31 August 2004 06:06

Seizing control

A few years ago, consumer-directed health plans were somewhat of a novelty, an intriguing but untested alternative to the HMOs and PPOs we'd all grown to trust. But these innovative plans now are going mainstream.

Consumer-directed health plans (CDHPs) typically include a health fund (such as a health reimbursement arrangement or a health savings account), a deductible and a traditional health plan, supported by a wealth of consumer tools and information. These plans give employees greater control over how they spend their health care dollars and increase their financial stake in decisions. The result is an increased employee focus on cost that tends to improve an employer's overall claim experience.

Market interest and enrollment in CDHPs is growing rapidly. This spring, 73 percent of nearly 1,000 employers surveyed by Mercer said they were either very likely or somewhat likely to offer a CDHP-style plan by 2006.

How the plans work

CDHPs encourage employees to infuse their health care decisions with the same informed consumerism they demonstrate when buying a car or a major appliance. To help them make informed decisions, these plans generally offer sophisticated planning tools, as well as information about health care costs and treatments.

Consumers are able to choose -- in consultation with their doctors -- treatment options, medications and other medical services to best meet their individual needs.

HRAs, HSAs and RRAs

Two of the most popular models are Health Reimbursement Arrangements (HRAs) and Health Savings Accounts (HSAs). Recently, Retiree Reimbursement Accounts (RRAs) have also begun to attract attention from employers who want to explore alternate or additional methods of funding employee benefits during retirement.

An HRA blends a deductible-based benefits plan with an employer-established fund, which is owned by the employer, not the employee. With an HRA, unused year-end balances roll into the following year's account, as long as the member remains in the plan. This gives the member a chance to save for future expenses. Underlying medical coverage will often include first dollar coverage for preventive care benefits.

HSA: A different animal

Health Savings Accounts are tax-advantaged accounts for both the employer and employee. Unlike an HRA, the funds in an HSA are owned by the individual and held by a trustee (a bank, insurer or other entity).

HSA funds can be invested, and earnings grow tax-free. Distributions for qualified medical expenses are also tax-free. Accumulated HSA funds automatically roll over from year to year and are portable.

Contributions you as an employer make to an HSA are excluded from the income of employees. Your employees' contributions to the HSA can be made on a pre-tax basis as part of a cafeteria plan offering, or, if they choose to use after-tax dollars, they can claim the amount as a tax deduction.

RRAs -- an alternative for retirees

In a Retiree Reimbursement Account, a type of HRA, funding is entirely employer-funded. Contributions are made to the employee's account to reimburse qualified health care expenses in retirement.

Employers offering RRAs have significant control over how the plan is structured, flexibility regarding contributions and are not required to maintain an underlying medical plan.

Only scratching the surface

Clearly, there is a lot more to these plans than we can cover here. You should consult with your insurance broker or consultant and your company's financial advisers to assess the various consumer-directed plans and their associated funds in light of your overall benefits strategy.

You may find that these trend-setting plans are just what you need to maintain high-quality, affordable health benefits for your employees. THOMAS J. SCURFIELD is vice president of sales and service for the Aetna's north central east region and is based in Cleveland. He has more then 25 years of experience working in employee benefits and holds both the Chartered Life Underwriter and Certified Employee Benefit Specialist designations. Reach him at (330) 659-8020 or ScurfieldT@aetna.com.

Tuesday, 25 January 2005 11:16

Help employees manage benefits wisely

Recent trends in health care hold two important lessons for employers: First, that one of the most promising ways to control rising health plan costs is to expand employees' roles in making cost-effective health care decisions; and second, that such an approach works best when employees are equipped with the information and tools to make sound choices.

The move to shared responsibility is part of a broader trend of consumerism in health plans. This approach is at the core of a new breed of consumer-directed health plans, which bring together high-deductible insurance with a fund or account controlled by the employee. But increasingly, employers want to infuse elements of employee decision-making into other types of plans, including HMOs and PPOs. According to a recent Mercer study, nearly half of all large employers say that promoting consumerism is part of their health care strategy.

Through consumerism, employees are asked to make better health care choices, such as pursuing healthier lifestyles or working with their doctors to explore using generic drugs that are equivalent to the more expensive name brands. In addition to reducing health claim costs, this can improve productivity by reducing absenteeism, chronic illness and disability.

Employee-empowered

Rapid advances in information technology are making this new employee-at-the-wheel approach possible. Technology is transforming health insurance and the medical field in general, just as it has helped consumerism thrive in other parts of society. Think about the way we buy cars today -- consumers use the Internet to access unbiased reports, peruse detailed pricing lists and pose questions in online chat rooms, all before they venture into a dealer's showroom.

Employees are relying on their company's health plan provider for the tools and information they need to take charge of their health care decisions. And increasingly, providers are coming through with a host of online tools and resources geared to the employee's level of knowledge, not a doctor's.

If you are reviewing your health plan with an eye toward introducing consumerism, take a hard look at the information tools offered by your provider. Ideally, they should provide resources in three key areas.

* Control. Generic plan documents and pricing lists are helpful, but employees want personalized health information and interactive tools. These should include online access to their health-related accounts, recent claim activity, actual drug and treatment costs and other details. Some companies also let employees view typical costs for a variety of drugs or medical procedures.

* Knowledge. As employees assess their health care choices, they need to know more about the medical issues they may face and steps they can take to reduce the severity or prevent them from occurring. Health plan providers should be able to provide access to a useful database of common conditions, medications, treatments and wellness activities. Such information allows, for example, someone at risk of diabetes to find out more about the disease, explore treatment options and link to diet and exercise ideas for diabetes prevention. Make sure that the source of the information is reliable. A well-informed consumer is able to communicate with his or her treating physician more effectively.

* Planning. As they move through their careers, employees may encounter life events that can complicate how they finance their health care. Starting a job, getting married, having kids or losing a job or a spouse can have a dramatic impact on the employee's overall financial integrity. Some health plan providers offer access to financial-planning information that guides employees through such decisions as choosing the right plan for their needs and planning ahead for life events and their financial implications. Again, check to ensure that the information comes from a reputable source.

With so many health plan options -- not to mention the employee health management tools highlighted -- it may be wise to work with your insurance broker or consultant to analyze your choices. He or she will help you find a health plan provider that offers the right amount of decision-making authority for your employees, and the tools and information they need to become careful stewards of their own health care dollars.

Thomas J. Scurfield is vice president of sales and service for Aetna's north central east region and is based in Cleveland. He has more then 25 years of experience working in employee benefits and holds both the Chartered Life Underwriter and Certified Employee Benefit Specialist designations. Reach him at (330) 659-8020 or ScurfieldT@aetna.com.

Thursday, 24 February 2005 06:39

Healthy savings

Like most new developments in employee benefits, the rollout of consumer-directed health plans a few years ago was greeted with a certain wait-and-see posture among many employers.

This was understandable. The new plans were built upon the reasonable, but as yet unproven, premise that employees who had in-depth health information and greater decision-making authority would ultimately make more effective and efficient health care choices.

Now that these plans have performed in the marketplace for a while, the validity of this powerful premise is clear -- consumer-directed health plans (CDHPs) can reduce a company's medical costs and improve employee access to wellness benefits.

CDHPs typically have two parts -- high-deductible insurance and some kind of fund or account. The insurance generally pays for preventive care and, after a deductible, handles big-ticket health expenses that limit what an employee might pay out of pocket in a given year. The tax-advantaged fund or account, which may be funded by the employer or worker, is used for typical medical expenses such as office visits and prescriptions. The employee is in charge of how this money is spent and may, for example, opt for less expensive generic drugs or select the most cost-effective treatment suggested by a doctor.

But perhaps more important is that, through a combination of incentives, these plans encourage employees to adopt healthy behaviors and seek out early treatment for potentially serious conditions, both of which benefit their health and the company's claim experience.

Solid savings

As the first national health insurer to establish consumer-directed plan offerings across the country, Aetna has collected preliminary data that underscore the performance of these plans. In 2003, for example, the insurer's Aetna HealthFund product delivered significant savings for employers adopting the plan. While every company's results will be different, these results give an indication of what an employer may realize from a well-crafted and executed benefits strategy and plan.

The employers who adopted Aetna's consumer-directed plan experienced:

* Nearly flat medical costs. Monthly medical costs per member in the plan increased only 3.7 percent. Meanwhile, by comparison, medical costs per member in Aetna-administered Preferred Provider Organization (PPO) plans rose 16.2 percent over the same period.

* Lower utilization. Members in the consumer-directed plan visited primary care physicians 11 percent less than they had in the prior year. By comparison, PPO member visits increased 2.2 percent. Those in the CDHP also reduced their use of facility-based services, with 3 percent fewer emergency room visits and 14 percent fewer outpatient cases; this compared to respective increases of 4 percent and 6.6 percent for PPO members.

* Positive pharmacy results. Members in the CDHP experienced a 5.5 percent decrease in pharmacy costs, driven by a 13 percent reduction in overall prescriptions. This is compared with an aggregate increase of 3 percent for enrollees in all of Aetna's plans. Members in the consumer-directed plans increased their use of generic drugs by 7 percent, compared with 4 percent for all enrollees.

* Sufficient fund dollars. CDHP members, on average, used 69 percent of their fund dollars. In fact, 51 percent rolled over some of their 2003 fund dollars into 2004. Such rollovers are possible in these plans, unlike the flexible spending accounts with their use it or lose it restrictions.

Healthy behaviors

While these results are impressive, a greater benefit of consumer-directed plans may lie in their ability to improve employee wellness in the long term. The equation is simple -- employees who have a greater financial stake in their health will seek out ways to stay healthy.

For example, a smoker who now is spending his own money on treatments and medications for chronic congestion may finally join a smoking-cessation program. A borderline diabetic who is sharing more in the cost of drugs and treatments may finally take the doctor's advice and adhere to a beneficial exercise-and-diet plan.

Do the math

There are a variety of consumer-directed plans available, with a broad range of features and plan designs. So it's a good idea to seek the help of your insurance broker or consultant to find a plan that suits your benefits strategy and employee needs.

Taking the step into consumer-directed health plans may deliver both the cost management you need today and encourage a healthier work force in the future.

Mark Hanrahan is vice president of sales and service for Aetna's north central west region. Reach him at (312) 928-3104 or HanrahanM@aetna.com.

Monday, 20 December 2004 11:38

Integrated health and disability plans

In today's business environment, managing benefits costs and maximizing employee health and productivity are crucial issues. To address these, most business owners look to insurers to provide programs for health care and disability services. When integrated, these programs can work seamlessly together, like two runners in a relay, to achieve success.

When it comes to improving an sick or injured employee's chances of returning to work sooner, timing is everything. Disability services are effective in helping employees, but, when information is shared between health and disability, it enhances an employee's ability to address his or her health condition.

That's why employers are increasingly pursuing programs that offer integrated health and disability (IHD) services. These programs link medical, short-term disability and long-term disability plans, viewing employee health more holistically, which can mean better identification and resolution of tough health issues.

Information sharing

With this integrated model, employees who have a certain health or disability claim are asked for permission to share data between the insurer's health and disability staffs. This provides protection for health information in compliance with the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

Once permission is granted, case managers from both disciplines work together to achieve the greatest impact on the employee's overall health. By looking at the employee's medical needs and ability to work, the insurer can identify opportunities to help the person return to the workplace sooner and avoid an extended disability claim.

Some insurers with IHD capabilities can help you achieve even greater preventive results by integrating your enrollees' medical and disability data. By analyzing historical claims data, they may apply certain predictive models that identify members at risk for adverse health and disability events. This allows them to implement early intervention programs designed to avoid or lessen disabilities and time away from work.

Employer and worker benefits

When your insurer links medical and disability claims information, claims processes and case management, it benefits you and your employees by:

* Improving plan administration

* Providing a consistent medical case manager for the employee

* Supporting complete, efficient interactions between your employees and health and disability staff

This last point can be especially effective in helping employees cope with the intricacies of difficult medical situations. IHD offers employees and their doctors a single point of contact for interacting with the insurer on complex treatment issues, eliminating multiple phone calls and duplicative paperwork.

IHD case scenario

Let's look at an example of the IHD model in action. Imagine that David, 50, is out on disability due to low back pain. He also has diabetes, a chronic and potentially dangerous condition.

Rather than look narrowly at the back injury, David's IHD case management team would review his situation holistically. With permission, the information is shared between medical and disability case management, and the disability team learns that David was also recently admitted to the hospital after suffering a diabetic coma.

With a handle on both of these health events, the team would then develop a common plan to help David more fully understand his condition and contributing factors. The team would also be aware of the potential for co-existing conditions such as depression and help David and his physician access providers to manage the depression.

This coordination of care could help David reduce his risk of future hospitalizations by taking proactive, preventive steps.

A closer look

There are many examples of how an integrated health and disability approach can lead to improved medical outcomes and reduce employer benefits costs at the same time. You may want to get in touch with your insurance broker or consultant to analyze how your organization might benefit from IHD and smarter, clearer handoffs between the people who help manage your employees' health.

Thomas J. Scurfield is vice president of sales and service for the Aetna's north central east region and is based in Cleveland. He has more then 25 years of experience working in employee benefits and holds both the Chartered Life Underwriter and Certified Employee Benefit Specialist designations. Reach him at (330) 659-8020 or ScurfieldT@aetna.com.

Monday, 22 November 2004 11:15

Retiree relief

It's a challenge many employers face -- providing your employees with affordable health care coverage today while also helping them prepare for their longer-term medical financing needs. This second task is increasingly important as health care costs continue to rise and the average lifespan -- and time spent in retirement -- gradually lengthens.

Without a doubt, workers need to start preparing now for their future medical needs. According to a recent Watson-Wyatt study, future retirees will shoulder substantially more of the cost of their health care in retirement. Under plans that were common in the 1980s, retirees paid 39 percent of their total lifetime medical cost, with employers picking up the rest.

But under new plans put in place by employers, it is predicted that future retirees will have to pay between 61 percent and 92 percent of their total lifetime medical costs -- that is, if an employer offers a retiree health plan at all.

Many find it difficult to sustain retiree medical coverage due to current costs and, worse, the open-endedness of future liabilities. Fortunately, a new employee benefit option has emerged in the marketplace that lets you provide employees with resources for health expenses -- but with associated costs that are flexible and predictable.

Solid solution

Retiree Reimbursement Accounts, or RRAs, are an outgrowth of the health-related arrangements that were enacted as part of Medicare reform legislation signed into law in 2003 to provide better tools for managing health care costs. The most prevalent of these tools is the Health Reimbursement Arrangement.

This employer-funded account reimburses employees for qualified medical expenses. An RRA works essentially the same way, except the program is designed to reimburse medical costs only after a worker retires.

Here's how it works. When you set up an RRA, employees who are actively working for you are able to receive an account. You (and only you) "credit" this account at a certain level. It's important to note that RRAs are notional accounts, which means that you do not actually have to deposit funds until the point when the retired employee requires reimbursement.

You retain control over the plan design. This means, for example, that you may determine a schedule for vesting of the credits.

If you choose to, you also may extend your RRA contributions into an employee's retirement years. There are no age limits regarding contributions to RRAs, and funds are rolled over from year to year.

Growth of the account

The RRA approach allows employees to build their RRA value year after year. Upon retirement, employees may access the funds to cover eligible medical expenses that adhere to IRS guidelines as an itemized health care deduction.

In addition to expenses for medical services, retirees also can use the funds to pay for insurance premiums, such as those for Medicare or Medigap coverage.

Should the employee die before reaching retirement, the employer may close the account or extend the benefit to the surviving spouse or dependents. In the latter case, the dependent must still use the account credits only for qualified medical expenses. They cannot be redeemed for cash.

Setting up

If you think an RRA might help you better manage your retiree benefits challenges, you should investigate your options with your insurance broker or consultant and your company's financial advisers. As you search for a plan administrator, keep the following factors in mind.

* Administration. Find a company that can handle the complex behind-the-scenes account management process. This is important now, but becomes crucial once retiree claims start flowing in. Be sure the company has the skills and resources to handle things expertly.

* Information. Because RRAs are a benefit that involves future liabilities for your company, you'll want to keep a handle on what's happening within the plan. Look for a service provider that can deliver regular, comprehensive reports so that you may track contributions, balances and reimbursement activity.

With the right plan administrator, a good plan design and proactive employee communications, a Retiree Reimbursement Account can be a valuable tool for managing your retiree benefit costs -- and helping your workers prepare for the challenge of their longer-term medical financing needs.

THOMAS J. SCURFIELD is vice president of sales and marketing for Aetna's east central region, based in Cleveland. He has more than 25 years of experience working in employee benefits and holds both the Chartered Life Underwriter and Certified Employee Benefit Specialist designations. Reach him at (330) 659-8020 or ScurfieldT@aetna.com.

Thursday, 21 October 2004 07:22

Dental dividends

As employers strive to control rising worker medical benefits costs, some are discovering a surprising ally in their efforts: their dental plans. Long in the shadow of higher-profile health and welfare benefits, dental coverage now is stepping into the spotlight both as an agent of better employee health and as a mechanism for preserving precious benefits dollars.

Inadequate dental care swallows up untold billions in productivity all across American industry. According to the U.S. Department of Health and Human Services, more than 164 million hours of work are lost due to employee dental disease or dental visits each year. And for your employees who are parents, the numbers are even more alarming. More than 51 million school hours are lost each year due to dental-related illness, which can translate into one or more parents leaving work or staying home to attend to their children's needs.

When it comes to calculating the costs to productivity and the strain that untreated oral disease can have on your benefit plans over time, the math isn't hard to do. But what is less understood is the impact that certain diseases, which may initially manifest in the mouth, can have on your bottom line.

There is compelling research indicating a strong connection between chronic, long-term health problems such as diabetes, heart disease and pregnancy complications, and the presence of oral disease and infection (see chart).

Teeth tell tales

While the medical evidence is still mounting, it is believed that 90 percent of systemic diseases -- those affecting many parts of the body -- also manifest themselves in the mouth. In fact, some researchers believe that the bacteria from oral infections can spread throughout the bloodstream and contribute to disease in other parts of the body.

What this means is that Americans -- and, in particular, employers -- need to adopt a broader view of the importance of dental care and, in particular, the roles of dental care providers. Dentists can be the catalyst in the prevention, early detection and treatment of potentially deadly diseases that go far beyond the mouth.

The good news is that most periodontal disease is easily diagnosed and treated through routine dental care. But, without regular dental visits and proper dental treatment, periodontal disease can go undetected and can lead to serious, long-term health implications and a lifetime of significant medical costs.

So it's not enough to simply offer dental benefits; employers must encourage workers to use their coverage by ensuring that they understand the benefits of good dental health as well as the more far-reaching quality of life improvements they may enjoy.

For employers who have not taken the step of sponsoring a dental benefit -- or those who have noticed a drop-off in participation in their existing plans -- this is a good time to take a fresh look at how a dental plan can help to keep employees healthy, productive and, yes, even smiling.

Thomas J. Scurfield is vice president of sales and service for the Aetna's north central east region and is based in Cleveland. He has more then 25 years of experience working in employee benefits and holds both the Chartered Life Underwriter and Certified Employee Benefit Specialist designations. Reach him at (330) 659-8020 or ScurfieldT@aetna.com.

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