What benefits approach makes a positive impact for your business?

Historically, if you are like many businesses trying to provide employees with a quality benefits package at the most affordable price, it is likely that you repeat the same old process year after year and at the plan renewal.

It typically begins with a few prayers to the renewal gods for a low premium increase, followed by reviewing quotes, comparing benefits and networks — leap frogging from one insurance company to another and shifting more costs to your employees.

To make matters worse, the Affordable Care Act (ACA) has placed even more regulatory requirements and administrative burden on employers.

Now more than ever, employers need to break tradition and work with a broker who can negotiate, innovate and leverage technology to support your plan’s enrollment, communications, data and reporting.

Smart Business spoke with Ron Smuch, insurance and benefits analyst at JRG Advisors, about key areas employers should consider when selecting an insurance broker.

Are you provided with year-round support?

Accessibility and support is the foundation for maintaining an effective benefits program.

While it’s true that open enrollment is a challenging time of year, employers need to ask themselves, ‘What is my broker doing for my benefits plan the other months of the year, when it comes to customer service, compliance support, education, technology and strategic planning for the next renewal?’

What advantages can ACA compliance tools provide?

The rules and regulations governing employee benefis plans are complex, but technology is available to guide employers.

For example, there are tools to determine your number of full-time employees, ensure that your health plan provides minimum value and deciphers complex IRS reporting requirements.

To avoid compliance violations and penalties, choose an experienced, technology-based broker who provides access to tools, resources and offers qualified guidance.

What are examples of how technology can be used in benefits?

Technology now exists that allows an employer to gain de-identified employee health data and risk factors. Armed with this information, gaps in care can be identified, employee education can be specific and emerging health insurance claims can be reduced.

As far as open enrollment, this process can be not only a lot of work for the employer, but also a very confusing process for employees.

By using technology-based enrollment, however, an employer can save time and money and make the process more efficient and user-friendly for the human resources department and their employees. Many technology-based systems have forged their way toward improved communications, increased productivity, streamlined processes and cost savings for employers.

What are the takeaways for employers that want to become more innovative when it comes to their benefits?

The balancing act for an employer, which is trying to maintain a cost efficient, effective and competitive benefits package, requires an innovative benefits expert who can implement and maximize technology to meet your company’s unique employee benefit needs.

As an employer, ask yourself, ‘Is my broker making a difference for my company?’ A benefits expert who provides technology, resources, data analysis, targeted solutions and strategy to impact cost has the expertise and innovation you should be demanding.

Insights Employee Benefits is brought to you by JRG Advisors

Benchmarks to help you attract top talent and compete

The employers that win the current and future talent wars are those that address talent issues and rewards from a human capital investment management perspective. They make decisions about rewards resource allocation that align with their organizational fingerprint and that maximize return on talent investment.

With an ongoing process of situational assessment, strategy and tactics development, and decision-making, these organizations are moving away from budget-driven rewards tactics and toward strategy-driven rewards budgeting.

Smart Business spoke with Joe Roberts, area vice president of Health & Welfare, Key Accounts, and Keith Friede, area vice president of Talent & Organization Development, at Gallagher, about how employers can move in front of their competitors as a destination for talent.

What challenges are employers facing?

A tsunami of benefits and HR legislation and accompanying regulations during the past few years has inundated employers — so much so that most employers, from a practical perspective, cannot successfully comply with all the requirements to which they are subject. The workforce continues to diversify. A one-size-fits-all approach to rewards, while simpler, is no longer a sustainable approach for employers wishing to attract, retain and engage top talent. Technology continues to change, which can disrupt revenue and profit models. This may result in difficult decision-making and in some cases, reluctance to make changes.

How does this impact benefits and HR?

Employers have to rethink and refocus their strategies. Attracting and engaging top talent is the ultimate goal, so employers should couple competitive short-term and long-term rewards with a strong engagement program. They should also focus on linking local outcomes and costs to employee career and global business success. Two other closely related elements, controlling health care costs and improving employee total wellbeing, require employers to balance increasing health care costs with other total rewards costs by reducing controllable spend. In its simplest form, the process starts with creating a culture of employee health that accounts for a person’s social, emotional, career, community and physical wellbeing.

For regulations, employers must develop a comprehensive human capital risk approach that identifies all types of human capital (not just compliance) risks comprehensively, and then assesses risk potential and degree of severity, determines the appropriate treatment for each risk (across a wide range of possibilities), and finally communicates decisions to key constituents. Too many employers wait for the next wave of legislation/regulation and then react, often in a way that complicates strategic objectives.

Employers should look at customizing rewards and overall employee experience. This isn’t just about generations. It’s about recognizing a range of differences, including life stage, career aspirations, risk tolerance, financial circumstances, family size and situation, health, spouse’s employment, etc.

Most employers utilize technology to address regulatory compliance and administration needs. But the employers that harness technology to help drive organizational and human capital strategy will have a competitive advantage.

What trends have you seen? What do you anticipate seeing this year?

Legislation and regulation will continue to proliferate. Workforce demographics will continue to diversify. Technology advances will result in greater choices and complexity (and cost). Compensation and benefits costs will continue to increase.
In 2018, there should be a bigger focus on employee engagement. Many organizations focus on improving customer satisfaction, increasing the bottom line and achieving other crucial business outcomes. These can be optimized with improved engagement.

Are companies structuring compensation or benefits differently as a result?

Too many organizations try to maintain the status quo — the same human capital investment mix, and with each legislative change, the same compensation or benefit investment within the new requirements. Top-performing organizations are clear about the human capital implications of their strategy, and then make decisions consistent with those implications and their strategy.

Insights Employee Benefits is brought to you by Gallagher

Your office spring cleaning should include employee benefits files

As spring approaches, many of us get the itch for a little “spring cleaning.” It’s less hectic with end of the year issues and open enrollment out of the way. It’s also the perfect time for employers to pull out benefits records for review, confirmation and updating, says Chuck Whitford, consultant at JRG Advisors.

Smart Business spoke with Whitford about the tasks that employee benefits professionals should consider when spring cleaning.

Why should employers review and confirm items in their employee benefits this spring?

Many employers use benefits confirmation statements once employees have completed their open enrollment elections. Although these statements are generally utilized for electronic enrollments, some employers also provide them for paper elections. During this time, an employer should compare the confirmation statements to what is on record for an employee’s benefits choices and dependents enrolled. Furthermore, an employer should ensure that payroll records reflect any premium changes because of the employee’s elections.

This is especially important when an employee’s premium insurance elections are done on a pre-tax basis through an employer’s Section 125 plan. Section 125 rules provide that an election is irrevocable for the 12-month plan year unless there is an IRS permissible reason for a mid-year election change. There are some events not in the 125 rules that could allow an individual to make a mid-year election change, such as a mistake by the employer or employee, or needing to change elections to pass nondiscrimination tests. To make a change due to a mistake, there must be clear and convincing evidence that the mistake has been made. For instance, individuals might accidentally sign up for family coverage when they are single with no children.

What could need to be updated with life insurance and disability benefits?

Two popular benefits that employers provide their employees are group term life insurance and disability (both short and long term). Life insurance premiums are usually based on the age of the employee, while disability premiums are based on an employee’s wages.

An employer should take advantage of spring cleaning to ensure that its records (payroll and invoices) reflect the age changes of employees as well as any pay increases that may have occurred at the beginning of the year. Also, the employer should double-check these benefits for issues such as the removal of terminated employees, employee classification change, which affects the amount of a benefit, and proper taxation.

Depending on the employer’s policies, an employee may be able to have the premiums for disability insurance paid on a post-tax basis, instead of pre-tax, which enables an employee to avoid taxation upon receipt of a disability benefit.

How should beneficiary forms be reviewed and updated, if necessary?

Beneficiary designations are frequently used in retirement and life insurance plans to determine entitlement to benefits payable upon death of the participant. In the case of certain benefits subject to spousal protections, federal law imposes requirements on both the form and timing of beneficiary designations. Other types of beneficiary designations are a matter of plan design. A beneficiary designation that doesn’t accurately reflect an employee’s intent can result in disputes following the death of a participant.

There are a multitude of life situations that could be costly to an employer if a proper beneficiary designation is not on file — think divorce, simultaneous death of the participant and beneficiary, or lost forms as examples. An employer may be required to defend a lawsuit, correct improper payments or find the proper beneficiary.

Does the Tax Cuts and Jobs Act make other changes necessary?

The IRS updated the income tax withholding tables for 2018 to reflect changes made by the new tax law. The updated tables, which were to be used no later than Feb. 15, 2018, reflect the new rates for employers. As part of its spring cleaning, an employer may want to have its employees complete new W-4s. Employers should visit the IRS website for the release of 2018 W-4s.

Insights Employee Benefits is brought to you by JRG Advisors

Health data should be used for more than just keeping score

Benefits consultants use data as a part of the consulting services provided to employers. The consulting strategy includes looking at health claims throughout the benefits year, creating reports and reviewing the reports with the benefits administration team.

“But this approach of simply ‘keeping score’ of data doesn’t accomplish the goals of every employer, which is to drive down the costs of a health insurance program,” says Michael Galardini, director of sales at JRG Advisors. “The next generation benefits consultant uses predictive modeling and data analytics to lower the largest cost of a health insurance program: emerging claims.”

Smart Business spoke with Galardini about how employers can get better results with emerging claims to lower the costs of a health insurance program.

How can predictive modeling and data analytics software identify risks and improve a health insurance program?

Predictive modeling and data analytics software is a population health management service that can identify the high-risk members of a health insurance program.

Once identified, these members are ranked by severity and gaps in care. A web-based reporting system will provide access to the actionable information to target these high-cost and high-risk members. The system reveals the members who are noncompliant with preventive care — and members who require disease management, prescription drug maintenance or health coaching intervention.

Managing this data properly can ensure that these high-risk members don’t fall through the cracks.

Once properly identified, the next step in the risk management strategy is to evaluate the actual cost and forecast the cost in the next 12 months for each member. These include things like the number of emergency room and inpatient stays for each member in the next year. By identifying and evaluating these emerging claims, consultants can now get ahead of the costs that are driving the increases in premiums.

What’s the benefit for employers?

Identifying and managing these claims helps stabilize or lower the premium costs. The old process of reviewing claims data after the claim already occurs doesn’t allow the benefits consultant to provide a strategy to mitigate the costs to the employer.

Using predictive modeling and data analytics to identify high-risk members gives time to develop a population health management strategy to better manage the emerging claims.

What is population health management?

A significant component of reducing the identified health risk is using care managers to work with high-cost and high-risk members. Benefits consultants partner with care managers to review the data provided by the predictive modeling and data analytics software to motivate these members to manage their health care. Care managers can work directly and confidentially with the members to ensure the proper medical care is being provided for their specific medical conditions. These members will be guided through actions, such as timely preventive care, prescription drug adherence and coordination of care.

How do employees benefit?

The goal of the care managers is to teach the high-cost and high-risk members to self-manage their health care, comply with care instructions and pursue ways to improve their health status. Care managers can also use cost transparency tools to guide the member to find the best price for medical services. This not only keeps the claims costs lower for the health insurance plan, but also can help lower out-of-pocket costs the member has in the form of a deductible or co-insurance.

Incorporating predictive modeling and data analytics with a population health management strategy can produce the result that every employer expects from a benefits consultant — disrupting the current distribution model to move the needle of the emerging claims to lower the costs of a health insurance program.

Insights Employee Benefits is brought to you by JRG Advisors

How alternate funding and tools can help control small group health plans

Today’s health care environment is riddled with complex plan designs and rigorous government regulations, leaving many employers to feel as though their hands are tied when it comes to finding unique, innovative and cost-saving solutions.

But a new concept is emerging that will enable small employers to identify current and future risk, influence behavior and control costs.

Smart Business spoke with Aaron Ochs, managing consultant at JRG Advisors, about strategic analysis and risk management in the small group health insurance market.

How is the small group health insurance market changing?

Typically, small employers have been unable to maximize the value of their medical benefits due to lack of claims utilization and analysis from their insurance company. In the typical buying arrangement, the small group market is a fully insured contract that does not offer the employer much control over the health plan. Self-funding works differently.

In addition to providing protection against excessive costs in years with high claims and the opportunity to keep the profits from favorable years, the availability of data, including claims utilization, is a significant advantage for the employer. Knowing the health and risk factors of the employee population helps the employer determine the appropriate benefits strategy.

Self-funding is not a new concept; but it is new to the smaller employer — with many insurance companies offering partially self-funded premium options to groups with as few as 10 insured employees.

With partial self-funding, the employer puts aside enough money to cover anticipated claim expenses and the monthly premium remains level for the entire plan year. If claims are less than the funded amount at the end of the year, a rebate or credit is issued. If claims exceed the funded amount, the employer is protected by stop loss.

How can employers use data as a tool to help?

The ability to anticipate or predict claims costs hasn’t been available in the small group market due to the absence of claims data from the insurance companies — until now.

This is where newly developed risk management and predictive modeling tools come into play, making it possible to take a much ‘deeper dive’ into the composition and risk of the smaller employer, proactively identifying members with markers for chronic illness to predict health risks and determine if self-funding is a viable solution.

The deeper dive begins with employee data that is captured through a custom access portal, scrubbed and reviewed. The portal is an insurance company-accepted, Affordable Care Act and HIPAA compliant online benefits application tool designed to reduce the amount of time, cost and paperwork for employers. Employees are asked to complete an online enrollment interview. The employer receives a confidential de-identified aggregate report with an overall analysis.

This expert analysis guides the business owner through the benefit decision process with the power of knowledge. Gaining insight into the composition and health status of the group means plan design decisions can be strategic rather than an annual game of ‘pinning the tail on the donkey’ to find a tolerable solution.

What kind of results can employers expect?

Often, the same portal technology can reduce or eliminate many administrative burdens by providing the added support of employee enrollment, communication and plan election/waivers. The solution is a faster and more efficient approach to benefits. This means employers can essentially build their own health plan, which can lead to generous cost savings, greater transparency and understanding, and better overall cost control.

Over half of an average employer’s health care budget is spent on members with preventable conditions. It’s time for small employers to take control of their health care plans. Talk to your advisor to learn how these funding arrangements and risk analysis tools can help with your strategic benefits planning needs.

Insights Employee Benefits is brought to you by JRG Advisors

Does it make sense to keep doing the same thing with health insurance?

Insurance in its purest form was designed to transfer unknown risk to another entity, the insurance carrier.

“But fully insured health insurance can be more accurately described as a payment plan for known or predictable expenses, which includes an element of insurance layered on top,” says Joe Roberts, area vice president of Health and Welfare Key Accounts at Arthur J. Gallagher & Co.

“A large number of frequently used medical services are predictable expenses,” Roberts says. “Consider your annual maintenance medication or a well child visit. Those are things that you can plan for or expect to pay. Funding predictable expenses through an insurance premium is essentially a payment schedule for a known expense and, therefore, like other financing mechanisms, financially inefficient.”

Smart Business spoke with Roberts and Ethan Hendrickx, an area vice president in Gallagher Benefit Services, about why it is important to understand the “financing” behind health insurance and how gaining this knowledge can lead to a more efficient and cost-effective benefits strategy.

What should employers understand about the financing of health insurance?

Paying premiums to an insurance company to fund predictable expenses is financially inefficient. Here is a simplified example. Let’s say you take a medication that costs $100 a month, but because your health insurance includes pharmacy copays, you only have to pay $20 to fill the $100 prescription. For the insurance company to collect enough premium to pay its $80 share of this prescription and cover the cost of doing business, it needs to charge $92-$96 in premium. Thus, you paid $116 for the $96 in premium plus a $20 copay.

Apply that scenario across all of the known or predictable expenses consumed each year by your employees and the numbers get very large.

Why is this important for employers to understand?

When purchasing a fully insured health insurance plan, there is a common misconception that insurance companies are going to pay your claims and lose money in the process without increasing premiums to make up for their losses. The reality is insurance companies formulate their premiums based on past claims experience and future risks.

Employers need to understand how health insurance works at the insurance carrier level in order to determine the best way to manage risk and fund the claims of their employees.

In many cases, employers are able to more efficiently manage their health benefit spend by purchasing an appropriate level of insurance for their business and then funding claims as their employees consume health care on a variable cost basis. This structure is commonly referred to as a partially self-funded plan.

How can employers save money with a partially self-funded arrangement?

There are five main areas from which savings can be derived in a self-funded arrangement:

  1. Insurance company profit.
  2. Administrative costs.
  3. Risk transfer costs.
  4. Fees/taxes.
  5. Pharmacy programs.

A self-funded arrangement may not be right for all employers; however, they should evaluate the feasibility of an alternative to a fully insured arrangement. In making this determination, there are several issues to consider, like risk tolerance, contract provisions and cash flow implications. It is important to find an adviser who understands the technical aspects of self-funded programs and has experience in structuring and managing those types of programs.

How large does an employer need to be in order to benefit from adopting a partially self-funded approach?

More and more small to midsize employers are converting to self-funding. There are organizations in Northeast Ohio with fewer than 50 employees on their plan that successfully self-fund their medical and pharmacy benefits. And a growing number of stop-loss insurance companies developing new products and contract features make it increasingly prudent for smaller employers to take advantage of self-funding.

Insights Employee Benefits is brought to you by Arthur J. Gallagher & Co.

How to avoid the plan administration pitfalls of employee benefits

There are numerous employee benefits laws requiring compliance. Staying on top of compliance can be daunting, and it’s easy for something to fall through the cracks.

As you gear up for the New Year, take some time to review the pitfalls of employee benefits plan administration.

Smart Business spoke with Frances Horn, Employee Benefits Compliance officer at JRG Advisors, about what to watch for with employee benefits compliance.

What’s the first step to compliance?

As employers gear up for 2018, they need to set some time aside to review their employee benefits plan administration. An employer may not be subject to every law, due to size or type of benefit offered, but no employer is not subject to any of the laws.

The major laws are the Employee Retirement Income Security Act of 1974 (ERISA), Consolidated Omnibus Budget Reconciliation Act (COBRA), Health Insurance Portability and Accountability Act of 1996 (HIPAA), Internal Revenue Code (IRC) Section 125, Family and Medical Leave Act of 1993, Medicare and the Affordable Care Act, with many having several compliance provisions.

How is failing to properly communicate with the plan participants a pitfall?

Under ERISA, plan administrators have disclosure and reporting requirements. Every plan may not be subject to these requirements, due to size or type of plan funding, but every plan subject to ERISA has disclosure or communicating requirements, such as distribution of a Summary Plan Description, Summary of Benefits and Coverage and numerous other notices.

Under COBRA, many administrators don’t recognize that there are several more notices required than just an election notice. These include, but are not limited to, an initial notice, notice of early termination and notice of unavailability of COBRA coverage.

Other communications that remain the plan administrator’s responsibility are the Medicare Part D notice, HIPAA Special Enrollment Rights, Women’s Health and Cancer Rights Act notice and the Children’s Health Insurance Program Reauthorization Act of 2009 notice.

Where else do employers go wrong with plan administration?

Understanding who is actually the plan administrator can be another pitfall. With most laws governing employee benefits plans, the responsibility for compliance rests with the plan administrator, which is the person usually designated in the plan documents. If no such designation exists, the administrator role defaults to the plan sponsor, i.e. the employer.

While the plan administrator is responsible for disclosures to participants, plan document preparation and penalties for any noncompliance, many employers incorrectly feel these requirements fall with either the insurer or the insurance broker. Even for a self-insured plan, the third party administrator rarely agrees to be the plan administrator, but may assist with an employer’s documentation responsibility.

The pre-taxing of an employee’s premium contribution share is another pitfall. Many employers require that employees pay a portion of the premiums, particularly medical, dental and vision insurance coverage. To assist employees with these contributions, an employer will take the premium out of an employee’s compensation before applying taxes, thus the term pre-tax. An employee’s taxable wages for the Federal Insurance Contributions Act, federal withholding and state withholding are then reduced. This practice is often referred to as being a tax-favored treatment for employees.

The capability to pre-tax benefits comes under Section 125 of the IRC. The code requires that an employer establish its pre-tax plan, often referred to as a cafeteria plan, Section 125 plan or a premium-only-plan, in writing. Not meeting this requirement means a Section 125 plan doesn’t exist and that the employer is more than likely improperly taxing its employees’ benefits.

Numerous laws govern employee benefit plans. Ultimately the employer is responsible for complying with these laws and can be subject to costly penalties for noncompliance. As the year draws to a close, employers should review the governance of their benefits plans and determine if they need assistance to climb out of any pitfalls.

Insights Employee Benefits is brought to you by JRG Advisors

How to increase engagement in your health care benefit programs

Many people think communication is the key to driving engagement. In the employee benefits space, employers push more communication to get employees to use different tools (i.e. transparency, telemedicine), programs and other resources in their benefit ecosystem. But mass communication isn’t the answer.

“You have to step into the shoes of the employees to understand their needs. Engagement is connecting with employees throughout their health care journey and meeting them wherever they are with the expertise and ability to deliver exactly what they need in the moment they need it,” says Kara Trott, founder and CEO of Quantum Health.

Today, communication and information are available through multiple channels. People sort out what doesn’t matter to them at that moment. More communication isn’t effective because the relevance is random.

Smart Business spoke with Trott about how to better engage employees.

Why is it important to increase engagement?

Employers typically spend more than $13,000 per employee per year on health insurance — and that is expected to rise. The top cost drivers are specialty pharmacy, high-cost claimants and specific diseases/conditions. To help with cost, employers are adding tools and resources to create competitive benefit package options for their employees. The problem lies with connecting the tools and resources to the person, family member or provider, when they need them.

A person who has been given a life-threatening diagnosis is thrust into an un-chosen health care journey. According to Quantum’s research, on average, that journey takes 11 months, involves five to seven doctors, 50 or more claims and more than 40 decisions. Certain tools only have value at specific points along the way, like when an employee needs an MRI and uses a transparency tool; the tool needs to be connected to the employee at the most relevant time.

Almost all health plan programs suffer from low engagement. It is typical for many solutions to get less than 5 percent utilization.

What steps are employers taking to increase engagement in their benefit plan programs?

Employers are providing a high-touch option to their benefit plans to help people use the health care system. It’s known as navigation and care coordination.

When employees are given a diagnosis or want to figure out a claims issue, they don’t think about the flyer in the company bathroom or the last corporate email. They typically reach for their insurance card.

Often, engagement occurs when someone has a discrete question or a provider inquires on eligibility. When people initially reach out, it’s best to have someone work with them in a broader way. Increasing the capabilities in navigation support with care coordination adds to the effectiveness.

Many health care solutions provide employees with a portal, website or application. However, when a health problem occurs many people haven’t downloaded the app, or don’t remember where to go. Employers, in return, don’t get the engagement they expect.

Does everyone want the same engagement?

Whether baby boomer or millennial, when something goes wrong with their health, people want personal support. For example, a recent survey by Oliver Wyman, in collaboration with FORTUNE Knowledge Group, found that millennials don’t want today’s health care delivered through an iPhone screen. They see technology as a way to deliver convenience, but they also seek guidance when going through a health issue.

When employees are truly engaged, what will employers see?

Employers will see employees feel better about the overall benefit plan. Navigation and care coordination leads to higher satisfaction scores from plan members. In just six months, the net promoter score, which gauges the loyalty of customer relationships, can go from a negative number, less than 20, to the low 70s.

When navigation and care coordination are coupled together, the impact is noticeable. Together they can create a better overall health care experience that saves both the employee and the employer money while continuing to flatten claim trends.

Insights Employee Benefits is brought to you by Quantum Health

Add value to your employee benefits with life and disability

Accident and tragedy are two things no employer wants to see for employees.

“Disability products and life insurance give employees peace of mind, knowing they have financial support in the event of unforeseen circumstances,” says Chuck Whitford, consultant at JRG Advisors. “They also give employers peace of mind in knowing that they help protect their employees. Ancillary benefits can even help businesses recruit and retain the best employees.”

Smart Business spoke with Whitford about how life insurance and disability coverages benefit employers and their employees.

Why should employers consider getting a disability plan?

According to the Council for Disability Awareness, every 7 seconds someone in the U.S. suffers an illness, injury or accident that will keep them out of work for more than one month. For individuals out of work for three months or more, the average time off of work due to a disability averages 2.6 years. That’s 136 weeks without a paycheck.

The cost of implementing a long-term disability plan is relatively small. For most business owners, the problem escalates as the owner tries to satisfy the current work demand and take care of the disabled employee. Providing long-term disability coverage is also valuable to employees — buying coverage on their own can cost as much as an entire group account because of stringent underwriting. Plus, the program can be structured so that the premiums are deducted as a business expense, but benefits can be received on an income tax-free basis.

What’s the difference between short-term and long-term disability?

Short-term disability fills the gap between day one of disability and when the long-term benefits kick in. Typically, a short-term disability contract covers the first 13 or 26 weeks of disability. Unfortunately, many people live paycheck to paycheck. Short-term disability can benefit those lacking sufficient savings.

Long-term disability is usually fully insured, with the exception of extremely large employers that self-fund the benefit. For most employers, the cost is determined by employee demographics and industry classification. Claims experience isn’t a significant factor. Long-term disability pays a portion of the disabled employee’s income after he or she runs out of both sick leave and short-term disability benefits, typically after 90 to 180 days. Depending on the plan design and how the policy defines disability, it may pay a monthly benefit for a specific number of years, such as two years or until normal retirement age under Social Security.

However, an employer shouldn’t administer its short-term disability program. Most employers aren’t equipped to assess when an employee is unable to perform his or her own job or when he or she is able to return, and employers are estimated to pay out 30 percent more in benefits than if the plan was managed by a claims professional. It is possible to outsource the claim adjudication process to a qualified third party, often referred to as ‘advise to pay.’

How has life insurance changed and why is this coverage important?

A recent study found nearly 70 percent of U.S. workers, across all generations, believe having a life insurance benefit available at work is important. This importance has grown over the past five years, an increase of 22 percent. For many, it is the only life insurance they own. Group life insurance can fill gaps in coverage and the purchasing power of a large group helps keep the coverage affordable for the employer.

Sixty-five percent of employees with group life coverage believe they need more life insurance beyond what their employer provides. Depending on the plan design and type and amount of coverage elected, employees may be able to buy additional life insurance without answering health questions. Some plans allow employees to purchase coverage on a spouse and/or dependent children. Buying life insurance at work is convenient because premiums can be paid through payroll deduction. When they leave the employer, people typically can choose to maintain coverage, paying premiums to the insurance company.

Employers that don’t have group life or group disability should meet with their insurance consultant. They most likely will be surprised by the relative low cost involved in establishing a program that can provide additional value to their employees.

Insights Employee Benefits is brought to you by JRG Advisors

Culture is key to creating a destination workplace

If you had to name only one thing that drives your organization’s success, chances are it would be your workforce. And when you think about what it takes to become a destination employer, the answer is quite simple. Focus on your most valuable asset — your employees. If employees are key to your success, it only makes sense to put them at the center of your total rewards strategies, including how you communicate. However, getting started on this path can be a daunting challenge.

To become a destination employer, executives have to be invested in the idea of a thriving culture and employee engagement.

“Culture is an inherent part of your organization that’s either defined by you or by other influences. There’s no short-term fix for improving it,” says Cindi Morris, Ohio wellbeing and engagement consulting leader at Arthur J. Gallagher & Co.

“What’s important is to ask yourself what defines your culture in the eyes of your employees, and whether that perception will help you compete at the highest level. If the answer is no, then you have some work to do to effectively bridge the gap,” says Joe Roberts, area vice president of Health and Welfare Key Accounts at Arthur J. Gallagher & Co.

Smart Business spoke with Morris and Roberts about how employers can improve their culture and employee engagement to start competing as a destination employer.

What kind of results do organizations see when their employees are engaged?

There are abundant opportunities for positive results when employees are engaged, from improved production to better talent attraction and retention, to name a few. When your employees are engaged, they have the ability to impact the way your business is run. Annual benefits costs may decline, turnover may be reduced and people may take fewer days off and perform at higher levels, which sparks competitive strength and success. Employees may even become brand advocates for your organization, helping to position it as a place where people want to work.

How can companies measure and improve their employee engagement level?

While most organizations have a set of core values, engagement hinges on earning employees’ trust by living up to those beliefs. Many employers use engagement surveys to gain feedback directly from their employees to better understand their unique needs and preferences. But when management conducts a survey, it’s imperative to transparently share the results with the workforce, along with plans to address issues and opportunities that were identified. Once employees know management is listening, executives can start to create effective programs that tie back to the core values of the organization.

A workforce evaluation tool to help organizations assess specific workforce dynamics can be a helpful starting point when developing a strategy to impact employee engagement. For example, when you know your employees may need a different level of benefits and prefer different communication channels depending on where they are in life — early career, mid-career, pre-retiree, etc. — you can tailor a program with those considerations in mind. You’re able to positively engage employees differently.

What else can strengthen culture and employee engagement?

A strong culture requires commitment beyond your HR department. It starts at the top. When executives demonstrate that culture matters, not only through their words, but more importantly through their actions, your organization begins to earn employees’ trust. An employee’s journey isn’t linear — it’s cyclical. Their experiences at each stage of the cycle can have major impacts on your business.

As a takeaway, what are the key elements of an effective destination-workplace strategy?

Organizations can develop a culture-centric approach by creating a cohesive, engaging and productive work environment based on a shared purpose, and a well-defined set of company values and norms. Being thoughtful, intentional and purposeful in defining your values, and communicating them consistently through words and actions will set the stage for success.

Insights Employee Benefits is brought to you by Arthur J. Gallagher & Co.