Are you in denial about your liability risk for employment-related claims?

“My people would never do that.” “We have a family-like environment.” “I know everybody here and I trust them.” These are the sentiments of employers who have a false sense of security when it comes to employment-related claims, says Chris Zito, president of Zito Insurance Agency, Inc.

“They feel it couldn’t, or wouldn’t, happen to them,” he says. “The problem is when somebody does get terminated that relationship changes immediately — and generally not for the better.”

Employers also use the fact that it has not happened to them yet as rationale that it isn’t likely to occur in the future. Zito says that’s like saying: my house has never burned down, so there is no reason to buy homeowner’s insurance.

Much like in a divorce, once people believe they have been harmed due to unfair or illegal treatment (i.e. termination of employment), an employee’s mindset can change from loyal to vindictive. There are few cases where employees who have been terminated accept responsibility.

Smart Business spoke with Zito about what employers today need to remember about employment practices’ risk and insurance.

Why does employment practices liability (EPL) play such a big role?

EPL claims were relatively uncommon 20 years ago, but their frequency has increased dramatically over the past decade, with claims coming from past, current or even prospective employees. (Some people interview with the intention of getting the employer to say or do something to violate employment law, so they can file a lawsuit.)

As with many types of liability insurance, protection against legal defense costs are as much a reason to purchase coverage as the fear your company will be deemed liable for damages.

Damages alleged in EPL claims often are intangible, so it typically boils down to the current or former employee’s word versus that of the employer. Accordingly, a significant amount of discovery is required to build a defense, including deposition of other employees, review of personnel files, etc., making the cost of defending EPL claims disproportionately high.

Are claims costs rising?

Yes. The combination of increases in the rates charged by law firms and the inflationary impact on settlements continue to inflate claim costs annually.

How does EPL insurance help companies?

In addition to paying for the cost to defend and as necessary settle EPL claims, many of the better policies on the market include access to employment law specialists. These specialists can provide guidance on sensitive employment-related issues — advice that could prevent a claim from occurring. They also can provide guidance about how to mitigate damages if a claim occurs.

What scenarios could fall into this coverage?

Although wrongful termination is the most common allegation in EPL claims, complaints can include harassment, discrimination for age, gender or health related issues, improper evaluations, wage and hour disputes, etc.

Beyond insurance, how do you limit EPL risk?

Keys to preventing EPL claims from occurring or controlling damages in the event they do occur largely center around:

  • Proper communication and education of employees regarding the terms and conditions of their employment.
  • Adequate documentation of employee files regarding disciplinary hearings or actions, as well as performance evaluations.

You also should review all employment related documents, such as employment applications and employee handbooks, to assure the language adheres to the current employment laws in your state.

Is there anything else you’d like to share?

In spite of the fact that some employers remain in denial, most:

  • Have incurred an incident that was settled internally, when no coverage existed.
  • Are aware of situations that could have easily turned into employment claims.
  • Know of other employers who have dealt with employment-related suits.

EPL coverage, even if at a nominal level, should be a standard component in most company’s insurance and risk management programs.

Insights Insurance is brought to you by Zito Insurance

An effective loss control program can safeguard a company, boost productivity

Loss control should be part of the daily operating plan of your business as a means to protect the hard work of you and your employees, says Brian Peck, Assistant Vice President and Loss Control Audit Manager at United Fire Group (UFG Insurance).

“There are unique loss exposures for each and every business and an effective loss control program can help reduce, prevent or avoid losses,” Peck says. “Effective measures to control losses can have a positive effect on your company’s financial stability and continuation of operations.

Smart Business spoke with Peck about the primary types of loss exposure that should be evaluated and how to develop a policy to protect your business.

What are the primary types of loss exposure?
The three primary areas that most companies focus on are property, liability and business income.

Property coverage exposures result in loss to buildings or personal property in which your company has a financial interest, whether the property is owned or leased. There are hazards common to all businesses that should be evaluated. These include electrical, heating, plumbing and housekeeping.

In addition, there are special hazards that are unique to a company’s operation that need to be evaluated. For example, a body shop using oil-based paint for its spraying operation has a much higher fire exposure than an operation using water-based paint.

With liability, you’re looking at exposures that result in an organization’s legal responsibility for injury or damage to another party due to negligence, something that can be devastating to a business’s operation. Effective quality control measures are important to assure products are manufactured or installed to specifications. Effective documentation is also critical to help in loss reduction if a liability claim were to occur.

Finally, business income losses are generally attributed to property and/or liability loss exposures that result in an interruption of operation.

If you’re a growing company and you lose your building or lose the use of highly specialized equipment due to a fire or some other calamity, the result could be loss of revenue, loss of customers or even a shutdown of your business. You need a program in place to continue operations as you work to get back to earnings stability and growth.

What is the difference between loss control and risk management?
Loss control is often used interchangeably with risk management.

Risk management is more holistic and includes risk control, but also includes risk finance. Independent agents work with policyholders on a risk management basis to put in place an insurance program that can not only transfer financial risk in the event of loss, but also assist in loss control measures.

How do you develop a comprehensive insurance policy to address loss control?
From a loss control standpoint, there are considerations to take into account when developing insurance coverages. For example, an effective loss control program that controls the frequency and severity of losses can help determine the type and amount of self-retention, such as deductibles and policy limits, to be carried in the insurance policy.

Loss prevention and loss reduction measures such as fire protection and supervisory systems can have an effect on the policy rate structure. Aggressive fleet control programs such as distracted driving policies, drug testing and telematics again can also make a big difference on rates.

When a loss occurs, the indirect costs can be much higher than the direct costs (costs covered by insurance). Indirect costs such as loss of customers and growth opportunities can have a negative financial impact on a company, but are often overlooked.

Loss control should be a major component of operating a business and should take into account both direct and indirect costs that occur with a loss. Not only does it reduce risk, it has other benefits such as improving product quality, increasing production and boosting employee morale.

Your agent and your insurance carrier’s loss control representatives can assist you in protecting your business. There are independent safety consultants specialized in evaluating loss exposures who can also help with your loss control program.

Insights Insurance is brought to you by United Fire Group (UFG Insurance)

How working with a licensed insurance agent can help protect your business

Small- and medium-sized businesses frequently have insurance needs that are not covered by the basic property, liability, auto and worker’s compensation coverage policies they have, says Karen Harpole, Corporate Manager for Small Commercial Business at United Fire Group (UFG Insurance).

“Unfortunately, they often don’t discover these coverage gaps until the claim occurs,” Harpole says. “They work under the premise that everything is covered with their existing policies. But in the world of insurance, there is just no way to cover everything.”

One of the best ways to fill these gaps and protect your business is to build a strong relationship with a licensed insurance agent.

“You need the help of an insurance professional who can tailor coverage to protect your business interests, your assets and your future,” Harpole says.

Smart Business spoke with Harpole about basic insurance policies and how to work with your agent to supplement that coverage and secure the future of your business.

What do basic insurance coverage policies provide?
It starts with general liability insurance, a foundational coverage that provides damages and defense if either you, your employees or your products or services cause (or are alleged to have caused) bodily injury or property damage to a third party.

It pays damages that your business is found liable, up to the policy limits, as well as attorney fees and other legal defense expenses.

Property provides coverage for damage from fire, hail, windstorms, burglary and theft and other common perils that occur to your building and any personal property used in your business.

If you run your business out of a home, you should be aware that your homeowner’s policy will typically exclude coverage for any business operations conducted in the home. You would need separate coverage for business operations.

Auto insurance will protect any vehicles that your company owns, leases or maintains. Coverage includes liability and physical damage, as well as medical pay, uninsured and under-insured and no fault coverage, which can be added to the policy by endorsement.

The fourth core is worker’s compensation insurance. It covers the business’s liability under the state worker’s compensation laws to give benefits to employees for accidental injuries they sustain or a disease they may contract that arises out of the course of their employment.

What are some risks that are typically excluded by the basic coverages?
One example would be business interruption or business income insurance, which protects earnings until you’re able to open your doors again following a loss that shuts down your company for a period of time.

It provides coverage for ongoing expenses even though you aren’t able to generate income. There are variations, however, so it’s good to work with an independent agent who can tailor a policy to meet your unique needs.

Other examples are professional liability or errors and omissions (E&O); employment practices liability (EPLI); cyber liability and directors and officers (D&O) coverage.

What’s the best way to identify potential gaps in coverage?
Work with an independent agent to discuss your insurance package.

You can sit down with your agent and go through a checklist that explains the coverage you have and the gaps that might exist based on your current coverage. Your agent can advise you of gaps that are critical and need to be addressed versus those that don’t pertain to your company.

Most agents can offer what’s known in the industry as value-adds such as loss control, risk management tools or general safety training.

These types of services would typically come at a high cost if purchased independently, but can often be provided at a small fee or even free of charge, in some cases, through your agent.

You may be able to mitigate a risk by simply eliminating a practice that doesn’t offer any valuable benefit to your company.

The key is having these conversations on a regular basis and making sure that as your needs change, your coverage adjusts accordingly. If you’ve done your due diligence and found an agent you can work with, it should give you peace of mind that your business and future are well protected against unwanted accidents. ●

Insights Insurance is brought to you by United Fire Group (UFG Insurance)

The cybercrime threat is real

Small- and medium-sized businesses are increasingly vulnerable to cybersecurity attacks and need to take steps to protect their assets, says Jennifer McDonald, Senior Product Development Analyst at United Fire Group (UFG Insurance).

Unfortunately, many of these companies fail to see the threat. It could be that they don’t think they have anything a hacker would want. Or it might be difficult to believe that such a crime could occur in their business.

“No one is immune,” McDonald says. “Just as you do disaster planning to prepare for a fire in your building or a tornado or some other physical damage, you need to think about your data and what you’re doing to make sure it’s secure. You also need to educate your employees and reduce the risk that they could inadvertently allow a hacker into your system.”

The methods hackers use to attack continue to evolve.

“We’re starting to see crossover from cybercrime to incidents where a hacker can cause real world property damage,” she says. “You need to be educated about what’s going on in the world of cybercrime.”

Smart Business spoke with McDonald about what you can do to reduce your risk of becoming a cybercrime victim.

What is the cost to your business when a cyberattack occurs?
The cost of a cyberattack comes in the form of time and money, as well as damage to your reputation.

There will often be forensic analysis that needs to be done on your machines, depending on the scope of the breach. You need to see how the breach occurred, what computers were compromised and where the virus is now. These are all things that can take significant time.

In terms of money, the average cost per compromised record in a cyberattack is a minimum of $154, according to Traverse City, Michigan-based Ponemon Institute. Verizon Business estimates the overall average cost of a data breach at anywhere from $36,000 to $50,000.

There is also the damage to your reputation and the time it takes to restore credibility with your customers after a breach has occurred that may have exposed confidential information.

What is the government doing to protect against cybercrime?
There is no legislation in the U.S. to assist cybercrime victims. The best option for companies is to work with a firm that specializes in cybersecurity breaches.

Part of the problem is that a lot of these attacks come from overseas from countries that are doing little to stop the hackers. In some cases, the governments in these countries may not even want to take on hackers out of fear that they could be targeted next.

How can a company protect itself?
The best tools to protect against cybercrime, in addition to a strong cyberinsurance policy, are awareness and preparation. You need to know what’s going on and where your company may be vulnerable to an attack.

Work with your insurance agent and cyber insurance company to address these weak spots and to develop best practices to reduce your risk.

Do you back up your data? Do you use passwords to protect your systems and do you change those passwords on a regular basis? Do you have a policy for when an employee is terminated to prevent an employee who left on bad terms from hacking into your system?

Smaller businesses may not be able to afford a full-time person to monitor these tasks, but there are a number of resources from free online quizzes to consulting firms that can assist you in protecting your business.

How valuable is employee training?
It’s critical that you educate employees to know the actions that could make it easier for an attack to occur.

Some companies embed photos with all internal emails so that if you get an internal email without a photo, you know something is wrong. You can also do mock viruses. Send an email to employees that include a suspicious-looking link and track how employees respond.

Place flash drives around the office and see who picks them up and tries to use them. Work with your team to ensure everyone understands the best practices to preventing an attack. ●

Insights Insurance is brought to you by United Fire Group (UFG Insurance)

How to make a reliable evaluation of potential insurance carriers

Financial strength should always be an important consideration when evaluating an insurance carrier’s ability to provide the most comprehensive coverage for your business, says Dawn M. Jaffray, Senior Vice President and CFO at United Fire Group (UFG Insurance).

“You’re obtaining a policy based on something that may or may not happen and you’re paying a premium for that coverage,” Jaffray says. “You need confidence that if there is a loss, fire or major catastrophe, your insurer will be there to minimize the disruption to your business.”

The inability to predict when, how or if a disaster will occur can make this a difficult question to reliably answer.

Fortunately, there are plenty of resources available to help you assess the financial strength of insurance carriers and gauge their ability to give you as the policyholder the support you need.

Smart Business spoke with Jaffray about this evaluation process and the value of building a trusting relationship with your agent and your insurance carrier.

How can you assess the financial strength of an insurance carrier?
There are a number of financial measures you can use to make an accurate assessment as to the carrier’s financial strength:

■  Third-party rating agencies, such as A.M. Best Company – These agencies provide an independent opinion on the financial strength of an insurance company.

■  Risk-based capital – This figure shows the minimum amount of capital that an insurance company is required to have to support its overall business operations.

■  Policyholder surplus – This figure shows the difference between a company’s assets and liabilities.

■  Claims reserves – A figure that shows the funds set aside for the future payment of claims that have been incurred, but not settled.

These metrics should provide tangible, substantive evidence that either a carrier is well-positioned to respond when your company runs into trouble, or it’s not. If it’s a publicly traded company, there is even more data at your disposal through the company’s required financial filings.

Through your research, you should be able to get a good sense of the carrier’s balance sheet, its assets and its approach to its investment portfolio. Focus on the areas that demonstrate the carrier’s level of financial strength and use those findings to inform your decision.

What other factors are important in the evaluation of an insurance carrier?
Stability, longevity, reputation and industry expertise are all factors that can provide you with confidence that the carrier is up to the challenge of helping your company through a loss or a catastrophe.

Look into how a carrier services its clients. Does it have a local presence, allowing you to build a more personal connection either with the carrier itself or through the agent that manages your policy?

If you’re a growing company, examine the carrier’s growth plan and its capacity to continue providing the service you need as your business expands across the country and potentially around the world. Enterprise risk management should be important to any business.

What types of proactive options are available to possibly prevent certain problems from occurring in the first place? What is the company’s approach to new liability concerns such as cyberrisk?

Find ways to get in front of potential problems before they happen. These value-added services can go a long way in maximizing the benefit of your insurance expenses and minimizing your long-term costs. Look at what value-added service the insurer can give you beyond your policy.

How important is regular dialogue with an agent or carrier?
If it’s a retail operation, the dialogue doesn’t change a lot and you may not need to talk very often. But if you’re making changes to your business such as adding warehouse space or purchasing new equipment, you may want more communication.

When you meet, ask plenty of questions. If your service providers don’t know about a problem that your company is having, they can’t help you. Be open about your company’s needs and work with your providers, and in this case your agent or insurance carrier, to develop a policy that meets your needs and protects your business. ●

Insights Insurance is brought to you by United Fire Group (UFG Insurance)

Being self-insured provides both benefits and new responsibilities

An increasing number of employers are considering self-insured coverage plans as a more affordable option to comply with the Affordable Care Act (ACA).

“Typically, large employers benefit more from self-funding because due to the size of their workforce, it becomes less expensive to pay for medical claims as they arise than to pay premiums to the insurance company,” says Ron Filice, president and CEO at Filice Insurance. “For these employers, especially those with a stable claims history, self-insuring can result in substantial cost savings.”

Small companies are not precluded from considering a self-funded strategy, but they are at a much higher risk of incurring unexpected, significant claims costs.

Smart Business spoke with Filice about what companies need to know when thinking about becoming self-insured.

What are some considerations that are unique to employers with self-insured plans?

The absence of an insurance carrier results in the employer taking on considerably more responsibility and liability. One often overlooked area of this increased liability concerns the assets of the plan. A fully-insured plan pays premiums to the carrier.

However, an employer that self-insures its health plan does not have an insurance carrier to which it remits premium payments or that maintains the plan’s assets.

Instead, this responsibility falls squarely upon the employer. An employer is permitted to pay claims from its general assets as they are incurred, but if any participant contribution is required — even if only for dependent coverage — the law requires those contributions be held in a trust, separate from the general assets of the company.

Another area of increased liability stems from the Health Insurance Portability and Accountability Act (HIPAA) privacy rule, which protects individually identifiable health information.

The rule exists to protect an employee from suffering adverse employment action as a result of the employer’s knowledge of their medical claims and costs.

An employer that sponsors a self-insured plan will be privy to the medical claims submitted by each employee. The receipt of the claims does not violate HIPAA, but the fact that the employer has the information may later raise serious questions of misuse, such as adversely targeting employees who incur high costs to the plan.

How can an employer minimize the risks?

Self-insured plans should utilize a third-party administrator (TPA). A skilled and knowledgeable TPA brings expertise in compliance and administrative-related issues with which an employer will, more often than not, have no experience.

One of the most important roles a TPA will fill is claims administration.

All medical claims incurred by plan participants will be submitted directly to the TPA, which removes the employer from the process of dealing with sensitive and protected employee information.

The employer retains the role of sponsor. But the opportunity to delegate certain duties, including claims administration, to a TPA allows the employer to focus on overall plan design and function, and to maintain a safe distance from the grittier details that concern individual participants.

Does the ACA raise any additional concerns for companies with a self-insured plan?

The ACA imposes a host of new obligations on employers and health plans, both fully-insured and self-funded. One of the most discussed requirements under the ACA is the Section 6055 and 6056 IRS reporting requirements that come due in early 2016.

Under this requirement, employers with self-insured plans must report more information than those with fully-insured plans.

For example, a small employer with fewer than 50 full-time employees is entirely exempt from the new IRS reporting requirements, unless it sponsors a self-insured health plan.

And while all large employers are subject to the reporting requirement, those with a self-insured health plan must report additional information pertaining to covered dependents as well as to all full-time employees.

Ultimately, if self-insuring presents a more affordable solution to an employer’s health plan, the advantages will likely far outweigh the potential drawbacks of increased liability and responsibility — especially with the proper safeguards in place. ●

Employers in California need to be ready for labor law changes in 2015

As the new year begins, a number of new labor laws are taking effect in California that will significantly impact employer responsibility.

Gov. Edmund G. Brown Jr. signed the Healthy Workplaces, Healthy Families Act of 2014 into law last September, requiring most California companies to provide employees with paid sick leave every year beginning in July 2015.

“Any employee who works at least 30 days of the year in the state must be provided paid sick leave under this new law — up to three days a year,” says Ron Filice, president and CEO at Filice Insurance. “California is the only state in the country to enact such a law, so employers are understandably unsure of what will be required of them and how it will impact their business.”

The bill specifically requires employers to provide paid sick leave to employees who work more than 30 days within a year from commencement of employment. Employees will earn a minimum of one hour of paid sick leave for every 30 hours worked.

The intent of the law is to help roughly 6.5 million workers in the state who cannot take a paid day off when they are ill or a family member is sick. That equals about 40 percent of California’s workforce of 18.8 million civilian workers, according to the California Employment Development Department.

Smart Business spoke with Filice about these labor law changes and what employers need to know to be compliant.

How can employers best respond to the new sick leave requirements?

There are a few things employers need to prepare for now.

First, the law sets out specific guidelines surrounding the accrual rate of paid sick leave, as well as usage and carryover limits. Therefore, employers must be meticulous about how their policy will be crafted and communicated to employees.

Second, employers that already have a sick leave or similar paid time-off policy in place for full-time employees will need to consider how best to expand their existing policies in order to include part-time and temporary employees, as well.

Finally, all employers need to be aware of some new communication pieces that are required under the law. New sick leave workplace posters should be posted now, and wage notices that reflect the amount of sick leave available to each employee will need to be provided starting in July.

What are some other developments employers need to be aware of this year?

A new section was added to the state labor code that makes employers that utilize staffing agencies jointly liable for violations by the agency in connection with the payment of wages, workers compensation, and occupational health and safety requirements.

This applies to employers with 25 or more workers where at least five of the workers are from a staffing agency.

Also of note are some developments in state anti-discrimination and harassment laws. Protections previously applicable to employees were expanded to also include interns and volunteers in the workplace. Additionally, anti-harassment training required for supervisors must now include education on “abusive conduct.”

Employers should carefully review workplace policies and communication materials in order to ensure compliance with these changes in the law.

In addition, a new law went into effect on Jan. 1 that pertains to the way companies treat undocumented persons.

Beginning in 2015, the state is issuing driver’s licenses to undocumented persons who can submit proof of California residency.

To coincide with this new development, Assembly Bill 1660 makes it a violation of the state’s Fair Employment and Housing Act for an employer to discriminate against an individual because he or she holds or presents a driver’s license issued to an undocumented person.

The law specifically provides that ‘national origin’ discrimination includes discrimination on the basis of possessing such a driver’s license.

An important clarification for employers to note is that actions taken in order to comply with federal I-9 verification requirements do not violate California law. ●

Insights Insurance is brought to you by Filice Insurance

Employers struggled with the ACA in 2014, but gained valuable knowledge

The start of 2015 marks the first year of enforcement of the Affordable Care Act’s (ACA) employer shared responsibility provision.

Many employers spent much of 2014 preparing to meet their obligations under the ACA.

While numerous guidelines were put forth in the previous year to educate employers on how to satisfy the law’s requirements, 2014 also served as an important learning opportunity.

“The task of meeting the employer mandate can be immense, but employers who spent 2014 focused on cutting corners or altogether denying the reality of the law ended up wasting time,” says Ron Filice, president and CEO at Filice Insurance.
“Various federal agencies came down hard on these strategies in 2014 and made it clear that enforcement of the law will move forward as planned.”

Smart Business spoke with Filice about where companies got off track in preparing for the ACA in 2014 and what their strategy should be going into 2015.

What is the status of the ACA’s employer shared responsibility provision?

Under the ACA’s employer mandate, applicable large employers (ALEs) that do not offer health coverage to their full-time employees (and dependent children) that is affordable and provides minimum value will be subject to penalties if any full-time employee receives a government subsidy for health coverage through an exchange.

These “pay or play” rules were set to take effect on Jan. 1, 2014. The IRS, however, delayed the employer penalty provisions and related reporting requirements for one year, until Jan. 1, 2015. In 2015, most employers with more than 100 employees will be required to offer health insurance or pay a tax penalty.

Eligible ALEs with fewer than 100 full-time employees have an additional year, until 2016, to comply with the shared responsibility rules.

What lessons can be learned going forward?

Some employers looked for strategies that required the least amount of commitment while still meeting the demands of the law.

For example, ‘skinny’ or ‘minimum-value’ plans were products that seemed to be the perfect solution, as these plans provided the bare minimum amount of coverage to employees, yet appeared to satisfy ACA requirements.

But the IRS and the Department of Labor swiftly came down on these plans and stated that they do not meet the standards contemplated by the ACA and will fail to satisfy the employer mandate.

The most detrimental strategy was for employers to deny the need to comply altogether. For a time, the political climate and rhetoric of 2014 encouraged this strategy. The now-Republican majority in Congress sparked speculation of an ACA repeal, or at the least, a major overhaul.

But the reality is that any change to existing law will not be seen for quite some time.

Additionally, the Supreme Court will hear arguments regarding the role of federally-established Marketplace Exchanges, which also fed the hopes of those who prefer the law to simply go away. A decision from the Supreme Court, however, is not only many months off, but is unlikely to result in the total unraveling of the employer mandate.

How should employers approach 2015?

For ALEs with at least 100 full-time employees, 2014 was all about the preparation — understanding the law’s requirements, reviewing options and getting a health plan in place.

In 2015, these same employers will need to shift focus to organization and the meticulous administration of the plan they do have in place.

A team of trusted benefit advisers and a competent payroll provider will prove extremely helpful to employers in this regard.

ALEs preparing for 2016 ACA compliance should recognize that while the process of implementing an ACA-compliant plan may pose significant challenges, the best way to accomplish the task is to face it head-on rather than to spend time searching for loopholes or hoping for a last-minute reprieve from the law’s mandate.

Employers should remain flexible, review upcoming requirements and react to changes as they come. ●

Insights Insurance is brought to you by Filice Insurance

Help is available for employees with chronic health conditions

When you have a problem with a piece of equipment in your office, you try to fix it. If it becomes a recurring issue, you delve deeper into the problem and try to understand why it keeps happening. In some cases, you may need to look at a new piece of equipment.

The situation is a little different with your employees, but perhaps not as dissimilar as you might think. Most likely, you don’t look to replace employees just because they suffer from lingering health conditions such as obesity, depression, chronic pain and diabetes.

But have you made a concerted effort to help them overcome these health conditions so they can get back to working at full capacity?

According to the Centers for Disease Control and Prevention (CDC), 7 out of 10 Americans die each year from chronic diseases, many of which are preventable.

“When preventive care is used and illnesses and diseases are caught early enough, individuals can avoid or better control their health problems,” says Ron Filice, president and CEO at Filice Insurance.

Smart Business spoke with Filice about what can be done to reduce the effects of chronic health conditions.

How can preventive care help alleviate chronic health issues in your workforce?

Preventive care is a type of health care designed to shift the focus of health care from treating sickness to maintaining wellness and good health.

It occurs before you feel sick or notice any symptoms and is designed to prevent or delay the onset of illness and disease. The CDC asserts that treatment for chronic diseases works best when they are detected early.

In its broadest definition, prevention includes a healthy lifestyle, exercise, diet and other similar efforts. In a medical setting, it includes a variety of health care services, such as a physical examination, screenings, laboratory tests, counseling and immunizations.

Regular health evaluations keep your employees healthy and prevent more serious problems in the future.

How do you create an environment where employees feel comfortable talking about and seeking help for chronic conditions?

You don’t necessarily want employees to freely express their conditions in the workplace; however, providing the tools and resources that allow them to speak with health coaches, doctors and nurses about their condition only promotes better compliance for health.

Bringing services on-site such as lunch-n-learns, seminars on various health topics and providing robust, interactive health fairs give employees the encouragement to seek out help.

How does addressing these conditions help your company lower its costs?

Many Americans live with one or more chronic diseases, which translate into an increased medical cost for employers. On average, employer health care coverage for an employee with a chronic condition is five times higher than coverage for an individual without a chronic disease.

So what can employers do to reduce healthcare costs for themselves and their employees? Think prevention.

While some factors such as age, genetics and environmental triggers may be unavoidable, most chronic conditions are preventable.

Preventive care helps lower the long-term cost of managing disease because it helps catch problems in the early stages when most diseases are more readily treatable.

The cost of early treatment, diet or lifestyle changes is less than the cost of treating and managing a full-blown chronic disease or serious illness, especially now that the Affordable Care Act has required many preventive services to be covered in full for your employees if they enroll in your group health plan.

What type of support is available to help companies help employees with these chronic conditions?

Services such as medication assistance programs, lifestyle health coaching and nurse navigation are just some of the ways that employers can assist their employees in gaining better access to services. Telemedicine services such as MD Live or Doctor-on-Demand are also solutions to help employees address and conquer their conditions. ●

Insights Insurance is brought to you by Filice Insurance

Commit to healthier employees and boost their productivity on the job

When physical and emotional problems affect the productivity of your employees, it can be costly.

Employee health problems cost employers roughly $226 billion each year, according to a study by Rutgers University. Of these costs, about 70 percent come from reduced productivity, with the rest coming from work absences due to illness.

“If you do not address your employees’ health care needs, your workplace is far more likely to experience the negative effects of both absenteeism and presenteeism,” says Ron Filice, president and CEO of Filice Insurance. “If you can commit time and funds to help your employees get and stay healthy, however, you will reduce medical and pharmacy costs and increase productivity.”

That commitment is often a challenge for leaders to make, especially in these times when companies are working harder with fewer resources to get work done. It’s that increased pressure, however, that makes it even more essential that you find a way to keep your team healthy.

Smart Business spoke with Filice about how small changes can lead to a healthier workforce.

What are some easy steps to encourage healthier behavior in the workplace?

Obviously, any problem that causes decreased productivity and increased absenteeism is one that you want to address in your own workforce. The first step is to analyze your workplace environment for areas that perpetuate poor lifestyle behaviors.

For example, if you subsidize the cost of vending machine food that is high in sugar and sodium, you’ve created an enabling situation that promotes poor food choices. If you allow a smoking break or a smoking area on-site, you’re letting your employees know that it’s OK to be a tobacco user at work.

How do you keep employees from reverting back to old habits?

Cash is king.

You need to provide the appropriate incentives to employees to spark a change. Using cash or discounts on contributions to their health plan is a great start.

Keep in mind that cash is a short-term solution — over time employees will see these incentives as entitlements. In the long term, however, the carrot approach of using monetary rewards leads to wellness fatigue. You need to focus on the real long-term benefits such as being healthier, having more energy and reducing health care costs.

Transform the behavior so it’s not seen as simply a path to a prize, but rather as a way of living a healthier and longer life.

What role can leadership play in the success of these efforts?

Leaders need to walk the walk, not just talk the talk.

Leadership needs to embrace wellness by participating in it. If you, as the leader of the organization, are not following your own wellness program’s prescription, then employees will not think it is meaningful.

Dedicating money to fund the wellness program is a great start, but putting the time and energy into the program itself is a responsibility of all individuals, not just employees.

If there is a group of employees walking during their lunch hour or bringing in healthy snacks to eat during the workday, you need to find a way to take part.
Demonstrate that you are just as committed as your employees to making healthier choices in your life.

What’s the impact on the bottom line of a healthier workforce?

Health promotion and education enables the individual to know when it is appropriate to seek out medical care and when to not over-consume the resources of their insurance program.

This can create a potential savings in the form of rate reductions or rate increases that are lower than the industry norms at renewal time. ●

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