Jessica Galardini

Wednesday, 23 March 2005 10:19

Online solutions

Companies large and small tackle challenges concerning the rising costs of providing health care benefits for their employees. Business owners are seeking alternative options through the Internet and online services.

In fact, one online provider claims that employers spend annually more than $750 per employee to administer and communicate employee benefits. Computer-based programs offer advantages to employers and employees and, in many cases, these online services supplement traditional human resource functions.

Online informational programs

Employees demand instant access to employee benefits information. When this information is available on a computer, at the work place or at home, employees are more aware and can better appreciate their employers' sponsored benefits. Companies can create customized Web sites that contain their name, logo, message and benefit information.

Business owners realize savings by offering up-to-date benefit information on a secure, current site, which cuts the cost of duplicating and distributing print information, streamlining paper flow. In turn, employees enjoy 24/7 access to information, which they can view privately and confidentially.

To add value to benefits Web sites, employers can collaborate with organizations that provide health care information, including extensive databases that list health and human services, physicians, dentists and other health care providers. Companies can link their custom benefits sites to these useful resources.

Businesses also can create links to their insurance carriers. The employee gains access to local resources with a simple visit to the employer's online benefit site. This 24-hour, online access reduces the human resource department's expenses and involvement in benefits administration.

Online assistance programs

As business owners strive to increase productivity levels, they realize they must help employees cope more effectively with problems in the workplace and at home. Personal problems can affect an employee's job performance.

By helping employees resolve problems in a timely, sensitive manner, employers smooth out workplace tension that can counter company efficiency. Most employees will accept assistance if employers address the problem in a private, confidential manner without compromising the worker's job security or relationship with co-workers or supervisors.

The solution: Companies now can access self-administered programs for employees. These easy-to-use decision trees lead an employee through a series of questions on selected problem areas. The program produces a summary of the situation and a list of expert resources.

Employees can contact these professionals and resolve their problems without interference from company supervisors. Besides maintaining an open-door policy, these resources provide additional assistance for employees.

Online solutions

Businesses looking for support with human resources can find help, free of charge, on the Net. Some offer online databases of thousands of service programs for employers and employees to access confidentially.

Additionally, companies seeking a Web-based problem solver can also find online tools that allow employees to answer a series of questions to identify troubling issues. One local project was developed with local businesses and human resource experts and found the following types of problems commonplace to many who work and which can be distractions: transportation, job skills, workplace concerns, personal concerns, and child care and adult care concerns.

When employers and employees partner, difficult situations can be successfully resolved, using today's technology. Online access makes finding solutions easier for both parties.

Jessica Galardini is COO of the Chambers of Commerce Service Corporation and Executive Vice President and COO of HRH Affinity Marketing Group. Reach her at (412) 456-7012.

Wednesday, 26 January 2005 10:09

Simplifying HSAs and HRAs

The ways in which employers approach their employee benefits programs were forever changed with the introduction of new consumer-driven health care models.

Determining whether high deductible health plans (HDHPs), health savings accounts (HSAs) and health reimbursement arrangements (HRAs) are right for you and your employees can be taxing.

The process requires consultation with experts who understand and can make sense of the intricate details of consumer-driven health care. Here is a simple primer that explains the basics.

What makes a high deductible health plan qualified?

A qualified health plan is a health insurance plan that meets these annually determined regulations.

* A minimum deductible

* Annual in-network, out-of-pocket expense limitations

* Indexed deductibles and out-of-pocket requirements

* Except for certain preventive care services, the plan may not provide benefits during any calendar year until the minimum deductible for that year is satisfied.

Are employers required to set up an HSA or HRA if an HDHP is elected?

No. HRAs and HSAs are funding arrangement options that are available to help employees fund higher deductibles and out-of-pocket expenses, but an employer is not required to make either of them available.

Figuring out the differences between an HSA and an HRA is key in deciding whether a move toward consumer-driven health care is right for your company.

* Health savings accounts are typically a good fit for employers looking to reduce their medical insurance premiums with a qualified high-deductible health plan. HSAs are tax-preferred funding vehicles, owned by the employee, much like a 401(k). An HSA can ease the employees' burden of the high deductible.

* Health reimbursement arrangements are typically geared toward employers looking for more latitude in designing their insurance benefits in order to reduce the premium. The employer maintains control over the HRA funds that can offset employee expenses due to benefits reductions.

Do yearly HSA contribution limits apply to both employees and employers?

Yes. The restriction affects both parties.

Are employers required to contribute the same amount to an HSA in the second year if such arrangements were made the first year?

No. Employers are not required to continue contributions into HSAs each year. If the employer wishes to do a one-time contribution, that is its right to do so, just as a company may change its contribution strategy when paying premiums.

If an employer makes $1,000 available per employee for an HRA and the employee only uses $500, can the employer claim the remaining $500 as a business expense?

No. The IRS does not allow this type of accounting.

These questions only touch on consumer-driven health care. The best way to ensure clear answers to your questions is to consult your employee benefits professional.

Jessica Galardini is chief operating officer and executive vice president of HRH Affinity Marketing Group. Reach her at (412) 456-7012.

Wednesday, 22 December 2004 05:56

Healthy choices

Rising health insurance costs can cripple business owners. Providing high-quality insurance to employees free of cost to them is a benefit of the past in most organizations. Premiums alone can cost an employer an average of $8,000 to $10,000 a year for every insured employee -- an expense that deflates the bottom line.

That said, there are options that can help you trim your monthly insurance premium bills, allowing you to offer quality benefits without buckling under costs.

You don't have to compromise quality health care benefits or eliminate plans entirely. There are two options that may save you from sinking your budget into rising insurance costs -- Health Savings Accounts (HSAs) and Health Reimbursement Arrangements (HRAs).

Both of these tax-favored vehicles support high-deductible health plans, which may significantly reduce premiums. High-deductible health plans (HDHPs) shift responsibility from business owners to employees, reducing the burden of premiums and encouraging consumers to make wise health care decisions. The HDHP concept isn't new -- it is the new vehicles, HSAs and HRAs, that can make HDHPs a viable option for your company and employees.

While HDHPs, HSAs and HRAs are not foolproof solutions to managing long-term health insurance costs, business owners owe it to themselves to consider the advantages and determine whether a consumer-driven arrangement is a fiscally-sound fit for their companies.

Health Savings Accounts

These are popular accounts for employers who believe in the consumer-driven health care philosophy of shifting responsibility to employees who are informed consumers of health care services. Informed employees will make smart medical decisions, such as considering generic medications over higher-cost brand-name drugs or visiting a general care practitioner when an emergency room is not necessary.

Similar to 401(k) accounts, both employees and employers can contribute to HSAs. When employers elect a qualified high-deductible health plan, the deductible is passed on to employees. Deductibles might range from $1,250 to $4,000 for individuals or $5,200 to $7,000 for families. An HSA will help employees mitigate their financial exposure for a high deductible on a tax-advantaged basis.

The employee and/or employer can contribute money to the HSA fund, which earns interest and is tax-free. Withdrawals to pay for health expenses are tax-free, as well. And if an individual does not use the money, the health savings account serves as a savings vehicle, earning interest and rolling over each year.

This option appeals to employers because the shared responsibility allows business owners to offer quality benefits, save on premiums and create a new "benefit" for employees. On the other hand, those who employ workers with lower salaries must look at whether their employees will be able to pay for medical expenses and prescriptions in full until their deductible is met.

Health Reimbursement Arrangements

This tax-preferred vehicle allows employers choosing a high-deductible health plan to identify the portion of the deductible that will be reimbursed to the employee from the company's general assets.

For example, say an employee's family deductible is $5,200. An employer might offer to pay the first $2,000 of that or any percentage up to 100 percent. In this case, workers approach their employers for this reimbursement the same way they would collect payment from an insurance company to cover medical costs.

Employers can save on premium expenses, and the money they take out of their general assets to reimburse substantiated expenses is tax-deductible.

HDHPs are likely to be an alternative that will reduce premium costs for your company. The new tax-advantaged vehicles, HRAs and HSAs, may enhance the advantages of HDHPs. Partner with a professional who can advise you of the employee benefits plan that fits your business model and growth goals.

Next month, we'll address the most frequently asked questions about HDHPs, HSAs, and HRAs.

Jessica Galardini is the COO of the Chambers of Commerce Service Corp. and executive vice president of HRH Affinity Marketing Group. Reach her at (412) 456-7012.

Monday, 25 April 2005 10:19

Making sense of the benefits puzzle

The health insurance benefits puzzle boggles many employers and employees. With so many pieces, parts and mix-and-match components to today's health care plans, both employers and employees must take on the responsibility of choosing and using their benefits wisely.

Your employee benefits consultant can unlock this information and help solve confusing issues by providing suitable plans and educational tools to help you facilitate an effective, valuable health insurance program. Benefits consultants should provide you with more than basic health, dental and vision plans. A good consultant will work with you to:

* Create a complete employee benefits package that fits the particular needs of your business

* Communicate the program options to your employees, so the best plans are selected

* Continue the value of the program with ongoing human resource support

Many employees choose one work place over another because of benefits, and employers know that offering more than basic insurance keeps their staff satisfied, motivated and loyal. But all too often, employers are not provided the appropriate communication tools to help employees understand insurance needs.

It is important to choose an employee benefits expert that invests time in researching relevant health care information for your particular business.

When employers are not equipped with resources to support their benefits packages, many times employees don't understand which plans meet their needs or do not dedicate time to learn about available health insurance options. Rather than asking questions, workers become frustrated working through the health care jigsaw and will leave pieces on the table for an employer to manage.

Partnering with the right employee benefits consultant will help you personalize the puzzle, so to speak. Your consultant can provide a variety of creative health care solutions and tools needed to educate your staff on their benefits. Particularly with the consumer-driven health care offerings such as Health Savings Accounts and Health Reimbursement Arrangements, it is imperative that your employees have full comprehension of their options.

A true benefits specialist will offer tools ranging from a detailed Web site to simple charts, grids, pamphlets and brochures as a way to educate your staff and encourage them to try these inventive options.

Communication is a critical factor in whether employees will play active roles in making benefits decisions. Work with your employee benefits expert on ways to implement a documented communications strategy. Even a simple plan pays off significantly in employee retention and satisfaction.

Your employee benefits consultant can offer you the right materials to help facilitate information flow, because you must inform workers of program changes and ways they can better utilize their plans.

Written communications or e-mail updates serve as useful documents. Further, periodic company meetings to review health insurance benefits and ways to maximize programs will help employees better understand and appreciate their benefits package. An expert in employee benefits will be able to support you by suggesting solutions, ranging from online human resource support to wellness fliers, brochures and payroll stuffers.

Employee benefits packages aren't valued when employees are not aware of or cannot make sense of their options. Don't lock your workers out of the significance of their benefits by working with a consultant that does not support you with the communication tools you need.

Jessica Galardini is COO of the Chambers of Commerce Service Corporation and executive vice president and COO of HRH Affinity Marketing Group. Reach her at (412) 456-7012.

Friday, 25 February 2005 08:51

Shifting responsibilities

New health care options offer employers the opportunity to develop creative alternatives when designing their employee benefits package.

With new offerings such as high deductible health plans, health savings accounts (HSAs) and health reimbursement arrangements, employers and employees find themselves taking on a new set of responsibilities. Many are intrigued by consumer-driven health care, yet the transition seems to be hesitant.

Despite the advantages of HSAs, relatively few employers have adopted them, due to a lack of familiarity with a relatively new offering and a concern that HSAs may not appeal to many employees. Additionally, employees with chronic health issues, for example, would likely deplete HSA assets to pay deductibles. Moreover, those financially unable to contribute to the HSA would be faced with high out-of-pocket expenses.

On the other hand, for employers whose only option is to offer a high-deductible plan, the HSA is a welcome option. HSAs make high-deductible plans more attractive to employees, and studies indicate that HSAs have helped small business owners cut health benefits costs significantly -- in some cases by well over half.

Use of HSAs is expected to grow over the next few years. Insurance companies are developing HSA-compatible plans, and several large insurers are slated to offer the plans in 2005 and 2006. Maximum contribution levels for HSAs and the out-of-pocket spending limits for high-deductible health plans have already seen increases.

Fifty percent of companies with fewer than 200 employees describe themselves as somewhat or very likely to offer a high-deductible health plan with a savings account, according to a survey conducted by the Kaiser Family Foundation and the Health Research and Educational Trust.

With employers moving toward consumer-driven health plans, often paired with an HSA or health reimbursement arrangement, employees must rethink how they use their group health care coverage with higher deductibles, co-payments and out-of-pocket maximums. With this shift in responsibility, employees will need support in making many new decisions.

Employees are faced with managing concerns beyond basic health care, and many companies have limited human resource support. But there are resources that can alleviate the frustrations of both employers and employees. The Business Briefcase, an offering of United Way of Allegheny County and the Chambers of Commerce Service Corp., is a free online tool that offers more than 5,000 health and human service programs.

The Business Briefcase is an example of how employers can offer their employees the guidance and support they need, such as help with child care services, assistance with an elderly parent or direction on where to receive free flu shots. Employees are up against a world of new responsibilities, and today's employer must be equipped with solutions.

Employers and employees have many challenges to look forward to with the changes that come with the move toward consumer-driven health care. Fortunately, there is support available to assist with this inevitable shift.

Jessica Galardini is COO of the Chambers of Commerce Service Corp. and executive vice president and COO of HRH Affinity Marketing Group. Reach her at (412) 456-7012.

Wednesday, 31 August 2005 11:01

Working with Medicare Part D

If you provide prescription drug coverage to retired employees, you could be rewarded for retaining this important component of your health plan. About 30 percent of Medicare beneficiaries have drug coverage through their former employers, and businesses that still offer retirees prescription coverage can take advantage of a tax-free subsidy by qualifying for Medicare Part D. Medicare Part D introduced prescription drug coverage, available to all beneficiaries, starting January 2006.

For every Medicare-eligible retiree who declines Medicare Part D in favor of your company’s coverage, you can receive tax-free returns equal to 28 percent of prescription drug expenses between $250 and $5,000, based on the amount the plan spends on retiree prescription costs.

Do you qualify?
Employers with the following categories of health plans that include retirees in prescription drug coverage can qualify: ERISA (Employee Retirement Income Security Act) group health plans; federal and state government plans; collectively bargained plans; and church plans. If an employer and a union maintain a plan jointly, and the employer is the primary source of financing, the employer is considered the sponsor for the purposes of the Part D subsidy.

Which expenses count toward the subsidy?
Subsidies are paid to employers only if Medicare-eligible employees choose the company plan over the Medicare plan. Prescription drugs costs incurred by retired employees who elect Part D coverage rather than the company plan are not figured into an employer’s tax-free subsidy.

Retired employees who have the option to maintain a company health plan and its prescription drug coverage still can enroll in Part D. Part D subsidies only provide tax-free returns to employers based on the prescription costs incurred by retirees who stay on the company plan.

How much can employers earn?
Employers can receive tax-free returns equal to 28 percent of actual prescription costs. This includes net discounts, charge-backs and average percentage rebates that the employer paid for Part D-covered drugs for each retiree between $250 and $5,000. Co-payments and other amounts paid by retirees also count.

This adds up for employers. Consider a retiree with $10,000 in Part D-covered prescription drug expenses. The subsidy takes into account costs after reaching the $250 deductible and not exceeding $5,000. Therefore, the employer can earn tax-free credit on $4,750 of the retiree’s drug costs. This amounts to $1,300 (28 percent of $4,750).

Qualify for Part D
The narrow window of time to qualify for this benefit means eligible individuals must act fast <\m> before September 30, 2005. These steps walk you through the process.

  • Are plans actuarially equivalent? Subsidy is available only if the sponsor plan’s is equivalent to Medicare Part D coverage. Not sure? Subtract the contributions or premiums paid by participants from the gross value of the coverage. If the net value of the sponsor plan is equal to or greater than the net value of Medicare Part D, it is actuarially equivalent and the sponsor can apply for the subsidy.
  • Identify Medicare-eligible participants. Plan sponsors must identify both active and retired prescription drug plan participants who are eligible for Medicare Part D. Not sure who you should include on this list? The Centers for Medicare and Medicaid Services (CMS) can help if you enroll in their online data-sharing program.
  • Apply for the subsidy. Deadline to apply to CMS is September 30, before which you must provide proof of actuarial equivalence.

Consult your benefits specialist for details on applying for actuarial evidence and for more details about Medicare Part D. Learn whether you qualify for the subsidy and how to enroll for tax-free returns on retiree prescription drug coverage. An employee benefits specialist can provide a complete review and consultation, and help you set up an enrollment and recording system to manage the process.

Jessica Galardini is COO of the Chambers of Commerce Service Corp. and executive vice president and COO of HRH Affinity Marketing Group. Reach her at (412) 456-7012.

Friday, 29 July 2005 11:10

More-flexible flex plans

Cafeteria plans provide employees a pool of choices — a benefits buffet in a sense, with options that range from retirement pay contribution to vacation days to insurance plans.

Regarding health insurance, cafeteria plans are also known as Section 125 plans or flexible spending accounts (FSAs). These allow employees to contribute to a tax-advantaged savings account and withdraw money as needed to fund a variety of medical expenses.

Cafeteria plans are flexible and financially sensible, but regulations proposed in the 1980s hinged a restrictive use-it-or-lose-it clause to the plans. Participants were required to forfeit unused benefits and contributions at the end of the plan year, and using contributions made during a plan year to purchase benefits in a subsequent year was prohibited.

Responding to public and congressional pressure, the IRS modified cafeteria plans in May 2005, alleviating participants from this clause. Notice 2005-42, applicable to Section 125 cafeteria plans, enacts a grace period. Now, participants can roll over contributions and use funds to reimburse expenses for two-and-a half-months following the end of the plan year.

In the past, employees have been reluctant to contribute to FSAs because they were afraid that they would contribute too much and lose money at the end of the year. For example, suppose an employee contributed $1,000 to an FSA and has $200 remaining in the account at the plan year ending Dec. 31, 2005.

With the grace period, the $200 could be used to reimburse medical expenses incurred from Jan. 1, 2006, through March 15, 2006. If the employee incurred a $150 expense on March 1, 2006, he could apply the unused $200 balance from the 2005 plan year to reimburse the expense.

But keep in mind, because the grace period is two-and-a-half months, the employee must forfeit the $50 if it is not used by March 15, 2006.

The grace period provides greater opportunity to maximize the benefits of FSAs, but first, employers must understand some key factors and communicate these requirements to employees. A benefits administrator can provide further information on these keys.

  • Plan amendment required. Employers must amend their plans by the end of the current plan year for employees to adopt the grace period.

  • Contributions cannot be converted to other benefits. Unused benefits or contributions cannot be converted to other taxable or nontaxable benefits during the grace period. For example, a participant cannot apply unused FSA contributions to reimburse dependent care expenses incurred during the grace period.

The cafeteria plan only permits rollover reimbursements for the same qualified benefits.

  • The use-it-or-lose-it rule still applies. In other words, if after two-and-a-half months, an employee still has $30 in unspent contributions, he or she will forfeit this contribution.

  • Run-out period allowed. Following the grace period, the cafeteria plan may allow for a run-out period. During this time, participants can apply for reimbursements for expenses incurred during the plan year and grace period.

Jessica Galardini is COO of the Chambers of Commerce Service Corp. and executive vice president and COO of HRH Affinity Marketing Group. Reach her at (412) 456-7012.

Wednesday, 02 November 2005 09:01

Health plan options

Employers are increasingly looking to consumer-driven health plans (CDHPs) to cut health care costs that have risen at double-digit rates for the last seven years.

Health savings accounts (HSAs), one of the many plans considered as a consumer-driven health plan model, will be gaining interest as many employers work on their plan renewals for 2006.

Consumer-driven plans got a significant boost in 2003 with the Medicare Prescription Drug Improvement and Modernization Act of 2003. Changes included new tax deductions for those choosing health savings accounts, which allow people to put aside a certain amount of money every year for health care-related expenses.

Who is attracted to HSAs?

  • Nearly half of the people who purchased HSA-eligible plans were 40 years old or older.

  • The average age of purchasers of HSA-eligible plans is 40, whereas the average age for purchasers of nonHSA-eligible plans is 35.

  • HSA-eligible plans are equally attractive to both individuals and families — 51 percent of purchasers are individuals, 49 percent are families.

  • HSA-eligible plans are being adopted by people at all income levels. Forty percent of HSA-eligible plans were purchased by people with incomes of $50,000 or below.

  • HSAs may play a role in helping uninsured people get health insurance. More than two-thirds of HSA-eligible plan purchasers who were previously uninsured for more than six months had incomes of $50,000 or less.

  • Ninety-nine percent of HSA-eligible plans purchased in 2004 included prescription drug benefits.

  • The number of HSA-covered lives nearly doubled recently, from 438,000 in 2004 to 1,031,000 in March of 2005 (see chart above).

What does this mean?
According to recent research from McKinsey & Co., consumer-driven health plan members are more than 50 percent more likely to ask about cost than were participants in traditional types of health plans.

Conversely, 80 percent said they didn’t have enough information on the prices doctors charge. So, there is more work to do on providing the needed information and resources to consumers in this area if these plans are going to be able to continue growing and remain cost effective.

Rely on your employee benefits consultant for direction when it comes to consumer-driven health care and the impact it has on you and your employees.

Jessica Galardini is COO of the Chambers of Commerce Service Corp. and executive vice president and COO of HRH Affinity Marketing Group. Reach her at (412) 456-7012.

Thursday, 30 June 2005 06:26

The reality behind rising costs

Benefits coverage is a valuable part of your employees' overall compensation package, and benefits help you protect your company's greatest asset -- its employees. But climbing rates make covering premium and deductible costs increasingly difficult. These unpredictable, uncontrollable rate hikes pose serious threats to employers' bottom lines.

Many employees don't realize the impact health care coverage increases have on their employers' financial health, and most do not understand why rates continue to rise. Why is health care so expensive today? Do your employees know how much you pay for health benefits?

Educating employees about the rising costs helps them understand why cost-sharing solutions are popular among employers. An employee benefits consultant can provide educational tools to assist employers in communicating the following reasons for health insurance hikes.

Aging Americans

America's "older" population is growing rapidly, while the number of younger adults and children remains stable, or in some cases, decreases. This mature demographic make-up requires more medical attention, and increased health care insurance utilization drives up costs.

As the Baby Boomer generation enters the 65-and-older category, the demand for health care coverage will be even greater. Elevated usage of prescription drugs and overall health care spending sparks a need for more resources, and someone must pay for these services.

Rising prescription drug prices

As pharmaceutical research continually provides treatment breakthroughs, the costs associated with progress affects insurance companies and managed care organizations and, consequently, employers who sponsor employee health plans. Rising prescription drug costs are a primary cause of escalating health care spending.

Why are prescription drugs more expensive? Reasons include new brand-name drug instructions, increased usage, more aggressive diagnoses and treatment methods and direct-to-consumer advertising of prescription drugs, which was outlawed by the Food and Drug Administration until 1985.

Industry consolidation

Competition among managed care companies and insurance carriers was fierce during the 1990s managed-care boom. To gain market share, large insurance companies acquired smaller firms and maintained low rates to stay competitive. This process led to dips in profitability and stock prices. Now, surviving companies are faced with less competition and are committed to returning to profitability, therefore increasing employers' health plan rates.

Expansion of providers

Expansive health care systems with acute-care hospitals, specialty facilities, clinics, labs, physician practice groups and other services are more prevalent today. These systems also require money to fuel their growth.

Political environment and government regulation

Health insurance is one of the most regulated sectors on both state and federal levels. Mandated benefits have increased 25-fold in the last 30 years. Often, these mandates duplicate or conflict with each other and usually are partnered with increased costs to health care systems.

Increased utilization and consumer demand

More people take advantage of health care services today for a variety of reasons -- improved medical technology, the influence of managed care, elevated consumer awareness and demand, and a boost in practicing physicians. Additionally, services such as breast cancer screenings, pediatric immunizations and diagnostic procedures such as MRIs also have experienced sharp utilization increases.

New technology

Old techniques are being replaced by new treatments and medication for diseases and acute illnesses. These developments play a major role in enhancing life expectancy and mortality rate statistics. However, these new technologies and procedures come with hefty price tags, and also influence the price of health care benefits.

As employers seek innovative solutions to share costs with employees, while still offering their work force valuable health care benefits plans, they also must explain to employees why costs are increasing. Understanding the variables that play into cost hikes helps employees realize the importance of their contribution.

Jessica Galardini is COO of the Chambers of Commerce Service Corp. and executive vice president and COO of HRH Affinity Marketing Group. Reach her at (412) 456-7012.

Tuesday, 24 May 2005 09:28

Balancing act

You and other employers are undoubtedly trying to determine how to keep accelerating health plan rates from having debilitating repercussions on your organization.

Many firms have been trying to absorb most of the costs because of attraction and retention issues but are now realizing that they will have to pass portions of the costs on to their employees in the form of increased contributions or out-of-pocket expenses. Small businesses in particular face the critical decision to raise employee contributions or discontinue offering coverage altogether.

Firms are undertaking a variety of measures to help minimize the effect of rate increases on their organizations. The chart, right, shows results from the Towers Perrin TP Track "The Changing Face of Health Care: Balancing Employer and Employee Needs" survey regarding actions employers anticipate taking to manage health care costs.

According to the survey, employers are focusing on interventions that they deem effective in managing costs -- typically tactical, short-term approaches that shift costs to employees. It also found that employers tend to choose tactics they consider the most effective in controlling costs in the short term. For example, three of the most prevalent tactics were also cited as having the most impact on cost savings.

* Selective changes in co-payments or coinsurance for prescription drug plans. This approach is used or planned to be used in the future by 85 percent of respondents, and is reported as effective by 85 percent of respondents.

* Selective changes in co-payments or co-insurance for health plans overall. This tactic, designed to encourage cost-effective use of health care, is in use or planned by 80 percent of respondents and reported as effective by 72 percent.

* Selective changes in employee contributions. Employers use this intervention to encourage cost-effective selection of plans. It is in use or planned by 74 percent of respondents, and is considered effective by 72 percent.

The survey also indicates that while basic cost-shifting is a prevalent means for managing costs, there is evidence of a movement toward a more strategic approach that includes longer-term, consumer-oriented solutions. Companies that want to balance cost and employee relations are incorporating a more consumerist focus into their plans..

Employers are finding ways to make health care a shared responsibility and commitment between employer and employee by putting more decision-making power (and potentially cost-management power) into the hands of the employees. By providing appropriate tools and education, employers can help employees assume this responsibility.

More than one-third of the survey's respondents indicated they planned to introduce and expand wellness and preventive care programs. In addition, 36 percent plan to introduce or expand consumer-oriented elements within their traditional plans, while almost the same percentage will introduce or expand disease management initiatives.

One potential trend is the increasingly popular move toward using the Internet to help employees become more educated health care consumers. The TP Track survey found that most employers are using Web-based solutions to implement consumer-oriented elements into their traditional plan designs. Many companies are providing Web-based employee health portals, often as part of an overall human resources portal, to support preventive care and wellness initiatives.

Which solution is right for you? Should you pass costs on to employees at the risk of losing some of them? Or, should you try to manage costs in some other way? It is a decision you need to come to through thoughtful and detailed analysis of your plans, and with the advice of your broker-consultant.

Below are questions to address to begin developing an effective strategy that is right for your organization.

* Is our program structure, plan design and pricing appropriate?

* Do we have the right vendors, services, contracting and funding in place?

* Are our employee communication efforts appropriate and effective?

* Do we have the right disease and case management programs for our employees?

* Do our pricing and plan design features encourage cost-conscious behavior on the part of our employees?

* Do our employee communication efforts and resources motivate our employees to become educated and effective health care consumers?

Jessica Galardini is COO of the Chambers of Commerce Service Corporation and Executive Vice President and COO of HRH Affinity Marketing Group. Reach her at (412) 456-7012.