Health and welfare benefits are a powerful tool to attract and retain employees. But as costs continue to escalate, employers are finding it more difficult to maintain competitive benefits, which are often one of the top three expenses for a business. When coupled with the multitude of other expenses associated with doing business, many employers are looking for ways to reduce the expense of benefits, says Amy Broadbent, vice president, JRG Advisors, the management company of ChamberChoice.
“Imagine an approach that would enable employers to control costs by establishing a predictable employee benefits budget for the next three to five years, while at the same time offering increased freedom of choice and flexibility for employees,” says Broadbent. “This is not as unrealistic as it might first appear, as a defined contribution approach allows employers to control costs while offering employees a wide range of benefit plans from which to choose.”
Smart Business spoke with Broadbent about how a defined contribution approach can help employers control costs and give employees a wider range of options.
How does the defined contribution approach work?
The driving product line is employer-sponsored health insurance. This unique approach is designed to lower both employer and employee costs, and the concept is simple.
In the traditional approach, the employer selects and funds the same insurance plan for all employees in a one-size-fits-all approach. The employer chooses one or two plans to satisfy all employees, yet, in reality, this canned approach only satisfies a few. A diverse work force equates to diverse needs. Every employee’s needs are different, and no one solution is going to meet all of them when it comes to benefits.
Alternatively, in a defined contribution approach, the employer designates a fixed amount of money, or a defined contribution, to each employee. Employees then use that money to purchase individual health care insurance, selecting products that specifically meet their needs and those of their dependents.
The defined contribution scenario enables employees to choose what they want, not what they are told they can have. This approach extends beyond medical benefits. Employers can make a strategic decision as to the amount of money they will make available and offer a wide range of insurance products, including dental, vision, life, disability, long-term care, cancer insurance, auto/homeowners insurance and so on.
How is the amount of money allotted to employees determined?
Typically, the amount of money allotted to employees is based on their eligibility tier (employee, employee/spouse, family) or their tenure with the company. The amount does not have to be the same for each employee. According to federal law, ‘a plan or issuer may treat participants as two or more distinct groups of similarly situated individuals if the distinction between or among the groups of participants is based on a bona fide employment-based classification consistent with the employer’s usual business practices.’
There is no maximum amount that employers can contribute, and no minimum that is required.
How can a defined contribution plan benefit employees?
A defined contribution, coupled with a Private Exchange platform will include employee tools and personal support to assist with the decision-making and selection process. This employee engagement results in a better understanding of the true cost of each product. Employees purchase based on their own personal needs and build their own custom benefits portfolio to guard against their personal risks, resulting in increased employee satisfaction.
Defined contribution offers multiple advantages for the employer, as well. Making a strategic decision relative to how much to spend per employee per year enables the employer to set predictable long-term goals, while eliminating multiple administrative tasks such as employee education, benefit communications, enrollment assistance, ongoing customer service support, compliance issues, etc.
A defined contribution approach allows employers to focus on their business, not on benefits. Employers can control their benefits budget and save money, expand their benefits and increase service administration at no added cost, and enable employees to have the tools and resources they need to purchase the benefits that work for their families and their personal budgets.
How can the defined contribution approach lower costs?
The approach shifts financial responsibility for health care from the employer to the employees, giving employees more responsibility and choice in how they spend their health care dollars. They have a direct financial incentive to spend those dollars wisely. The defined contribution approach to benefits offers an innovative solution for employers. This platform transforms the traditional approach to employee benefits and offers a sustainable win-win for employers and employees alike.
Amy Broadbent is vice president, JRG Advisors, the management company of ChamberChoice. Reach her at (412) 456-7250 or email@example.com.
People tend to think that listening is the same thing as hearing, but this is inaccurate.
Listening requires being alert and realizing that the person that you are conversing with needs to be understood. Most people do not listen with the intent to understand, but, rather, with the intent to reply. And many times, a person who is “listening” will interrupt to share his or her opinion before even acknowledging what the other person has said, says Keith Kartman, senior sales executive with JRG Advisors, the management company for ChamberChoice.
“This can be dangerous, particularly when it comes to business,” says Kart- man. “Are your employees really hearing the message that you want to deliver? Are they fully grasping the feedback from customers?”
Smart Business spoke with Kartman about really hearing what people are saying, and not just listening to calculate a response.
Why is being a good listener so important?
Listening is one of the most effective ways of learning what your customers truly value. Effective listening is an invaluable skill that can help you and your employees better understand your customers’ needs, wants and expectations. When listening with total engagement, communication is not just saying something; it is really being heard.
Although listening is a primary activity, most individuals are inefficient listeners. Why? Because most people were never taught how to listen and some are too busy talking or thinking about what they are going to say next. You cannot talk and listen at the same time. As a result, they miss out on new business opportunities, a chance to learn new ideas and to meet new people. Listening is an active process that consists of three primary activities: hearing, understanding and judging.
What are some tips for being a good listener?
- Give your full attention to what the other person is saying. Do not look out the window, talk with others or daydream while an individual is speaking to you.
- Be focused. It can be easy to let your mind wander. You need to be attentive; do not assume that you know what the speaker is going to say next. If you have that expectation, the chances are good that you could be wrong.
- Do not interrupt. Let the individual finish speaking before you respond. Speakers appreciate the opportunity to say everything that they want to say and do not appreciate being interrupted.
- Take the opportunity to truly listen. Let the speaker finish before fashioning a response. It is difficult to listen if you are too busy thinking about how to respond before the speaker has finished his or her thoughts.
- Be empathetic and nonjudgmental. Each of us has quirks. Instead of focusing on distracting behaviors that the speaker may exhibit, concentrate on what the speaker is saying.
- Ask questions. If the speaker’s point is unclear, ask concise questions to clarify. It is also a good idea for the listener to repeat what the speaker said in his or her own words to ensure that the message is understood correctly. This is commonly called three-way communication. After repeating what the listener heard, the speaker then has an opportunity to clarify any confusion.
- Give feedback. Be attentive, sit up straight and establish eye contact with the speaker. Use nonverbal signs such as a facial expression to help connect with the speaker.
How can asking the right questions help you become a better listener?
Once you have learned to keep yourself from speaking and interrupting the person who is talking to you, learning the right way to ask questions can also help with effective listening. Asking questions is often the most practical way to find out what you need to know. Here are some examples for asking questions:
- Ask a question that allows you to confirm or correct the thoughts you may have formed.
- Pause for silence; try not to talk over a crowd when asking a question.
- Plan your questions carefully. This will help you avoid being long-winded.
- Do not make excuses, as this can be annoying to the crowd and unnecessary.
- Remember that you will be happy that you asked a question. This allows one to feel more engaged and interested in the topic at hand.
A good listener should find it easy to establish positive working relationships with bosses, clients and colleagues. Oftentimes, people will try to avoid bad listeners altogether rather than spend the energy required to properly communicate complex matters. This leads to missed opportunities that would be readily accessible otherwise.
Careful listening is difficult and will require practice to improve. Make an at- tempt to understand the other person’s point of view and perspective before passing judgment and offering a response. Take the time to listen, and you might be surprised at what you learn.
KEITH KARTMAN is senior sales executive with JRG Advisors, the management company for ChamberChoice. Reach him at (412) 456-7010 or firstname.lastname@example.org.
From 1999 to 2009, employer-sponsored family health insurance premiums have increased an average of 131 percent, from $5,791 to $13,375, according to the National Conference of State Legislatures.
Of that, workers contributed an average of $3,515, with the rest of the burden falling on the employer.
As a result, rising costs have forced employers to choose alternative solutions that shift cost sharing to the employee in the form of higher deductibles and/or co-payments, creating a greater interest in voluntary benefits, says Joanne Tegethoff, account executive at JRG Advisors, the management company for ChamberChoice.
“The work force today is much different than it was 25 years ago,” says Tegethoff. “More women are working today. And with the divorce rate at around 50 percent, there are more single parents seeking benefits. Long-term employment is becoming the exception, and employees are more mobile. All of these factors are making voluntary benefits more appealing.”
And because competition for top-notch employees is stiff, offering quality and comprehensive benefits is key to recruiting and retaining employees.
Smart Business spoke with Tegethoff about how voluntary benefits can help attract quality employees and lower your cost of doing business.
What are voluntary benefits?
Voluntary benefits are insurance products available to employees for elective purchase via payroll deductions. These benefits are sponsored and made available by the employer, but the employee is typically paying 100 percent of the premiums. Many of the products can be taken as a pre-tax deduction, which provides additional savings to both the employee and employer.
The benefits offered often depend on the type of medical coverage the employer offers. For example, employers with a high-deductible health plan with at least a $1,000 individual deductible typically offer short-term disability insurance, which provides income protection should an employee be disabled in an accident outside of work; accident insurance; critical illness insurance; cancer insurance; term-life insurance; and universal life insurance, which is a flexible, permanent policy offering the protection of life insurance, as well as a savings element that is invested and builds cash value.
Short-term disability is typically offered if the employer does not offer group disability, and universal life is typically made available to a work force with a younger average age.
If an employer has a medical plan with a low or no deductible, they will not generally offer critical illness insurance, which pays a lump-sum benefit upon diagnosis of a critical illness.
Less common voluntary benefits that are appreciated by employees include long-term care insurance, dental and vision insurance, prepaid legal services, identity theft insurance, auto and homeowner’s insurance, and pet insurance.
Keep in mind that employees may feel overwhelmed and find it difficult to make a decision when too many products are offered. A successful agent will help the employer sort through the choices and narrow down the product offering.
How can a company begin to implement a voluntary benefits plan?
The employer first needs to determine whether employees have interest in taking advantage of voluntary benefits. Survey your employees to determine the level of interest and need.
Once interest is determined, you will need to select an insurance company that best meets your needs. Not all companies and policies are the same. Talk with your consultant or adviser to determine your needs and for assistance with the insurance company selection and implementation process.
An employer will select an insurance company that hosts group meetings to explain the available benefits to its employees. The insurance company should also conduct one-on-one meetings with employees to discuss their individual needs. If they are not interested, employees should sign a waiver stating they are declining the offered benefits.
In addition, the agent and the insurance company should conduct open enrollment meetings every year for new hires and for those employees who may have changed their minds about participating.
Do employers have any fiduciary responsibilities associated with offering voluntary benefits, even though they are not contributing financially?
Although most employers do not contribute to the cost of voluntary benefits, they still have a fiduciary responsibility under ERISA to police such plans if they engage in the promotion or distribution of benefits information related to these programs. They also have a fiduciary responsibility if they allow payroll-deducted payments on a pretax basis through a Section 125 cafeteria-style plan.
What does an employer gain by offering voluntary benefits?
Voluntary benefits add value and financial security to a company’s employees without impacting the employer’s bottom line. By implementing voluntary benefits, employers acknowledge the needs of their employees and allow the employees to select benefits based on their individual needs.
Joanne Tegethoff is an account executive at JRG Advisors, the management company of ChamberChoice. Reach her at (412) 456-7233 or email@example.com.
With more employees continuing to work past the age of 65, employers can find themselves without answers when asked for advice about insurance benefits.
With health care reform and premiums that continue to rise, employers need information to deal with their older employees, says Crystal Manning, account executive/Medicare specialist at JRG Advisors, the management company of ChamberChoice.
“It’s a good idea to start with the basics,” says Manning. “When Congress passed the Medicare federal health insurance program in 1965, it was to provide health care benefits for people ages 65 and older, people younger than 65 who have certain disabilities and those of any age who have permanent kidney failure.”
Smart Business spoke with Manning about what employers need to know about Medicaid when dealing with employees ages 65 and older.
How does Medicare work?
Traditional Medicare has two parts. Part A provides hospital coverage and those covered do not pay a premium if they are age 65 or older and they or their spouse worked and paid Medicare taxes for at least 10 years. Those under age 65 are eligible if they have been entitled to Social Security benefits for two years or are either on dialysis or are a kidney transplant patient.
Part B covers doctors’ visits and other medical services, for which the covered person pays $115.40 per month in 2011. Services for both Part A and Part B are covered at 80 percent, with the Medicare enrollee paying 20 percent of any approved services.
And effective Jan. 1, 2006, Medicare Part D was added to the plan for the prescription drug component. Part D is not optional; anyone with Medicare Part A and B must also enroll in Part D. It is important to sign up for these benefits when you become eligible because penalties may apply if you fail to do so.
While many people retire at age 65, if you plan to continue working after age 65, there are rules that you need to be aware of. First of all, someone who is continuing to work should not decline Part A. In some instances, employees have been given improper advice to decline Medicaid in order to be eligible for a health savings account. This is a mistake, as it may result in penalties and the employee would not receive Social Security retirement benefits.
How would employees age 65 or older be covered?
If there are more than 20 employees in a company, the employer’s medical benefits plan — not Medicare — would be the primary source of coverage for an active employee over the age of 65. In this case, the employee does not need to enroll in Part B if he or she is satisfied with the coverage provided by the employer. However, if the employer has not set up a senior product plan, Part B would be an option.
After officially retiring, the employee would then be eligible for a special election period. If there are fewer than 20 employees in the company from which the employee is retiring, Medicare will be the primary coverage and the employee should enroll in Part B and look at a Medicare Advantage option.
These plans are a complement to Medicare and include a creditable drug benefit, some dental and vision benefits and, in some instances, even health club membership benefits. These plans usually have budget-friendly options.
In 2011, the Medicare Part D Annual Coordinated Election Period will run from Oct. 15 through Dec. 7, with an effective date of Jan. 1, 2012. There can be no changes to the plan once someone has enrolled, unless he or she chooses to go back to original Medicare only.
What is the employer’s role in Medicaid?
Each year, all employers, regardless of the size of the company, are required to send out a Part D creditable coverage letter to all employees. Although they may not realize it, the majority of employers are affected by Medicare Part D in some way. Even if your employee benefits package does not offer a specified retiree prescription drug benefit, you may have an active employee or one of their dependents who is, or will soon become, Medicare eligible.
A common mistake made by many employers is enrolling an employee who is 65 or older in COBRA. However, COBRA is not creditable coverage for Medicare. If a Medicare-eligible employee is put on COBRA because of a lack of knowledge of the employer, that person will be subject to Part D penalties, will inadvertently waive their enrollment options and would then have to wait until the next general enrollment period in order to become eligible.
As many employees choose to continue to work past the traditional age of retirement, employers need to be aware of the issues that will impact those employees. Employees who are working past the age of 65 present special challenges to their employers, who need to be knowledgeable about how Medicare will impact those workers.
Medicare is complex and requires the expertise of someone appropriately licensed/appointed to advise eligible individuals of the options available. In order to prevent mistakes that could potentially harm your older employees, it is a good idea to provide them with access to a Medicare specialist who can clarify any uncertainty.
Crystal Manning is an account executive/Medicare specialist with JRG Advisors, the management company for ChamberChoice. Reach her at (412) 456-7254 or firstname.lastname@example.org.
Your company’s benefits package is a surefire way to attract and retain staff; however, this only works if your employees know how and when to take advantage of what is offered.
Because of the explosive growth of social networking sites such as Facebook and Twitter, combined with the increasing popularity of PDAs, the number of avenues employers have to communicate with their employees continues to grow, says Renay Gontis, communications coordinator for JRG Advisors, the management company for ChamberChoice.
As benefits managers become less apprehensive about publicly communicating benefits plans, the use of social networking sites to reach employees with general benefit information is becoming more common.
Smart Business spoke with Gontis about how utilizing social networking sites as a platform to break down potentially confusing and overwhelming amounts of benefit information can be a great way to reach out to your employees.
Why utilize social networking in the workplace?
Social networking can enhance everyday communications. It provides an innovative avenue for employees to locate information relative to employee benefits, business policy, wellness and other business-related material. Social networking is no longer limited to personal use and can be used by employers to effectively expand upon business initiatives both internally and externally.
The idea of using social networking in the workplace may evoke feelings of both fear and excitement in the minds of employers, and it should. This phenomenon has the potential to change the way companies do business. Social networking not only helps your company connect with patrons and other interested parties, it is also a valuable resource for drawing in potential employees and recruiting the finest candidates for jobs. Social networking has the ability to get your message across to thousands of people quickly, which makes it priceless to public relations.
What are the perks to using social networking to communicate benefits?
Social networking is a quick and flexible way to get information out to your employees and can be a powerful addition to your benefits communication initiative. Sending fast and frequent updates to your employees helps to keep them thinking about their benefits year round.
? Short messages entice your employees to link to more detailed information.
? Quite often, benefits communication is delivered in a one-size-fits-all package, with so much technical information that employees cannot find what they are looking for. Social networking allows for the message to be broken down into short and concise posts.
You can pull social networking information into your employee intranet, allowing employees to choose how they want to receive information from a variety of outlets.
How can you protect your company’s reputation online?
According to Facebook’s statistics page, Facebook — the largest social networking site today based on monthly unique visitors — has more than 250 million active users. The fastest-growing group of users is people older than 35, which means it is becoming increasingly likely that your work force is getting involved with social networking.
While this has many potential benefits, you also want to take steps to ensure that no one — whether it is a competitor, a patron, or a former or current employee — is tarnishing your company’s name or reputation. The same holds true for blogs, where damaging content may appear without your consent.
The key to keeping your risk low is identity management. The best way to prevent Internet buzz from becoming a hazard is to monitor the use of your company name. Periodically type it into a search engine to make sure that your official website is the top hit and that nothing offensive comes up in the first 20 hits, which is statistically as far as most people will dig in a search.
What steps can you take if you find negative references online?
If you do find references to your company name in the first 20 hits that could be hazardous to your business or reputation, you have a few options. If social networking sites are the culprit, consider enacting a policy prohibiting employees from mentioning the company name on their personal sites. Explain the negative outcomes that this could have for business and help employees understand how acting as poor representation of the company through scandalous photos or negative comments on a social networking site could affect them directly.
If negative or derogatory comments about your company have seeped into other sites outside the control of your employees, the risk to your business is even greater. This type of hazardous publicity is more difficult to manage.
One approach is to flood the Internet with positive information about your company so that the negative write-ups are no longer within the top search results. Contacting sites and asking them to remove fictitious and defamatory material is another option.
Although social networking is a great way to get information out to your employees and their families, comprehensive resources are still necessary. A mix of online, interactive, print and in-person communication provides a well-rounded benefits communication strategy. Companies should consider how to integrate social networking into their robust employee communication platform.
Renay Gontis is the communications coordinator for JRG Advisors, the management company for ChamberChoice. Reach her at (412) 456-7011 or email@example.com.
If you are feeling confused about health care reform, you are not alone. Last year brought many big changes for health and welfare plans as the Patient Protection and Affordable Care Act (PPACA) was passed and the implementation of health care reform began.
Significant provisions to this new legislation took effect in 2010, including tax credits for small businesses (based on specific parameters), the expansion of dependent coverage to age 26, the elimination of lifetime and annual plan limits, the elimination of exclusions for pre-existing conditions and limits on rescissions or the retroactive cancellation of health insurance policies.
“We will continue to see changes to existing and pending legislation into 2011 as the legislation evolves, beginning with Flexible Spending Account (FSA) plans eliminating reimbursement for over-the-counter medications — with the exception of insulin — unless prescribed by a doctor,” says Joanne Tegethoff, an account executive with JRG Advisors, the management company for ChamberChoice. “Another change will impact those who have a Health Savings Account (HSA) and withdraw funds for non-medical expenses — their penalty will be larger this year.”
As of 2011, the HSA money your employees spend for non-qualified expenses will be taxable income, plus a 20 percent fine.
Smart Business spoke with Tegethoff about health care reform and how companies can begin to understand how it will affect them and their employees.
How does health care reform look right now?
The PPACA, along with the Health Care and Education Reconciliation Act of 2010, make up the new health care reform law. This legislation creates a number of issues for employers that sponsor group health plans. The changes are intended to be implemented over the next several years, but employers need to be aware of some impending plan design issues for the upcoming plan year. These issues include:
- Extended dependent coverage for adult children up to age 26.
- Restrictions on annual benefit limits and elimination of lifetime limits.
- Elimination of pre-existing condition exclusions for children.
- Prohibitions on rescission of health care coverage.
- Limits on reimbursing over-the-counter medications.
- Compliance with nondiscrimination rules for fully insured plans.
Are there any other provisions companies should be aware of?
On November 22, 2010, the Department of Treasury, Labor and Health and Human Services jointly announced the Interim Final Regulation for the PPACA Medical Loss Ratio (MLR) provision. This provision states that beginning in 2011, insurers and HMOs must annually calculate their MLR and provide rebates to policyholders if their MLR (percent of premium revenue spent on claims/medical care) is less than 85 percent for large groups and 80 percent for small groups or individuals. MLR applies to insured plans only, regardless of grandfathered status.
Whether certain provisions of the health care reform law will apply to a group health plan depends on whether the plan is considered a ‘grandfathered plan.’ A grandfathered plan is one that was in existence on March 23, 2010, the day the main legislation was passed. Certain health care reform provisions do not apply to grandfathered plans, even if they renew the coverage or allow new employees or current participants’ family members to enroll. It is unclear what could cause an existing plan to lose its grandfathered status, but additional guidance is expected. Special rules apply to collectively bargained plans.
How does this affect insurers?
Insurance companies that are not meeting the MLR standard will be required to provide rebates to their customers. Insurers will be required to make the first round of rebates to consumers in 2012. Rebates must be paid by August 1st each year. Enrollees owed a rebate will see a reduction in their premiums, receive a rebate check, or, if the enrollee paid by credit card or debit card, a lump-sum reimbursement to the same account that the enrollee used to pay the premium. In some cases, the rebate may go to the employer that paid the premium on the enrollee’s behalf. Regardless of whether the rebate is provided to enrollees directly or indirectly through their employer, each enrollee must receive a rebate that is proportional to the premium amount paid by that enrollee.
Are more changes on the horizon?
Additional changes will continue through 2014 as a result of health care reform, none of which are optional and many of which will increase the cost of coverage. To go along with these changes, there will be requirements that everyone carry a minimum level of health insurance coverage or be subject to a fine (some may be exempt if they have very low income). Employers with more than 50 employees generally will be required to offer a minimum threshold of health insurance coverage or potentially be subject to one or more fines. Employers could also be subject to fines if their employees choose government subsidized coverage through the exchange.
A variety of taxes are scheduled to go into effect at different times between 2011 and 2014 that may increase tax liability for certain individuals or increase the cost of your health plan. Your insurance and employee benefits advisor can help you determine the most cost-effective options for your needs, as health care reform continues to evolve.
Joanne Tegethoff is an account executive with JRG Advisors, the management company for ChamberChoice. Reach her at (412) 456-7000 or firstname.lastname@example.org.