Posts from — September 2010

When an worker ignores directions from a physician, who’s responsible if the worker causes a serious accident on the job?

In some cases, it’s your firm that ends up on the hook – both for workers’ comp and for other people ’s injuries caused by misuse of a prescription drug.

Situations such as these raise three questions that even HR/benefits pros have trouble answering. Precisely how are you – or supervisors – supposed to know what meds people  are on and whether they’re taking them as directed by their doctors?

In most cases, you won’t.

Are you able to determine without violating health insurance portability and accountability act (HIPAA) or other laws?

You can’t, unless the worker volunteers the info or a doctor notes the effects of medication being the reason for the accident.

So if you won’t know and can’t find out, how on earth can your firm be held responsible after the fact?

It all depends on the circumstances. Three key danger signs –

• A supervisor already has knowledge of an employee’s medical condition, if not the meds themselves. Example –  the employee requested a schedule change and said it was due to a particular medical problem

• The person has a history of erratic behavior that management suspects is medication-related, and/or

• The employee’s job involves potentially perilous situations.

Spotting possible danger

A Florida case (Johnson v. Rentway) is a classic example of the two of the three large danger signs.

1.  The supervisor knew an staff member had insulin-dependent diabetes.

2.  The staff member was under physician’s orders to take insulin at specific times, which required the organization to adjust the employee’s schedule.

But because of short staffing, the staff member was often forced to work shifts that overlapped with times he was supposed to take injections.

What’s more, the employee worked a potentially perilous job (he was a specialist truck driver).

In conclusion, the inevitable happpened.  The staff member suffered a diabetic blackout at the wheel, causing a serious crash that injured himself and another driver.

The worker filed for workers’ comp, and the injured driver sued the organization.  The firm fought – and lost- both cases. Total cost –  $5 million.

Having even one problem drinker on your health plan – including a covered family member with abuse issues – can cost your company big.

Some estimates place the potential cost as high as $35,000 a year per case. What’ your company’s risk?

Many health promotion programs are geared toward managing employees’ health risks associated with illnesses like diabetes or asthma.

But unless the wellness program is integrated with an staff member assistance program (EAP), chances are alcohol abuse-related risks go undetected. Here are two strategies that’re getting good results.

1. Include alcohol in medical screenings

If you already sponsor confidential worker health-risk assessments, it’s easy to screen for alcohol risks, too. This could be as simple as making sure three questions are added to the current appraisal –

• Exactly how often do you’ve a drink containing alcohol?

• How many alcoholic drinks do you’ve on a typical day? And

• How often in the last month have you’d six or more drinks?

For male employees, more than 14 drinks per week, or one or more episodes of heavy drinking suggests a possible problem. for women, more than seven drinks in a week, or one or more episodes of drinking four or more drinks, is a red flag.

Alternative – If you don’t offer appraisals, you are able to refer staff members to a free, confidential web-based screening.

Benchmarking tools

A lot of specialists say drug-free workplace policies and worker assistance programs (EAPs) are the two most proven solutions within companies’ grasp for minimizing the risks and costs of alcohol abuse by health plan enrollees.

To see when sponsoring an employee assistance program (EAP) makes financial sense, you can calculate your own firm’s current cost risk for free here. Plug in your company kind, locale and number of employees.

You’ll get a customized estimate of each year direct (absenteeism, disability, ER visits) and indirect (presenteeism, turnover) costs from alcohol misuse by a covered employee or family member.

To design a drug-free workplace policy – or check when your existing one is up to par and compliant with the law – more guidance is available here.

It’s easy to feel like your PBM holds all the power over you. In most cases, it does.

A landmark 2004 study compared what pharmacy benefits managers (PBMs) charge companys’ plans to what they actually pay pharmacies.

Scientists found staggering overcharges – namely for generic drugs. Unfortunately, four years later, the situation has scarcely changed. All too often, PBMs improve their own bottom line at the expense of the plan sponsor’s.

Chances are, it’s your health insurance provider – not yourself – who contracts with the PBM to administer the prescription drug portion of your health benefits.

So how can you feel confident your firm is getting the best value and service? Start by asking your health-plan broker these four questions about the current or prospective PBM.

1. Just how does the PBM calculate price?

A lot of PBMs gain hidden profits off your plan through a practice called “differential pricing,” says consultant Gerry Purcell.

In other words, the PBM pays one price to drug retailers and then sets a lesser discount off the typical wholesale price (AWP) for your company’s plan. Example –

• The PBM compensates the drugstore the AWP minus 18%

• your plan and staff pay AWP minus 15% for meds, and

• The PBM pockets the difference.

Now for some good news. You do have some leverage in this area. If your drug plan is covered under the ERISA umbrella, the PBM must disclose this info.

Ideally, you’ll find the rates are the same on both contracts. But if there’s differential pricing, insist your firm get the full discount.

2. What’s the PMPM?

One key cost figure PBMs can’t manipulate is the per-member-per-month (PMPM) cost of your plan. This number will show when your plan’s costs actually increased or lowered.

The PMPM is calculated by dividing the sum costs spent by the number of workers enrolled in the drug plan.

It’s also a excellent tool for comparing different PBMs to see which is the most cost-efficient for the size of your company, says Peter Reed of Managed Benefits Strategies.

3. can we get rebates, too?

Some PBMs receive money from drug businesses that your brokers won’t tell you about – but may  be able to leverage to your plan’s advantage. Example – A lot of PBMs get rebate checks from drug businesses (typically 50 cents to $1.25 per claim) for assisting increase the sales of their products.

When you push hard enough for it, your broker may able to work an arrangement where you either –

• split rebates from your plan evenly, or

• let the PBM keep the entire rebate in exchange for a price break on administrative fees.

Important –  Ask to determine all the payment kinds the PBM gets from the drug firms. Rebates are often couched in the form of grants or classified as access fees or formulary fees.

4. How do changes in the formulary work?

In most states, PBMs can change your plan’s list of approved medications without prior notice.

The problem –  PBMs often make mid-year switches that save them money, but might not save your company or staff a dime.

Example – When the PBM adopts a mail-order-only coverage policy on a certain formulary drug, an worker who needs same-day access to the medication could  be forced to pay full price for it at a drug store.

Meanwhile, your plan is still charged the formulary price.To avoid such unpleasant surprises, insist the PBM give written notice of formulary changes, including the addition of new generics.

The best staff member recognition practices are often the simplest.  

Here’s one that’s recently been adopted at the publishing business where I work –  a progam called “See something good, say something good.”  It’s a way for workforce to bring positive attention to things that their peers, managers and the company’s different departments do well.

Exactly how it works –  the organization provides colorful index cards, placing them conspicuously in several commonly traveled areas in the building. When personnel and supervisors want to publically recognize someone else’s efforts, they can grab a card and fill it out. It takes very little time.

When the index card is filled out, the staff member drops it into a wrapped box (there are two in the building).  The boxes are later collected and the cards displayed in a room the corporation uses periodically for meetings, presentations and quarterly staff member appreciation events.

In order to build awareness and participation in “Say Something Good,” management put up fliers around the building, so individuals  from every department can see them, as well as visitors and job applicants who’ve come in for interviews.

The wellness program, which was originally thought up by the head of our product advertising division, doesn’t cost anything apart from the cost of the index cards and paper. There’s minimal administration time, and it takes workers only a moment or two to fill out a card on a fellow employee’s behalf.

But the return is a lot of, and the recognition possibilities are endless. It’s a good way to boost morale, encourage productivity and differentiate the corporation culture from work environments where the negative things seem to get the lion’s share of the attention.

When it comes to wellness programs, it can be tough to get past all the hype. Here is how to avoid the three most common traps employers fall into.

Trap #1.  The “one-size-fits-all” approach

For good reason, your organization does not simply copy other firms’ 401(k) plans or compensation designs. Yet, all too often, firms adopt ill-fitting health promotion programs based on things that have worked elsewhere.

Your CFO might have seen data on the cost savings other businesss have achieved via certain wellness incentives. Or an old peer of your CEO swears by the health promotion program at his or her own firm.

In response, the top brass pushes for a copycat health promotion program – for example, offering smoking cessation incentives.

That could  be a good idea, if tobacco use-related illnesses are a key driver of your company’s healthcare costs. But how can you be sure? is it good enough to have your employees undergo a health risk assessment?

Ordinarily, the answer is no.

Health risk assessments are a excellent starting place, but it’s often a mistake to stop there.  The assessments help you get a feel for what your employees’ baseline physical problems are before you try to design a wellness program around them.

This creates rough outlines of what your wellness program goals ought to be and where to target worker programs. When you want the maximum bang for your wellness buck, you’ll have to dig a little deeper for information. Key places to look –

• your organization’s medical-claims breakdown for the last three years

• prescription-drug claims

• staff member absence information

• employee assistance program use

• disability claims, and

• worker demographics (workers’ ethnic, gender, age and dependent coverage status points to greater – and lesser – health risks associated with each category).

Trap #2. Leaving the wellness program on autopilot

A lot of wellness programs often get off to a good start and then fizzle out. Employers are left wondering what went wrong. Their mistake –  They failed to revisit the wellness program on an ongoing basis – at least every other year.

Why it’s crucial –  Your cost-drivers can easily shift as staff members come and go from the company.

Example –  This year, emphysema and other smoking illnesses could  be your largest cost driver. But two years from now, it could be obesity and diabetes.

Unless you continuously track the health promotion program and adjust your goals as necessary, you might not be prepared to meet those new challenges.

Trap #3. Unrealistic expectations

Generally, it takes at least a year and a half for corporations to break even on the cost of a wellness program.  As a rule of thumb, the average program cost per staff member per month to the corporation is about $3 to $5.

If, after three years, you still aren’t seeing results, something went wrong. Currently, the benchmark Return On Investment (ROI) after the third year of a health promotion program is $4 to $5 saved for every dollar spent.

How can you manage the cost in the short-term? In many cases, companys pass the cost of the wellness program on to the employees. for example, let’s say you want to roll out a wellness program effective January 1 (or whatever your first day is of the new plan year).

You can roll that $3 to $5 per worker per month cost directly into the employee’s monthly share of their health care premium. That makes the wellness program a budget-neutral expense for your business.

But remember –  You get what you pay for – both in time and money invested.  The less guesswork that’s involved in the planning and execution, the better the chance for success.

Variable compensation could be a excellent way to satisfy demand for higher pay while addressing executive management’s need to improve productivity and keep base salaries under control.

But there are some major pitfalls.  Here are two proven ways to avoid the most common legal and return on investment risks.

Non-exempt employees

Beware when you use variable comp as a pay-for-performance strategy for hourly workers. Reason –  It’s easy to inadvertently run afoul of the Fair Labor Standards Act (FLSA) overtime rules.

Under FLSA, you must recalculate employees’ hourly wages to include all variable pay (such as individual or departmental bonuses) when figuring overtime compensation.

Failure to do so could cost your organization more in penalties and back-wage payments than the variable comp plan saved on the front end.

So it’s a good idea to double-check with Payroll to be certain the department knows to make OT adjustments after hourly personnel receive bonuses.

Reward the right things

In order to make the criteria for bonuses easier for staff to understand and management to measure, many firms prefer using strictly objective measurements. Example –  the plan may pay out based on how much money staff save their department in a year.

But what happens when workers cut corners – on safety, service, quality, etc. – to reach the goal?

At some firms, personnel are still rewarded with additional pay, even though their actions potentially did more harm than good to the bottom line. for best results –

• set behavioral criteria for bonuses as well as economic ones, and

• consider using a mix of firm-wide, departmental and individual economic performance measures.

Shopping for heath plans through a broker is a fact of life for the vast majority of corporations. But how well is your broker meeting your needs?

And how can you work together better to minimize costs while getting maximum bang for your organization’s benefits buck?

What’s New in Benefits and Compensation conducted an exclusive survey of 195 subscribers to determine how they view their company’s relationship with their brokers. Here’s what they said –

Half see room for improvement

The good news – Almost half of your coworkers rate their relationship with their current broker as “excellent.” But that means the other half see some room for improvement.

Thirty-nine percent of respondents rated their broker relationship as satisfactory and said they were at least “reasonably happy.” the remaining 11 percent noted “unpleasant surprises” while 4 percent are actively considering a switch.

Tools for making buying decisions

Of course, the No. 1 reason any organization works through a broker is to find the best deals on health benefits. But many of your colleagues pointed to several areas where their brokers could help make their lives a little easier.

First and foremost, your peers say they’d love for their brokers to provide user-friendly – but thorough – return on investment data they can use to benchmark different plans.

It’s worth discussing with your broker how much arm-twisting the broker can do with medical plan carriers to get key data in your hands. Two specific areas of data benefits pros say they’d like help from brokers –

• obtaining and sharing claims cost data to compare to premiums, and

• benchmarking your typical plan costs against those of similar-sized firms in the region.

Regrettably, claims cost data is often hard to pry loose from insurers, at least for smaller businesss’ plans.

Reason –  Without this data, it’s tougher to judge if your premium rate adjustment at renewal time is fair. Fewer than half of respondents (46.3%) say they’ve ever discussed such information with their brokers.

Obtaining benchmarking data on similar-sized plans helps you see how comparably your costs and plan designs stack up in your area. Roughly 43% of respondents say they’re armed with at least some of this info when it comes time to decide whether to stay with the existing plan.

Earlier renewals

It’s worth talking with your broker about ways to push for the earliest possible renewals – and strategies for making sure your carrier does not hit you with any unpleasant surprises.

One notorious game insurance corporations play with employers’ plans is to wait until the last moment to reveal the new premiums at renewal. That way, there’s less time for negotiation – or to shop around with the insurer’s competitors.

About 28% of respondents report getting their renewals about 30 days before the rate kicks in. Different brokers use different benchmarks for securing renewals. A minority of respondents (19.5%) have seen them as early as 90 days ahead.

Taking work off HR/Benefits’ plate

The benefits brokerage marketplace is highly competitive. Some brokers attempt to set themselves apart by offering customers so-called value-added services.

Among your colleagues, the most popular services are those which relieve the company’s HR/ benefits manager of time-consuming tasks. Some examples –

• analyzing  plan documents

• Auditing (and, when needed, reconciling) carrier bills for errors

• monitoring plans for compliance (HIPAA, COBRA, etc.)

• offering tech support for a benefits intranet and/or worker self-service software, and/or

• assisting with employee education.

Which costs your corporation more – staff who miss work or ones who show up physically but take a mental PTO day?

For most employers, it’s the latter. So why do even savvy upper managers and finance directors (we’re not just talking about the bean-counters) worry about absenteeism while downplaying so-called presenteeism as a drain on business productivity, not to mention the compensation and benefits budget?

In some cases, senior level managers seem to think that admitting that presenteeism even exists at the firm is akin to saying, “We’re a poorly run company.” In reality, presenteeism exists in every workplace.

Virtually every employee, manager, supervisor and executive who has ever tried to “tough it out” at work when he or she’s been sick has been a presentee on those days.

So has whoever who’s ever been distracted at work by non-work issues – whether it’s spending the day attempting to resolve a personal financial matter, checking on a sick child at home or constantly checking for scoring updates from a sporting event.

In brief, unless we’re to believe that every employee is productive every single day, no corporation in the world is immune from presenteeism.

Some corporations that don’t bury their heads in the sand about presenteeism still don’t track it. Why? Normally, there’s a belief that chronic presentees eventually get rooted out of the business.

And short of watching over every other employee’s shoulder throughout the workday, it’s too difficult (and even counterproductive) to try to estimate the cost to the business.

Here are some strategies that firms have used to not only measure the cost but also reduce the problem.

Creating a cost estimate

When your organization is like most, senior management worries endlessly about health benefit costs without realizing undetected presenteeism is just as expensive, but easier to control.

Consider these facts from a recent CSG study – Nearly 10 percent of the typical each year pay and benefits

budget is spent on non-productive (but treatable) workforce.

Add in personnel who call out at the last second and the percentage rises to 17 percent, according to SHRM.

But how do you estimate the actual dollars-and-cents cost to your firm?

Let’s assume you have 50 staff, who make an average $40,000 a year. Over the course of the year, the average employee is non-productive 2.5 % of the time, due to assorted personal issues or minor diseases that serve as distractions.

In this instance, presenteeism costs your corporation $50,000 a year. When you’ve a 5 percent presenteeism rate, the figure shoots up to $100,000.

While it’s impossible to entirely stamp out presenteeism, even small reductions in presenteeism add up to big bucks in controlling compensation and benefit costs.

The next step, of course, is doing something about the issue. Broadly speaking, the process normally works in three phases –

• review current policies and procedures for things that accidentally increase presenteeism

• get supervisors and staff members involved on the front end, and

• stress the importance of work-life programs to executive management and supervisors.

Let’s look at each area to see how they work in real-life practice.

Unintentional effects

Three common ways many firms attempt to cut absenteeism often increase presenteeism –

1. Over-stressing attendance in employee’s annual reviews

2. Having supervisors check up on personnel who take sick days to verify they’re really ill, and/or

3. Disciplining personnel for last-moment sick callouts.

From a practical and cost standpoint, the best solution might  be to switch from separate vacation and sick-day benefits to a single paid time off (PTO) bank.

When folks have no-questions-asked control over their off days, they’re sometimes more likely to use a PTO day when they’re sick.  Of course, you know that PTO carries some risks of its own.

Early detection

Fewer than one organization in 10 gets both managers and workers involved in the process of spotting and eliminating presenteeism.

That’s too bad, says consultant Mary Beth Chalk, because it can been done pretty easily.

Ask a sampling of staff to rate how energetic and productive they ordinarily feel at work, on a percentage scale. Have supervisors estimate their staff as well. Then split the difference.

The result is a pretty good barometer of your organization’s current and future presenteeism risk.

Work-life balance

Anything you can do to promote work-life programs at your firm can have a positive effect on the bottom line. Proven ideas include –

• rewarding supervisors who support flexible work arrangements

• sending sick workforce home

• cover onsite flu shots, and

• Actively promote your existing Worker Assistance Program.

Any benefits HR/manager can adopt these ways to make workers feel more appreciated.

The common thread –  using your own communication skills as a powerful tool for improveing morale.

1. Put in face time

When time permits, managers may want to put in some “face time” with staff members. This in and of itself is a type of employee recognition. Example –  There’s a lot of value in simply walking around the building, chatting with staff members.  Ask staff members about the personal items they display at their workstations.

In the short-term, folks will notice and appreciate your interest.  Long-term, this may inspire ideas for rewards and incentive programs.  The same technique works at  firms with multiple locations.  Make a site visit to get a feel for the morale. This is much cheaper – and often more effective – than designing a formal benefits survey.

2. Send ‘em personalized stuff

Looking for a simple way to show personnel that HR/Benefits cares? Develop a template from which you are able to send personalized “Welcome” letters to new hires or “Happy Anniversary” notes for employees’ company anniversaries.

3. Target overlooked employees

Most firms have staff (e.g. part-timers) who aren’t eligible for the 401(k), medical plan and other company-sponsored benefits.  Small gifts help firms connect with these often-overlooked staff.

Example –  on the first day of spring, send them a packet of flower seeds and attached a note from Benefits. Burston-Marsteller Worldwide has used this simple, low-cost idea and gotten good results.

Looking for recognition ideas that get results?  Here are two keys to success –

The most common characteristics of high-Return On Investment recognition programs – regardless of their monentary value – are their spontaneity and perceived value by workers themselves.

In reality, the cost of some of most effective spot awards and bonuses often amount to less than 1% of base pay – and the awards don’t even have to be given in cash.

Less sense of entitlement

Part of the problem with traditional end-of-year or quarterly bonuses (apart from the fact that they cost companys an typical of 10 percent of base pay) is that staff expect to receive them for reaching certain objectives.

Sometimes staff simply expect it no matter what. for example, at many firms, an annual holiday bonus is viewed as an entitlement and individuals  inevitably grumble that it’s not high enough. on the flip side, with spontaneous awards and bonuses, staff are often pleasantly surprised.

Benefits consultant Ken Stahlmann spells out four keys to making the latter kind of awards work, even if they’re lower in cost –

1. Creativity is crucial

The most effective programs ordinarily give out awards weekly or monthly.  To avoid over-stretching the budget – and avoid a ho-hum attitude setting in – creativity is a must.

One way that never gets old –  combining time off with a second, non-cash award. Example –  One firm gives a half-day off in combo with movie passes once a month.

Another, at weekly staff meetings, holds a random drawing for a dinner gift certificate, plus permission to leave work early once.

2. Make it personal

Rewards have more lasting impact when they’re geared to people ’s personal needs or interests. Two examples –

• one firm with many foreign-born, low-wage staff awards a $20 pre-compensated phone card after 90 days of service, and a $100 card for outstanding work, and

• Another corporation with a lot of sports nuts took a few top-performers to a ball game. Managers said it was the best $200 they’ve ever spent in terms of creating ongoing enthusiasm.

3. Add structure

The awards might seem spur of the moment, but top programs have a fixed budget and structure set before anything is handed out. Example –  One retail firm awards “points” for good work. Folks can then trade in their points for store merchandise.

By letting individuals  bank points for additional valuable rewards, the company saw a solid jump in retention.

Other organizations prefer to let workforce reward each other. for example, a small healthcare provider keeps a “goodies box” onsite – paid for in petty cash and stocked by workforce themselves.

When someone spots a coworker going the extra mile, he or she pulls out a prize and awards it.

The program is a immense hit –  It’s immediate and personal, yet structured.

4. Don’t let good intentions backfire

Most spot awards go over well. But keep these four issues in mind –

• For most cash or cash-value awards, there are tax implications (just as with traditional bonuses)

• Awards need to be spread around or else resentment can creep in

• Be sure honorees don’t mind being the center of attention (some firms have accidentally alienated people  they tried to reward), and

• Make sure the reward is something people  actually want. One firm that awarded a VIP parking space next to the CEO found no one used it. No one wanted the CEO knowing what time he or she came and left.