Small Businesses Can Control Costs with a Self-Funded Health Plan

Business Week has suggested that the government “Make Health Insurance Cheaper for Small Employers” by requiring insurers to issue standard policies “or at least dramatically reduce the number of policy alternatives—so that businesses could better compare them.” This suggestion is certainly well intentioned but missing the mark. The issue is not that there are too many plans for employers to choose from but likely that none of the choices offered can really serve to address the particular needs oftheir organization. Instead of simply limiting the number of insurance policies offered, small employers should be encouraged to embrace self-funded health plans that will help keep costs in check because these employers can design plans to fit their employee population’s specific needs. As it stands now, the Centers for Medicare and Medicaid Services “requires policies to be compared across only three hypothetical patients.”

Business Week notes that:

“Small business owners tend to change their insurance plans often, as they search for more affordable insurance. Not only does this switching impose costs on the businesses, but it also motivates insurers to take short-term approaches to health coverage for small businesses.”

This does not have to be the case at all. Small businesses don’t have to jump from plan to plan, leaving employees feeling uncertain and in a continual state of re-adjustment. Today, smaller employers have some options that weren’t available to them just a few years ago. A third-party administrator can help a small employer craft a health plan that fits their particular needs. And a self-funded plan is not stagnant. It can be altered to accommodate changes in a small employer’s work population, providing much-needed flexibility.

Creating a Vision for Worksite Wellness Programs

Deciding on a worksite wellness program, let alone finding a vision for it may sound like a daunting task. What should the goal be in defining the desired end results? Smoking cessation programs? Weight loss incentives? Lowering blood pressure and cholesterol? Reducing the risk for cardiovascular disease and stroke? Yes, in fact, to all of those and more.

U.S. health officials and the American Heart Association have put forth an ambitious set of goals for reducing deaths from heart attack, stroke and coronary heart disease in a new program called Healthy People 2020. While this program is a nationwide effort to reduce disease by lifestyle changes, it can also become the vision and focus for many worksite wellness programs. The vision of the Healthy People 2020 program that sets goals for specific prevention activities includes:

• Increasing the number of people who have had their blood pressure and cholesterol tested recently;

• Increasing the number of people who have taken preventive measures to reduce high blood pressure or high cholesterol, i.e. lifestyle changes;

• Raising awareness of the early warning signs and symptoms of heart attack and stroke.

A Vision That Includes the Bottom Line

There is a common misconception that a wellness plan for employer groups is an unnecessary benefit that has nothing to do with a company’s performance. Harvard Business Review defines workplace wellness as an “organized, employer-sponsored program designed to support employees (and dependents) as they adopt and sustain behaviors that reduce health risks, improve quality of life, enhance personal effectiveness and benefit the organization’s bottom line.”

The dramatic increase in health care costs is being driven primarily by increased number of employees (and dependents) with chronic diseases, including high blood pressure, high cholesterol, diabetes, and obesity. The challenge is to improve overall health while lowering costs.

While many wellness programs are still largely unconnected to health-plan strategic planning, design, communications and open enrollment, the top 10 causes of death in the United States remain directly related to lifestyle or personal behavior. Employers have endless opportunities (and should have incentive) to affect change in their employees’ personal health behaviors, starting at open enrollment time and continuing throughout the year. According to the Centers for Disease Control and Prevention, (CDC), 59 percent of next year’s high-risk population will come from this year’s low-risk population.

Carol Guglimetti

Principal Launches Voluntary Benefits Program

A Principal news release said the key advantages of voluntary benefits is that they allow employers to offer a wide variety of products at no cost to the company and workers can pay for the benefits through payroll deduction.

The company said it works with employers to create a customized enrollment strategy and benefit education program for voluntary benefits. Ranging from group meetings to one-on-one sessions, education programs feature working directly with a salaried financial professional at the work site.

Using an interactive needs analysis tool, the financial professionals help employees identify gaps in insurance and financial protection and then prioritize and select the most appropriate type of voluntary benefits both inside and outside of the group program.

The Principal now offers online enrollment for both English and Spanish-speaking workers.

“Employers taking a closer look at their benefit budgets are feeling the financial squeeze, but also realize retaining valued employees in the current environment is critical. Voluntary benefits allow employers to offer attractive benefits at a lower cost for both the employer and their employees,” said Amy Friedrich, vice president of the Specialty Benefits Division of The Principal, in the announcement. “We’re seeing an increase in our customers offering voluntary benefits because they realize it’s a win-win situation for their business budget and their biggest asset, employees.”

Fred Schneyer

Experts: Don’t Overlook Disability Benefits

Rising health care costs and a tough economy can make health care benefits a primary focus for employees during benefit enrollment time. But experts advise that income-protecting benefits, such as life and disability insurance, deserve some attention, as well.

According to a new report by Prudential, workers are expressing interest in life (83 percent), disability (66 percent) and long-term care insurance (21 percent) this enrollment season.

“While the life insurance enrollment rate is reassuring, many Americans are not electing sufficient coverage to maintain their families’ standard of living in the event of an untimely death, or taking the time to really think through their benefit elections,” said Lori High, president of Prudential Group Insurance, in a report by

Disability can be a particularly hard sell for employers because many workers think they’ll never need it, experts say. A disabling condition, however, can spring from more than a fall at work, Barry Lundquist, president of the Council for Disability Awareness (CDA), told Kaiser Health News. While many people assume accidents are the main cause of disability claims, 90 percent of all claims actually stem from illnesses, including musculoskeletal conditions and cancer, Lundquist said.

The CDA noted in a 2010 poll that 30 percent of Americans entering the workforce today will become disabled before they reach retirement. Only about a third of American workers have some sort of disability insurance, Lundquist said.

Unfortunately, fewer employers these days are offering the benefit, according to a LIMRA study published by KHN. Only 47 percent of employers offer long-term disability benefits, the study found. Of those companies that offered coverage in 2010, only 37 percent paid the entire premium, a decrease from 49 percent in 2002. When employers don’t pay any of the premium, only 40 percent of workers elect the benefit, Lundquist said.

The need for disability coverage will continue to grow as the U.S. workforce ages, experts say. By 2050, people over the age of 60 will outnumber those in younger generations, according to a news report by the Society for Human Resource Management.

“Workplaces must be ready to accommodate these employees, or there will be more disability claims,” said Susanne M. Bruyere of Cornell University in a recent webinar.

While Bruyere said companies shouldn’t make broad assumptions about the health and productivity of older workers, she noted that statistically the rates of disability increase with age.

Bruyere called for better education of employers about how they can make accommodations for the disabled and aging. She also suggested that employers examine their policies and procedures to ensure that they can accommodate these workers.

Voluntary benefits: Make them so good, no one knows they’re voluntary

I recently heard a business owner describe his company’s voluntary benefits package as a “nice to have.” If that’s the case, I say get rid of the package and save both the aggravation and administrative cost.

If you’re going to offer voluntary benefits, those benefits should be a fixed part of your employment package — part of the ala carte set of options an individual is entitled to as a result of working for the company. People don’t call a 401(k) plan a “voluntary” benefit. Why, then, should an optional life, disability, vision, and dental package be thought of as “voluntary”?

Voluntary benefits are part of a comprehensive benefits package; choosing to take advantage of them is simply optional.

Employers seek satisfaction and productivity from their employees. In our current “jobless recovery” economic environment, productivity is high, but satisfaction is low. The employer is in a quandary because cash flow is tight, so satisfaction cannot be bought through additional compensation. This is where voluntary benefits can prove so useful.

A 2010 study by SHRM found that job security and benefits are the top two motivators of employee satisfaction. In fact, benefits have ranked in the top two since 2002. The challenge is to help voluntary benefits be perceived as benefits. If they’re simply marketed as a “nice to have,” they won’t be valued and, most importantly, won’t enhance employee satisfaction.

Employers should focus on some key elements in designing and offering a voluntary benefits program. These ideas don’t add cost; they simply require attention and some effort.

*Choose those benefits that are most valued by the most employees.
*Limit the benefits to those that can be understood and appreciated by most employees.
*Educate employees about both the need for benefits and how to obtain them.
*When it comes to benefits education, one size doesn’t fit all.

To be successful, employers need to be able to focus on running their businesses. Unproductive, unfocused, and unsatisfied employees can really distract business owners.

In terms of benefits, these employee distractions can come in the form of wasted time cruising the Internet for information and deals, trying to sort out advisors from scoundrels, and stressing over not being able to obtain adequate coverage. When an employer vets carriers, advisors, and benefits, offers a controlled environment where they can learn about and purchase these benefits, and, finally, makes it easy to obtain and maintain them, employee satisfaction is a natural outcome.