Benefits MANA 5322 Dr. Jeanne Michalski

Strategic Benefit Planning  Top- Down Approach  Proactive process  Regular review of benefits programs (all or part)  Backing-in approach  Reactive process  Reevaluate benefits when unexpected problems arise

Benefits Strategy Top Down Approach Overall Corporate Benefit Strategy Strategy Benefit Management MIS Benefit Administra tion Benefit Communi cations Strategy Innovative & non ERISA Benefits Work-life, relocation financial planning, other Strategy Health and Welfare Plans Health Benefit Strategy Design and mgmt of health plans: medical, dental, vision, prescription, retiree medical, substance abuse, etc. Disability Strategy Design and mgmt of long- and short- term disability plans Death Benefit Strategy Design and mgmt of death plans: term life, universal life, death and dismember -ment, etc. Strategy Pension and Investment Plans Defined Benefit Plans Design and mgmt of defined benefit plans Defined Contribu- tion Plans Design and mgmt of savings and thrift plans, cash or deferred arrange- ments, S T R A T E G I C T A C T I C A L

Benefits Strategy Backing-in Approach Tactical Question “ How should our health plan be changed to control employee health care costs? 1. What health care costs are increasing most rapidly?

Benefits Basics  Income Protection – Mandatory  Social Security  Worker’s Compensation  Unemployment Insurance  Health Care (?)  Income Protections - Non-Mandatory  Health Care (medical, dental, prescription, etc)  Welfare (Life insurance, STD, LTD, etc.)  Retirement and Investment (DB,DC)  Pay for Time not Worked  Vacations  Holidays

Discussion Topics  Actions companies can take to reduce costs associated with legally required benefits.  Social security  Unemployment insurance  Workers compensation  FLMA Issues  Health Care Costs

Discussion Topics  Creating successful Wellness Programs  Vendor Relationships  Benefits Administration considerations

Dealing with Intermittent FMLA  Have a doctor certify all FMLA leave for medical reasons. You’re entitled to ask for a second or even a third opinion.  Use a form that asks the certifying doctor for complete information on the claimed condition, including schedule of dates and times for treatments, and minimum amount of time leave will be needed.  Have the employee recertify the condition especially if patterns of abuse are apparent. This is at the worker’s expense and has proved to be a strong deterrent to bogus leave claims.

Dealing with Intermittent FMLA  Ask for a new certification for the claimed condition for each 12-month period.  Insist that the employee work with you in setting up a schedule that includes as many treatments as possible in off-work hours.  Transfer the employee to a position where absences are less disruptive. Keep pay and benefits equivalent to the previous job.  Look for obvious abuse patterns, such as the “Monday/Friday syndrome.” You are entitled to ask for recertification of a claimed medical problem if “the employer receives information that casts doubt on the stated reason for the leave”.

The Costs of Benefits  What are some of the factors that impact costs of benefit programs?

Consumer-Driven Health Plan  A type of health benefits plan that requires member responsibility for certain up-front medical costs; an employer-funded account that may be used to pay these up-front costs; and catastrophic coverage with a high deductible. Full coverage is provided for in- network preventive care.

Disease Management  People with chronic conditions — 44 percent of non- institutionalized Americans — account for a disproportionate share — 78 percent — of health care expenditures in the United States

Common Chronic Health Problems  Lost economic output associate with 7 common health problems total more than $1 trillion (includes lost time) world at work, 2009  Cancer  Diabetes  Heart disease  Hypertension  Mental disorders  Pulmonary conditions  Stroke

Wellness Programs- What They Can Do

Wellness Programs  Use assessment activities to identify health risks  Provide Health Screening  Make self help materials available  Include “self-care” programs  Nurse advice lines, software, educational materials  Involve the employee’s family

Some Easy Examples of Wellness Changes  Healthy foods in the cafeteria and/or vending machines  America Heart Association, American Cancer Society, etc to conduct educational workshops  Bike racks  Free health screenings

HIPPA and Wellness Programs  The HIPAA nondiscrimination provisions generally prohibit group health plans from charging similarly situated individuals different premiums or contributions or imposing different deductible, copayment or other cost sharing requirements based on a health factor. However, there is an exception that allows plans to offer wellness programs.

HIPPA and Wellness Programs If none of the conditions for obtaining a reward under a wellness program are based on an individual satisfying a standard related to health factor, or if no reward is offered, the program complies with the nondiscrimination requirements. For example:  A program that reimburses all or part of the cost for memberships in a fitness center.  A diagnostic testing program that provides a reward for participation rather than outcomes.  A program that encourages preventive care by waiving the copayment or deductible requirement for the costs of, for example, prenatal care or well-baby visits.  A program that reimburses employees for the costs of smoking cessation programs without regard to whether the employee quits smoking.  A program that provides a reward to employees for attending a monthly health education seminar.

HIPPA and Wellness Programs  Wellness programs that condition a reward on an individual satisfying a standard related to a health factor must meet five requirements described in the final rules in order to comply with the nondiscrimination rules.

Five HIPPA Requirements for Rewards Based Wellness Programs 1. The total reward for all the plan’s wellness programs that require satisfaction of a standard related to a health factor is limited – generally, it must not exceed 20 percent of the cost of coverage under the plan. 2. The program must be reasonably designed to promote health and prevent disease. 3. The program must give individuals eligible to participate the opportunity to qualify for the reward at least once per year. 4. The reward must be available to all similarly situated individuals. 5. The plan must disclose in all materials describing the terms of the program the availability of a reasonable alternative standard.

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