Employee Benefits Blog

As the end of the year approaches, it a good time to talk about making a fresh start in the new year. One way to ensure your employee benefits program gets off to a good start in January is through a series of audits.

Two of the more popular benefits audits are Dependent Eligibility Audits and Claims Audits; both are typically conducted to drive longer-term health plan objectives as well as to receive immediate, short term returns or a one-time recovery of funds. 

By making use of these periodic audits, businesses can more easily control the rising costs of employee benefits, while protecting the program from purposeful fraud or accidental waste. These audits also protect your workforce from unnecessary expenses and possible denials of coverage which could prove financially disastrous.

We'll cover the "ins and outs" of claim audits in another post, but for now, here are some general guidelines to follow with Dependent Eligibility Audits.

Dependent Eligibility Audits 101

Eligibility audits identify plan participants who should be purged from the rolls because they no longer qualify for benefits. Examples include divorced spouses, adult children who age-out of eligibility, and nieces or nephews living with an employee.

According to AON, these audits typically find 5 to 7 percent of dependents do not meet eligibility criteria. Other sources peg the number at closer to 20 percent. With the average cost of covering a dependent costing an employer $3,500 a year, companies can easily lose upwards of hundreds of thousands of dollars when providing health care to ineligible dependents. Losses of this magnitude can affect a company's bottom line, and its ability to fund other important employee benefits.

In survey after survey, employee benefit costs remain the top concern for HR professionals. Providing a competitive benefits package that is within an organization's budget sometimes seems like an impossible task. Affordable Care Act (ACA) requirements have added further strain, forcing employers to get creative, most especially when it comes to funding options.

For example, a self-funded benefits strategy used to be reserved for only the largest corporations, yet the Kaiser Family Foundation has tracked dramatic growth in this funding mechanism in companies with 200 or more employees over the past 15 years (from 67% in 2000 to 83% in 2015).

What other funding options for employee benefits are working for U.S. companies? Here are two of the most common strategies being used today, along with a plan design which is exploding in popularity.

1. Fully-Insured Health Plans

These are often thought of as "traditional plans" which used to be very prevalent with employers of all shapes and sizes. They include Preferred Provider Option Plans (PPO), Point of Service Plans (POS), and Health Maintenance Organizations (HMO). Simply put, fully-insured health plans work as follows; employers pay an agreed upon annual premium to a carrier, coupled with employee premium contributions per paycheck. In return, the insurance carrier pays all covered benefits.

One of the most significant advantages to fully-insured plans, in additional to ease of administration, is risk reduction: the risk of claims out-sizing premium collection is removed entirely from the employer. No matter how many eligible claims are made, regardless of scope and size, premiums remain the same for the one-year negotiated period.

The downside to fully-insured plans is that companies may pay more in premiums than they really have to. This often occurs with employers who have young, healthy workforces, but it also happens quite often with companies who know how to effectively manage claims and those who foster positive wellness and preventative care programs.  Furthermore, fully-insured plans only reduce in-year risk. Carriers who get burned on claims will inevitably exact their proverbial pound of flesh the next year in the form of exponential increases in premium.  Lastly, access to carrier claims data is a real challenge for smaller companies on fully-insured plans. This lack of transparency impacts an employer's ability to more successfully manage workforce health and wellness.

As an employee benefits broker, we immerse ourselves in health care issues every day. After all, it’s part of our mission to ensure our clients’ employees and their dependents get access to outstanding health care resources. 

Yet our reach in this regard only extends so far. For the unemployed and under-employed, employer-sponsored health care simply isn’t an option. And for some, not even the marketplace exchanges and other government-provided relief programs make their way to the youth of this country. 

That’s why, as long time supporters of underprivileged children’s charities, it gives us great pride to lend our support to The Hope Association and their Run for Hope initiative. Their mission is to build and operate two mobile health clinics to serve underprivileged children in the Washington, DC and Los Angeles metro areas, with possible expansion to other cities thereafter. 

We announced this collaboration back in September, when Levi Rizk, a Virginia Pediatrician, set off from Santa Monica Pier to run from LA to DC in just under 100 days.  To cover that distance, he'd have to run roughly 40 miles a day. That essentially two marathons a day, back-to-back for 100 days. Tomorrow morning, Levi will run the last 3 miles of this journey, up the National Mall in Washington DC to the steps of the US Capital.

Already, the millennial generation is beginning to shape the workplace. According to the US Bureau of Labor Statistics, millennials form 25% of the today’s workforce, and by 2030, they will occupy 75%.

Millennials' attitudes towards work, their vast knowledge in technologies, and their strong career aspirations will determine the culture of the 21st century workplace. Therefore, this generation is not only different but also a very crucial engine that will steer the world economy in the coming decades.

A lot is said about these “digital natives,” but much of it is conjecture. Mostly, what is said about millennials is said through the biased lenses of Baby Boomers and Gen Xers. Employers need to shed this narrow thinking and separate the facts from myths about this demographic.

Here are the five most common employment myths about millennials you need to get right.

Myth 1: Millennials want constant acclamation.

Millennials are said to crave positive reinforcement and tend to think that everyone in the team “deserves a trophy.” However, a study by IBM showed that this is just a misconception. The study found that millennials value feedback and a fair manager who recognizes their accomplishments.

The upcoming election is just days away and includes Propositions 205 and 206 in Arizona, which places company benefits front and center in the minds of employers- accompanied by a collective sigh.

A quick review of what’s at stake in terms of considerations for Arizona employers reveals that questions are more prevalent than answers, especially regarding Proposition 205.

To place employers' questions in their strategic context, here is a framework in which to consider what to do:

• Consider the role your employees play in giving your enterprise a competitive edge. Benefits plans and policies are key employee attraction and retention tools, as savvy CEOs know.
• Consider that your benefits plans and policies can work to keep your workforce healthy and productive. It doesn’t end there: when the families of your employees are healthier, your employees remain more productive too.
• The right benefits policies strategically aligned to your workforce are likely to increase your employees’ engagement with their jobs—which leads to happier, more productive employees who are eager to pitch in outside their job descriptions.

Everyone - employers and employees alike - know all too well that the world of healthcare coverage is confusing. As they say in the movies, “It’s complicated.” Yet despite the confusion, there's simply no stopping the trend towards consumer-driven healthcare coverage.

That’s why it's time to unpack the facts about workplace health spending accounts, otherwise known as Health Reimbursement Accounts (HRAs) and Health Savings Accounts (HSAs) - with a focus on how to view their costs and benefits.

Before we dive into the benefits of each one, let’s start with clarifying what they are.

HRAs

HRAs come in many flavors, including Retiree HRAs, Stand-Alone HRAs, One-Person Stand-Alone HRAs, and Integrated HRAs, which are also known as Group HRAs, Linked HRAs, or Deductible-Only HRAs.  For purposes of this discusion, we are talking about Integrated HRAs - those linked with a High Deductible Health Plan (HDHP). 

This type of HRA is designed to help offset the cost of higher deductibles and is only offered to employees and their dependents who enroll in the group health insurance plan. Only the employer contributes to the HRA, and only the employer owns the account. An employer will typically set aside a dollar amount per employee per year that can cover some portion of group plan premiums, co-pays, and deductible expenses. This does not mean, however, that funds accumulate in a separate account; employers only pay after employees incur healthcare expenses.

Hot on the heels of Millennials, the new wave of talent is known as "Generation Z". Born in a globally accessible society, from 1993 onward, this generation has never seen the world without the internet. Among the 2 billion worldwide, 60 million nationally have grown up technologically savvy.  Though the majority of them are now either in high school or attending universities, there are some that are beginning to enter the workforce.

Just like previous generations, Generation Z will also have distinguished characteristics for which employers will need to prepare. So what exactly should employers expect from the next generation of the workforce? Here are the most overarching features of Gen Z that HR professionals should know about:

1. They prefer digital communication and a steady stream of information.

Gen Z are visual learners and have grown up with an iPad or a smartphone in their hands. Digital communication has been their way of life, and workplaces where communication is hushed may be unfavorable to them. They are socially responsible and connected with their peers around the world via social media; their communication is often done on social networks or through text messages, not email. Organizations need to shift from the traditional ways of communication, such as memos and emails, to accommodate the Gen Z workforce.

A recent survey found that Millennials of both genders are more likely to accept a job that offers a flexible schedule. Why is a flexible schedule so important? Entrepreneur magazine reported 74 percent of employees want it for better work-life balance. Other reasons included health and exercise, time savings, reduced commute stress, costsavings, and more time to travel or spend with family.

To date, millennials already make up one in three American workers, and are expected to become the largest living generation in the not-so-distant future. Offering benefits that attract top talent from this demographic is critical to a company's future growth and success. Can you balance a productive workforce, while giving employees the schedules they want? It's worth examining why and how some companies are making flexible schedules work in their company culture.

Why?

Many employers fear that flexible schedules give employees too many opportunities to slack off. In fact, the opposite is true. Study after study shows that flexible schedules contribute to increased productivity, a happier workforce, and better recruiting leverage. Reporting on Yahoo's decision to ban working at home, the Washington Post commented, "Such a policy could very well hurt Yahoo’s chances at recruiting the most talented young developers, engineers, and executive talent." Consider the highlights from just two studies:

• Fewer distractions equals increased productivity. Sixty-one percent of employees report being less distracted by office politics. Another 59 percent say they experience fewer distractions from their colleagues, 56 percent say they have less general distractions.
• Flexible scheduling is a huge recruitment tool. Researchers reported that 82 percent of workers say they would be more loyal to their employer simply because of flexible schedules. Thirty-nine percent would even turn down a promotion, not take a job, or quit a job because of not having flexible scheduling options.

If you think your employees only care about salary, think again. You should never underestimate the power of employee perks when it comes to gauging employee satisfaction. In fact, a survey from Glassdoor found that 80 percent of people would rather have new benefits or perks than a pay raise.

So what kind of perks are we talking about? We don't just mean two-week vacations and employee discounts — companies need to go above and beyond to keep their employees engaged and loyal.

Of course, we've all heard of more and more companies offering perks that would have been unthinkable in the working world of yesteryear, like unlimited vacation or free lunches. However, some companies on the cutting-edge are thinking outside of the box to offer unique and unusual perks to their employees to keep them engaged and happy.

Here are some examples of unique employee perks from high-flying companies:

1. Free overnight breast-milk shipping for new moms on business trips at Zillow.

2. Free egg freezing and fertility assistance for Spotify employees.