Wellness Program A to Z

Having even one problem drinker on your health plan - including a covered family member with abuse issues â.” 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 wellness programs are geared toward managing employees’ health risks associated with diseases like diabetes or asthma.

But unless the health promotion program is integrated with an employee 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 can be as simple as making sure three questions are added to the current appraisal -

o  Precisely how often do you have a drink containing alcohol?

o  How many alcoholic drinks do you have on a typical day? And

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

For male staff members, 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 - When you don’t offer appraisals, you are able to refer staff members to a free, confidential online screening.

Benchmarking tools

Many specialists say drug-free worksite 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 EAP makes financial sense, you are able to calculate your own firm’s current cost risk for free here. Plug in your organization type, locale and number of personnel.

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

To design a drug-free workplace policy â.” 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 businesss’ plans to what they actually pay pharmacies.

Scientists found staggering overcharges - namely for generic drugs. Regretfully, 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 vendor - 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? Begin by asking your health-plan broker these four questions about the current or prospective PBM.

1. How does the PBM calculate price?

Many PBMs gain hidden profits off your plan through a practice called “differential pricing,” says advisor Gerry Purcell.

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

o  The PBM pays the drugstore the AWP minus 18%

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

o  The PBM pockets the difference.

Now for some good news. You do have some leverage in this area. When 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 decreased.

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

It’s also a great tool for comparing different PBMs to see which is the most cost-efficient for the size of your organization, 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 - Many 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 -

o  split rebates from your plan evenly, or

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

Important -  Ask to find out 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. Just 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 may not save your company or employees a dime.

Example - If the PBM adopts a mail-order-only coverage policy on a certain formulary drug, an worker who needs same-day access to the medication might  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 worker recognition practices are often the simplest.

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

How it works -  the company provides colorful index cards, placing them conspicuously in a few commonly traveled areas in the building. When staff and supervisors want to publically recognize someone else’s efforts, they are able to 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 and marketing division, does not cost anything apart from the cost of the index cards and paper. There’s minimal administration time, and it takes employees 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 increase morale, encourage productivity and differentiate the organization 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 could be tough to get past all the hype. Here’s how to avoid the three most common traps businesss fall into.

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

For good reason, your company doesn’t simply copy other firms’ 401(k) plans or compensation designs. Yet, all too often, firms adopt ill-fitting wellness programs based on things that have worked elsewhere.

Your CFO may have seen data on the cost savings other companys have achieved via certain wellness incentives. Or an old colleague of your CEO swears by the wellness program at his or her own firm.

In response, the top brass pushes for a copycat health promotion program â.” for instance, offering smoking cessation incentives.

That might  be a good idea, as long as smoking-related illnesses are a key driver of your company’s health costs. But how can you be sure? is it good enough to have your employees undergo a health risk assessment?

Usually, 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 health promotion 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 -

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

o  prescription-drug claims

o  staff member absence information

o  employee assistance program (EAP) use

o  disability claims, and

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

Trap #2. Leaving the health promotion program on autopilot

Many wellness programs often get off to a good begin and then fizzle out. Companys are left wondering what went wrong. Their mistake -  They failed to revisit the wellness program on an ongoing basis â.” at least every other year.

Why it’s vital -  Your cost-drivers can easily shift as personnel come and go from the company.

Example -  This year, emphysema and other tobacco use diseases might  be your biggest cost driver. But two years from now, it might be obesity and diabetes.

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

Trap #3. Unrealistic expectations

Usually, 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 wellness program is $4 to $5 saved for every dollar spent.

Just how can you manage the cost in the short-term? In many cases, corporations pass the cost of the wellness program on to the workforce. for  instance, let’s say you want to roll out a wellness program effective January 1 (or no matter what 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 healthcare premium. That makes the wellness program a budget-neutral expense for your corporation.

But remember -  You get what you pay for â.” 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 can be a great way to satisfy demand for higher pay while addressing senior level 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 if you use variable comp as a pay-for-performance strategy for hourly employees. 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 corporation 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 staff 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 workforce cut corners â.” on safety, service, quality, etc. â.” 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 -

o  set behavioral criteria for bonuses in addition to economic ones, and

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

Shopping for medical programs 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 find out how they view their company’s relationship with their brokers. Here is what they said -

Half see room for improvement

The good news - Nearly half of your peers 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 purchasing decisions

Of course, the No. 1 reason any corporation 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 â.” but thorough â.” return on investment data they are able to use to benchmark different plans.

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

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

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

Regretfully, claims cost data is usually hard to pry loose from insurers, at least for smaller employers’ 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 assists you see how comparably your costs and plan designs stack up in your area. Roughly 43 percent 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 â.” and strategies for making sure your carrier doesn’t hit you with any unpleasant surprises.

One notorious game insurance companies play with corporations’ plans is to wait until the last moment to reveal the new premiums at renewal. That way, there’s less time for negotiation â.” 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 try 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 -

o  analyzing  plan documents

o  Auditing (and, if needed, reconciling) carrier bills for errors

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

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

o  helping with staff member education.

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

For most businesss, it’s the latter. So why do even savvy upper-level 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 company productivity, not to mention the compensation and benefits budget?

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

Virtually every worker, 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 an individual 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 worker is productive every single day, no company in the world is immune from presenteeism.

A lot of businesses that don’t bury their heads in the sand about presenteeism still don’t track it. Why? Typically, there’s a belief that chronic presentees eventually get rooted out of the organization.

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

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

Creating a cost estimate

If your corporation is like most, upper management worries endlessly about health benefit costs without realizing undetected presenteeism is just as costly, but easier to control.

Consider these facts from a recent CSG study - Almost 10% of the average annually pay and benefits

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

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

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

Let’s assume you’ve 50 employees, who make an typical $40,000 a year. Over the while the year, the typical staff member is non-productive 2.5 % of the time, because of assorted personal issues or minor illnesses that serve as distractions.

In this instance, presenteeism costs your organization $50,000 a year. If you’ve a 5% 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 large bucks in controlling compensation and benefit costs.

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

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

o  get supervisors and personnel involved on the front end, and

o  stress the importance of work-life programs to upper 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 workers 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 may  be to switch from separate vacation and sick-day benefits to a single compensated 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 if they’re sick.  Of course, you know that PTO carries some risks of its own.

Early detection

Fewer than one business in 10 gets both managers and staff 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 workers to rate how energetic and productive they generally 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 are able to do to promote work-life programs at your firm can have a positive effect on the bottom line. Proven ideas include -

o  rewarding supervisors who support flexible work arrangements

o  sending sick workers home

o  cover onsite flu shots, and

o  Actively promote your existing Worker Assistance Program.

Any benefits HR/manager can adopt these ways to make employees 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 workers. This in and of itself is a type of staff member recognition. Example -  There’s a lot of value in simply walking around the building, chatting with workers.  Ask workers 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 â.” and often more effective â.” than designing a formal benefits survey.

2. Send â..em customized stuff

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

3. Target overlooked employees

Most firms have personnel (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 personnel.

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 (ROI) recognition programs â.” regardless of their monentary value â.” are their spontaneity and perceived value by staff members themselves.

In reality, the cost of some of most effective spot awards and bonuses often amount to less than 1 percent of base pay â.” 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 employers an average of 10 percent of base pay) is that employees expect to receive them for reaching certain objectives.

Sometimes staff members simply expect it no matter what. for  instance, 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 members are often pleasantly surprised.

Benefits advisor Ken Stahlmann spells out four keys to making the latter type 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 â.” and avoid a ho-hum attitude establishing in â.” 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 -

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

o  Another company with a lot of sports nuts took several 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 more valuable rewards, the employer saw a solid jump in retention.

Other businesses prefer to let workforce reward each other. for  instance, a small healthcare provider keeps a “goodies box” on-site â.” compensated 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 enormous 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 -

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

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

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

o  Be certain the reward is something individuals  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.

Looking for ways to boost morale, productivity and retention? Spot awards may  be the way to go.

They are the most well-liked recognition incentives among employees, a recent research study  shows.  The best part -  the incentives typically amount to less than 1 percent of base pay. That also can makes this choice attractive to C-levels.  And the awards don’t even have to be given in cash.

Spontaneity grabs â..em

Traditional end-of-year or quarterly bonuses cost businesss an typical of 10 percent of base pay yet often have a lower payoff in morale and retention.

Reason - Workers appreciate them less because they expect to receive them for reaching certain goals. By their nature spot awards are spontaneous and compensated out immediately. Honorees are pleasantly surprised and see the corporation values their work.

Here are four keys to successful spot bonus programs, as reported by benefits consultant Ken Stahlmann -

1. Creativity is crucial

The most effective programs ordinarily give out awards weekly or monthly.  To avoid over-stretching the budget â.” and avoid a ho-hum attitude establishing in â.” 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 individuals ’s personal needs or interests. Two examples -

o  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

o  Another firm with a lot of sports nuts took several top-performers to a ball game. Managers said it was the best $200 they’ve ever spent as for building ongoing enthusiasm.

3. Add structure

The awards may seem spur of the moment, but the most effective 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 people  bank points for additional valuable rewards, the company saw a solid jump in retention.

Other businesses prefer to let staff members reward each other. for  instance, a small health care provider keeps a “goodies box” onsite â.” compensated for in petty cash and stocked by staff members themselves.

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

The program is a gigantic hit -  It’s immediate and personal, yet structured.

4. Don’t let good intentions backfire

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

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

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

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

o  Make certain 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.