Make 3 foundational decisions today for a successful 2015

Get ahead of the curve by owning three benefits decisions

While some companies are taking a “wait and see” approach as health care reform goes into full-swing mode in 2014, there are several important, and tangible, steps your business can take to lay a firm foundation for the new era of health care in 2015. These three benefits decisions can give you a fresh perspective and successful edge now and for the year ahead.

1. Choose a benefits strategy – not just a benefits package

With employer penalties delayed, many companies have decided to stick to the status quo in 2014 when it comes to benefits and not make any big changes. Though the penalties may not yet be a reality, now is the time to begin planning ahead and making benefits decisions to set a firm foundation for 2015. As you research your options, keep in mind that it’s not simply a benefits package you should be after. Since health care costs continue to rise at rates faster than inflation and wages,1 it’s key for businesses to look beyond a specific benefits plan and look to experts to help build a benefits strategy that will carry their company into the future.

Many companies are working with finance executives and benefits consultants or advisors. Nearly half (46 percent) of companies report that finance executives are more involved than they were three to five years ago,2 and 3 in 5 (61 percent) companies are using a benefits consultant or advisor to make their benefits decisions.3

A successful benefits strategy will consider cost, the quality of employee financial protection and whether any penalties will apply to your organization in 2015, 2016 and beyond. There are multiple benefits options to evaluate, including: adjusting your current plan, maintaining grandfathered status, self-funding, private or public marketplaces, a hybrid of the mentioned options, or discontinuing partial or all coverage. Generally, your company can adjust or change its strategy as you learn what works best for your business. Learn more about strategies that may apply to your company at aflac.com/healthcare_reform.

Big brands take a stand with benefits strategy

Maintaining coverage

In August 2013, amid widespread uncertainty surrounding rising health costs, Starbucks’ CEO announced that its insurance plans would stay in place for full and part-time employees, explaining “An investment in your people is an investment in shareholder value." According to the CNN Report, benefits cost the company $300 million in 2010, more than it paid for its signature product: coffee.4

Private marketplaces (exchanges)

Private marketplaces are steadily growing momentum, and offer a new way to purchase employer-provided insurance – with “defined contribution.” Employers such as Walgreens and Sears Holding Corp are looking to these marketplaces to help reduce costs by giving employees a fixed stipend towards benefits, with any remaining costs being paid by the employee through their paychecks.5

Cutting certain benefits options

Big retail names Home Depot and Trader Joe’s announced they would not offer insurance to part-time employees, instead sending them to the state or federal exchange. Trader Joe’s said it would offer part-time employees a $500 stipend to use towards the benefits.6

Some companies cut benefits in other ways. G.E. and I.B.M are among business leaders canceling health plans for retirees, and the United Parcel Service (U.P.S) announced that it would stop providing benefits to spouses who could obtain coverage through their own employer.7

2. Prepare employees for what’s ahead

Though your company cannot protect employees from all of the changes coming their way, your business can help prepare workers by providing them with the right information and resources to make the best decisions possible.

Whether your company offers benefits options or not, your employees are most likely facing rising health care costs and feeling the burden of these increases. In 2014, Towers Watson predicts health care costs will increase by 5.2 percent, and increases are expected to take another $181 (6.9 percent) out of take-home pay, but annual salary increases are not keeping up - the average salary increase in only 3 percent.2 At the same time, many are also gaining more control of their health care decisions, including determining which health plan to purchase, and how to spend their health care dollars. Prepare workers for what’s ahead by clearly communicating your company’s benefits options, explaining how workers can apply for adequate coverage, and providing employees with access to resources so they can make informed healthcare decisions.

Tips for preparing workers for changes to their benefits:3

Rely on your benefits provider or consultant to meet with workers one-on-one to determine the best benefits for them. These partners might also offer important benefits education and support tools.

78% of employees say they would be more informed about health insurance choices if they sat with an insurance consultant during enrollment.

Offer workers out-of-pocket support such as voluntary accident or disability insurance options. These policies help employees cope with daily living expenses and out-of-pocket costs associated with accidents or illnesses — helping to protect their well-being and financial assets.

63% of employees say voluntary insurance benefits influence their job satisfaction.

54% of employees enrolled in voluntary insurance say adding these benefits is important because it offers more options for health care coverage.

Communicate your company’s benefits offerings, along with workforce health and wellness, three or more times throughout the year to help employees understand their benefits.

Best-in-class companies are 1.5 times more likely to communicate about benefits three to 10 times throughout the year, compared to companies overall.

Tailor your benefits and communications based on the different employee life-stages. An individual close to retirement will need different benefits and information than a recent college recruit.

9-in-10 employees (92%) say they would be more likely to take advantage of a benefits package that was tailored to their personal situation.

3. Embrace workplace wellness and prevention

Companies that offer wellness programs not only give their employees the opportunity to take advantage of healthier lifestyles, they also help build the value of their total rewards package, and help lower long-term benefits costs by encouraging employees not to skimp on regular preventive care. Though companies have sought wellness programs and preventive care for years, in 2014 companies have the option to offer employees attractive incentives to get involved with wellness programs and kick poor health habits like tobacco use.

The new health care law allows companies to charge different insurance rates (up to 30 percent) based on employee participation in wellness programs, and companies can charge higher rates for individuals who use tobacco (1.5:1), as long as the program is reasonably designed, and all outcome-based programs provide a reasonable alternative standard to qualify for the reward for all individuals who do not meet the initial standard that is related to health factor.8 Perhaps because of the added incentive to keep more of their paycheck, many employees say they view these types of programs favorably. The 2013 Aflac WorkForces Report found that 3-in-4 employees (78 percent) say they would be willing to change their lifestyle habits if their employer rewarded them with lower premiums, and 88 percent think it is fair for their employer to give employees incentives to become healthier.3

Wellness programs have been linked to overall ROI and performance, 9 and are also linked to:3

  1. Benefits knowledge and engagement: Employees enrolled in wellness programs are more likely to be knowledgeable about benefits and health care. They are also more likely to be engaged in their benefits programs and choices.
  2. Employee satisfaction and morale: Employees who are enrolled in worksite wellness programs are more satisfied with their jobs and benefits, as well as express more confidence in their employers.
  3. Employee well-being: The Aflac survey reveals employees that participate in a wellness program are more likely to score higher on physical and financial well-being indicators.

Wellness program success

Program Success How did they do it?

Rutgers’ Workplace Weight Management Program

The company’s LIFT UP program helps promote lifestyle changes. Participants lost an average of 3.5 pounds in the first 12 weeks and a total of 9 to 10 pounds over 26 weeks.

Employees meet one-on-one with a registered dietitian and for three months attend weekly lunch-and-learn sessions. Weight, body mass index, blood pressure and cholesterol were measured during follow-up appointments after 12 weeks, 26 weeks, one year, and two years.10

Journal of Occupational and Environmental Medicine Study

Cut lost work time by about 10.3 hours per year and saved an average of about $350 for each participating employee.

Wellness coaches provided telephone support to help employees address health problems or risk factors.11

The Dow Chemical Company

Employees reducing their risk of chronic disease by 15 percent between 2004 and 2008, and saving more than $100 million in U.S. health care costs between 2004 and 2010.

Establishing a culture of health that focuses strongly on prevention and addressing chronic disease risk factors, such as physical inactivity, obesity, and tobacco use among its employees.12

Build a firm benefits foundation

Though some businesses are waiting to see what will come next when it comes to health care reform and benefits, these tangible steps can help you prepare for the changing health care landscape. Choosing a benefits strategy, preparing workers, and embracing wellness and preventive care can help your business attract and retain talent and achieve your business objectives today and in the future.

Sources

1 Kaiser Family Foundation (2013). 2013 Employer Health Benefits Survey. Accessed on November 6, 2013, from http://kff.org/private-insurance/report/2013-employer-health-benefits/.
2 Towers Watson (2013). Health Care Changes Ahead Survey. Accessed on November 6, 2013, from http://www.towerswatson.com/en/Insights/IC-Types/Survey-Research-Results/2013/09/2013-Health-Care-Changes-Ahead-Survey.
3 2013 Aflac WorkForces Report, , a study conducted by Research Now on behalf of Aflac, January 7 – 24, 2013
4 CNNMoney (2013). Starbucks CEO: We won’t cut benefits because of Obamacare. Accessed on November 6, 2013, from http://money.cnn.com/2013/08/27/news/companies/starbucks-obamacare-schultz/index.html.
5 Reuters (2013). Walgreens shifting employees to private health-care exchanges. Access on November 6, 2013, from http://www.cnbc.com/id/101043149.
6 Breitbart.com (2013). Home Depot Moving Part-Time Employees to Obamacare Exchanges. Accessed on November 6, 2013, from http://www.breitbart.com/Big-Government/2013/09/20/Home-Depot-Moving-Part-Time-Workers-to-Obamacare-Exchanges.
7 Bloomberg (2013). GE, IBM Ending Retiree Health Plans in Historic Shift. Accessed on November 6, 2013, from http://www.bloomberg.com/news/2013-09-09/ge-to-ibm-ending-retiree-health-plans-in-historic-shift.html.
8 Federal Register (2013). Incentives for Nondiscriminatory Wellness Programs in Group Health Plans. Accessed on December 2, 2013, from https://www.federalregister.gov/articles/2013/06/03/2013-12916/incentives-for-nondiscriminatory-wellness-programs-in-group-health-plans#h-20
9 Bloomberg BNA (2013). Study Finds Link Between Company Focus On Safety, Financial Return for Investors. Accessed on November 6, 2013, from http://www.bna.com/study-finds-link-n17179877352/.
10 Rutgers (2013). Rutgers' LIFT UP, a Workplace Weight Management Program, Promotes Lifestyle Changes. Accessed on November 6, 2013, from http://news.rutgers.edu/feature/rutgers-lift-workplace-weight-management-program-promotes-lifestyle-changes/20131001#.UnqdwZFmmZR.
11 Occupational Health & Safety Online (2013). More Confirmation Employee Health Plans Boost Productivity. Accessed on November 6, 2013, from http://ohsonline.com/articles/2013/10/14/more-confirmation-employee-health-programs-boost-productivity.aspx?admgarea=news.
12 Occupational Health & Safety Online (2013). Health Protection/Promotion for the Workforce: The Business Case. Accessed on November 8, 2013, from http://ohsonline.com/articles/2013/11/01/health-protection-promotion-for-the-workforce.aspx?admgarea=news.

This material is intended to provide general information about an evolving topic and does not constitute legal, tax or accounting advice regarding any specific situation. Aflac cannot anticipate all the facts that a particular employer or individual will have to consider in their benefits decision-making process. We strongly encourage readers to discuss their HCR situations with their advisors to determine the actions they need to take or to visit healthcare.gov (which may also be contacted at 1-800-318-2596) for additional information.

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