How Companies Can Assist Employees in Transitioning To Retirement

How Companies Can Assist Employees in Transitioning To Retirement

As older workers are preparing for retirement, employers can help them make this sometimes challenging transition smoother by encouraging these employees to think about the steps they can take to create value and improve their well-being before and during retirement, according to an article that appeared in the April 2017 issue of Workspan, a magazine published by HR association WorldatWork.

The article, “How to Help Employees Ease into Retirement,” was written by Lori Block and Alan Vorchheimer of Conduent HR Services. The authors observed that given the extended lifespan of the average retiree, people who are preparing to leave the workforce have to consider the possibility that their retirement could last 20-30 years. Thus, they pointed out, prospective retirees will have to adjust to a number of new realities in order to live “well” during this final, and often extended phase of life.

In their article, Block and Vorchheimer referred to research done by the Gallup organization that identified “five pillars,” or elements of well-being that are essential to most people: namely, career, social, financial, physical, and community well-being. Increasingly, they said, HR professionals are recognizing that the workplace can be the foundation these pillars are built upon, providing people with the tools they need to perform well and feel good throughout their lives.

The authors advised companies looking to boost the professional well-being of their workers nearing retirement to offer these employees access to options like phased retirement, which can help both the employer and the employee gradually adjust to the individual’s departure. They also recommended that employers promote social well-being in the workplace through initiatives like multi-generational “reverse mentoring,” in which younger employees help their co-workers who are closer to retirement understand new technology and industry trends.

In addition, Block and Vorchheimer noted, employers can improve the financial well-being of older employees by offering them access to third-party vendors, voluntary benefits, and other programs they can carry into retirement. Finally, the authors advised employers to promote community well-being by, for example, giving mid-career employees and retirees assistance in transitioning from their current job to a position in a nonprofit organization that would benefit from their skills and experience.

Block and Vorchheimer stressed that applying this five-pillar approach to helping employees transition to retirement can enable employers to live up to their values and honor their commitments to their workers, while also resolving some practical issues. “On a practical level,” they argued, “it enables better workforce management and movement, breaking up possible career bottlenecks for newer employees while retaining and transferring critical knowledge from outgoing senior and experienced people.”

From Benefit Trends Newsletter, Volume 60, Issue 6

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2018 Liberty Publishing, Inc. All rights reserved.

A Continued Shift toward Value-Based Health Care

A Continued Shift toward Value-Based Health Care

While the outcome of the 2017 presidential election is expected to usher in a new era for U.S. health care, the painstaking and challenging work of shifting to value-based care will likely continue even if the Affordable Care Act (ACA) is repealed, according to the PwC Health Research Institute’s annual report.

The report, published in December 2016, observed that President-elect Donald Trump, along with a number of leading Congressional Republicans, have said they intend to repeal the ACA and replace it with a mix of tax credits, health savings accounts, high-risk pools, state Medicaid block grants, and a transfer of regulatory control from the Federal government to the states. The study also pointed out that President-elect Trump has called for reforming the U.S. Food and Drug Administration and modernizing Medicare.

While acknowledging that the goals of Republicans can be seen as representing a break with the health care reform efforts of Democrats, researchers pointed out that the overarching mission of transforming the health care industry to offer more value-based care has been underway for years, through Democratic and Republican administrations. Specifically, they noted, policy-makers from both parties are committed to ensuring that health care is affordable and of high quality, and that health care providers and insurers use patient-centric approaches and promote consumer choice. The report’s authors predicted that 2017 will be a year dominated by this continued shift toward value, albeit with a greater emphasis than in recent years on free market approaches.

The most significant change in health care policy that is likely to occur in 2017 is the start of the process of repealing and replacing the ACA, the report said. Yet according to researchers, a review of Republican efforts to repeal the law since it passed in 2010 shows that any dramatic moves would likely be followed by a transition period for some provisions. They pointed out, for example, that President-elect Trump has indicated that he wants to keep popular parts of the law, including the requirements that insurance coverage cannot be denied based on health status or age, and that these requirements could in turn cause premium costs to increase.

The report also speculated that there could be changes in drug pricing in the coming year, as the public demand for drug pricing accountability, pushback from drug purchasers, and the potential for new price control regulations are prompting pharmaceutical company executives to embrace voluntary codes of conduct to rein in the kinds of pricing practices that have led to Congressional shaming and executive resignations.

In addition, the report observed that although the U.S. health care industry lags behind other industries like retail and telecommunications in deploying emerging technologies such as artificial intelligence, drones, and virtual reality, 2017 is the year to prepare for the eventual arrival of these technologies and their effects on business models, operations, workforce needs, and cybersecurity risks. For example, the report said, a consumer-operated tricorder could perform work now handled by primary care medical professionals, increasing efficiency. Moreover, new technologies could revolutionize pharmaceutical supply chains, or be used to collect data and issue warnings on the spread of infectious diseases.

From Benefit Trends Newsletter, Volume 50, Issue 2

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2017 Liberty Publishing, Inc. All rights reserved.

Narrow Networks Rare in Employer-Sponsored Plans

Narrow Networks Rare in Employer-Sponsored Plans

While so-called “narrow provider networks,” which limit the health providers covered by health insurance plans in order to reduce costs, have become common in the health insurance plans offered through the exchanges of the Affordable Care Act (ACA), they do not appear to be widespread among employment-based health plans, according to an analysis published on December 14, 2016, by the Employee Benefit Research Institute (EBRI).

The analysis was conducted by Paul Fronstin of EBRI in association with Mark A. Hall of Wake Forest University. To measure the extent to which narrow networks are becoming a feature of employer-sponsored health plans, the researchers conducted a literature review, interviews with HR directors at 11 large employers, and field research by health policy experts in 11 states. The study defined narrow networks as networks that offer considerably fewer health providers than is typical in the group market, and in which providers are included primarily based on price discounting.

The results of the analysis indicated that although narrow networks are playing an increasingly prominent role in the ACA individual (non-group) marketplace exchanges, this trend has so far not been observed among employers. For example, the study cited research showing that only 7% of employers with health plans offered a narrow network in 2016, and that employers surveyed in 2014 ranked narrow networks as the least effective among several strategies for managing health insurance costs.

According to the study, the reasons HR directors gave for their muted interest in moving to a narrow network include the absence of a track record showing sustained (year-over-year) savings; concerns about antagonizing workers; the spotty availability of narrow networks, especially in rural areas; greater interest in other cost-savings strategies; and a reluctance to make substantial changes in benefit structures until the future of the ACA’s so-called “Cadillac tax” is resolved.

The authors also observed that employers’ reluctance to adopt narrow networks is reinforced by uncertainty over whether particular hospitals and physicians will remain part of new networks year after year. For example, they noted, larger employers typically conduct a “disruption analysis” before considering a change in networks to determine how many workers might have to change their current providers.

In addition, the authors pointed out that employers that currently offer plans with narrow networks could increase participation in these plans by giving workers stronger financial incentives to consider this option. For example, employers may want to consider adopting a model of managed competition in which employers make defined contributions on behalf of employees through private or public insurance exchanges.

Hall and Fronstin added that there are signs that employers’ interest in narrow networks may increase in the near future, as more than one-third of employers with 5,000 or more workers have been found to currently offer some type of alternative network, including a tiered or a “high-performance” network. The researchers also cited field reports suggesting that the adoption of narrow networks is growing among both large and small employers, particularly in urban areas.

From Benefit Trends Newsletter, Volume 60, Issue 1

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2017 Liberty Publishing, Inc. All rights reserved.

Health Plan Sponsors Step Up Efforts to Manage Drug Costs

Health Plan Sponsors Step Up Efforts to Manage Drug Costs

As prescription drug prices continue to rise, employers are making greater efforts to manage costs while continuing to ensure that employees have access to the drugs they need, according to the results of an annual survey conducted by human resources consultancy Willis Towers Watson.

The survey of 600 U.S. employers that collectively employ 12.2 million full-time employees was conducted between June and July 2016. The responses reflect the respondents’ 2016 health program decisions and strategies, as well as their 2017 and 2018 plans.

The findings indicated that prescription drugs account for about 25% of the total cost of employer-sponsored medical benefits, and that 88% of health plan sponsors have identified managing pharmacy spending as a top priority over the next three years. Researchers pointed out that employers are paying particular attention to high-cost specialty medications used to treat complex conditions such as cancer and hepatitis C. For example, they noted that the cost of new and highly effective prescription drugs or combinations of drugs for treating hepatitis C ranges from $65,000 to $120,000 for a three-month course of treatment.

The survey found that employers are using a range of strategies to manage pharmacy spending. For example, 63% of respondents said they are currently evaluating and renegotiating pharmacy contracts to obtain better pricing, while another 31% reported that they are planning to or are considering doing so by 2018. In addition, 61% of the employers surveyed said they currently have added programs to ensure the appropriate use of prescription drugs, up from 53% in 2015; and 85% of respondents said they are considering implementing such programs by 2018.

The results further showed that employers are increasingly restricting or excluding the use of certain drugs when equally effective, lower-cost alternatives are available. For example, 52% of respondents said they exclude compound drugs, and another 13% said they are considering doing so by 2018.

The findings also indicated that employers are developing a number of strategies for dealing with specialty drugs, with 39% of respondents saying they are currently evaluating whether specialty drugs should be financed through the medical benefit instead of through the pharmacy benefit, up from 26% in 2015; and 82% of respondents saying they will consider making this shift by 2018. Moreover, the survey found that employers are making changes to coverage to influence where and how specialty drugs are administered, with 19% of respondents reporting that they have made such changes, and another 43% saying they are considering making such changes by 2018. Additionally, 18% of respondents said they have been establishing different copays for specialty drugs to promote the use of lower-cost alternatives such as biosimilars.

The employers surveyed said they expect total health care costs (both employer and employee) to increase 5.0% in both 2016 and 2017, up from 4.0% in 2015. In absolute dollars, the average employee per-year costs are expected to rise to $12,338 in 2016 and to nearly $13,000 in 2017. Despite these cost pressures, 81% of the respondents said that for 2017 they will make relatively modest changes to employee premium contributions and other cost-sharing provisions, such as deductibles and out-of-pocket limits. However, the results also indicated that employers are likely to make additional changes to their health care plans in the future, including increasing enrollment in high-deductible health plans with tax-advantaged savings accounts.

From Benefit Trends Newsletter, Volume 59, Issue 12

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2016 Liberty Publishing, Inc. All rights reserved.

HR Professionals Are Failing To Convey the Importance of Employee Benefits

HR Professionals Are Failing To Convey the Importance of Employee Benefits

Very few human resources professionals are consistently delivering against their benefits plan objectives, which is having a negative impact on employees’ assessments of the value of these plans, according to the findings of a survey conducted by benefits software provider Thomsons Online Benefits.

The survey of 448 global HR professionals and 1,120 employees from around the globe, including North America, Latin America, and Europe, was conducted in the first half of 2016. The results showed that only 7% of respondents believe they are consistently delivering against their benefits plan objectives. The findings also revealed that nearly 90% of the HR professionals surveyed view attracting talent and improving engagement as among their top benefits objectives, but that 70% are struggling to deliver effective plans for local markets.

Specifically, the survey found that HR teams are grappling with two gaps in their benefits strategy: outmoded technology, which is preventing them from analyzing employee benefits data and deriving the insights they need to inform effective decision-making; and benefits relevance, which implies that HR teams are struggling to make schemes and communications relevant to a globally diverse employee base.

The survey also found that employers’ inability to overcome these hurdles is having a significant impact on employees’ appreciation of their schemes, with over 60% of the employees polled saying they are dissatisfied with some aspect of their benefit plans. More than one-quarter (27%) of employees said they are dissatisfied with funding levels, 18% said they are not happy with how they have to interact with benefits, and 17% said they are unhappy with the way benefits are communicated to them.

While the results showed that employers that use data analytics have employee engagement scores that are 14% higher than those that do not (73% compared to 59%), 46% of the HR professionals surveyed said they do not yet use analytics.

At the same time, the survey confirmed that employees value benefits that make their lives simpler and more convenient. For example, more than one-third (34%) of the UK and the US employees surveyed ranked having a flexible work schedule as the factor that most influences their job satisfaction. Moreover, another 34% of these respondents said they would opt for unlimited paid time off over an annual salary increase.

The survey further showed that while more than half (52%) of the respondents believe that employee benefits should be adapted to their personal circumstances, less than 40% said they feel that their benefits are very relevant to their personal situation. Researchers observed that part of the problem lies in inadequate communications: almost 70% of the employees polled said they want to hear about benefits around key life stages, such as marriage or home purchase; but only 46% of the HR professionals surveyed said their company uses these moments as an opportunity to engage with their workforce.

The results also indicated that the perceived value of benefits increases by over 20% if employees receive total reward statements that demonstrate the full value of their package. The survey found that the technology used to deliver benefits is the most important factor in employees’ perceptions of their benefits package, and that the respondents who said they are very satisfied with the technology delivering their benefits—such as an online portal that lets employees access their benefits on any device at any time—were almost twice as likely to say they view their benefits as innovative or unique (93.8% versus 46.6%).

From Benefit Trends Newsletter, Volume 59, Issue 11

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2016 Liberty Publishing, Inc. All rights reserved.