Lack of Sick Leave Benefits Linked To Financial Worries

Lack of Sick Leave Benefits Linked To Financial Worries

While many Americans worry about making ends meet, the threat of financial insecurity is even greater for working adults without paid sick leave, according to the findings of a recent study by researchers at Florida Atlantic University (FAU) and Cleveland State University.

The article, “Working U.S. Adults without Paid Sick Leave Report More Worries about Finances,” was published on October 15 in the Journal of Social Service Research. Even after controlling for education, race, sex, marital status, employment, and insurance, the researchers found a positive association between not having paid sick leave and worrying about both short-term and long-term financial issues. The lead authors of the study, Patricia Stoddard Dare, associate professor of social work at Cleveland State, and LeaAnne DeRigne, associate professor of social work at FAU, noted that according to the Bureau of Labor Statistics, nearly one-third of all workers in the U.S. lack access to paid sick leave.

The study’s findings were based on the responses of a sample of 17,897 working adults aged 18-64 who participated in the 2015 National Health Interview Survey. The analysis found that workers without paid sick leave were more likely to say they worry about both short-term financial issues like housing expenses, as well as long-term financial issues such as retirement or future bills for an illness or accident. The results showed that compared to workers who had paid sick leave, workers who lacked paid sick leave were 1.59 times more likely to report being very worried about their normal monthly bills, and were 1.55 times more likely to report being very worried about paying rent, mortgage, or other housing costs.

In prior research, DeRigne and Stoddard Dare demonstrated that workers without paid sick leave benefits also reported a higher level of psychological distress: compared to workers with paid sick leave, these workers were 1.45 times more likely to report that their distress symptoms interfered a lot with their daily life and activities. Their previous research also showed that working adults without paid sick leave were three times more likely to have incomes below the poverty line, and were more likely to experience food insecurity and need welfare services.

“The costs of providing sick leave benefits may be lower than employers think when taking into account the costs of workers coming to work when they are sick or performing sub-optimally,” said Stoddard Dare. “Both employers and policymakers should consider the potential cost savings associated with offering a few guaranteed paid sick day.”

From Benefit Trends Newsletter, Volume 61, 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.

Employers Move Toward Managing Health Care Costs

Employers Move Toward Managing Health Care Costs

Workers can expect to see their health care costs increase only moderately in 2019, as employers are turning away from shifting costs to employees, and toward addressing the underlying drivers of cost increases, according to the findings of an actuarial analysis conducted by professional services firm Aon.

The projections, released on October 15, are based on an analysis of actual employer-based health plan results data from Aon’s Health Value Initiative database, which captures health care cost and benefit data for 497 large U.S. employers representing 10.9 million participants. The analysis showed that for 2018, the increase in employees’ contributions to the cost of their health plans was at its lowest level over the last five years, as the combined increase in the share employees contribute to the cost of the health plan through premiums and the costs at the point of service rose just 1.6% in 2018. Projections for 2019 indicated that these costs are likely to increase slightly over their 2018 levels.

The analysis also revealed that in 2018, health care premiums rose 3.5%, but employers passed along a lower 2.2% premium increase to employees, while absorbing a larger 3.9% increase to company costs. The results further indicated that after plan design changes and vendor negotiations, 2019 medical and pharmacy plans premiums are projected to increase 3.5%, or by the same percentage as in 2018.

Researchers emphasized that employers are increasingly seeking to manage health care costs by turning to personalized provider navigation and transparency solutions designed to help patients find high-quality, cost-effective care locally, or appropriate digital health and telehealth solutions.

The analysis found that around one-half of employers are considering adopting high-performance networks for addressing chronic conditions over the next three to five years; and that 29% of employers have already implemented center of excellence (COE) strategies for certain non-transplant procedures, while another 51% are considering doing so in the near future. Moreover, the findings showed that 15% of employers are already offering integrated delivery models to improve care delivery effectiveness, while another 54% of employers are currently piloting them; and 20% of employers offer value-based insurance design approaches, while another 59% are considering doing so in the future.

The results also suggested that the pharmacy market is changing to address the cost and transparency of drug pricing practices, and that more transparency into the entire pricing structure of market participants, including drug manufacturers and pharmacy benefit managers, is needed. Researchers noted, for example, that because rebates have come to make up a substantial portion of the total cost of branded products over the last five years, there has been a growing interest in determining how much of those rebates are passed on to plan participants at the point of sale.

From Benefit Trends Newsletter, Volume 61, 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 © 2018 Liberty Publishing, Inc. All rights reserved.

Rising Health Care Costs Contribute To Wage Stagnation

Rising Health Care Costs Contribute To Wage Stagnation

Rapidly rising health care costs have been eating into the take-home pay of U.S. workers, contributing to the concentration of income among the wealthiest Americans, and making it more difficult for lower-income workers to achieve the American Dream, an analysis published on September 4 by the Council for Affordable Health Coverage and Willis Towers Watson warned.

The report, “Health Care USA: A Cancer on the American Dream,” was written by health care consultant Sylvester Schieber and Steven A. Nyce of Willis Towers Watson’s Research and Innovation Center. The estimates presented in the study are based on an analytical framework developed by the authors using data from the U.S. Census Bureau from 1980 through 2015.

The study highlighted the significant and increasing role rising health premiums have played in skewing net earnings toward higher earners. The analysis showed, for example, that over the 1999-2015 study period, workers in the 90th to 99th percentile of earnings had average pre-health premium compensation increases 7.6 times those of workers in the 40th to 49th percentile; and that after deducting employer and employee premiums for single coverage, individuals in the higher earnings group had, on average, remaining disposable wage increases 26.2 times those of workers in the lower earnings group. Meanwhile, the analysis showed that average workers in the bottom 40 percentiles of the earnings distribution saw their disposable earnings decrease over the 1999-2015 period.

The report also indicated that the average U.S. health expenditures rose to $10,348 per person in 2016; and that in constant dollars, annual employee premiums for full-time, full-year workers rose from $415 in 1999 to $1,068 in 2015 for individuals, and from $2,127 to $4,956 for families. The authors pointed out that while the Affordable Care Act promised to moderate health cost inflation, average premiums for coverage under an employer plan increased 18.25% for individuals and 21.6% for families in constant dollars between 2010 and 2017—a period when compensation and wage growth was flat or negative for a large share of the workforce.

Moreover, the analysis showed that health care costs are reducing the share of employer-provided benefits devoted to retirement: whereas in 2001 employer allocations to health and retirement bene-fits were 41.9% and 58.1%, respectively; by 2015, the allocation was in the other direction, at 63.5% for health benefits and 36.5% for retirement benefits.

The report also mentioned specific ways the organization and delivery of health services in the U.S. sustain abnormally high health costs. Among the examples the authors cited are the questionable development of clinical guidance for coronary artery bypass grafting surgery, and the inertia a hospital leader in value-based care had to overcome to reduce reliance on C-sections.

Finally, Schieber and Nyce offered several practical solutions for lowering costs and encouraging evidence-based best practices. Among the developments, trends, and practices the authors said call for a “new public health response” from policymakers, care providers, and employers are the market concentration of hospitals and other health care providers, as well as the uneven and often irrational pricing of medical goods and services, including drugs. They also pointed to the need to reform the inadequate medical management of treatments, which can lead to inefficiencies and waste; the insufficient testing of the efficacy of medical procedures and drugs, followed by the failure to curtail those found to be ineffective; and the failure to incorporate study results and best practices into physicians’ treatment patterns.

From Benefit Trends Newsletter, Volume 61, Issue 10

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.

Employers Seek To Manage High Cost Health Plan Claimants

Employers Seek To Manage High Cost Health Plan Claimants

As a relatively small number of employees or their family members with intensive medical needs can drive up the costs of a workplace health plan, managing and monitoring high cost claimants is the top health benefits strategy U.S. employers will be focusing on for the next five years, according to the results of an analysis of survey data published by human resources consultancy Mercer on July 15.

The study’s findings are based in part on responses to the Mercer National Survey of Employer-Sponsored Health Plans, 2017, which was conducted in 2017 with a sample of 2,481 employers. When asked to identify their main strategies for keeping health care costs under control, 77% of the large U.S. employers (500 or more employees) surveyed identified as important or very important the strategy of monitoring or managing high-cost claimants. Among the other strategies these large employers rated as important were taking focused action to manage specialty pharmacy costs (72%), and having a focused strategy for creating a culture of health (70%).

According to researchers, the rapid rise in high cost claims is most likely a key driving force behind this strategic prioritization by employers. Based on an analysis of information from a database containing approximately 1.6 million health plan members, the study found that a relatively small number of plan members drive a large majority of the costs. The analysis showed that, on average, the sickest 6% of an employer’s population represent 47% of the total allowed medical and pharmacy spend.

The study also examined carrier claims data from Mercer Health Advantages (MHA), a program offered through select insurance carriers that features high-intensity care management for the sickest employees. Researchers emphasized that high-intensity care management programs differ from standard health advocacy programs, as the care manager works directly with the care team as well as with the patient and family, staying in contact with the patient after discharge to provide support and performing a supportive role in ensuring that the patient complies with treatment plans.

The data showed that the percentage of claims classified by the participating carriers as “high cost” (>$50K/claimant) has been increasing rapidly, but that MHA achieved a 3.3:1 return on investment for plan years 2015 and 2016, while also improving patient outcomes. Researchers observed that these results suggest that “high touch, nurse-centered care coordination can often produce the best possible health outcomes and as cost-efficiently as possible.”

From Benefit Trends Newsletter, Volume 61, Issue 8

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.

Action Called For To Provide Gig Economy Workers with Access to Benefits

Action Called For To Provide Gig Economy Workers with Access to Benefits

Noting that employees in the U.S. are entitled to a long list of legally mandated benefits and protections whereas independent contractors are not, a recently published law and policy article argued that many gig economy workers occupy an ambiguous area between employee status and independent contractor status that demands legal clarification, as well as action by legislators and businesses to ensure that these workers are not left with little bargaining power or access to important benefits like health care and retirement savings plans.

“Workers, Protections, and Benefits in the U.S. Gig Economy,” by Seth D. Harris, an attorney and visiting professor at the Cornell Institute for Public Affairs, was posted online on July 12, and will be included in the forthcoming Global Law Review (September 2018). Harris observed that under existing U.S. labor, employment, and tax laws, a worker in any one work relationship is either an “employee” or an “independent contractor;” but that this binary classification of workers has been called into question by “gig economy” or “online platform” companies that provide personal labor services through smartphone apps, such as ride-hailing, food delivery, and home cleaning and handyman/woman services.

According to Harris, while independent contractors are presumed to have sufficient individual bargaining power to secure their own individual contracts with contracting partners, online platform companies’ relationships with their “independent workers” force these workers into a gray area between employee status and independent contractor status. He pointed out that U.S. law does not currently offer a clear and broadly applicable rule for resolving the resulting ambiguities and ensuring consistent and predictable decisions by adjudicators, which could lead to serious social and economic problems.

The article outlined several potential policy solutions to address these gaps, including the amendment of labor, employment, antitrust, and tax laws by Congress and state legislatures to allow independent workers and other workers in similar relationships with companies to organize and bargain collectively, secure protection from labor market and workplace discrimination, and benefit from companies withholding their income taxes and contributing to payroll taxes and health insurance at the same levels they contribute to employees.

A second potential strategy described in the article calls for the enactment of new laws or policies permitting or facilitating the creation of “portable benefits” systems, in which benefits are easily transferable for workers engaged with multiple companies. Such systems could be offered by the government, online platform companies in partnership with third-party providers, or third-party entities.

Finally, Harris suggested that Congress and state legislatures consider establishing or expanding public benefits systems to provide benefits and protections to all independent and similar workers, explaining that “as with non-governmental portable benefits systems, some benefits and protections could be included in these public systems—retirement savings, health insurance and other forms of insurance, paid leave systems—while others that are inextricably bound up with a particular work relationship, especially minimum labor standards, could not be included.”

From Benefit Trends Newsletter, Volume 61, Issue 8

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.

Employees Want Benefits With a Personal Touch

Employees Want Benefits With a Personal Touch

Regardless of whether they are younger or older, employees who feel personally supported by their employer’s benefit package are significantly more likely to stay with the organization, the findings of a global study conducted by Thomsons Online Benefits indicate.

Drawing on a survey of more than 2,200 employees of multinational companies, the “Global Employee Benefits Watch” study, released on May 22, reported that respondents who said they feel that their benefit scheme has a positive impact on their lives were more than 40% more likely to classify themselves as loyal towards their employer than those who did not.

The findings indicated, however, that global employers are struggling to provide the range of benefit options needed to support today’s diverse workforce. For example, the survey showed that almost 60% of employees want to improve their mental well-being and get fit and healthy, but only 23% of employees feel fully supported in such efforts by their employer.

Researchers also observed that employees who currently have a vast array of choices in how they manage information in their personal lives now seek to have this level of choice replicated in their workplace. When respondents were asked which platforms they would like to use in managing their benefits, 45% cited their desktop and 35% said their mobile device, while 46% indicated they still want face-to-face communication. Noting that the desire to have a range of communication types was found across age groups, researchers advised employers looking to win the loyalty of their employees to focus on supporting their individual needs, and stop thinking in generational stereotypes.

In addition, the analysis shed light on regional discrepancies, with employees based in the Asia-Pacific countries (APAC) displaying higher expectations of employer support around life events than workers in other parts of the world. For example, the survey found that 42% of respondents in APAC countries, but just 19% of respondents in European, Middle Eastern, and African countries (EMEA) said they would appreciate support from their employer when starting a family. Similarly, 47% of APAC respondents, but only 19% of EMEA respondents, said they would like help from their employer when getting married.

From Benefit Trends Newsletter, Volume 61, Issue 7

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.