Tag Archives: benefits

5 Trends for Employers to Watch in 2018

Advanced planning and preparation, strategic global thinking, shifts in legislative landscapes and sound technology investments are on the minds of most industry leaders as we move into 2018. As an extension of its own thought leadership program, Sedgwick has identified key trends that are likely to affect risk management and benefit decisions in the coming year.

To stay on top of issues that may affect our clients and industry partners throughout the year, we took a close look at internal research and colleague observations, external exploration and employer discussions and in-depth market monitoring of current and emerging risks. We will continue to watch and offer our projections on these potentially defining movements, classified into five categories:

  • Compounding global risks
  • Shifting tide of policy
  • Bridging the gaps
  • Leveraging interdisciplinary care
  • Improving experience through technology

Compounding global risks. An unusually high number of natural disasters in 2017 underscored the need for organizations to have a strong disaster recovery plan in place. Establishing strategic partnerships that can support an effective business continuity plan is critical. Preparation and action must occur before, during and after a catastrophe if an organization is going to recover and resume operations in a timely manner.

Additionally, the continuing threat and prevalence of emerging risks are expected to push the boundaries of organizational resources and resiliency. Cyber threats like data intrusion and ransomware are evolving and multiplying as the global economy becomes increasingly connected. As we continue to see terrorism, both international and domestic, in the headlines, it underscores the need to prepare and protect our people and property.

During these turbulent times, society’s reliance on first responders as a line of defense against risks of all types becomes even more critical. Caring for first responders’ overall physical and mental health is one way communities and businesses can increase preparedness for debilitating crises. Several states have taken up legislation aimed at increasing coverage for first responders. Organizations can anticipate that, as coverage grows, so will the need for specialized claims, managed care and disability services.

See also: Industry Trends for 2017  

Shifting tide of policy. Businesses can look for leave programs to expand in response to demand from their own employee populations, faced with the need to care for their own health and the welfare of their families. Parental leave, caregiver leave and other paid leave programs are on the rise; several states have already introduced new family-friendly paid leave bills, and others are clarifying and expanding regulations for leave benefits. This trend is expected to continue as the population shifts.

More than ever, vigilance is needed for employers to maintain compliance with continuing changes in the Americans with Disabilities Act, Family and Medical Leave Act and other connected federal, state and municipal laws. Throughout 2018, organizations can expect regulatory complexity to increase and fines and litigation to be a looming threat for non-compliance. Many organizations are facing policy changes and compliance demands with a renewed willingness to collaborate across disability, leave of absence and workers’ compensation teams.

It is impossible for organizations not to feel the impact of the prescription drug crisis on their workforces. The costs – personally and financially – of the misuse and abuse of opioids place undue burdens on society. Governmental agencies, pharmacy retailers and employers continue to look for ways to take back control through such means as legislation, drug formularies and first-fill limitations.

Bridging the gaps. Throughout 2018, organizations will seek new ways to bridge gaps in knowledge and services based on evolving needs and preferences of consumers. Organizations are joining in the race toward on-demand, self-service innovation to provide immediate resources to those in need. The infusion of machine learning and artificial intelligence is advancing many capabilities by automatically sifting through mountains of data, allowing service providers to detect patterns faster and formulate valuable insights to improve the quality of the customer experience.

Organizations are also seeking new ways to bridge diversity gaps. Different generations and populations have different needs when considering health concerns, technology, communication preferences and resources. We must address changing demographics within the workforce and determine how to better adapt practices to accommodate and support differences.

Focusing on the claims industry specifically, insurance carriers, third party administrators and self-administered employers must broaden the knowledge and capabilities of today’s claims professional. As seasoned professionals begin to retire, bridging the talent gap becomes increasingly important. Training of claims professionals must expand beyond the traditional claims process. Claims organizations must look holistically at how examiners are addressing the needs of their clients and consumers and how their part in the process affects the bigger picture.

Leveraging interdisciplinary care. The movement toward a whole health approach increases trust and engagement and places less influence on individual providers in favor of a more holistic, consensus view of treatments and interventions. As more employers embrace principles of advocacy, empathy and responsiveness, they are using centralized support to link teams and resources with a common focus on quality care. With this shift, organizations look forward to continued improvement in the consumer experience and stronger physical, emotional and financial health for employees.

We are seeing more businesses embrace integrated programs as a means to address the shared challenges of healthcare, return to work and compliance. In addition, the importance of data connectivity within organizations and across providers will grow as organizations work to avoid information gaps, optimize care and avoid potential dangers.

Interdisciplinary cooperation is also important as a means for exploring alternatives for pain management. Organizations can anticipate more collaboration between employers, physicians, claims specialists and patients as they move away from long-term drug prescriptions, looking instead toward alternative therapies and weaning techniques to help injured workers regain their health and productivity without the risk of addiction.

See also: 3 Technology Trends Worth Watching  

Improving experience through technology. Technology helps employers engage workers throughout their recovery, maintaining a stronger connection while they are away from work and making the process easier for them to understand. Better communication and improved access to on-demand care can help improve the claims experience, and increased consumer satisfaction is leading to accelerated outcomes and better overall health.

Telemedicine and other remote access offerings are still on the rise and evolving as other “tele” services are added to the mix. Eliminating some of the barriers of distance and time, these resources are connecting patients with the right providers for initial and follow-up treatments for minor injuries and illnesses, as well as support resources throughout the claims process. Chatbots and avatars are becoming more prevalent as support and service options for all lines of business. The industry is even seeing potential for these tools as virtual health coaches for workers’ compensation, disability and wellness programs.

Employers can also expect to see the claims industry reach the next level of decision optimization and use technology to deploy intervention strategies in real time. Analytics will influence next-generation methods for addressing all types of claims and be used to predict those that will become complex or incur large liability losses, anticipating care and pharmacy needs, prescribing appropriate steps toward resolution and facilitating return to work.

While the year ahead may bring challenges, it also brings a renewed sense of hope and excitement. As these and other trends materialize and develop, those who have anticipated and planned ahead will be in a position to capitalize on opportunities as they arise. Sedgwick will continue to guide our clients and the broader industry by tracking topics and trends like these that may affect employees, customers and businesses.

To read more, visit Sedgwick’s Navigating 2018 webpage.

5 Mistakes CFOs Make on Healthcare

Which sounds worse: getting shortchanged by a cashier at the grocery store or losing your life savings to a Bernie Madoff-type investment?The answer is obvious. Still, it’s a good metaphor for how to manage your healthcare investment and, more importantly, the glaring flaws in how healthcare is administered and delivered.

First, some background. The Employee Retirement Income Security Act of 1974 (ERISA) was designed to protect employee benefits, including health plans. The person exercising authority over a health plan is a “fiduciary” and legally bound to act in the best interests of the participants.

But, according to a recent article, chief financial officers (CFOs) are facing millions of dollars in personal liability suits due to a lack of “fiduciary oversight.” Whether the cause is negligence, omission or imprudent management, the result isn’t good: a potential lawsuit for the company and executive, mishandled or wasted money and shortchanged employees. Throw the Department of Labor into the mix (it’s been keeping a close eye on 401k plan fiduciaries in recent years), and the choice is cut-and-dried: Most companies need to up their game.

See also: A Way to Reduce Healthcare Costs  

Here are the five biggest mistakes CFOs make when designing, purchasing and managing their health plans.

1. Taking a gamble.

CFOs of middle-market companies are gambling with the organization’s healthcare by taking 19 to 125 times more risk than they should. Why would any organization risk $500,000 or $1 million when it can reduce exposure to less than $8,000?

It’s even more shocking at large companies when the bottom line is exposed to unnecessary healthcare overspending. Healthcare managers wager millions of dollars by ignoring reducible risk, and the mistakes hurt the bottom line. C-suite executives are surprised when I explain why “best practices” don’t work—until I show how many millions of dollars are trapped inside their healthcare budget.

2. Surrendering responsibility to unqualified departments and managers who don’t have P&Ls.

I always ask CFOs one simple question: “By a show of hands, who would hire a HR-level executive to lead a $100 million division of your company?” No CFO has ever raised a hand.

Yet the company’s healthcare investment is often treated as an operating expense that’s delegated to operations managers who don’t have the time or expertise to make the best-informed decisions. Too often, these decisions end up in the hands of consultants who, most often, will take a boilerplate path of least resistance by recommending “best practices” that only major in minor outcomes.

3. Not all healthcare costs are created equal.

For many, health-plan management falls outside standard business supply chain cost-control strategies. So, shift perspectives: Negotiate the highest utility for every dollar invested in the healthcare supply chain. Hospitals, outpatient surgery centers, physicians and pharmacy account for more than 90% of claims, and all can be negotiated. Successful cost reductions must focus on four areas: wasteful spending, excessive fees, poor quality and non-transparent pricing.

Who in his right mind would shop at a grocery store and fill up two carts, then leave knowing he’ll receive a bill 30 days later and only then be told how much everything costs? Well, that’s how most healthcare works.

4. Not involving senior executives.

I always ask CFOs: “Which two ‘best practices’ are most effective in reducing the frequency and severity of your claims this year?” The CFO soon realizes that, despite a legacy of best practices, there has been negligible improvement, with millions left on the table.

The CFO must be directly involved and recognize that healthcare investment is a capital allocation strategy—it requires the supervision of an executive with P&L responsibility.

5. Not knowing what you’re paying for.

Most CFOs don’t know whether their company’s medical plan pays retail, wholesale or institutional charges. Like with a 401k, it’s a CFO’s fiduciary responsibility to know the healthcare broker’s and consultant’s total compensation.

It’s imperative to ask the right questions to uncover where your dollars are going. Familiarize yourself with fees, commissions, bonuses, overrides, incentives, profit sharing, contingent fees, expense reimbursement allowances or performance-based compensation—because they all add up.

See also: Healthcare Debate Misses Key Point  

Being uninformed can cost your company a lot of money, or worse. When explaining in court that you consistently supervised and overpaid by as much as 10x for a poor-performing, low-quality medical plan, ignorance is no defense.

So there you have it: five common mistakes to avoid when buying healthcare. Take ownership, talk to an expert and educate yourself on sourcing the best solution for your company. You really can’t afford not to.

‘Alexa, What Is My Deductible?’

When it comes to adoption of technology, simple is most often better than complex. Steve Jobs and Apple went to great lengths to make their products simple. Without user adoption, products fail. Current technology trends continue the move toward simplicity with the advent of artificial intelligence and personal assistant tools like Amazon’s Echo and the Google Home. Before you know it, these tools will enter the benefits world. The question is, who is going to be first and best? And if I am a benefits broker, how does this affect my business?

While many brokers are aware of the vendors that call on them or have booths at industry conferences, I believe the benefits technology race is going to heat up, with new competition entering the market. These new competitors see the market opportunity to automate large segments of our economy, including health insurance and healthcare. You may have heard of some of these companies, like Microsoft, Google, Salesforce.com and Apple. This would be in addition to current leaders such as ADP and Paychex. The stakes of the game will change, and the price of entry, from an investment standpoint, is in the hundreds of millions of dollars. Those with the capital will quickly outpace those with less capital.

Don’t be surprised when you start to see major mergers and acquisitions in the HR and benefits space. Could Microsoft buy Ultimate Software? Why not? Microsoft already purchased LinkedIn and recently hinted at getting deeper into the HR space.

See also: Could Alexa Testify Against You?  

When I look at products like the Amazon Echo and Google Home, I see products that have very quickly grabbed market share, with high rates of adoption. My wife, who is not an early adopter of technology, quickly became a user of Google Home. Why? Because it is easy. Would she have a better understanding of her health insurance if she could simply ask Google? Absolutely!

Benefits technology, on the other hand, has not had broad adoption by employees. Yes, employers have bought systems or brokers have given them away, but when you look at utilization on the employee side it is abysmal. I believe the reason for this is because there is not enough value as a stand-alone solution to generate broad adoption. Keep in mind that the majority of people hardly use their healthcare in a given year, so there is little need to access such a system. I don’t know about you, but I can hardly remember the login to my computer, never mind something I may not use for six months.

The next generation of technology in the HR and benefits area is going to have broader and “everyday” value, while being much easier to use. Market-leading vendors, especially those with a great deal of capital, will invest in the latest technologies to try to win the technology race and gain more customers. And before you know it, you will be saying the following:

“Alexa, is Dr. John Smith from Boston in the Blue Cross network?”

“Ok, Google, request Friday off from work.”

“Hey, Siri, how much does the average office visit cost?”

“Alexa, what is the balance of my 401k?”

“Ok, Google, transfer $500 from my savings to checking.”

The advancement of technology and artificial intelligence has enabled many to have more personalized user experiences. Your Amazon Echo will “get to know you.” Maybe in the near future your doctor will get to know you a little better, too.

Many benefits brokers have chosen some technology vendor with a mission of putting as many clients on the system as possible. This is a risky position competitively as more advanced solutions from highly capitalized companies come along. I don’t know many sales people or business owners in any industry who like running around with the eighth best product. Even more so when it is not necessary. The market and your customers do not care if you have invested thousands of dollars on some technology that may quickly fall out of favor.

One should take the advice of Jack Welch, ex- CEO of General Electric, who once said,

“If the rate of change on the outside exceeds the rate of change on the inside, the end is near.”

For those who have purchased the Amazon Echo or Google Home, you don’t have to look far to see that the outside world is changing faster than the inside. The health insurance and healthcare industries often feel like they are moving at a snail’s pace. Private exchanges were lauded as change, when they really are a reincarnation of cafeteria plans from the ’80s.

See also: Why 2017 Is the Year of the Bot  

With the Trump administration, changes in health insurance legislation may create a shift that empowers the consumer. The industry may need an army of people on the front lines to help the industry move to a whole new paradigm. The vendors will need help and the employers, and employees will need it, too. The technology is there. Alexa is ready. Are you?

Benefits: One Size No Longer Fits All

Overview

Across the developed world, leading businesses are facing new workforce productivity challenges. Many recent graduates lack the skills necessary to succeed in today’s quickly changing workplace, while economic uncertainty has forced many experienced workers to delay their retirement. Companies need to consider the impact of these trends and the ways they can differentiate themselves as they wage the battle to find and retain top talent. 

Winning the battle for talent is about more than compensation. To remain attractive to multiple generations of current and future employees, businesses are shifting their focus to a broader array of benefits. A healthy person at the beginning of a career, for example, is more likely to want flexible benefits that support an independent lifestyle. In contrast, a long-time employee who is nearing retirement is more likely to favor a more predictable structure weighted toward retirement savings.

The reality is that there will be five generations of employees sharing the workplace by 2020, and the best places to work will be defined by their ability to meet the increasingly diverse needs of their entire workforce.

So what can employers do to ensure they are offering a competitive range of benefits that attract and retain the best talent?

In-Depth

Workplaces are evolving — and not always in ways that support business goals. Employee trust in employers is at an all-time low, according to the Aon Workforce Mindset Study, and one-third of employees are seeking to change jobs in the next year.

With populations aging and the pool of local, fresh talent stagnant, businesses can’t afford to ignore these realities. They need to develop innovative ways to attract and retain talent, including workplace flexibility, according to the Workforce Mindset Study.

Benefits packages, in particular, stand out as one area that can be made more appealing.

Craig Dolezal, senior vice president of Aon, believes offering a wider range of benefit choices tailored to each generation’s needs can become an important differentiator for attracting and retaining this talent.

One model that could become a powerful vehicle for achieving both of these aims is through what Dolezal calls “a total rewards exchange,” where an employee gets to create a benefits package, prioritizing compensation, bonuses, time off, medical, dental, wellness and child care (among other rewards).

Essentially, it’s like creating “a marketplace where people can make their own decisions about how they want to be compensated,” he says, “whether they want life insurance at this level or they’d rather have it in a sabbatical. It’s up to them to decide.”

Learning From Health Exchanges

Such an arrangement can appeal to prospective employees who desire greater individual control over their benefit options and care choices. But, according to the Workforce Mindset Study, employees also want to see more honesty and transparency from their leaders, which ranks as their top suggestion. Further, consistent with other aspects of their life, they expect to be able to access information on their benefits when and where they want.

Mike Christie, senior vice president, Exchange Market Strategy at Aon, says health exchanges, which are becoming popular in the U.S., represent a significant step in this direction. Private health exchanges are competitive marketplaces where consumers can shop across multiple products — often from multiple providers in an efficient manner. Their purpose is to combine cost-accountability with meaningful control over health benefits for individual employees. They also arm employees with information to make smart choices based on their health needs and tools to evaluate their options.

“What the health exchange does is in a very overt way show employees what the employer contribution allows you to purchase,” Christie says, so it brings more cost transparency about what the company’s contribution provides them.

New thinking about benefits

The high cost of health care in the U.S. is one of the key drivers of the private health care exchange market. But the U.S. experience with private health exchanges does have potential applications in other countries.

Today’s workforce is more global and diverse than ever before. In almost every country in the world, there is a greater range of age groups, ethnicities and nationalities, as well as more women, more people working remotely and more hiring in other countries and time zones.

“Private exchanges give employees a wide range of options so they can decide which plan is best suited for them,” Christie says, and this has broad appeal in markets around the world.

In the competition for talent, businesses offering benefits that employees crave is only part of the challenge. Businesses should consider using a more consumer-driven benefits approach to create incentives for healthy behaviors and encourage people to make smarter choices about the health insurance, supplemental benefits and retirement products they need to prepare and protect themselves and their families for the future.

For example, strong retirement packages might have greater appeal to people in their 60s than to people in their teens — and a working parent might prioritize child care, while someone just beginning a career could be interested in tuition reimbursement. For many, a balance of reward options is a precondition for employment, and as the battle for talent becomes more competitive, perks such as travel vouchers and free lunches could become differentiators.

The Future of Employee Rewards?

At a time when skills shortages are on the increase globally and workforce demographics are changing, 70% of employers say they are going to be revising their total rewards strategy to accommodate the changing needs and demographics of their workforces in the next five years, according to the Aon 2015 Health Care Survey.

Applying the health exchange approach to employee benefits could prove a valuable model for rethinking how to administer these benefits. It can “take away a lot of the corporate decision making employers have to do when trying to choose the right plans,” Dolezal says, allowing organizations to focus their energies on value creation rather than administrative functions. Employers can also find significant cost savings through this model because of the reduced in-house administrative burden.

By giving employees more choice, an exchange-style approach answers the increasing demand for benefits flexibility from employees. By expanding this approach beyond healthcare to a fully flexible benefits offering, organizations can offer a rewards package that meets the needs of employees as individuals, rather than attempting a one-size-fits-all approach.

“We actually think that will be the next wave of innovation,” Dolezal says. “Moving beyond healthcare exchanges to total rewards marketplaces.”

Talking Points

“By shifting the role of the employer to that of financier/facilitator and empowering employers with a true consumerism model — one that brings together competition and consumerism, a private health exchange brings a host of incentives to bear to exert positive influence on the market, including reduced costs and higher consumer satisfaction.” – Private Health Exchanges and the Consumerism Movement, Aon Hewitt (White Paper)

“We’ve seen individuals move to plans that are close to what they’ve had in the year prior, however, there are individuals who increase coverage or try to secure lower premiums. The exchange model lets people decide which plans and which insurance companies are best suited for them and their situation.” – Mike Christie, senior vice president, Exchange Market Strategy, Aon

“We believe this new approach to medical coverage better meets the needs of our diverse workforce and provides our company with increased efficiencies in our health careofferings.” – Dean Carter, chief human resources officer of Sears Holdings

Further Reading

How to Set Benefits in Different Nations

With a growing recognition that employees are a company’s greatest asset, it is increasingly important to consider how to keep staff in different countries happy and engaged.

According to some studies, happy, comfortable employees are 12% more productive. Further studies suggest that benefits such as health insurance can reduce employee turnover by up to 25%. There is also increasing evidence that ensuring employees get enough time off and don’t work too many hours can boost productivity — as well as your workforce’s long-term health.

A recent Aon survey of multinational companies found that 56% don’t have a global benefits database, despite global benefit reviews being a top priority. For companies operating in more than one country, setting benefits centrally can cut administrative costs, while simplifying reporting and reducing resentment between cross-border teams who may perceive the perks their colleagues receive to be unfair.

Understanding what is normal in different countries is the best starting point to work out how to develop appropriate packages, from local working cultures — such as working hours, vacation time, salaries, levels of tax on earnings — to indirect benefits like the availability of state healthcare, statutory sick days and age of retirement.

But when considering a working location, remember that simple top-level overviews like those shown below are never sufficient to make a decision — the devil is in the details, so seek out expert advice.

In Depth

Most in-demand employee benefits

Universal health care

Paid sick day entitlement

Retirement and savings planning

State retirement ages

Leave benefits

Flexible schedules

Average wages

Other benefits that employees love

Talking Points

“There is a clear trend of centralization at multinationals, yet it isn’t flowing through to the way that employee benefits are managed…. The vast majority of decisions are still being taken by local stakeholders. [Effectiveness of global planning] is generally being restricted by a lack of up-to-date information and administration activities.” – Carl Redondo, Aon Global Benefits

“When considering the impact of local laws, care should be taken to note cultural differences and issues of discrimination. Employers should question whether or not a particular benefit will integrate with cultural norms.” – Personnel Today

“You need to understand what impact [benefit schemes] are having on behavior… a big alarm bell should be ringing if they perceive it to be unfair” – Jonny Gifford, Chartered Institute of Personnel and Development

This article originally appeared on TheOneBrief.com, Aon’s weekly guide to the most important issues affecting business, the economy and people’s lives in the world today.”

Further Reading