EXPERTS CORNER – TOUCHSTONE WELLNESS RESEARCH CONFIRMED BY RECENT RAND STUDIESIn the continuing battle against rising healthcare costs, many employers have increasingly relied on wellness programs. To date, the return on investment in terms of either reduced medical costs or increased worker productivity has been varied. This is not surprising considering the underlying methodology of the ROI calculation is determining the savings from an event that does not occur due to a specific intervention.
From an employer’s perspective, the ultimate goal of a wellness program is to reduce the cost of medical claims and increase worker productivity by changing plan participant behaviors. Commonly targeted behaviors are tobacco use, obesity, and inefficient utilization of healthcare services. To realize this goal, certain behaviors must not only be changed, but those changes must be sustained. The most popular wellness program components to foster positive behaviors are:
- Smoking cessation;
- Gym memberships /onsite fitness;
- Increased (and/or subsidized) healthy food options in work-site cafeterias;
- Preventive care, including incentives for physicals;
- Health coach;
- Onsite screenings;
- Health risk assessments (HRA); and
- Disease management programs.
These programs fit into two distinct categories: health promotion and disease management. The goal of the latter is to manage the costs of those plan participants who already have a chronic condition, such as diabetes or asthma. The goal of the former is to prevent plan participants from reaching the chronic stage.
Two recent ROI studies published by RAND Corporation have made headlines. The first was a study sponsored by the U.S. Departments of Labor and Health and Human Services; this relied on a sample of large employers who were members of the Care Continuum Alliance (CCA). The second was a study of the PepsiCo program published in the January edition of the journal Health Affairs. It is important to note that these studies focused on ROI for medical claims and did not attempt to measure worker productivity (which measure tends to be more subjective and, perhaps, does not resonate with CFOs like reductions in healthcare costs do). Following are links to these studies:
A discussion of the methodology used by RAND is beyond this article; however, it will be scrutinized by many (as are most wellness studies). Both these studies draw a similar conclusion:
- Health promotion programs show savings ($.50 for every $1 spent) but do not have a positive ROI until 5 years, at which point they become cost neutral; and
- Disease management programs had a positive ROI, $3.80 for every dollar spent.
Touchstone Consulting Group’s 2010 study for The Alliance for Wellness, a consortium of five large US companies, achieved results consistent with the Rand studies using a similar methodology:
- Health promotion ROI of $.75 for every $1 spent; and
- Disease management ROI of $3.90 for every $1 spent.
An employer cannot assume that any wellness program will result in a positive ROI. Success will depend on numerous factors, such as the underlying demographics of the employee population, good promotional communications, turnover, and the company’s willingness to make these programs part of a continuing culture of wellness. Employers should perform due diligence before committing the resources necessary for an effective program. Acknowledge that, despite the potential for a net negative ROI, there are other benefits to wellness programs that can lead to improved employee morale and productivity.
MENTAL HEALTH PARITY & ADDICTION EQUITY ACT DOES IMPACT SMALL GROUPS AND EAPs
The Final Rule under the Mental Health Parity and Addiction Equity Act (MHPAEA) was recently published. Although the impact of its regulations on group health plans has been publicized over the past few years, sponsors of small group plans had thought that the law would not apply to them. However, the Affordable Care Act (ACA) overrides the prior exemptions for smaller employers with non-grandfathered plans.
Plans must comply with MHPAEA interim regulations now (and with the Final Rule for plan years beginning on or after July 1, 2014) in order to satisfy the essential health benefits requirements of the ACA.
All group plans should review their compliance, and be especially mindful of the implications for Employee Assistance Programs, as well.
- Compliance Bulletin: Final Rule Implementing Mental Health Parity Requirements
- Legislative Brief: 94347 Mental Health Parity FAQs 1-9-14(5)
- Legislative Brief: 89806 Compliance Checklist for Mental Health Parity 11 13 13(1)
- Benefits Bulletin: Final Rule Implementing Mental Health Parity Requirements
- Final Rules Under the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008; Technical Amendment to External Review for Multi-State Plan Program 11/13/2013 https://www.federalregister.gov/articles/2013/11/13/2013-27086/final-rules-under-the-paul-wellstone-and-pete-domenici-mental-health-parity-and-addiction-equity-act
- FAQs about Affordable Care Act Implementation (Part XVIII) and Mental Health Parity Implementation. U.S. Dept of Labor, EBSA website, January 9, 2014 (See Question #12). http://www.dol.gov/ebsa/faqs/faq-aca18.html
CHANGES TO ‘EXCEPTED BENEFITS’ UNDER HIPAA AND ACA
The Health Insurance Portability and Accountability Act (HIPAA) specifically excepted certain types of benefits from its portability and non-discrimination requirements. Such excepted benefits included ‘limited scope’ dental and vision plans that met certain conditions. For self-insured dental and vision plans, HIPAA required that such dental and vision plans permit employees to opt out of coverage without effecting a change in their medical coverage, and that employee contributions for such dental or vision coverage be separate from that for medical coverage.
In re-considering excepted benefits for purposes of the Affordable Care Act (ACA), regulators have dropped the requirement that self-insured limited scope dental and vision plans impose an employee contribution amount. This change impacts both ACA and HIPAA regulations.
In addition, recent regulations have clarified when employee assistance programs (EAPs) are considered to be ‘excepted benefits.’ Employers should be careful how EAPs are coordinated with their health plans (e.g., whether the EAP serves as a gatekeeper for medical, drug, or mental health benefits).
The following resources provide more assistance in understanding these changes:
- Benefits Buzz: Proposed Expansion of “Excepted Benefits” February Benefits Buzz
- Health Care Reform Legislative Brief: Proposed Expansion of Excepted Benefits
- Proposed Rules: Amendments to Excepted Benefits. Federal Register Vol. 78, No. 247, Tuesday Dec. 24, 2013, pages 77632 – 77642 http://www.gpo.gov/fdsys/pkg/FR-2013-12-24/pdf/2013-30553.pdf
PAID TIME OFF BENEFITS: TRADITIONAL, FLEXIBLE, OR GOVERNMENT IMPOSED
A 2013 survey of more than 2,800 employers shows that there is great variation in the ways that employers address the need for time off. The survey covers traditional time-off programs (vacation, sick, personal time) and more flexible PTO time banks. There has been only a slight drop in the use of traditional measures. Although PTO banks offer greater privacy for employees, they can make it more difficult for employers to effectively manage an employee’s use of time. Careful consideration of the employee, manager, and co-worker concerns must be made during program design in order to encourage responsible use of paid time off and better planning for job coverage during absences.
The increasing legislative push to mandate paid time off during sick or family leave demands that employers carefully consider their policies and the precedents that they are setting. Paid family leave is required in 3 states (CA, NJ, RI) and paid employee sick time has been ordered in dozens of municipalities. Further legislated paid time off is being debated at local and national levels.
Following are links to some general information on PTO programs. To request specific information on requirements to provide leave time in your particular state, please contact us at firstname.lastname@example.org.
- 2013 Survey Results: 2013 Paid Time Off Survey Results
- HR Insights: Is PTO Right for Your Organization REV4-11
FINANCIAL PLANNING AS A VOLUNTARY BENEFIT
Do you have any employees who are not worried about their finances? People are concerned about rising costs on everyday needs and confused by the many avenues of investment and savings opportunities in the general marketplace. Even the President noted in his recent State of the Union address that most people are not saving enough to properly prepare for their retirement years.
Guidance in financial planning can be a very popular voluntary employee benefit program. These can be tailored to the needs of your employee population. As with all voluntary benefits, the entire cost can be borne by the participating employees, or subsidized by the employer. These articles provide some general information on what types of financial planning help can be arranged:
- Benefits Insights – Financial Planning Assistance
- Know Your Benefits – Financial Planning Assistance
Reports on other voluntary benefits that have been made available to you since the last newsletter:
- Benefits Insights: Cancer Insurance for Your Employees’ Needs and Peace of Mind Benefits Insights
- Know Your Benefits – Cancer Insurance
- Benefits Insights – Legal Plans
- Know Your Benefits – Legal Plans
- Benefits Insights – Employee Purchase Programs
- Know Your Benefits – Employee Purchase Programs(1)
- Benefits Insights – Employee Discount Programs
- Know Your Benefits – Employee Discount Programs
The Internal Revenue Service and the Employee Benefits Security Administration of the Department of Labor released ‘informational copies’ of the 2013 Form 5500 series on Dec 5. This early warning allows plan sponsors adequate time to respond to changes in the reporting requirements, including the mandatory submission of Form M-1 Compliance Information by all welfare plans.
Among other changes for 2013 is the discontinuation of the exemption for small multiple employer welfare arrangements and certain entities claiming exception; these must file Form 5500, regardless of the number of plan participants or type of plan funding. Retirement plans may be impacted by minor changes to the Form 5500 series.
Consider the information-only materials available from the EBSA website and contact us if you have any questions.
- Dept of Labor news release http://www.dol.gov/ebsa/newsroom /2013/EBSA120513.html
- 2013 Form 5500 series http://www.dol.gov/ebsa/5500main.html