4) Voluntary Benefits

On-Site Medical Services

A major player in this arena is Florida-based Harris Rosen, whom you may have seen interviewed on CNN, CBS, or Fox News. Rosen is the president and COO of Rosen Hotels and Resorts, with seven properties in Central Florida. He has the distinction of starting an on-site primary care facility 19 years ago to serve the needs of his employees and their dependents. While most employers have seen their health insurance rates increase every year, often in double digits, the costs associated with Rosen's health-care plan have been relatively flat for the past five years, according to Kenneth Aldridge, Jr., director of health services for the Rosen Medical Center. Because the plan is totally self-insured, it is not subject to state mandated benefits. Despite this, Aldridge said that the company plan greatly exceeds what most employers/employees are used to in the traditional health insurance market. At Rosen:

• Benefits are provided to all employees working at least 32 hours or more per week.
• Employees are on the clock when participating in the various exercise programs.
• All new employees and their dependents are provided a complete medical assessment. The goal is to identify necessary interventions as quickly as possible to achieve and maintain maximum health.
• Services not available at the on-site clinic are under direct contracts with specialists, ancillary facilities, and hospitals to maximize cost savings. Focused case management is provided for all services provided outside of the clinic.
• As a condition of employment, employees may not use nicotine products.
• Medical services are provided at the clinic while the employee is on the clock. When necessary, roundtrip transportation is provided from the worksite.
• The copay for pediatric services and most medications is $0; primary copay is $5.

• The $500 hospital copay is waived for use of the birthing center.
• More than 4,100 covered lives have access to the medical center.
• As a result of the program, Rosen claims that:
• The Rosen properties' employee turnover rate is approximately 17 percent. Turnover rates in the hospitality industry are typically 50-200 percent per year.
• Diabetic compliance rate is over 70 percent.
• Generic utilization rate is over 70 percent.
• A progressive and one-of-a-kind pharmaceutical program has reduced Rosen's spend to a fraction of what other employers pay in the same industry.
• Workers' compensation injuries and sicknesses are handled through the clinic.
• Rosen's workers' compensation premiums are half those of its peers.

Ashley Bacot, president of ProvInsure, a Rosen-owned company, said, “For every dollar we put into this model, we get over $8 back. This is just what the doctor ordered.”

The Rosen Hotels and Resorts model needs approximately 500 employees to support and justify the infrastructure. However, smaller employers can implement incremental steps, such as establishing clinics shared by multiple employers or employing a visiting physician with set office hours on the premises.

Health and Wellness Initiatives

According to the Centers for Disease Control (CDC), more than half of all Americans have one or more chronic diseases, which include cardiovascular (heart disease and stroke), cancer and diabetes. Chronic diseases result not only in obvious medical costs, but also in indirect costs through absenteeism and presenteeism. (“Presenteeism” is when an employee who, although sick, reports to work to avoid taking a sick day; his level of productivity is greatly diminished.)

Many chronic diseases are preventable, and corporate-directed wellness initiatives can play a critical role in improving employee health and productivity. While some health management programs focus entirely on the small percentage of employees with the highest health claims, it is generally thought that the most effective programs also take a proactive approach, targeting preventative features for all employees. The goal is to minimize the number of workers moving into the high-risk category by providing increased awareness, education, motivation, and accountability. Almost all wellness programs today include some type of health risk assessment with programs for smoking cessation, weight loss, stress reduction, and/or chronic disease management. All of these are practical and cost-effective strategies to improve employees' physical and mental health and well-being.

According to “Two Roads Diverged: Hewitt's Annual Health Care Survey” in 2008, 88 percent of employers planned to make “significant investments in longer term solutions aimed at improving the health and productivity of workers.” This represented a 25 percent increase from 2007. Another 2008 Hewitt report, “Wellness and Beyond: Employers Examine Ways to Improve Employee Health and Productivity, Reduce Cost,” stated, “While the return on investment varies for each employer, studies have shown that for every $1 an employer spends on wellness programs, employers can expect a $3 to $6 return.”

Mental Health and Substance Abuse Parity

The Wellstone and Domenici Federal Mental Health Parity and Addiction Equity Act (MHPAEA), was signed on Oct. 3, 2008, and became effective for plans renewing after Oct. 3, 2009. Interim Final Rules (IFR) released on Feb. 2, 2010, and effective April 5, 2010, are applicable to insurance plan years that begin on or after July 1, 2010.

Under the MHPAEA, all employers with 51 or more employees who provide medical and surgical insurance with mental health or substance abuse benefits must provide those benefits in a manner that is no more restrictive than those required for the medical and surgical benefits. Prior to the law, it has been customary to use a different standard for substance abuse and mental health treatment benefits. It is anticipated that over 100 million Americans will be affected by this legislation, including over 80 million enrolled in self-funded plans regulated by ERISA who are not subject to state parity laws. According to The Holman Group-Managed Behavioral Health Care Services, the new regulations state that:

• Equity coverage applies to all financial requirements, including deductibles, copayments, coinsurance, and out-of-pocket expenses; and to all treatment limitations, including frequency of treatment, number of visits, days of coverage, or other similar limits.
• The bill builds on the current 1996 federal parity law, which already requires parity coverage for annual and lifetime dollar limits.
• Mental health and substance abuse disorder benefits are defined broadly to mean benefits with respect to services for mental health conditions and substance abuse disorders, as defined under the terms of the plan and in accordance with applicable federal and state laws.
• A plan may not apply separate cost-sharing requirements or treatment limitations to mental health and substance abuse disorder benefits.
• If a plan offers two or more benefit packages, the requirements of the Act will be applied separately to each package.
• As under the current federal parity law, mental health or substance abuse benefits coverage is not mandated. If, however, a plan offers such coverage is must be provided at parity in accordance with the Act.

Cost exemptions are available based on set criteria, but require the use of a “qualified actuary” and apply for one plan year only. The Congressional Budget Office estimated that parity will result in cost increases of 0.2 to 0.4 percent for health plans.

As part of its report, the IFR referenced studies that showed a cost reduction for mental health and substance abuse premiums of 20-48 percent when behavioral health carve-outs are used.

Mary Liz Schwartz, formerly a benefit administrator and head administrator of a major airline's medical clinic and currently a Florida account executive with The Holman Group, is familiar with the past and current regulations. At the airline, Schwartz said that by carving out mental health and substance abuse benefits from its health plan and placing these services with a stand-alone national behavioral health provider, her company experienced savings on many levels.

“The savings of HR man hours in the staffing and benefits department was noticeable with manager/supervisor referrals going directly to the behavioral health provider,” Schwartz said. “Issues were often resolved before they came to HR, which resulted in less litigation.” Schwartz noted that savings also were realized in “reduced turnover and disability claims, and productivity increased as employees were more closely monitored by specialists whose top priority was curing the employees rather than merely treating symptoms.”

Voluntary Benefits

Perhaps the most significant finding from the seventh annual MetLife “Study of Employee Benefit Trends” (March 2009) is that employees are placing even greater value on benefits provided through their employers. Employee retention remains the most important benefits objective for employers, and benefits consistently rank as an important factor in employee loyalty.

However, the MetLife studies have historically found that employers tend to underestimate the degree of value that employees place on benefits. The recent survey asked both groups how benefits influence employee loyalty. The opinion gulf between employers and employees on this is telling:

MetLife research also revealed that with greater financial responsibility for benefits being shifted to employees, workers are more aware of existing gaps in coverage and they are increasingly interested in filling those gaps with voluntary benefits — despite having to pay for these benefits themselves.

While 40 percent of employees responded that they want a wider selection of voluntary benefits, only 19 percent of employers identified this as a benefit strategy. It may be interesting to see where those 19 percent rank in employee retention studies. It is probably pretty high.

David A. Gentry, M.Ed, CFP, RHU is the COO for Fringe Benefit Plans, Inc., in Winter Park, and a past state president of the National Association of Health Underwriters. He may be reached at 407-862-5900 or [email protected]; www.FringeBenefitPlans.com.