Fewer Resources Means
More Creativity in
Employee Benefits
By Deborah Render
A
s health care organizations
struggle to do more with
less in the face of shrinking
reimbursement, employee
benefits are getting a serious
makeover. “We clearly know that the
cost of wages and benefits is at least
60 percent of the overall health care
budget,” observes ASHHRA Immediate
Past President Grace Blair Moffitt, CHHR,
executive director, human resources, at
Cone Health in Greensboro, N.C. “We have
to think of ways to provide benefits and
competitive salaries while still being
able to manage our budgets.”
To keep benefits affordable,
employers are increasingly asking
employees to share more in the costs
of health care coverage, promoting
wellness programs and incentives and
revamping their approach to retirement
plans. At the same time, they’re thinking
creatively about how to offer a host of
low- or no-cost non-traditional benefits
to help attract and retain talent in a
competitive marketplace.
“It used to be that benefits, good or
bad, were just something that came with
the job,” notes Denise Hoover, SPHR,
CHHR, a former director of employee
wellness, benefits and compensation at
Salem (Ore.) Health who recently moved
into a new position there as service line
director for orthopedic, neuroscience
and rehabilitation. “What used to be
a paternalistic, ‘we’ll take care of you’
approach is now a hot topic of social,
political and philosophical debate.
We’re certainly seeing a shift away
from paternalism to empowerment and
engagement.”
Health care organizations are far
from alone in bidding farewell to the
traditional paternalistic approach.
“Globally, benefits are using more of
a ‘take care of it yourself’ approach.
Employers are taking a back seat role in
how people use their benefits. It’s more
‘manage your health care spend, manage
your retirement plan, manage your paid
time off,’” says Kevin Nazworth, vice
president southeast region and head of
the health care market for TIAA-CREF, a
national financial services organization.
But it’s the Affordable Care Act
that has had the biggest impact on
benefit plan design, according to Bob
Walters, SPHR, CHHR, director, human
©2014. Posted with permission by the American Society for Healthcare Human Resources Administration (ASHHRA) of the American Hospital
Association (AHA) www.ashhra.org
HR Pulse magazine, summer 2014 issue.
“... As we get our employees
to think more about wellness
and the preventive aspects of
health care, in conjunction with
establishing baseline data in
determining the areas of risk
for employees and dependents,
our cost experience will likely
improve.”
— Bob Walters, SPHR, CHHR, director,
human resources operations, Health
First, Inc.
resources operations, Health First,
Inc., in Melbourne, Fla., and a past
president of ASHHRA. “The greatest
challenge today is keeping up with the
Affordable Care Act provisions, staying
in compliance, controlling plan expenses
and establishing a reasonable cost for
benefits for reasonable services,” he
says. “We really don’t know what the
impacts will be with the continued
rollout of this program and the effect the
public exchanges will have on providing
medical benefits.”
Hoover wonders whether health care
organizations, like other employers,
will continue to be in the business of
providing health insurance to employees
in the future. “I think that remains a
question. Certainly we’ll see what the
retail, hospitality and other industries
do,” she says. “A big part of what we’ve
been doing on the benefit front for
quite a while is really about health
care benefits and designing all the
supporting pieces that wrap around that
core. If that shifts, I think we’ll see a
significant shift.”
Not your father’s health care benefits
In the meantime, health care benefits
are starting to look radically different
than they did even a few years ago.
“Employers who pay all medical and
dental costs are few and far between,
and organizations with an 80 percent
employer-paid and 20 percent employeepaid plan strategy are shifting to 75-25,
70-30 or less,” Walters says. In addition,
the rise of health spending accounts
(HSAs) and flexible spending accounts
(FSAs) has been redefining who pays for
health care benefits.
Not only are employers requiring
employees to shoulder more of the cost
of health care and expecting them to
make more informed, cost-conscious
care choices, they are also convinced
that a sharper focus on employee
wellness will keep everyone’s costs
in check. A growing number of health
care organizations now offer premium
discounts or rewards programs for
employees with good biometric health
risk assessments, who are non-smokers,
who lose weight or who demonstrate
other healthy lifestyle behaviors.
“That’s a major change that has
occurred over the last five to 10 years,”
Moffitt says. “It’s not something we held
our employees accountable to. We gave
them benefits and didn’t necessarily ask
something in return.”
Cone Health even goes a step further,
with an eye toward helping employees –
especially those with chronic conditions
– live healthier and avoid expensive
emergency room visits. “The creation
of our ACO provides an opportunity to
partner with the people managing the
health of our community to also help
manage the health of our employees,”
she says, explaining they are able to
identify at-risk employees and offer
resources and assistance.
However, HR leaders need to carefully
balance their efforts to encourage
wellness with respect for employees’
privacy. “It’s a minefield in many ways,
but as we get our employees to think more
about wellness and the preventive aspects
of health care, in conjunction with
establishing baseline data in determining
the areas of risk for employees and
dependents, our cost experience will
likely improve,” Walters says.
He noted that Health First employees
initially were suspicious of providing
biometric data in exchange for avoiding
a premium increase. “They were thinking
it was ‘Big Brother-ish.’ Hopefully over
time they will realize we only want
to identify the trends, what we need
to treat, and how we can provide the
best services for them and dependents.
After all, the ultimate goal is reduced
premiums for our employees,” he says.
“We also offer a plethora of classes and
lectures, a free fitness club membership
to all benefit-eligible associates and
their dependents, and a personalized
web portal with the latest and greatest
wellness information.”
Walters points out that many benefits
professionals think there’s much to be
gained – and saved – by encouraging
employees to approach medical care
the same way they do dental care.
“Employees and their dependents see
their dentists for a preventive visit and
check up every six months, which reduces
the major and catastrophic claims,” he
notes. “If they would get a physical
exam at least once a year, including all
of the biometric screens, we believe the
result would be the same.”
Hoover agrees that educating
employees to be active consumers rather
than passive recipients of health care
will yield positive results. “For example,
some high-deductible plans, if paired
with the right tools, empower employees
to make better care decisions instead of
being shuffled through the system based
on physician orders without a robust
discussion of options and cost,” she says.
She also sees value in transparency
initiatives such as the ABIM Foundation’s
Choosing Wisely® program, designed to
promote discussion between patients and
physicians about tests and procedures
that may be unnecessary. “We have to
help patients think through, ‘If I’m going
to spend my money on health care, I
want to purchase the highest quality
and most effective care at a reasonable
cost,’” Hoover says.
Retirement planning, redefined
The paradigm shift in retirement
benefits has been at least as radical as
the one in health care benefits. “The
changes we’re seeing in the health care
field are similar to other industries. More
organizations, if they haven’t already,
are transitioning from defined benefit
or traditional pension plans to defined
contribution plans, such as a 401(k) or
403(b),” Nazworth says. “This transition
has shifted more responsibility for saving
for retirement onto the participants, who
may need significant communication,
education and advice to make the best
savings and investment decisions for
their lifestyle and lifestage.”
Research from the TIAA-CREF Institute
indicates employees have their work cut
out for them when it comes to achieving
retirement readiness. While hospital
workers are more likely than other
Americans to save for retirement, only 48
percent have calculated how much they
need to accumulate, and less than onequarter feel confident they are investing
their retirement savings appropriately.
©2014. Posted with permission by the American Society for Healthcare Human Resources Administration (ASHHRA) of the American Hospital
Association (AHA) www.ashhra.org
HR Pulse magazine, summer 2014 issue.
Nazworth notes, “Employees are facing an unprecedented
number of choices when it comes to selecting benefits, such as
types of plans and types of investments. Navigating through
these choices can be tough, and many employees don’t seek out
the financial counsel they need.”
The multi-generational workforce further complicates the
issue, since baby boomers, Generation X and millennials/Gen Y
all have different needs. “Employers must balance not only what
these populations are seeking from their retirement plans, but
also the different ways they prefer to receive information and
education about these plans,” Nazworth says. For example, some
employees prefer printed materials and face-to-face meetings
with an advisor, while others want to receive information
through social media and would rather seek advice, planning
tools and calculators using an online portal.
Cone Health switched to a defined contribution plan after
freezing its defined benefit plan about eight years ago. The
Cone Health HR team now works closely with their third-party
retirement plan provider to ensure employees have prudent
options and solid financial guidance. “We have a model where
two members of their team are actually hard-wired into our
HR department,” Moffitt explains. “They’re onsite every
day to consult with employees and work with them on an
individual basis.”
Hoover predicts the challenges of helping employees plan
appropriately may spark renewed debate about the popularity
of 401(k) plans. “I don’t know that we’re going back to
pensions. But sometimes we make assumptions that if we
build it, they will come,” Hoover says. “Do average employees
want to make investment decisions for themselves? Is that
something they feel equipped to do? How do we close the gap
between what they’re able to do and what they need to be
doing?”
Thinking out of the box
Although the details and framework may vary, traditional
benefits such as health care, retirement planning, insurance
and disability have been – and continue to be – key factors in
attracting and retaining top-quality employees. But increasing
pressure to balance affordability with recruitment needs has
led many HR leaders to embrace a wider range of benefit
options.
At Health First, Walters introduced a Qualified Separate
Line of Business (QSLOB) plan four years ago that has proven
popular with physicians. More than half of the organization’s
250 physicians have enrolled in the plan, which allows
participants to contribute additional funds to their 401(k)
plans above the specified IRS limits. “This plan, although
complex to administer, has been instrumental in attracting
talented specialists into the organization,” he says.
Health First also instituted an aggressive concierge
benefits and volunteer benefits program a dozen years ago.
The system now offers supplemental insurance such as auto,
legal and pet, a Real Estate Affinity Program that provides
one-stop shopping for real estate needs including buying and
selling, mortgages and home inspection, and convenience
benefits such as dry cleaning drop-off and pick-up and car
washing and detailing.
Cone Health also provides concierge services for
employees. “Having a concierge on our campus helps busy
employees with scheduling appointments, buying movie
or event tickets, or running errands. The concierge is an
expense, but there are also lots of creative ways to offer
benefits that aren’t an expense but help employees,” Moffitt
says, noting these can run the gamut from connecting
employees with a travel agent for vacation planning to
arranging onsite delivery of pre-ordered honey-baked hams
during the holiday season.
Walters expects to see even more voluntary benefits,
and more creativity, in the future. “For example, I’ve been
contacted by one of the large burial and bereavement
coordinators in the area offering funeral plans,” he says. “I’m
not sure our employees are ready for this one yet, but I may
be surprised. Employees want choices and will gladly pay for
the convenience of additional benefits and payroll deduction.
There are many vendors that want visibility with large groups
of employees, like our 8,000 associates, but we have to be
careful in monitoring the fine line between offering benefits
and the issue of solicitation.”
Hoover believes health care organizations are likely to
continue to add non-traditional benefits designed to help
employees deal with emerging needs such as elder care, nontraditional families and adult education. “It will partially
depend on the cost issue and partly on the market issue.
You can do anything you want to in ‘benefit-land’ with
measurable results, but the cost issue is more of a systemic
challenge,” Hoover observes.
She also firmly believes that organizations must ensure
they have HR professionals with the right talents and skills
to balance benefits with affordability in today’s valuefocused environment. “It’s part of a broader shift of the HR
function from a transactional personnel one to a strategic
planning, business tied-in function. It’s not just shop for
a health insurance plan and pay your bill,” she says. “The
ability to manage population health might become a core
competency. In the benefits world, we need high caliber
professionals who are well-versed not only in administrative
complexity but in how we engage people and motivate them
to change their behaviors.”
■
Deborah Render is a freelance writer. She can be reached at
[email protected].
©2014. Posted with permission by the American Society for Healthcare Human Resources Administration (ASHHRA) of the American Hospital
Association (AHA) www.ashhra.org
HR Pulse magazine, summer 2014 issue.