Gibson’s Employee Benefits Practice Leader Wes Mantooth shares his insight and wisdom on what 2016 may bring for the world of employee benefits.
Constant change is the norm in human capital management. Like many employers, you likely make investments in resources to address the increasing number of regulations surrounding your organization, depleting funds that would otherwise be direct investments into your core business. Naturally, this leads to doing more with less, but forces a reflection of strategic plans, or at least view of the future.
As an employer, you’re interested in national health care trend data and curious about what increases other employers are facing. However, at the end of the day, what matters most to you are your costs and your employees. Health care costs are increasing, which translates into increases in health insurance premium…direct correlation - there are many others, but maximizing assumptions here. A 6% trend is much greater in dollars and cents today than a 6% trend 5 years ago. Facts are facts, but don’t simply rely on the numbers to tell you what to do.
Numbers play a huge role in plan review and strategy development. It’s pretty difficult, if not impossible, to create a health care budget without having access to credible data. It’s just as difficult to use historical data to predict who your large claimants are going to be in the future. It’s hard to predict that a healthy-eating, in-shape 40 year old male is going to have a heart attack in 6 months. There are many aspects we can’t control, but for those we can, it’s time to step up.
Each year, we as humans are encouraged to get an annual exam or physical, or at least complete a self-examination. As an employer, why wouldn’t we do the same with our human capital strategies? It’s never too late to start. An ounce of prevention = a pound of cure, right? Or, is it an ounce of strategy = a ton of confidence?
The wellness industry continues to evolve. In fact, you are probably hearing less about wellness and more about wellbeing. While both wellness and wellbeing encompass the same basic tenets of health - career, financial, social, community, and physical - workplace wellness has focused primarily on the physical aspect. Unfortunately, employers who have invested in these types of wellness initiatives have often been disappointed with mediocre results.
Employers can also add incentives to the list of questionable strategies, as they are being challenged for their legality and efficacy with escalating intensity. Research has indicated while incentives may lead to compliance, they are not effective in producing sustainable behavior change. Going forward, employers should consider a broader approach to wellbeing, viewing organizational and employee health as one in the same.
Health care reform regulations continue to be in a state of flux. Congress delayed the effective date of the Cadillac Tax by two years, making it now effective in 2020. Almost simultaneously, the IRS delayed the due dates of Affordable Care Act (ACA) reporting by a few months. Please keep in mind that although the government doesn’t require these forms now until March 31st, your employees’ accountants will sure be expecting them attached to the W-2. These two extensions generated the most excitement among employers since the enactment of the legislation. Although the ACA has overshadowed the increasing complexity of ERISA, HIPAA, and FMLA, they have not gone away and are all here to stay.
Specific to health insurance, it is inevitable the distribution model will change at some point in the future, creating disruption for all involved. Employers can’t continue to repeatedly absorb double digit percentage increases in health insurance and also make it “affordable” for employees. Whether it is 4 years, 7 years, or 10 years, most employers will be out of the risk business and employees will be purchasing individual health insurance policies. This notion seemed crazy 10 years ago, but the transition is on the horizon and it is a matter of when, not if. It is very likely the roles of the employer, employee, advisor, and carrier will all change. Further, technology will play an ever-increasing role in this evolution with the hopes of streamlining a more efficient education and enrollment process.
Instead of letting the industry “happen” to your employees, engage them to drive change. Surround yourself with trusted advisors who share in your vision to make your organization one of choice, not default. Starting now is not too late.
The winds of change are coming. Or are they already here?