UltraLink Newsletter

April 2006

Link Between Corporate Benefit Plans, Employee Health and Productivity
PriceWaterhouseCoopers Management Barometer and their Health Research Institute surveyed 135 top executives at large U.S.-based multinational companies. The results show that two-thirds of these executives believe that the design of their company's employee benefits plans has a connection to the overall health status of their employees.

Here are some of the results:

Employee Health Status

• 59% say that the health status of their workforce has stayed about the same over the past two years
• 18% believe it has improved
• 14% are uncertain

Healthcare Plan Choice
Eighty-two percent of companies offer choices within their healthcare plan:

• 98% provide cost and coverage options
• 64% offer health savings accounts
• 54% offer a selection of insurance companies

Health and Well Being Programs and Incentives

• 64% currently offer programs and incentives
• 19% describe the programs as strong or above-average

Healthcare Data

• 39% provide healthcare data to their employees
• 36% of these measure employee satisfaction with the data

Priorities in Healthcare Plan Design

• 86% say that cost is top priority in designing their company's health care plan
• 67% say that quality of service for employee claims is next in importance with 25% giving this their highest rating
• 23% say availability of data about healthcare quality is a high priority

Source: PriceWaterhouseCoopers - Barometer Surveys, April 10, 2006

Mandatory Health Screenings - Big Rewards, But Do They Come At a Cost?
Cadmus Communications, a publishing services company with 4,000 covered lives and a self-insured plan, has found great success with their wellness program. They required that all employees take a health risk assessment and blood pressure and cholesterol screenings. The seventeen that didn't comply lost their health care coverage. Cadmus was concerned about the legalities of the program so made sure it was cleared by their attorneys. They found that many had hypertension or high cholesterol and that while 23% thought they were overweight, 78% actually were. Nurses followed up with the employees to make sure that they got proper treatments. Cadmus also organized weight loss contests and provided a 25% subsidy for Weight Watchers memberships.

The results were big. There was a 21% drop in hospital admissions, a 44% reduction in the length of hospital stays and a 33% decrease in diagnostic testing costs last year. Their health premiums jumped only 7% for 2006, compared to 22% for 2005.

Despite these kinds of rewards, some worry about the legalities surrounding the requirement of health screenings. Thomas McCord, partner with Nixon Peabody law firm in Boston clarifies this for employers, "There's an important distinction between requiring someone to take the test and requiring them to pass the test." Others disagree and are concerned that wellness programs infringe on people's right to privacy and in addition may violate The Americans with Disabilities Act which prohibits companies from requiring a medical examination, unless the examination is job-related and consistent with business necessity.

There are alternative approaches to wellness programs that stop short of mandating health tests. What Weyco, an employee benefits administrator in Michigan, does is require those that refuse the tests to pay higher premium contributions than those that comply. As of January 91% of their employees have participated. Other incentives for the workers are: a $25 decrease in monthly premiums if an employee agrees to take a fitness evaluation twice a year and an $80 decrease if their spouse doesn't smoke.

While the results of mandatory health screenings are showing big rewards, employee privacy is being questioned. The way the wellness program is implemented may make a difference but the jury is still out on this issue.

Source: Employee Benefit News, April 1, 2006

Two of America's Largest Car Manufacturers Implementing New Cost Cutting Measures
In March both Ford Motor Co. and Chrysler Group announced new ways that they will try to curb their health benefit costs. While both companies have the same goal in mind, they are taking different approaches.

Ford's new policies are another attempt on their part to curb last year's $3.5 billion health care tab and will affect their 40,000 salaried employees in North America.

• They will begin charging workers $110 a month for health insurance and $11 a month for dental insurance for coverage of spouses and domestic partners who have access to their own insurance.
• Rather than increase premiums for those that choose the Ford Medical plan, they will be increasing employees' deductibles. While the deductibles are higher, workers will avoid monthly premiums and have access to the new pre-tax health savings plan.
• Employees who select alternate health plans will have a 30% increase on average for their premiums and face higher out-of pocket expenses.

Chrysler, struggling to control health care costs which have doubled since 2000, have implemented several new changes taking effect January 1, 2007.

• Salaried employee's health care premium increases to be linked to rank and base salary. Midlevel managers will pay, on average, $450 for 2007 while top executives will contribute an extra $1,500.
• Current and future pre-Medicare retirees to share some premium increases based on exit salary. Employees who left with a salary below $50,000 will pay half of the premium increases and those who exited earning more than $171,000 or more will pay 100% of the inflationary premiums.
• Medicare-eligible retirees to have health care retirement accounts to which company will contribute. In 2007 Chrysler will credit each eligible retiree's account with $1750 and an additional $1750 for each retiree's spouse or domestic partner. The amount will increase 3% for 2008.

Sources: Business Insurance, March 20, 2006 and The Detroit News, March 15, 2006.

Enjoy Risk Taking? You're Not Covered Here
As companies are seeing increases in health care costs year over year, many are coming up with innovative ways to help curb the increases. Love Box, Co. in Wichita, Kansas has a variety of activities and lifestyle choices in their health plan that will not be covered if a medical claim is made. One of the more unique stipulations is that if an employee injures themselves while taking a health risk such as bungee jumping or parachuting, those medical claims will not be covered by their health plan. On the other hand, they reward those employees who make healthy choices. Employees who don't smoke pay half the deductible of employees who use tobacco. Also, if a pregnant woman chooses not to participate in a prenatal wellness program, she will see her insurance deductible increase by $500. These maneuvers have paid off. Love Box has experienced flat health care costs for the third year in a row.

Other examples of interesting solutions for cost cutting come from Krause Corp. in Hutchison, Kansas. Faced with a 30% increase in premiums from last year, they switched self-funded plans and began penalizing certain unhealthy or illegal behaviors such as drunk driving or not wearing a seat belt. If an employee gets injured in an accident and it turns out that they were drunk, the employee must pay their own medical costs. They have already saved $15,000 in the situation where an employee was in a car accident but was not wearing their seat belt. Krause did not cover those medical bills. They have also instituted random drug testing and do not cover spouses of employees with can get benefits through their own employers.

Some of these examples may seem extreme but many employers are struggling to stay competitive in the marketplace while the cost of providing health benefits is working against them, therefore, they are turning to creative ways to encourage good employee health while also reducing costs.

Source: The Wichita Eagle, April 2, 2006