Interview by Joseph Coombs, SHRM Workplace Trends and Forecasting Specialist
It is obvious that a healthier workforce is more productive and beneficial for employers. What trends are you seeing in the form of wellness programs offered and other forms of health benefits that go beyond basic medical care?
An employer’s vision of a highly successful wellness/health promotion program would be a healthy and engaged workforce with increased physical and emotional energy. This results in more productive employees, fully engaged in serving clients and driving the mission of the organization. Secondary benefits from a successful wellness program would include lower employer medical costs and lower incidence of claims for disability and workers’ compensation programs.
Although national surveys indicate that the majority of employers have some form of a wellness program, many only offer fairly pedestrian programs focused on assessing health risks rather than changing them. We see several new and emerging trends in employers’ investment in wellness programs for employees. First, many employers with “first generation wellness programs” focused on a “know your numbers” campaign using a health screening approach are becoming disillusioned with their current program and the lack of employee engagement and subsequent behavior change. These employers are coming to the wellness marketplace asking for wellness solutions with proof the programs work as advertised by changing employee behavior and resulting in a measurable return on investment.
Second, employers are experimenting with various means to drive employee participation in wellness programs, such as using rewards and incentives by linking employee health insurance contributions to the employee’s participating and level of engagement in wellness. The derivation of reward amount (positive or negative) for desired activity remains inefficient as many employers do not have the data to set their reward targets. Third, employers are looking for a state of the art wellness solution which can reduce the incidence and duration of both workers’ compensation and disability claims. Employers with a global workforce focus initially on designing a second generation model in the United States, which is successful in changing employee behavior with the plan to expand the wellness program to other countries with large populations of firm employees. The U.S. wellness model can be built on a global platform, but needs to be customized to reflect language and cultural concerns of countries that often are more focused on employee absence or disability costs, rather than employee health care trends.
Beyond wellness programs, more employees are seeking new skills and knowledge to manage chronic stress and the depression and anxiety that come with unmanaged stress. In addition, fatigue resulting from insufficient sleep is an acute problem for employees in the transportation sector as well as other industries.
What has been the biggest adjustment for HR professionals, in terms of compliance with the Patient Protection and Affordable Care Act?
For HR leaders, national health reform is a journey and not a single event. The first year following passage of Affordable Care Act (ACA) was stressful for most HR teams, given the need to understand and comply with insurance market reforms, including offering group coverage to qualified adult children and addressing the requirements to eliminate or phase out life and annual limits on plan coverage. The pace for implementing ACA slowed in 2011 as several regulatory requirements were delayed, and employers are now in a waiting period for the design and implementation of state-based insurance exchanges beginning Jan. 1, 2014. In 2014, eligibility for state exchanges will be generally limited to uninsured Americans and employees of smaller companies, with potential expansion to larger organizations in subsequent years.
Most HR leaders now fully realize the ACA did not address the biggest problem facing most employers – high single-digit or low double-digit annual cost increases. Employers need to develop a formal three-to-five-year strategy dealing with employee health and the continuing cost escalation, since employee health costs are the largest indirect business expense for virtually all employers. In addition, uncertainty about ACA continues due to court challenges to employee mandates and potential changes coming out of the 2012 election.
There has been much debate on whether these changes will result in savings or increased costs for providing coverage. Do you think many employers are still weighing whether or not to offer health care, due to this uncertainty?
Employers have traditionally believed the sponsorship of group health coverage was important for the recruitment and retention of employees. However, the commitment to continue employer-based coverage has gradually eroded in the small employer market, due to multiple years of high single-digit or low double-digit cost increases for group health insurance. The passage of ACA did not directly address or resolve the significant annual cost increases required to continue employer based coverage. The new law primarily addresses changes in individual and small group insurance markets and the need to reduce the number of uninsured through expanded coverage for adult children, broader Medicaid eligibility, and the development of state-based insurance exchanges beginning in 2014.
Although numerous employers remain committed to sponsoring employer-based coverage, an increasing number of organizations are looking for an “exit strategy” from plan sponsorship that does not have a negative impact on the recruitment and retention of employees. Small employers eligible for state insurance exchanges will explore that option in 2014, although many employers are skeptical about the viability of these public exchanges.
Employers are also interested in the potential of private, or corporate, exchanges to provide a broader marketplace of plan options for employees, with employer sponsorship structured as a defined contribution instead of the conventional defined benefit model.
Workers aged 55 or more are staying on the job longer and representing a greater proportion of the labor force. In the future, how will this affect the types of health benefits offered through employers?
Some employees over age 55 are considering working past traditional retirement age of 60 to 65 due to reductions in traditional pension plans, concerns about the viability of Social Security payments, and reductions in defined contribution retirement plans such as 401(k) plans. The ability of these older and experienced workers to work beyond traditional retirement is strongly linked to their personal health status and resultant productivity. Approximately one third of early retirees leaving the work force before age 65 have to retire due to significant health problems. Even with good health, older workers need to be fully productive and engaged in the company’s mission and continue to update skills in technology.
Employees working past age 65, which is the current date to begin Medicare eligibility, would remain on their employers’ health coverage with Medicare coverage being secondary. Several national proposals have recommended Medicare eligibility be raised to age 67, but there is no consensus in Congress on such a change. Although the number of employees working full time past age 65 is relatively small, employers need to fully engage these older adults in the same health promotion and wellness programs offered to other active employees, and also provide effective care management services dealing with acute and chronic medical problems.