HRM textbook

CHAPTER 13 BENEFITS AND SERVICES 437
in treatment decisions. 64 So, for example, periodically send a statement to each
employee listing the employer s costs for each health benefit. Online selection lets
employees choose the best of the employer s health care offerings, based on input
from other employees concerning matters like doctor visits and specialists.
WELLNESS PROGRAMS Many illnesses are preventable. In one study employers
who undertook prevention programs aimed at cardiovascular disease . . . reported an
average 28% reduction in sick leave, [and] a 26% reduction in direct health-care
costs. 65 Many employers therefore offer preventive services. 66 Clinical prevention
programs include things like mammograms, immunizations, and routine checkups.
Walgreens recently purchased two companies that provide on-site health care services
such as mammograms for employers. 67 Health promotion and disease prevention
programs include seminars and incentives aimed at improving unhealthy behaviors. 68
Top wellness program trends include obesity management, stress management, senior
health improvement, and tobacco cessation programs. 69 Incentives, for instance,
$50 $100, can boost wellness program participation, but may backfire. 70 Whirlpool
gives nonsmoker discounts on health care premiums worth about $500. It suspended
39 workers it caught smoking outside the plant after claiming on their benefits enrollment
forms that they were not tobacco users.
CLAIM AUDITS It makes little sense to initiate cost cuts when employers are paying
out thousands or millions of dollars in erroneous claims. Unfortunately, with health
care plans increasingly complicated, it s easier for errors to occur. Human resource
consultants Towers Perrin conducted a survey of claims payments. The industry
standard for percentage of claims errors is 3%, but Towers Perrin found the actual
percentage of claims with financial errors were about 6.3%. The industry standard for
percentage of claims dollars actually paid in error was 1%; the actual percentage
of claims dollars paid in error were 3.4%. So, setting standards for errors and then
aggressively auditing all claims may be the most direct way to reduce employer health
care expenses. 71
LIMITED PLANS Some employers are offering limited-benefit health care insurance
plans. Unlike health care plans that may have lifetime coverage limits of $1 million or
more, these mini medical plans have annual caps of about $2,000 $10,000 per year.
The advantage, of course, is that the premiums are correspondingly lower. 72
OUTSOURCING Benefits management ranks high on the list of HR activities that
employers outsource. For example, in one survey, 94% outsourced management of
flexible spending accounts, 89% outsourced defined contribution plans, 72% outsourced
defined benefit plans, and 68% outsourced the auditing of dependents. 73
OTHER COST-CONTROL OPTIONS Employers are taking other steps. One is
using defined contribution health care plans. Here each employee gets a specific dollar
amount allotment to use for co-payments or discretionary medical costs, rather than a
specified health care benefits package with open-ended costs. 74 As noted, outsourcing
health care plan administration and employee assistance and counseling to outside
companies for a fee are other options. 75 Many employers reduce subsidized health
benefits for their future retirees. 76 Small firms are joining benefits purchasing alliances,
banding together to purchase health care benefits. Other employers are encouraging
medical tourism, which means asking employees to have non-urgent medical procedures
abroad, where costs are lower. 77 One simple method is just to ensure that any
dependents enrolled are actually eligible for coverage. 78
Long-Term Care
With baby-boomers in their 60s, long-term care insurance for things like nursing
assistance to former employees in their old age is a key employee benefit. The Health
Insurance Portability and Accountability Act of 1996 lets employers and employees