Most employers making changes to their 2010 medical program expect to increase employee contributions
Introducing or expanding wellness programs also an expected change for 2010
As employees flip through their open enrollment packets, they may notice substantial changes to their medical plan for 2010, from increases to employee contributions to introducing a wellness program, according to the 2009 Benefits & Talent Survey by Aon Consulting, the human capital consulting firm of Aon Corporation.
Aon Consulting surveyed 1,313 employers nationwide in its 2009 Benefits & Talent Survey and found that 41 percent of employers are expecting to make more substantial changes to their 2010 medical program than they did this year. Specifically, 70 percent are planning to increase employee contributions(1) and 67 percent are expecting to raise deductibles(2), co-pays(3), coinsurance(4) or out-of-pocket maximums(5).
In addition, more than half of employers are expecting to introduce or expand a wellness program next year, and 34 percent are planning to introduce or increase financial incentives for wellness programs in 2010.
“As in year’s past, many employers are expecting to shift additional health care costs to employees in 2010 to share the burden of double-digit rate increases,” said John Zern, U.S. Health & Benefits Practice Director with Aon Consulting. “However, it may be more dramatic next year, as many organizations try to avoid taking other drastic measures such as layoffs or salary freezes. Conversely, the good news is found in that more than half of employers are planning to either introduce or expand wellness programs, in an effort to build a healthier and more productive workforce, and ultimately lower health care costs.”
Short-term solutions
To reduce employer and employee health care costs, employers have been implementing various types of audits as a short-term savings solution. According to the Benefits & Talent Survey, 46 percent of organizations conducted a dependent eligibility verification audit in 2009 or earlier, and 20 percent are planning to do so in 2010 or later. These audits are designed to save on health care costs by ensuring only eligible dependents are covered.
“Employers who conduct dependent eligibility audits can see immediate savings ranging from 3 percent to 10 percent in dependent health care costs,” said Tom Lerche, U.S. Health Care Practice Leader with Aon Consulting. “Achieving savings from removal of ineligible dependents may reduce the need for further employee layoffs and will ensure program integrity,” he added.
Other audits employers are planning to implement in 2010 or later include electronic prescription drug (16 percent of employers); medical claims (13 percent of employers); and prescription rebate (12 percent of employers).
Long-Term Solutions
Not only are employers taking advantage of short-term cost savings opportunities, they are also offering wellness and disease management initiatives to help improve the health care cost trend in the long-term. The survey found 67 percent of employers have promoted exercise/physical activity in 2009 or earlier, and another 12 percent are planning to implement this initiative in 2010 or later. Additionally, 63 percent of respondents offer disease management programs and 10 percent plan to do so in 2010 or later.
Wellness programs rely on improved health to lower costs. In order to measure progress, organizations offer employees a health risk appraisal (HRA) and biometric screenings as benchmarks. In fact, the survey found 52 percent of organizations have already offered both an HRA and biometric screenings. What’s more, 20 percent are planning to implement an HRA and 16 percent are planning to implement biometric screenings as early as next year.
“Both the HRA and biometric screenings are important components of a wellness program,” said Paul Berger, chief medical officer with Aon Consulting’s Health & Benefits Practice. “Based on self-reported data, HRAs provide employees with personalized feedback to help meet their health goals. Biometric screenings, on the other hand, provide employers with objective data based on such tests as cholesterol and blood sugar. This gives employers a better understanding of the health risks in their employee population on an aggregated basis; as a result, they can develop the right wellness and disease management programs for their workforce.”
Incentives and tracking wellness & disease management programs
The key to a successful wellness and disease management program depends on participation, and one way to motivate employees to sign-up is by offering incentives, according to Berger.
The survey found 41 percent of employers offer a gift card or merchandise as an incentive, and of those organizations that offer at least one incentive, 39 percent offer between $50 and $249 as the maximum value an employee can earn in one year.
Tracking the status of health measures also is an important component of any wellness or disease management program. According to the survey, some of those measures employers are tracking include:
– Medical costs of chronic conditions (45 percent)
– Participation in corporate wellness/preventive activities (36 percent)
– Participation in corporate disease management programs (32 percent)
– Biometric data (28 percent)
“While these numbers are encouraging, the overwhelming majority of employers are still not tracking the indirect affect of chronic conditions: presenteeism(6) and absenteeism,” Berger said. “Only 10 percent of employers are tracking measures of presenteeism, and only 13 percent are tracking absence costs of chronic conditions.”
“Once employers know the impact chronic conditions have on their employees’ productivity and absences from the workforce, they can begin to make greater improvements to their programs to lower health risk factors and build a healthier, more productive workforce,” Berger added. “Done right, a wellness program will reduce medical trend, presenteeism, absences from work and the incidence and duration of disability.”
About the Study
Aon Consulting surveyed more than 1,300 employers nationwide for its 2009 Benefits and Talent Survey. This annual survey provides a glimpse into the strategies and tactics companies are using to ensure that they continue to improve talent, reward success and prepare for economic recovery. It includes findings in the areas of Retirement, Health Care and Workforce Management. To learn more about this survey, please click on the following link http://insight.aon.com/?elqPURLPage=4552.
(1) An employee contribution is the employee portion of the premium, which is the dollar amount taken out of the employee’s paycheck each pay period to pay for health insurance.
(2) The deductible is the portion of a claim that is not covered by the health plan. It is the amount of expenses that must be paid out-of-pocket before an insurer will cover any expenses.
(3) Copay is the fixed amount the employee owes for an approved medical or prescription drug expense.
(4) Coinsurance is the percentage of the cost that the employee owes for an approved medical expense.
(5) Out-of-pocket maximum is the most an employee will pay for covered medical services during a benefit period.
(6) Presenteeism is a term used to describe employees who are working but who are not productive due to illness, stress, depression, or injury.
Source: Aon Corporation
To Repair or to Replace – That Is the Question
AAA offers advice for motorists debating costly major repairs vs. new vehicle purchase
With the downswing in the economy and the country in a recession many motorists have delayed the purchase of a newer vehicle. But as existing vehicles continue to age, major components can begin to fail and leave motorists facing a tough decision — invest in costly repairs to an older vehicle or the purchase of a newer one.
“Repairing major vehicle components such as the transmission or engine can run upwards of $2,000 or more,” said John Nielsen, director, AAA Approved Auto Repair and Auto Buying. “When faced with the decision of whether to invest in the repair of a current vehicle or purchase a newer one, motorists need to consider a number of factors.”
Comparing costs
It is typically less expensive in the long run to repair the vehicle already owned rather than purchasing a newer one. Financing even a $2,000 repair typically results in lower payments (or similar payments for a shorter time) than those incurred when purchasing a newer vehicle.
If motorists are still paying off a car loan on an existing vehicle, they need to take a careful look at the equity they have in it. If they are ‘upside down’ in the loan, meaning they owe more than the current value of the vehicle, purchasing a newer vehicle could mean not only financing its purchase price but also the negative equity from their current vehicle.
The 50-percent rule
After receiving the estimate of a major repair, consider the ‘50-percent rule.’ When the cost of a needed repair approaches 50 percent of the vehicle’s value, it is time to seriously consider replacing it. Current trade-in and retail values of vehicles can be determined using tools available in the Auto Buying section of AAA.com.
Reliability and maintenance history
The decision to make a major vehicle repair should always be based on knowing the vehicle is otherwise in good condition and likely will not require additional major repairs anytime soon. Consider the reliability of the vehicle so far. If it has a history of problems, it could indicate there are more costly repairs still to come.
The best way to know a vehicle’s condition is by maintaining it on a regular basis and using the same repair shop. If a repair shop knows the service history of a vehicle, consumers can look to its technicians for guidance on when their vehicle likely will need major repairs. Keep in mind that the best time to make a repair or replace decision is always before the vehicle breaks down. A car with its transmission scattered by the roadside has little or no trade-in value.
“Following the vehicle manufacturer’s maintenance recommendations can greatly increase the lifespan of a vehicle,” Nielsen said. “It’s the difference between paying $100 now to replace a part before it fails or being faced with a $1,000 repair bill later when the part fails and causes major damage to other vehicle components.”
Cosmetics
The cosmetic condition of a vehicle can greatly affect its value and a motorist’s desire to hold on to it. Motorists should take a critical look at their vehicle for signs of a wear and tear and evaluate how important their vehicle’s cosmetics are to them. For someone who frequently drives business associates, vehicle appearance might be a higher priority than it is to others.
Nicks in the paint that are starting to rust or snags in the upholstery might not seem like a big deal now, but they can grow into larger cosmetic issues that can depreciate the value of a vehicle. If opting to hold on to a vehicle, be sure to address those little things to prevent them from getting worse.
Lifestyle
Changes in lifestyle can be a large factor in changing vehicles. Family size, commute length, recreational usage and business needs are all legitimate reasons to consider purchasing a newer vehicle that is better suited to a consumer’s driving routine. Changes in priorities can also be a factor, such as the desire for a more environmentally friendly vehicle or one with more safety features.
Outside factors
Several outside factors may impact the decision between repairing and replacing a vehicle such as reduced pricing and special offers from manufacturers; the ability to secure financing; and other upcoming expenses. A vehicle that could become an appreciating classic sometime down the road also might be worthy of extraordinary repairs and maintenance.
“Given proper maintenance and an occasional repair, modern cars are highly reliable and can be safely driven far beyond 100,000 miles,” Nielsen said.
If deciding to go ahead with a major repair, be sure to use a qualified and trustworthy auto repair facility. AAA offers a free public service to assist consumers in their search for a quality auto repair shop. AAA Approved Auto Repair facilities have met stringent standards for customer service, quality and expertise. A listing of AAA Approved Auto Repair shops is available at AAA.com/repair.
As North America’s largest motoring and leisure travel organization, AAA provides more than 51 million members with travel, insurance, financial and automotive-related services. Since its founding in 1902, the not-for-profit, fully tax-paying AAA has been a leader and advocate for the safety and security of all travelers. AAA clubs can be visited on the Internet at AAA.com.