Tuition Aid - Who Offers, How Much and Of Course, Payback's a #####...

Is the economy heating up?  The conventional wisdom is that companies are sitting on hoards of cash and not hiring, but if Tuition Aid is any indicator, companies expect the competition for talent to increase.  As a result, they're offering up benefits designed to lock people in with increasing frequency.

Case in point: Tuition Aid...

From the the newly released Benefits USA 2011/2012 survey results:

"The rate at which companies are offering tuition reimbursement to all of their employees is rapidly increasing. In 2009, only 34.9 percent of employers offered tuition reimbursement to all employees. This increased to 45.3 percent in 2010, and again in 2011 to 51.7 percent.

The amount companies are willing to reimburse employees for their education varies by industry as manufacturing and distribution companies average a reimbursement maximum of $4,689 per year. Utilities employees may receive reimbursement up to $4,227, while companies in banking and finance reimburse employees an average $3,869 each year. Healthcare organizations offer $3,104 annually for reimbursement, while those in hospitality offer the lowest reimbursement maximum, $2,757.

Sixty-five percent of organizations impose work requirements on employees receiving tuition reimbursement. On average, employees are required to work 15 months, post-reimbursement. In addition, nearly 87 percent of employers have course requirements which must be met in order to be reimbursed for education." 

Did you cut Tuition Aid in 2008?  Might be time to bring it back....

Don't be a @$@$: A Great Way for Acquiring Companies to Deal With Large Amounts of Banked PTO

Last week, I ran a post called, "Ask the Capitalist: Is This Acquiring Company a Bunch of Pricks?  Simple theme - acquiring company comes in, buys the other company and says "none of your existing vacation and sick time banks are going to transfer to our company".

Obviously, that company's in a situation where they're not worried about organizing/unionization, etc.

However, there's a real cost to rolling those hours over into the new company, since the acquiring company will have to account for the future liability - today - via the P&L statement.  CFO and Controller skills needed.

Still, it begs the question - if you're an acquiring company and you want to be graceful but don't want the financial baggage associated with the huge PTO banks owned by the employee base you're inheriting, what do you do?

You find the middle ground, Marge.  A sharp reader of the Capitalist had the obvious answer in the comments section of that post:

----------------------------------------------------

Kris—

"My dad's company was acquired a few years ago, and while he had to go with the new company's PTO plan, his accrued sick time was thrown into a special bank of time to be used for salary replacement in case of FMLA, STD/LTD, or extended bereavement. It came in really handy twice."

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Bingo.  Accrued time thrown into the special bank to be used for salary replacement not covered by your STD plan in the case of FMLA leave.  I'm no CFO, but I bet the P&L impact of this is much less, and just as importantly, you look like you actually give a $##t as the acquiring company.

Which is where you want to be.  Simple answer that is a nice middle ground....

Tuition Aid Programs: They Look Great on the Company Brochure, But Are Hard as #*#* to Use...

Hi Kris - 

I'm a benefits manager in Atlanta and I'm looking for some best practices related to Tuition Aid Programs offered by companies across America.  What do you have for me?

-J

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Hi J - 

Thanks for the note - I browsed around for a bit and didn't find anything very interesting... My experience would tell me the major program components that serve as levers to differentiate a tuition aid program would be the following:

1. The amount available annually - $$$
2. What's eligible for reimbursement - what type of programs qualify for reimbursement?  Wide open or only job related?
3. Eligibility - how long do you have to be at the company to get the benefit?
4. Performance Required for Payback - do you need an "A" or a "B" to get reimbursed?  If so, how are non-traditional classes treated?
5. Payback agreements - How much time do you have to be with the company until you clear the requirement to pay back the reimbursement granted by the program? 1 year, 2 years?

I think the last point is the most important lever.  Tuition Aid is one of those things that looks great on the company brochure, but it's hard to use.  People have kids, are trying to live their lives, etc., so only the most ambitious take advantage of the program.  With that in mind, looking at traditional penetration rates of the program is the best practice when trying to budget, and payback agreements will help give your leadership some piece of mind that the folks who use the benefit are the ones most likely to stay.

Easy to promote, hard to use.  A cynic would call it the perfect company benefit - drives positive good will but most folks will never utilize it ...

Sorry I can't help more than that - and remember...stay thirsty my friend.

Ask the Capitalist: Am I Discriminating Against Singles By Paying Full Premiums for Family Coverage?

KD  -

I’d love to get your thoughts on the notion that it’s an unfair practice for companies to fund more $$$ towards the healthcare coverage costs of employees with families than they pay for the single employees.  We all know the costs of insuring a family are at least triple the costs of insuring an individual, so do you buy into this as "singles discrimination" or standard practice (If Company X pays $400/month for an employee and $1,200/month for a family)?   I've got my thoughts on the matter, but I think your readers would be interested in a blog post on the topic, should this interest you.  Thanks and happy Spring!

Donna in Dallas

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Donna - 

Discrimination? No. Unfair? No. Interesting topic?  Yes.

It's a market-based issue.

When it comes to the percentages you pay to cover insurance premiums for singles vs. families, I'd cover the topic in the following way:  People who are trying to insure their families value insurance more than singles do.  While there can be exceptions to that rule, the young immortals who make up most of the single pool don't value insurance as much as people with kids.  Therefore, you paying more to insure families is an actual investment that can pay dividends on the recruiting and retention trail toward those who need family coverage.  

Now look at the other side.  Will it actually help you recruit the young immortals and others who fall in the single coverage bucket by saying, "we're equitable in how we cover single and family coverage"?  The answer is no - for the most part, most single coverage individuals aren't going to make a decision to join or stay with your company based on that.  

My take - the single coverage folks who are complaining to you about this aren't disadvantaged, they're just chronic complainers.  If they leave the company, you'd be better off.  I'd redirect them to take full advantage of all the benefits your company offers before they start trying to take things away from others, because if you're an average employer with average benefits, I'll guarantee you that there are things they aren't using.  If you're thinking about offering additional benefits to this group due to this issue, I'd make it something like Tuition Aid - something where that group has to actually put forth some effort and investment in themselves rather than just complaining.  Lame.

Last note - God help the politician who tries to make family coverage employees potentially pay more in any circumstance due to this angle.  

I'd short his stock immediately, because that sucker is going down. 

When Wellness Sucks... Nobody Wins, People...

A lot of you out there are haters when it comes to wellness.  You know who you are... You think that there's no ROI in wellness programs, that companies have no right to push, prod or otherwise seek ways to make employees take care of themselves in an effort to control the overall cost of administering a group medical plan...

This video is for YOU!  Smoke 'em if you got em...

Below is one of the most "money" videos you'll ever see related to wellness.  You want wellness stereotypes?  This video has them all, from the over-bearing internal wellness champion, the cliche' fitness instructor who comes in to do a class, the BS shake-type drink, even the girl hooked on crank who wins the weight loss contest as a result.

Because let's face it, the wellness program that focuses on weight loss WINS!  What's your BMI?  Mine's 14.2.  I'm shooting to get it under 14 by the end of the year. Don't hate me because I'm skinny.  HATE THE GAME...

Watch this video and love it - then click out to the companion site called whenwellnesssucks.com and take the quiz designed to tell you - you guessed it - whether your wellness program sucks.  It was bankrolled by a wellness firm headquartered in Portland named Recess, that's led by a disruptive force whom I admire and respect - Tanya Barham.  She rocks. 

If you see any of your company's wellness program in this video, you might want to call Tanya...

Obamacare, Ice-T and the Law of Unintended Consequences...

So... I was reading the latest issue of Fortune last night and came upon an interview with Randall Stephenson, CEO of AT&T.  After they went after him a bit for all the network issues related to the iPhone, the last question went a little something like this:

"AT&T took a well-publicized non-cash charge of about 1 Billion after the health care reform was enacted. An internal document showed that the company figured it could save 1.8 Billion a year if it dropped health insurance. Is that actually a possibility?"

Stephenson's response: (I'm paraphrasing) "you bet your sweet #$& it's a possibility."

Actually, Stephenson was more reserved than that, but the point was clear.  Obamacare has a reality that hasn't been discussed a lot - by putting penalties in for employers who don't offer healthcare at a certain level to their employees, Obamacare may actually cause employers with world-class healthcare plans to blink on absorbing that cost - and perhaps STOP offering healthcare to their employees, opting instead to let the government figure it out - and take all the risk that goes with a self-insured plan.

Work the math a little bit.  The last time I looked, employers were spending between 4K and 6K per covered individual (that's different than per employee, because you have family members also covered) depending on the demographics of the group.  Obamacare calls for a 2K penalty annually per employee who's not offered healthcare coverage by the company in question.  The simple math means that employers could shed a big cost point simply by paying the penalty and let the government become the insurer of record for employees.

Law of unintended consequences: Set up a penalty for those who don't provide coverage, and make it a reasonable number since those businesses couldn't afford to cover employees to begin with.  The number can't be the full ticket 4K to 6K annual number cited above, because you can't drive all those small businesses into the ground.  You're simply just looking to get a contribution from those folks toward the cost of covering the employees they can't or refuse to cover.

Whoops...  The big companies see that number and say, "that's interesting".  We could save a lot of money by simply shedding this cost and paying the 2K fine per employee (See the summary slide of the AT&T costs - current and if they opted not to provide coverage to employees - above and to the right).

Deeper in the Fortune interview, Stephenson refers to what I'll term the tipping point.  He doesn't think AT&T will be the first to do this, but... once a competitor does and removes that cost structure and is in a position of competitive advantage, who knows how many companies will follow suit..

As for who pays the difference between the 2K penalty and the 8-12K total expense per employee (you have to take my 4-6K number per covered individual and multiply it by 2, since that's the average number of covered individuals under most plans per employee), you don't have to look far to guess - that would be the taxpayer.

As Ice-T once said in poetic fashion, "You played yourself".

When You Want Your Employees to Get a New Drug...

Note: When I start talking about medical plan design, you should care.  Still not convinced? Just dream this post will make you seem all cultured the next time someone you know wants to drone on (in support of or against, doesn't really matter) about Obamacare....

It's almost July, and that means the uber-organized among you have your project management software set up to consider the design of your Medical Plan for 2011.

If you're continuing to get slammed by medical costs, you're not alone - either now or in the past couple of years.  Your choices to control medical plan expense and stay cost-neutral on the same plan are pretty simple:

A. You can pass along costs to your employees by increasing employee contributions to premiums (impacts all employees),

B. You can alter the design of your medical plan to ensure that those who use the plan the most pay the most (impacts those who use the plan extensively), or

C. You can do a combo of A and B to control your cost line.

A smart thing to do if you're faced with cost increases is to focus on the top 5 plan design changes you could make that would save you the most money.

Example from the street last week.  A friend of mine made a change to the Rx plan at his company.  This company had your standard 3-tier Prescription program, with generic/preferred/non-preferred tiers coming in at a $10/$30/$45 co-pay respectively.

They changed the co-pay cost of preferred to $35, and changed non-preferred to $100.  The result on cost projections was, let's just say, shocking.

Taking the more aggressive stance on non-preferred drugs saved the plan 5.1% in total cost based on last year's medical utilization (how much the plan was used).

5.1% on the total cost front!!  That's more than pocket change.  That's a real number, and in the spirit of who should bear the costs, the increase in cost is passed along to those who use the plan the most.

The moral?  Ask your broker for the top 5 things you can do from a plan design perspective to save costs.  If they don't talk top tier on the Rx plan, make them talk about it.

The Fourth Biggest Lie in HR: It's Our Parental Desire to Provide Great Benefits...

I’m here this week not to give you the normal PR spin about how strategic the HR function can be, but instead to call BS on the biggest lies in HR. It’s not that HR people want to lie. It’s just that we’ve created our own prison: the urban myths that have developed over the last 20 years as the HR function has matured.

And so we’re trapped. We’ve spawned narratives that make the HR function seem like a cross between Mother Teresa and Stuart Smalley, while the team members—aka employees—we serve actually need more tough love, a cross between Jack Welch and Dennis Miller. They need that little thing called the truth, effectively washed down with a bit of leadership, personality and, at times, humor.

Let's roll...

The Fouth Biggest Lie in HR: It’s the company’s desire to provide strong benefits to all team members. How many shades of gray are there on the color wheel? While we like to take care of team members, if it wasn’t part of the American health care system and a competitive necessity related to talent, employers would be out of the benefits business so fast it would make the collapse of Martha Coakley in Massachusetts seem glacial in comparison. As someone who has been fortunate enough to run a self-insured health care plan in a smaller business environment and witness the humanity firsthand, I can tell you the biggest component to this lie is our unwillingness to hold employees accountable for their own health. HR professionals talk about our cost increases during open enrollment, but most of us never really try to change employee behavior through incentives or penalties.

The truth: If we had the guts, we’d tell employees: We’re not Mom. We only provide benefits because it’s an expectation we have to meet in order to compete in the talent game. We have little to no control over insurance costs incurred, and due to our collective unwillingness to penalize smokers and team members who are gold members at Krispy Kreme, we never will. Employees have to take the cost increases we give them as a result, and if we ever get brave enough to try to change the behavior of the outliers, we’ll find we’re too late due to a legislative environment that protects those making unhealthy choices. Wow, that was depressing to write.

Put the donut down and ponder this: If you’re a good HR pro and don’t feel like you actively pitch the lie above, do you actively preach the truth?

If the answer is no, you’ve got work to do before you’re part of the solution.

See the whole list of HR Lies at Workforce here, or wait - I'm previewing them all week long.  Lucky you..

SHAMWOW ALERT: I'm Not Here to Help You Sell Your Product, Mr. Voluntary Benefits Provider...

Warning - HR Capitalist opinion ahead which many HR professionals will not agree with....

Topic - "Voluntary Benefits", defined as benefits in which the employee pays all of the cost, provides employees with options for benefits and insurance coverage they might not otherwise be able to afford.  The affordability of such benefits is usually enhanced by the fact that employees can often pay for voluntary benefits with pre-tax dollars.

It's back on my mind again after reading this from William Strahan at Human Markets:

"The first offer was to offer free administration of our health and welfare plans.  The administrator would also provide access to their suite of voluntary benefits (auto, home, pet insurance and the like).  They say this with a straight face.

The second offer is even more insidious.  They will provide my employees discounts on electronics – their focus is on computers.  They will help our employees bridge the digital divide.  The employee can even pay for the merchandise over time.  How?  Through payroll deductions.  In a variation on this theme there is no direct purchase of merchandise but there is a debit type card set up.  Again the payments come directly through payroll deductions.

Reasonable people can disagree.  All of these pitches came with lists of current clients that are very impressive.  In my view however, this is a pretty clear market transaction.  I am selling these companies access to my employee base as a sales channel with a built-in collection agency.  The economics 0f this for the vendor seem amazing.  The employer does the heavy lifting of branding and marketing to a group of people with steady jobs and provides an authorative mechanism to provide payment.  The normal risks of extending credit and running a retail operation vanish.  By lowering the risk profile of the sale, the vendor gets a much more profitable operation.  As for the administration vendor – they provide a real service but also get marketing access to sell more services to the employee group."

Sounds noble, right?  Read William's entire post for his view of the drawbacks. Here are a few problems from my view that are often overlooked:

-Voluntary benefits usually include benefit classes like supplemental life insurance, long-term care and auto/property insurance that can have wildly variable cost structures based on the provider and the demographics that are insured.

-HR shops don't do RFPs that closely canvas each class of voluntary benefits.  They usually are hit by a comprehensive provider like an ADP, which provides a package of voluntary benefits with some high margin products built in.  If an HR shop doesn't do a comprehensive provider of the benefits, then they are usually assaulted by the bank or insurance agent with the most aggressive marketing strategy.  In that scenario, HR people are often bad at saying no.

-Everyone, including the employee and the voluntary benefits provider, loves the concept of voluntary benefit costs being automatically deducted from their paycheck.   Employees love it for the convenience and the fact they don't have to track it.  The providers love it because they don't have to collect money.  Once the automatic deduction is in, it's hard to get out.

Put all that together, and it's complicated.  Here's the biggest issue I have, and one of the reasons I haven't opened my shop up in a big way to voluntary benefits since I arrived at my current company - I feel responsible for the solicitation.  If I'm going to open up our employee base to a voluntary benefit, for which the employee is going to pay 100% of the cost, I feel like I am VOUCHING for its quality and value across the marketplace.

And there's no doubt that employees expect you to be looking out for their best interests.  So, they take the voluntary coverage, if available, often without shopping. 

If I am going to allow an auto insurance product to be marketed to my employees through our normal channels, I feel like I need to say the quality/price combination is the best in the marketplace.   And that, my friends, is hard to do.

And that's why I traditionally have said no to the concept of voluntary benefits. 

Pfizer MAINTAIN Program - Part of the Stimulus Program?

What can I say?  I can't pass up a Viagra headline after being subjected to 1 MILLION ads during NBA and NFL games.  Here's a tip.  Guys don't talk about that stuff.  They certainly don't form bands and make up songs professing their love for a drug that would make them the object of harsh jokes around their manfriends.

But I digress... The content behind the headline has to do with Pfizer, part of the Rx machine many of you love to hate, stepping up and starting a program that can help the unemployed and their families that perhaps can't afford to continue the regiment of prescriptions:

"MAINTAIN, which became fully operational on July 1, 2009. MAINTAIN helps eligible unemployed Americans (and their families) who are in financial need and lack prescription coverage continue to get their Pfizer medicines free-of-charge for up to one year or until they become insured, whichever comes first. 
 
Through MAINTAIN, more than 70 Pfizer medicines are offered that treat a range of chronic health conditions. It is easy to learn if you may be eligible, by visiting www.PfizerHelpfulAnswers.com or calling 866-706-2400. The program is user-friendly, with a one-page application that Pfizer will typically process within two to three weeks. The program is expected to accept applications through December 31, 2009.
 
There are four eligibility requirements for MAINTAIN:

--Applicants must be able to demonstrate loss of employment since January 1, 2009;
--Lack prescription coverage;
--Attest to financial need; and,
--Be on their Pfizer medicine for at least three months prior to unemployment and enrolling in the program.

I'm adding one:

--Be willing to break out the trombone and join a band with people you don't know to profess your love for a preferred drug of choice based on your condition. 

A rendition of "Loving Lipitor", anyone?  Seriously, it's good to see them giving back, even if they created markets for some of the drugs with a mixture of thin air and billions of dollars of advertising.  

Props.