15 employee benefits on the rise

Retirement plans and employer-sponsored health insurance are two vital employee benefits, but there are numerous others that are on the rise. Continue reading to learn more.


Employer-sponsored health insurance and retirement plans are always a vital part of the employee benefits conversation. But a number of other benefits — think wellness and perks that promote work-life balance — are becoming table stakes as employers look to attract and retain talent in a tightened labor market. Here are 15 of the employee benefits that are on the rise, according to the Society for Human Resource Management’s recently released annual benefits survey.

Health savings accounts

Health savings accounts continue to rise in popularity. The number of employers offering HSAs — which offer triple tax benefits for employees — rose just one percentage point from 2017 to 2018 (from 55% to 56%), but has increased by 11% in the last five years.

Paid parental leave

The availability of paid parental leave increased significantly between 2016 and 2018 for every type of parental leave, according to SHRM. Paid maternity leave increased from 26% in 2016 to 35% in 2018, and paid paternity increased from 21% to 29%. Meanwhile, adoption (20% to 28%), foster child (13% to 21%) and surrogacy (6% to 12%) leave also increased in the last two years.

A number of large employers have added or enhanced paid parental leave programs in the last year. Dollar GeneralTD Bank and Unum are among the companies that added parental leave benefits for employees, while IBMTIAA and Walmart are among those that expanded their programs.

Company-organized fitness competitions/challenges

The last year has seen a substantial uptick in employers targeting employee wellness through company-organized fitness competitions and challenges. The percentage of employers offering the perk increased from 28% in 2017 to 38% in 2018.

Standing desks

Standing desks are one of the fastest-growing employee benefits: The percentage of employers offering standing desks to workers increased from 20% in 2014 to 53% in 2018. In the last year alone, the benefit increased 8 percentage points.

Research indicates long hours of sitting are linked to obesity, diabetes, heart disease and cancer, so employers are looking for benefits to help combat the problem.

Critical illness insurance

One in four employers now offer critical illness insurance to their employees, according to SHRM. That’s an 8% increase from 2017 and a 10% increase from 2014. As healthcare costs continue to mount for both employers and employees, voluntary benefits offer workers some additional protections for financial emergencies at a low cost, benefit experts say.

Telecommuting

Flexible working benefits, such as telecommuting, flextime and compressed workweeks, encourage work-life balance and can result in higher productivity and more engaged employees, SHRM reports. That’s likely the reason that more than two-thirds (70%) of organizations offer some type of telecommuting, either on a full-time, part-time or ad-hoc basis, up from 62% last year and 59% in 2014.

CPR/first aid training

A growing number of employers are getting serious about safety: The prevalence of CPR/first aid training increased 7 percentage points (47% to 54%) in the past year.

Acupressure/acupuncture medical coverage

Nearly half of employers (47%) now provide acupressure/acupuncture medical coverage, according to SHRM. The benefit experienced significant growth over just the last year: 38% of employers offered the coverage in 2017.

Onsite stress management programs

A growing number of employees report they are stressed out — and the effects are showing at work. So employers are increasingly taking action. The number of employers offering workplace stress management programs is on the rise, with 12% of companies offering these programs. That’s up from 7% last year, and just 3% in 2014.

Lactation rooms

More employers are offering benefits that help new mothers adjust to getting back to work after having a baby. Nearly half (49%) of organizations now offer onsite lactation rooms, according to SHRM, up seven percentage points since 2017 and almost doubling since 2014 (28%).

Casual dress benefits

Dressing down is going up: More employers are embracing casual dress benefits, according to SHRM statistics. The most common practice is to allow employees to “dress down” one day per week, up six percentage points since 2014 (to 62%) and three percentage points since 2017. Half of employers say they allow casual dress every day, up six percentage points since 2017 and 18 percentage points since 2014. And about one-third (34%) of organizations offer the perk on a seasonal basis, up seven percentage points since 2017 and 15 percentage points since 2014.

Service anniversary awards

The percentage of employers offering service anniversary awards, the most common type of compensation benefit, rose by nine percentage points — to 63% — since 2017, SHRM reports.

Spot bonuses

Nearly half (48%) of employers told SHRM they offer employees spot bonuses/awards. That’s a 3% increase from 2017 and a 7% increase since 2014. A number of employers, including Comerica BankHostessLowe’s and McCormick, have announced bonuses for employees in the last six months as a result of financial savings from the GOP tax law.

Life insurance

Company-paid group life insurance is offered by 85% of organizations, and 80% of organizations offer supplemental life insurance for employees, a four-percentage-point increase from 2017, SHRM reports. A substantial increase was seen for life insurance for dependents with more than two-thirds of organizations (70%) offering this benefit in 2018, an increase of 13 percentage points since 2017 and 16 percentage points since 2014.

Paid time off to volunteer

An increasing number of employees are interested in volunteer opportunities — and employers are listening. SHRM reports that 24% of employers now offer employees paid time off to volunteer, up from 22% in 2017 and 16% in 2014.
SOURCE: Mayer, K (6 August 2018) "15 employee benefits on the rise" (Web Blog Post). Retrieved from https://www.benefitnews.com/slideshow/telecommuting-life-insurance-trending-employee-benefits

How to motivate millennials to participate in retirement savings

Millennials make up a third of today’s workforce, but according to The National Institute on Retirement Security, not even half of millennials that are offered retirement plans participate in them. Continue reading to learn more.


Millennials comprise one-third of the U.S. labor force, making them the single-largest generation at work today, according to Pew Research Center. But they don’t appear to be functioning as full-fledged members of the workforce just yet — at least when it comes to participating in benefit plans.

The National Institute on Retirement Security found that two-thirds of millennials work for employers that offer retirement plans, but only about half of that group participates. That means just one-third of working millennials are saving for retirement through employer-sponsored plans.

The culprit for such low participation originates primarily with eligibility requirements. Millennials are more prone to disqualifying factors like minimum hours worked or time with the company — products of being relative newcomers to the workplace and spending the early parts of the careers in a deeply challenging labor market. The passage of time will hopefully help relax these eligibility limitations.

But there are other headwinds bearing down on millennials that could be holding them back from plan participation, and which present an opportunity for plan sponsors to demonstrate value to the largest working generation. For one thing, millennials have earned the most college degrees as a share of their generation, according to the Center for Retirement Research at Boston College, all while tuition costs have continued to outpace inflation. The resulting financial burden is compounded by the fact that millennials are earning less so far in their careers, despite their education gains, than older generations were earning at their age.

It’s important for sponsors to figure out how to enroll more millennials, and not just because it will generate goodwill. Boomers will continue to roll assets out of their plan accounts as they retire. The flight of their outsized share of plan assets will leave a smaller pool to share plan costs. Increased millennial engagement can offset this drawdown.

Plan design that gives due consideration to the rise of millennials should consider how to help with their financial needs and play to their strengths.

Harness millennial tech savvy

Growing up immersed in an electronic and interconnected environment reduces the learning curve that millennials might face in using planning tools. Simple offerings like a loan payment calculator or retirement savings projection interface can make a profound difference on the path to financial preparation.

The flipside to millennials’ willingness to tinker is that they tend to over-scrutinize their investment mix. TIAA found that millennials are three times as likely as boomers to change their investment allocation amid a market downturn — typically a decision that ends in regret. The compulsion to de-risk tends to strike after the worst of the damage is done, leaving investors ill-prepared for the ensuing recovery.

Solutions like target-date funds can remove the need to think about allocations altogether, so millennials can focus on more effective factors like retirement savings or loan repayment rates and stretching for their full matching contributions.

Provide an education benefit umbrella

Compound interest — the accelerant that makes saving and investing for retirement over several decades so effective — works in a similar way against borrowers that are slow to repay their loans. This is an acute problem for millennials, but it doesn’t stop with them. Almost three-fifths of 22 to 44-year-olds have student debt, and they’re joined by more than one-fifth of those over 45-years-old.

Employer-sponsored student loan repayment assistance can take a variety of forms. It can be as simple as directing participants to enroll for dedicated loan payments, and can extend all the way to helping them refinance at a better rate or consolidate multiple loans.

The education benefit umbrella can also cover tuition reimbursement programs for employees that want to continue their education but are hesitant to spend the money. These programs can also serve employee retention goals as they’re typically offered with a payback period if workers leave shortly after being reimbursed.

Any program that lowers employee financial stress will likely help improve productivity. From a practical standpoint, workers have more disposable income — and feel wealthier — once they’ve vanquished their loans.

Being an advocate in helping employees accomplish that goal has obvious benefits for organizations that are seeking to retain members of the country’s largest working generation.

SOURCE: Zito, A (9 August 2018) "How to motivate millennials to participate in retirement savings" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/motivating-millennials-to-participate-in-retirement-savings


One sure-fire way to engage employees in voluntary benefits

Employers are trying to help employees by offering voluntary benefits. Continue reading to learn how to engage employees in voluntary benefits.


Whether your employees are 22 or 62, they need to plan for the unexpected. A sudden injury or illness can dramatically derail their financial well-being and retirement readiness. As the responsibility for healthcare costs shifts to employees, employers are taking steps to help their employees by offering voluntary benefits, like critical illness and accident insurance.

The hitch, however, is that many employees aren’t taking advantage of these benefits.

There are many reasons for this: Employees may not have much appetite for voluntary insurance benefits after choosing medical benefits. They may not understand what’s being offered or how it is relevant to their lives. Further, if they haven’t been close to someone who has dealt with a catastrophic health issue, they may not grasp how destabilizing that is and how voluntary benefits can help at a difficult time.

So how do employers keep employees from hitting the snooze button on voluntary insurance benefits, and wake them up to how these benefits can help with their overall financial wellbeing?

One way is to understand what employees might need given their life stage, family situation or other variables. To help employees sort this out, here are few scenarios of how voluntary benefits could help employees — with fictional people based on a combination of our experiences with customers.

Leaving nothing to chance

Scott tends to be a worrier. His friends joke that he’s a 45-year-old man in a 25-year-old body. He is in the “adulting” stage of life — getting settled in a career, figuring out his personal life, and living on a salary that’s just a few steps up from entry-level. Scott worries about what might happen if he gets sick or injured and can’t meet his portion of his high-deductible plan. He’s also open about the fact that he doesn’t want to move back in with his parents. Unlike most of his friends, he’s also thinking decades ahead and is already contributing to a 401(k).

Scott wants it all — financial protection now and for the future. Based on what he’s seen happen to friends and colleagues close to his age, he chose critical care and accident insurance coverage during benefits enrollment at work. These options will help cover unexpected costs if an unexpected covered event does happen, and the cost won’t take a big chunk out of his paycheck thanks to his employer’s group rate. What’s more, the benefit is tax-free if he ever needs to use it, and can help keep him independent, and out of his parents’ house.

For employers, these kinds of benefits can help mitigate employees’ financial stressors so they can focus on wellness and getting back to work if an unexpected health issue strikes.

Weekend warriors and thrill-seeking hobbies

Catherine is a marketing manager who is married with two children. She is 44 and in the “balancing” stage of life, between “adulting” and “planning.” Her main concern when looking at voluntary insurance benefits was her husband, who likes high-thrill, risky sports. While Catherine tends to shy away from motorcycles and extreme sports, she is a bit of a weekend warrior since it’s hard to find time to exercise during the week. Her kids are also active and perpetually on the go, whether playing sports or just running around with the neighborhood kids.

Once Catherine learned about voluntary benefits, it was a no-brainer to choose accident insurance for her entire family. While she hopes that her family will only have fun — and avoid injury — doing what they all enjoy, she knows they have to be prepared for anything.

Employers can help employees choose the right benefits by encouraging them to think about how they and their families spend their leisure time, including sports, hobbies, adventure travel or any other activities.

Taking account of a family history of cancer

Meet Justin. He’s 55, married, and has a daughter. He is at the “planning” stage of life — following “adulting” and “balancing.” While Justin is healthy, his family history of cancer is a concern when he considers his future. He’s seen family, friends and colleagues struggle with the costs of a serious illness. He also is acutely aware of saving enough for retirement as he has only 10-15 more years in the workplace, during which he can save.

For Justin, his life stage, family history of cancer and concern for his family’s physical and financial well-being led to his purchasing decisions. To help mitigate financial setbacks if he should become ill, Justin purchased critical illness insurance. He also purchased critical illness and accident coverage for his wife and daughter.

From an employer point of view, emphasizing that employees should consider their family and individual medical history — and how an adverse event could impact them and their families — is a compelling way to make voluntary benefits relevant.

Making it real for employees

Many employers want to help their employees choose the right benefits for their specific needs to protect their financial well-being now and for the future. Showing how needs change with age and lifestyle sheds more light on how voluntary insurance can provide benefits for covered events that will help mitigate financial losses and reduce stress.

Digital technology is making it easier than ever to engage employees across channels with easily digestible but important information. Employers can set up “decision tools” that help employees make choices, offer videos that bring different situations to life, develop app-based calculators, and tell stories about how voluntary benefits can help them and their families during an unexpected illness or injury.

Employees have a lot on their minds. The key to making voluntary benefits real is to show employees why they matter and how to choose the right products. What many employees don’t know is that employers are working hard behind the scenes to offer benefits tailored to their workforce. This is an opportunity for employers to personalize the experience and demonstrate to employees that they truly care.

Grubka, R. (27 June 2018) "One sure-fire way to engage employees in voluntary benefits" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/opinion/engaging-employees-in-voluntary-benefits?tag=00000151-16d0-def7-a1db-97f024870001


Compliance Recap July 2018

July was a quiet month in the employee benefits world. The Internal Revenue Service (IRS) released draft Forms 1094-B, 1095-B, 1094-C, and 1095-C. The IRS also released an information letter on the employer shared responsibility provisions.

UBA Updates

UBA released two new advisors:

UBA updated existing guidance:

IRS Releases Draft Forms 1094-B, 1095-B, 1094-C, and 1095-C

The Internal Revenue Service (IRS) released draft Forms 1094-B, 1095-B, 1094-C, and 1095-C. Employers will use the final version of these forms to report on offers of health coverage to full-time employees and their family members, and enrollment in health coverage by employees and their family members (for employers that sponsor self-insured health plans).

There are no substantive changes to draft Forms 1094-B, 1095-B, or 1094-C for 2018. There is a minor formatting change to draft Form 1095-C for 2018. There are dividers for the entry of an individual’s first name, middle name, and last name.

Employers will have more information about any additional changes to these forms when the IRS releases its draft instructions for these forms.

IRS Releases Information Letter on Employer Shared Responsibility

The Internal Revenue Service (IRS) released its Information Letter 2018-0013 to reiterate how the employer shared responsibility provisions would apply to an applicable large employer. Specifically, the IRS explained how the Service Contract Act (SCA) interacts with the Patient Protection and Affordable Care Act (ACA).

As background, the SCA requires workers who are employed on certain federal contracts to be paid prevailing wages and fringe benefits. An employer generally can satisfy its fringe benefit obligation by providing the cash equivalent of benefits or a combination of cash and benefits. Alternatively, an employer may permit employees to choose among various benefits, or various benefits and cash. An employer may choose to provide fringe benefits under the SCA by offering an employee the option to enroll in health coverage provided by the employer (including an option to decline that coverage). If the employee declines the coverage, that employer would then generally be required by the SCA to provide the employee with cash or other benefits of an equivalent value.

This Information Letter refers to IRS Notice 2015-87 which describes how the ACA and the SCA may be coordinated for plan years beginning before January 1, 2017, and until further guidance is issued and applicable. Notice 2015-87 clarifies that, for employees under the SCA, the choice of a cash-out payment will generally not require an employer to pay a greater share of the cost of the health coverage for the coverage to be considered affordable.

Question of the Month

  1. What if a plan sponsor fails to file or pay the PCORI fee?
  2. Although the PCORI statute and its regulations do not include a specific penalty for failure to report or pay the PCORI fee, the plan sponsor may be subject to penaltiesfor failure to file a tax return because the PCORI fee is an excise tax.

The plan sponsor should consult with its attorney on how to proceed with a late filing or late payment of the PCORI fee. The PCORI regulations note that the penalties related to late filing of Form 720 or late payment of the fee may be waived or abated if the plan sponsor has reasonable cause and the failure was not due to willful neglect.

If a plan sponsor already filed Form 720 (for example, for a different excise tax), then the plan sponsor can make a correction to a previously filed Form 720 by using Form 720X.


Everything benefits managers need to know about Generation Z

Say hello to Generation Z. Yes, they have some similarities to Millennials, but they have they own thoughts and attitudes when it comes to work and benefits. Read this blog post to learn more.


Just when you thought you had finally figured out the millennial generation, there’s another young cohort of professionals entering the workforce. Sure, they’ve got some similarities to tech-focused millennials, but they have plenty of their own attitudes and opinions about money, relationships and, of course, work and benefits. Meet Generation Z.

Generation Z was raised in a post-9/11 world, following the dot-com boom and bust and during the midst of the Great Recession. There’s no doubt that these world events have colored the way they think and the way they work. Generation Z is a large cohort of about 72.8 million people and about 25% of the population. It’s a generation that employers will need to understand to create meaningful relationships. Here’s what you need to know.

They’re true digital natives. Generation Z was born between the 1995 and 2010, which makes them the first truly digital native generation. By the time they were heading off to Kindergarten, the internet had reached mainstream popularity and Mark Zuckerberg had already launched Facebook across college campuses.

Like many of us, Generation Z is rarely without their phones. But unlike your older colleagues, Generation Z may be more connected than ever — documenting their days on Instagram Stories and Snapchat, and messaging friends by text and other messaging platforms.

However, they’re also a relatively private bunch. Rather than broadcasting their lives on Facebook (like their parents, aunts, uncles and grandparents), they favor networks that allow for privacy. Snapchat snaps disappear, as do Instagram Stories. Gen Z also gravitates toward apps like Whisper, an anonymous social network for sharing secrets.

Here’s the takeaway for HR pros: Rather than seeing this as a barrier to communication, look at it as an opportunity. Try using text message reminders for open enrollment deadlines or creating a Slack channel for benefits communication, in addition to email and paper updates.

They’re seeking financial security. Generation Z grew up during the Great Recession, during which they may have seen their parents lose their jobs or deal with serious financial hardships. Because of this, Generation Z is focused on financial stability.

Unfortunately, many Gen Zers may join your company drowning in student loan debt from college. Consider offering benefits that help them get out of debt and begin saving for the future. Student loan debt repayment benefits with platforms like SoFi or Gradifi provide appealing avenues to pay off debt faster. You can also promote tax-deferred savings programs such as a 401(k) or health savings accounts to minimize their tax liability and maximize savings opportunities. These benefits may also appeal to millennials struggling with student loan debt and the prospect of saving for retirement — all while they start families.

Financial wellness benefits are attractive to all of your employees — Gen Z included. Consider partnering with local banks or credit unions to provide other savings options and financial education. Make this education appealing to everyone by providing it in different formats — in-person for anyone to attend, as well as on-demand webinars or Skype meetings for those who appreciate a more interactive experience.

Gen Z wants to actively participate. Generation Z is the most connected generation yet; they’re used to Googling an answer before you can finish your question or chatting with their friends throughout each day.

This hyper-connectedness lends itself to more interactive workplace meetings. Keep your Gen Z employees engaged and garner feedback by incorporating polls into your meetings, or creating recordings and presenting to computers and smartphones using a platform like ZeetingsPresentain or Mentimeter.

Whereas millennials were known for their interest in collaborating with each other, Gen Z wants to own their work a little bit more and compete against colleagues. Use this to your advantage to introduce gamification into your programs. Platforms such as Kahoot cannot only help you create some fun competition, but it can improve information retention.

They have a surprising communication preference. We’ve established that Generation Z is a hyper-connected cohort. But research uncovered one surprise about this generation’s preference for feedback: they prefer to be in-person. Use this knowledge to mentor your managers who will deliver feedback, and use it to make your benefits more appealing, too. For example, a confidential advocacy program with phone, email and chat options can be a great source for Gen Zers who want more information on their benefits.

While not everyone in this age group will conform to these attitudes and feelings, it can be helpful to pull back the curtain and understand how this generation could be different from millennials, Gen Xers and baby boomers.


Specialty Drugs and Health Care Costs

Prescription drug spending is rising every year and a significant portion of that spending it on specialty drugs. Read on to learn more.


This November 2015 fact sheet was updated in December 2016 to reflect new data.

Overview

Spending on prescription medications continues to rise each year in the United States.1Specialty drugs— including those used to treat conditions such as cancer and hepatitis C—represent a significant portion of this spending. The high cost of these novel therapies, which often offer advancements in patient care, raises affordability concerns for health plans, patients, and consumers.

What is a specialty drug?

The Pew Charitable Trusts defines specialty drugs as medications with high costs for a course of treatment or a year of therapy. Some health plans also categorize drugs as specialty if they are novel therapies; require special handling, monitoring, or administration; or are used to treat rare conditions. In general, elevated costs are a distinguishing characteristic of specialty drugs. A recent survey found that 85 percent of health plans consider high cost a determining factor in identifying specialty drugs.2 Medicare’s definition of specialty drugs is also based on price: Pharmaceuticals costing $600 or more per month are considered specialty.3

See also: How employers can manage the skyrocketing cost of specialty drugs

Cost implications

The estimated price tag for treating a patient with a specialty drug is high: For some chronic conditions, a year of treatment with a specialty drug can exceed $100,000.4 In 2015, only 1 to 2 percent of the American public used specialty drugs, yet they accounted for approximately 38 percent of total drug expenditures.5 And the price of many specialty drugs continues to rise: In 2015, specialty drug unit costs increased by 11 percent.6 More patients are treating their health conditions with these drugs; utilization rose by 6.8 percent in 2015 because of increased use of existing drugs and the introduction of new pharmaceuticals.7 In 1990, only 10 specialty drugs were on the market,8 but there are now more than 300,9 33 of which became available in 2015 alone.10 And nearly 700 specialty drugs are under development.11 Because of higher prices and increased use, spending on specialty drugs represents an increasing share of total health care costs.12 In 2015, specialty drug spending reached $121 billion on a net price basis.13 The estimated number of Americans with annual drug costs greater than $50,000 increased 63 percent in 2014, from 352,000 people to 576,000.14 Many of these patients take multiple drugs, and 92 percent use high-priced specialty drugs.15 Importantly, patients who need specialty drugs face higher out-of-pocket (OOP) costs, because health plans often require a co-insurance payment, which is a set percentage of a drug’s price. Some plans charge a co-insurance payment as high as 33 percent.16

Managing specialty drug costs

To deal with the high cost of specialty medications, payers in public and private programs use a number of strategies to control patient OOP costs and member premiums, such as negotiating with manufacturers to obtain rebates and other discounts that help reduce the prices that plan members pay for medications. Payers also use different benefit design strategies to ensure the appropriate use of medications and manage total drug spending, including:

Formularies and cost sharing: Specialty drugs are typically placed in a health plan’s highest drug formulary tier, where OOP costs are most expensive. Patients are often required to pay co-insurance in order to access these medications. Research shows that requiring patients to pay more out of pocket reduces their use of prescription drugs.17 In their negotiations with drug manufacturers, payers can sometimes achieve lower prices by allowing patients to pay lower OOP costs for drugs.

See also: A Look at Drug Spending in the U.S.

Step therapy: When multiple treatment options are available for a patient’s condition, plans sometimes require patients to try, and fail, treatment with a cheaper, traditional drug before letting them access a specialty drug. Patients with rheumatoid arthritis, for example, are sometimes required to attempt therapy with traditional oral medications before they can use specialty biologics.18

Prior authorization: These policies require a health care professional to provide documentation that validates a patient’s need for a particular medication. Under most prior authorization criteria, clinical information is necessary to verify that a specialty drug is medically appropriate for a patient before coverage is granted.

Looking forward

Many specialty drugs offer meaningful therapeutic advances over existing treatments. However, if current trends continue, the high cost of specialty drugs will have a significant impact on overall health care spending and patients’ OOP costs. Pew is focused on identifying and evaluating policy options that balance the need to control overall health care spending with ensuring patient access to appropriate medications.

Endnotes

  1. Express Scripts, 2015 Drug Trend Report (2016), https://lab.express-scripts.com/lab/drug-trend-report.
  2. EMD Serono, EMD Serono Specialty Digest, 10th Edition: Managed Care Strategies for Specialty Pharmaceuticals (2014), http://specialtydigest.emdserono.com/pdf/Digest10.pdf.
  3. Centers for Medicare & Medicaid Services, Announcement of Calendar Year (CY) 2016 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter (2015), http://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.
  4. Bradford R. Hirsch, Suresh Balu, and Kevin A. Schulman, “The Impact of Specialty Pharmaceuticals as Drivers of Health Care Costs,” Health Affairs 33, no. 10 (2014): 1714–1720, http://content.healthaffairs.org/content/33/10/1714.short.
  5. Express Scripts, 2015 Drug Trend Report.
  6. Ibid.
  7. Ibid.
  8. American Journal of Managed Care, “The Growing Cost of Specialty Pharmacy—Is it Sustainable?” (2013), http://www.ajmc.com/payer-perspectives/0213/the-growing-cost-of-specialty-pharmacyis-it-sustainable.
  9. Ibid.
  10. Express Scripts, “FDA Approvals Set All-Time High” (2016), https://lab.express-scripts.com/lab/insights/drug-options/fda-approvals-set-all-time-high.
  11. IMS Health, “Overview of the Specialty Drug Trend: Succeeding in the Rapidly Changing U.S. Specialty Market” (2014), http://docplayer.net/4230764-Overview-of-the-specialty-drug-trend.html.
  12. The estimates in this section are based on published reports, some of which use different definitions for a specialty drug. However, the various authors do note that drug price or cost is used as part of their definitions of specialty.
  13. Quintiles IMS Institute, “Medicines Use and Spending in the U.S.: A Review of 2015 and Outlook to 2020,” (2016), http://www.imshealth.com/en/thought-leadership/quintilesims-institute/reports/medicines-use-and-spending-in-the-us-a-review-of-2015-and-outlook-to-2020.
  14. On an invoice price basis, specialty spending was $150.8 billion in 2015.
  15. Express Scripts, “Super Spending: U.S. Trends in High-Cost Medication Use” (2015), http://lab.express-scripts.com/lab/insights/drug-options/super-spending-us-trends-in-high-cost-medication-use.
  16. Kaiser Family Foundation, Medicare Part D at Ten Years: The 2015 Marketplace and Key Trends, 2006-2015 (2015), http://kff.org/medicare/report/medicare-part-d-at-ten-years-the-2015-marketplace-and-key-trends-2006-2015/.
  17. Dana P. Goldman, Geoffrey F. Joyce, and Yuhui Zheng, “Prescription Drug Cost Sharing: Associations With Medication and Medical Utilization and Spending and Health,” Journal of the American Medical Association 298, no. 1 (2007): 61–69, http://jama.jamanetwork.com/article.aspx?articleid=207805.
  18. Express Scripts, Drugs That Require Prior Authorization (PA) Before Being Approved for Coverage (2015), https://www.express-scripts.com/art/medicare15/pdf/prior_authorization_choice.pdf.

SOURCE: PEW (16 November 2015) "Specialty drugs and health care costs" (Web Blog Post). Retrieved from http://www.pewtrusts.org/en/research-and-analysis/fact-sheets/2015/11/specialty-drugs-and-health-care-costs


15 employee benefits on the decline

Employee benefits are on the rise due to many employers ramping up benefits in an effort to attract and keep talent. Although employee benefits are on the rise, a recent SHRM survey showed that these 15 benefits weren't as prevalent as they used to be.


Thanks to a tightened job market, a number of employers are ramping up benefits in an effort to recruit and retain talent. A number of big companies, including Discover, WalmartTaco Bell and Kroger, have announced new and enhanced benefits for employees just this year. In fact, according to research from the Society of Human Resource Management, between 2017 and 2018, the prevalence of more than 60 benefits assessed increased compared with just 20 between 2016 and 2017.

However, not every employee benefit out there has been there on the rise. A number of offerings have declined in prevalence over the last few years — especially for employers looking to better manage benefit costs. Here are 15 benefits that are not as hot as they once were, according to SHRM’s annual survey.

Preventative programs

Though wellness programs are still very popular among employers, preventative programs specifically targeting employees with chronic health conditions has seen a significant drop in the last five years. The coverage fell by eight percentage points since 2017 (from 33% in 2017 to 25% in 2018) and a whopping 17 percentage points since 2014 (42%).

Flexible spending accounts

FSAs are not as prevalent as they once were: 63% of employers currently offer the spending accounts, down from 69% in 2015. While they are still more popular than health savings accounts, that may change in the years to come: HSAs are on an upward trend. The number of employers offering HSAs — which offer triple tax benefits for employees — rose just one percentage point from 2017 to 2018 (from 55% to 56%), but has increased by 11% in the last five years.

Domestic partner benefits

Domestic partner benefits fell by 10 percentage points for opposite sex partners and by nine percentage points for same-sex partners (both to 15%) since 2017.

Childcare and eldercare referral services

Both childcare (17% in 2017 to 9% in 2018) and eldercare (13% in 2017 to 10% in 2018) referral services fell between 2017 and 2018.

Onsite cafeterias

Onsite cafeterias that are fully or partially subsidized by the company are on the decline. Twelve percent of employers currently offer the perk, down from 16% in 2017.

Defined contribution catch-up contributions

The prevalence of defined contribution catch-up contributions — which permit participants who are age 50 or older to make additional elective deferral contributions at the end of the calendar year — has continued to fall over the past five years with 64% of organizations offering this benefit in 2018, down from 76% five years ago.

Short-term disability insurance

Short-term disability insurance has fallen 10% in the last three years: In 2015, 74% of employers offered the coverage; 64% of employers currently offer it, according to SHRM.

Incentive bonus plans

Incentive bonus plans fell by nine percentage points for executives (to 42%) and seven percentage points for nonexecutives (to 37%), SHRM reports.

Sign on bonuses for executives

Sign-on bonuses for executives fell by six percentage points in the last year, from 35% to 29%. SHRM notes of the change: “As competition for talent rises as unemployment falls, organizations may be identifying which types of compensation benefits are the most helpful in recruitment and retention, and subsequently making changes to spend their budgets as wisely as possible.”

Bariatric coverage for weight loss

Bariatric coverage for weight loss — including stomach stapling and gastric bypass surgery — has fallen in the past five years. While 38% of employers offered such coverage in 2014, 33% now offer it, according to SHRM.

Onsite health screening programs

Employers who offer onsite health screening programs — for example, screening for employees’ glucose and cholesterol numbers — have declined 17% since 2015. Thirty percent of employers offer these programs currently, according to the latest statistics.

Employee discounts

Benefits in employee discounts and charity fell in several areas since 2017, including discount ticket services (from 31% to 27%), donations for employee participation in charitable events (from 28% to 24%), company-purchased tickets (from 23% to 20%) and employer-sponsored personal shopping discounts (18% to 12%). SHRM noted the drop “may be due to less value added in terms of effects on recruitment and retention compared with other benefits.”

Elective procedures coverage

The percentage of employers who cover elective procedures for their employees — defined as any nonemergency surgical procedure other than laser-based vision correction — has dropped over the last five years. In 2014, 15% of employers offered such coverage; 11% now do.

Housing and relocation benefits

Overall, housing and relocation benefits are among the least common compared with other benefits categories. Since 2014, prevalence rates for several housing and relocation benefits fell, “perhaps indicating that organizations see little if any value added,” SHRM notes. Although the decreases are between just three and five percentage points, given the low prevalence rates of these benefits to begin with, the decreases are quite substantial (between 25% and 60%). For example, 16% of employers say they offer temporary relocation benefits, down from 24% who offered it in 2016.

Health fairs

The prevalence of corporate health fairs have dropped 10 percentage points in the last three years. Now, 30% of employers surveyed by SHRM say they offer health fairs, down from 40% who did in 2015.

SOURCE:
Mayer, K. (24 July 2018) "15 employee benefits on the decline" [Web Blog Post]. Retrieved from https://www.benefitnews.com/slideshow/employee-benefits-on-the-decline?brief=00000152-14a5-d1cc-a5fa-7cff48fe0001


A Look at Drug Spending in the U.S.

Spending on prescription drugs in the U.S. is projected to overtake other sectors of healthcare in 2018. Continue reading this blog post to learn more.


This fact sheet was updated on April 26, 2018, to reflect newly published data.

Overview

Spending on prescription drugs in the United States is on the rise and is projected to outpace growth in other parts of the healthcare sector in 2018.1 Limited public data on how much various payers and supply chain intermediaries pay for prescription drugs, as well as a lack of consensus on a single metric for drug expenditures, presents methodological challenges in measuring drug spending.

See also: Specialty Drugs and Health Care Costs

Nevertheless, a number of public and private organizations have published drug spending estimates over the past several years, including the share of health spending attributed to drugs. Historical estimates and spending projections from the Department of Health and Human Services’ Assistant Secretary for Planning and Evaluation (ASPE), the Centers for Medicare & Medicaid Services’ (CMS’) National Health Expenditure Accounts (NHEA), the Altarum Institute, and IQVIA are explored in Figures 1 and 2.

Figure 1 illustrates estimates and projections of U.S. drug spending by source from 2010 to 2018. Each incorporates rebates and spending on drugs, excluding over-the-counter (OTC) products.

  • ASPE estimates total prescription drug spending, including retail and nonretail, using CMS NHEA, IQVIA, and Altarum Institute data.2
  • CMS’ NHEA data provide estimates of retail prescription drug spending, excluding nonretail.3
  • IQVIA estimates total manufacturer revenue (“net price spending”), accounting for rebates and other price concessions.IQVIA also breaks down manufacturer revenue for drugs sold in both retail and nonretail settings.

Figure 2 illustrates drug spending as a percentage of health expenditure. Each of these estimates incorporates rebates and spending in retail and nonretail settings excluding OTC products, unless noted below.

  • ASPE estimates total drug spending (retail and nonretail) as a percentage of personal health expenditures, a subset of national health expenditures.5
  • The Altarum Institute estimates total prescription drug spending (retail and nonretail) as a percentage of total national health expenditures.6
  • CMS NHEA estimates drug spending (excluding nonretail) as a percentage of total national health expenditures.7
  • IQVIA estimates net drug spending (retail and nonretail) as a percentage of health care spending, including OTC products that do not require a prescription.8

See also: How employers can manage the skyrocketing cost of specialty drugs

Organizations use different denominators to describe health care expenditures

  • National health expenditures: Total health expenditures, including medical spending and public health activities, administrative costs, and research investments (Altarum Institute and CMS).
  • Personal health expenditures: Spending exclusively on direct patient care (ASPE).
  • Healthcare spending: An estimate of health care spending from the World Health Organization (IQVIA).

What drug spending estimates include

  • Rebates: Drug price reductions intended to increase sales through formulary placement. While the method used to calculate the rebate is specified at the time of purchase, the actual rebate is received in the future, as it is based on product sales. Most rebates are paid to pharmacy benefit managers and health plans. Rebates are accounted for in all five estimates, but none of the organizations has access to the specifics of manufacturer agreements.9 IQVIA approximates rebates and other price concessions using publicly available wholesaler and pharmaceutical sales data, public financial filings, the Medicare trustees’ report, and proprietary audits. CMS NHEA adjusts estimated drug expenditures to account for rebates in retail and mail-order settings.10 Altarum Institute and ASPE apply CMS’ rebate adjustments to their drug expenditure estimates.
  • Payers: Entities other than patients responsible for paying health care costs. In the United States, payers generally include insurance companies, health plan sponsors—such as employers or unions—and pharmacy benefit managers. Medicare is the nation’s largest payer. CMS NHEA data include estimates of pharmaceutical expenditures by private health insurers and public health insurers such as Medicare and Medicaid. CMS NHEA data also incorporate the amount that premiums contribute to the cost of pharmaceuticals, though the data do not include the share of premiums that go toward pharmaceuticals. IQVIA does not directly incorporate patient premiums in its drug spending estimates. CMS NHEA data include nonretail prescription drug spending in overall health expenditures but do not separately report spending on nonretail drugs. Spending on drugs in these sites of care is included in overall health cost estimates for each respective setting (for example, drugs purchased by hospitals are reported as hospital spending). The Altarum Institute uses IQVIA data to estimate spending on nonretail prescription drugs. ASPE also publishes an estimate of pharmaceutical spending for both retail and nonretail outlets.
  • Over the counter: Drugs that do not require a prescription. Only the IQVIA estimate for net drug spending as a percentage of health care spending incorporates spending on OTC products.
  • Retail prescription drugs: Drugs sold in a retail setting, such as a pharmacy, drugstore, mail-order, or other mass-merchandising establishment.
  • Nonretail prescription drugs: Drugs dispensed in clinics and institutional settings such as hospitals, long-term care facilities, and nursing homes.

Endnotes

  1. Gigi A. Cuckler et al., “National Health Expenditure Projections, 2017–26: Despite Uncertainty, Fundamentals Primarily Drive Spending Growth,” Health Affairs 37, no. 3 (2018): 553–63, https://doi.org/10.1377/hlthaff.2016.1627; Centers for Medicare & Medicaid Services, “National Healthcare Expenditure Data,” accessed February 14, 2018, https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData.
  2. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, “Observations on Trends in Prescription Drug Spending” (2016), https://aspe.hhs.gov/pdf-report/observations-trends-prescription-drug-spending. ASPE figures rely on data from the NHEA and the Altarum Institute. ASPE expenditures are available from 2009 to 2013 and projections from 2014 to 2018. This was a one-time publication.
  3. Centers for Medicare & Medicaid Services, “National Healthcare Expenditure Data.” CMS data are sourced from Census Bureau retail data, Medicare and Medicaid claims, and IQVIA data. CMS expenditures are available from 1970 to 2016 and projections from 2017 to 2026. CMS publishes these data annually.
  4. IQVIA, “Medicines Use and Spending in the U.S.: A Review of 2017 and Outlook to 2022” (2018), https://www.iqvia.com/institute/reports/medicine-use-and-spending-in-the-us-review-of-2017-outlook-to-2022. IQVIA data are sourced from wholesaler and pharmaceutical company sales information. IQVIA publishes expenditures from 2013 to 2017 and projections from 2018 to 2022. It updates this publication annually.
  5. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, “Observations on Trends in Prescription Drug Spending” (2016).
  6. Charles Roehrig, “A Ten Year Projection of the Prescription Drug Share of National Health Expenditures Including Non-Retail,” Altarum Institute (2017), https://altarum.org/sites/default/files/uploaded-publication-files/Non-Retail%20Rx%20Forecast%20Data%20Brief%20with%20Addendum%20May%202017.pdf.
  7. Centers for Medicare & Medicaid Services, “National Healthcare Expenditure Data,” accessed February 14, 2018, https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData.
  8. IQVIA, “Understanding the Dynamics of Drug Expenditure: Shares, Levels, Compositions and Drivers” (2017) https://www.iqvia.com/institute/reports/understanding-the-dynamics-of-drug-expenditure-shares-levels-compositions-and-drivers. IQVIA data are sourced from wholesaler and pharmaceutical company sales information and the World Health Organization’s Global Health Expenditure Database from December 2016. This one-time publication includes expenditures from 1995 to 2015.
  9. IQVIA accounts for but does not report drug supply and payment chain entity profit retentions (e.g., discounts, rebates, chargebacks and other financial transactions among manufacturers, pharmacy benefit managers, pharmacies, and wholesalers).
  10. Centers for Medicare & Medicaid Services, “National Health Expenditure Accounts: Methodology Paper, 2015,” https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/DSM-15.pdf.

SOURCE: PEW (27 February 2018) "A look at drug spending in the U.S." (Web Blog Post). Retrieved from http://www.pewtrusts.org/en/research-and-analysis/fact-sheets/2018/02/a-look-at-drug-spending-in-the-us


3 ways to support employee caregivers

Employers are now offering their employees benefits if they act as caregivers to loved ones. Do you have employee caregivers?


Think about the people you work with every day—their similarities and differences, their hobbies and family backgrounds, their areas of expertise. Despite their myriad differences, employees of all backgrounds face common challenges that preoccupy their thoughts and pull them away from their work.

A newly released white paper, “Taking Care of Caregivers: Why corporate America should support employees who give their hearts and souls to those in need,” highlights caregiving as an emerging factor that greatly impacts the well-being of today’s workforce.

The scope of what it means to be a caregiver is broad, and many employers remain unaware of how caregiving affects the well-being of their employees. “For many, caregiving is comparable to holding down a second job, and the lines between their work and personal lives become blurry, at best, when the care of a loved one is top-of-mind,” the white paper states. “Tethered by an emotional struggle to leave unpaid caregiving at home, these people must go to work and are expected to perform at the highest level.”

Transamerican Institute’s pivotal study, The Many Faces of Caregiving, reported that 14 percent of employee caregivers go so far as to reduce their work hours or receive a demotion. Another 5 percent  give up working entirely.

While caregiving proves costly for employee well-being, studies also reveal how costly it is for business. According to AARP and the Family Caregiver Alliance, employee caregiving costs employers:

  • Up to $33 billion annually from lost productivity
  • $6.6 billion to replace employees who retire early or quit
  • $5.1 billion in absenteeism

It doesn’t take a “Big Four” accounting firm to see that ignoring this challenge is bad for business. The National Business Group on Health reports 88 percent of employers have “expectations that caregiving will become an increasingly important issue in the next five years.”

But what can be done to make life easier for employee caregivers and keep them happy, healthy and focused at work? Companies of all sizes are taking notice of this challenge and embarking on the first steps to support employee caregivers.

Taking Care of Caregivers highlights a few policies industry leaders have implemented thus far to support employee caregivers.

1. Offer paid leave for caregivers

Giving employee caregivers time and space to be with their loved one and figure out what’s next is a great starting point.

Companies like Microsoft, Starbucks, Bristol-Myers Squibb and Facebook all offer paid time off for employees to care for sick family members. Facebook even offers 10 to 20 days of bereavement leave, which provides much-needed time for caregivers to focus on self-care after experiencing the loss of a loved one.

Renee Albert, Facebook’s Director of benefits, goes so far as to say, “Caregiver support is part of our DNA,” as Facebook aspires to be “the best company for families, no matter how you define ‘family.’”

2. Get creative with online resources

While paid leave certainly frees up time for employee caregivers to focus on their loved one’s care, simply providing PTO doesn’t guarantee that the employee will figure out how to best care for their loved one while they’re away from work. Most first-time caregivers spend hours searching the internet for what to do next with little luck or clarity.

Taking Care of Caregivers cites online support groups, decision-support systems and digital support platforms as primary ways to support employee caregivers in today’s digital world. These tools can be particularly helpful for emotional support and guidance.

“Use opportunities to create communities,” Albert suggests. “Often just knowing you aren’t alone and have someone to share your experience with goes a long way.”

3. Consider how your workplace culture can benefit caregivers

Caregiving programs come in all shapes and sizes, and companies of all sizes can leverage their resources to develop solutions that are responsive to the needs of employee caregivers. This includes options like telecommuting and flexible schedules, which are becoming increasingly common as traditional workplace culture continues to change.

A study conducted by AARP and the ReACT coalition confirms the importance of these programs, stating that “flextime and telecommuting programs saw an ROI of between $1.70 and $4.45 for every dollar invested. What’s more, a work-family human resources policy is associated with a share price increase of .32 percent on the day that policy is announced.”

Even incorporating stress-reduction activities into the workplace can go a long way for caregivers. On-site yoga and exercise classes, relaxation techniques, and massage therapy are just a few options that can help caregivers focus on self-care.

As America’s workforce continues to face the challenges of caregiving, it is time for employers to creatively consider ways to offer support to this preoccupied and stressed-out employee group. Caregiving will eventually touch us all. Take part in these initiatives now, and your employees will thank you later.

SOURCE:
Payne, E. (19 July 2018) "3 ways to support employee caregivers" [Web Blog Post]. Retrieved from https://www.benefitspro.com/2018/07/19/3-ways-to-support-employee-caregivers/


Point-of-sale wellness: How health plans are cashing in

With skyrocketing healthcare costs, payers constantly look for ways to reduce costs and improve health. Continue reading to learn more.


Health care costs continue to skyrocket, and payers are constantly looking for ways to keep their populations healthier and to reduce these costs. Payers looking for more effective strategies to improve health and wellness for members should be aware of the new preventative approaches that more health plans are offering.

One such method that health plans are deploying to engage members is point-of-sale wellness, a type of incentive program that encourages members to actively make healthier purchases and lifestyle choices. As point-of-sale wellness becomes more prevalent among health plans, human resource managers and benefits brokers should understand how these programs work to best determine if they would be a valuable option for their employees and clients.

What is point-of-sale wellness?

Point-of-sale wellness is all about helping health plan members make smart, healthy purchasing decisions when they’re in a retail store or pharmacy. According to the Henry J. Kaiser Family Foundation, the average consumer visits their doctor 3.1 times per year. This same consumer will visit his or her favorite retailers multiple times per week. This presents the perfect opportunity for actionable engagement. It is often too easy for individuals to make impulsive decisions that favor cheaper care items or junk food that provides instant gratification but lead to an unhealthy lifestyle in the long run. Empowering consumers in these moments before checking out at the register with the understanding — and more importantly, the financial incentive — to make informed, smarter choices can lead to a healthier lifestyle and reduced health care costs. In short, the goal is to help individuals prioritize health and wellness at retail point of sale.

There are numerous ways that health plans can achieve this goal. One of the most common is by providing members with prepaid cards that are loaded with funds and discounts for the purchase of over-the-counter (OTC) items such as vitamins, diabetes care items and medications for allergies or cold and flu symptoms. The key component of these specialized prepaid cards is that they can be restricted-spend cards. In other words, they cannot be used to purchase any items that the health plan members want; they can only be used to purchase items off a curated list of products.

Under this arrangement, all parties, from the individual to the health plans and retailers, benefit. With a restricted-spend prepaid card in hand, an individual is rewarded for making purchases that contribute to a healthier lifestyle, while reducing health care costs both for themselves and the health plans administering the cards. In the meantime, the retailers partnering with the health plans to make point-of-sale wellness possible enjoy the opportunity to build long-term customer relationships with the health plan members using the cards.

Point-of-sale wellness in action

Point-of-sale wellness can be customized to be as general or specific as a health plan needs. For example, a health plan that supports a high number of new parents on a regular basis may offer a prepaid card designed specifically to assist members with newborn children. The first years of an infant’s life are among the most expensive from a health care perspective. More health plans are starting to offer new parents prepaid cards that are loaded with funds and discounts for items such as OTC medications, baby food and formula, diapers, strollers, car seats or thermometers. This opens an easier path for new parents to do basic at-home diagnostics and keep their babies’ health monitored so costly trips to an emergency room or urgent care center are not needed as often.

Payers that offer health and wellness programs to assist new parents in their populations can consider engaging health plans that offer these types of prepaid cards. Having a healthier child has the added benefit of reducing stress on the parents, which means they are in a better position to continue performing in the workplace.

Financial incentives for healthier choices

Most wellness programs are focused on informing participants of the best ways to support a healthier lifestyle, but that is only half of the equation. Point-of-sale wellness goes one step further to ensure participants are empowered from a financial perspective to make smarter purchasing decisions while shopping for daily care items. Businesses and benefits brokers who want to provide their employees and clients the best opportunities to live a healthier lifestyle should consider engaging health plans that prioritize these prepaid card incentives into their offerings.

Vielehr, D. (19 July 2018). "Point-of-sale wellness: How health plans are cashing in" (Web Blog Post). Retrieved from https://www.benefitspro.com/2018/07/19/point-of-sale-wellness-how-health-plans-are-cashin/