Participants April 10, 2015

ACA Could Crimp Competitive Benefit Offerings

Health benefits may no longer be as big a draw for new employees, with the ACA in play.
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Call it the law of unintended consequences. The Patient Protection and Affordable Care Act (ACA) has made it harder for companies to offer competitive medical benefits, according to Nationwide Retirement Institute’s small-business survey. 

When Nationwide set out to poll small businesses (between 50 and 299 employees) about their reactions to the ACA, they found a few surprises. First, companies said their ability to offer competitive medical benefits diminished as employees came to see their health care benefits as less attractive than those provided under government plans.

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A few factors are in play, says John Carter, president of the retirement plans business at Nationwide. “Employees have more choices,” he tells PLANSPONSOR. “They have the employee benefit plan, or they can turn to the exchange.” As a result, the overall benefits package is a critical area for employers to examine. “If the employee chooses to go to the exchange, the company then has the salary and the retirement plan to focus on to recruit and retain staff.”

“A company’s health benefits package once proved to be a deciding factor in where employees chose to work. With health care now available on the open market, it’s harder for employers to separate from the pack,” Carter says. “Today’s job prospects will look for employers that provide them the greatest amount of total compensation. That includes those who match a higher percentage of what they will invest into a company retirement plan.”

Slightly more than two-thirds of employees in small business (64%) already see their health benefits as less attractive than what they can find on the open market. Carter points out that this option wasn’t as attractive before the ACA, which made it illegal for insurance companies to turn down people for pre-existing conditions in non-employer-sponsored health care.  

Small businesses are looking to financial advisers for assistance, Carter says, noting this is unsurprising when you look at small businesses, and the role of medical benefits in retaining and keeping employees. “Forty-four percent of small-business owners said the ACA is difficult to navigate,” he says, and 34% said they’re not prepared to handle the changes.

Carter also points out that nearly half of the smaller companies with at least 50 employees (43%) have increased their contributions to the retirement plan since the implementation of key employer and individual mandate provisions that took effect under the ACA at the beginning of 2015. “If the health benefit is less of a competitive benefit package, then retirement moves to the forefront,” he says. “It’s a clear sign employers are ready to re-engage with the plan’s features, having discussions with employees so they really see the benefit of the plan.”

The speed with which plan sponsors have begun responding to the impact of 2015 ACA provisions is a testament to the resilience of U.S. small businesses, Carter believes. “When you think of all the things on a small business’ plate, to react with a retirement increase in only four months is noteworthy,” he says.

That 43% increase in contributions means the other 57% probably should be having those discussions, Carter says. “They must understand there are more competitive medical benefits outside the company,” he says, and be ready to illustrate clearly the value of all benefits provided.

The rollout of the ACA is still ongoing, and the coming expansion of ACA regulations is changing the mix of employees, Carter says. Smaller companies with 50 to 90 employees are taking a hard look this year at their workforces while there’s still time. “We thought it relevant that nearly one-quarter of these business owners told us they plan to replace full-time employees with part-time workers,” in a move to mitigate future health care costs, he says.  

Employees in small businesses today are more mobile, Carter observes, another impact of the ACA. Plan sponsors will need to adopt strategies that carry further incentives for the best employees to stay with their companies, says Kevin McGarry, director of the Nationwide Retirement Institute. “Plans that allow for larger benefit contributions to certain employees will be an attractive option, as will be offering retirement benefits with greater matching contributions,” he says.

Among the findings:

  • 67% of small businesses believe the ACA will make it more difficult to offer competitive medical benefits;
  • 44% say a greater need exists now to offer employee benefits than before the ACA was adopted; and
  • 16% intend to pare their workforce over the next two years because of the ACA. 

The survey was conducted online in the U.S. by Harris Poll on behalf of the Nationwide Retirement Institute between October 7 and October 20, 2014, among 334 small business owners with 50 to 299 employees and who are moderate/major influencers or primary decision-makers in the selection of employee benefits for their company.

The 2015 Nationwide Retirement Institute Small Business Owners Survey can be accessed here.

Benefits April 10, 2015

A Plan Sponsor Injects Fun into Employee Wellness

To get employees to focus on healthy lifestyle behaviors, you have to have convenient and fun programs, says Carrie Camin, at Methodist Health Systems.
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When a new CEO took the helm at Methodist Health Systems, based in Dallas, Texas, in 2007, he was very focused on wellness and health.

The health system, which self-funds its health benefits, established an eight-year strategy in 2007 for employee wellness, which included the usual health risk assessment and biometric screenings. “We had always intended on having an outcomes- or achievement-based wellness plan design; employees who show they are healthier pay less in health care premiums,” says Carrie Camin, assistant vice president of wellness at Methodist Health Systems. She adds that this requirement established an obligation for Methodist Health Systems to provide tools and resources for employees to get healthier and focus on lifestyle behaviors and healthy habits.

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“To do that, you have to have convenient and fun programs,” she tells PLANSPONSOR. At an event the health system held in partnership with the American Diabetes Association, it was introduced to Fitness Interactive Experience (FIX), a health and fitness platform. Camin says it looked like a great opportunity and fun way to get employees moving.

Mike Tinney, founder and CEO of FIX, says FIX is different from most wellness tool providers because 50% of the company’s DNA is from the video game industry, but they also have health and wellness experts on staff. Tinney himself spent 20 years in the gaming industry. “We feel behavior change is much more an entertainment effort than a stick and fancy carrot effort,” he says, explaining that most of FIX’s programs are presented in a challenge format, with participants put on teams and given a finite period of time to complete activities.

The health system utilizes FIX’s flagship product, UtiliFIT. To implement the program, FIX met with Methodist Health Systems to do a discovery and information technology (IT) due diligence process to understand the employer’s needs and goals. A health coach met with Methodist Health Systems to determine acceptable activities for the work environment. FIX has more than 300 activities to choose from to customize a program for clients. All are activities that participants can do in 30 to 60 seconds and require no equipment—such as standing up from their chairs five times in a row, taking a flight of stairs to a meeting rather than an elevator, or cross-fit type of activities such as completing a certain number of squats. The tool also tracks nutrition and lifestyle habits of employees.

Once the discovery process was completed, Methodist Health Systems was set up with its own private domain for challenges, only available to employees. The firm used its own resources and FIX’s internal advertising resources to get employees excited, then opened a registration period for employees. Tinney says the whole implementation process takes four to six weeks.

With the program in full swing, those among Methodist Health Systems' 7,400 employees (from seven hospitals and 32 family health centers) who enrolled in the program get notifications during the day—either by text or email, whichever they signed up for—to do an activity within a certain time frame. The notification includes a link to a webpage that will show a picture or moving image of the activity and descriptions. The system keeps track of activities completed, participants get points, and there is a leaderboard on which teams and individuals get recognition and praise.

The team that receives the most points from all activities in a challenge may win a prize. Camin says the health system offers onsite chair massage to winning teams, and every individual that completes three activities throughout a day during the entire challenge gets 20 dollars in his or her paycheck and points to use towards other rewards.

Camin notes that FIX let the health system frame the verbage used for notifications. “They understand each workplace is unique,” she says. In addition, the system keeps track of employee improvement and activities become more difficult over time.

Methodist Health Systems implemented FIX at the end of 2014. Feeling that the program was new and it would be hard to get employees to register during the holiday time, as well as wanting to manage its budget, the health system established a participant registration cap of 150 employees. But, Camin says soon it had to move to 300, then 500. “We decided that since employees were so excited about something that could better their health, we could work our budget around that,” she adds.

It is too soon to see if FIX has positively affected Methodist Health System’s health benefit costs, but Camin says it isn’t all about costs. “Just doing something to show employees that you care about their health is a great first step, whatever that is,” she contends. “It’s not just about costs of the health plan.” She adds that she’s heard from employees they are still replicating challenges because they don’t want to lose what they gained from challenges—some people have seen physical differences and some have lost weight.

Methodist Health Systems does track claim trends, however, and measures the effectiveness of its wellness program on employee productivity and absences.

Tinney points out, “One of the things that I think makes Methodist so successful is the environment where leadership understands that a healthy worker is a more happy and effective worker and builds it into the DNA of the company culture. This is fertile ground for success stories.” He adds that getting leadership engaged in a wellness program is one of the most meaningful signals to staff of the importance of wellness.

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