Benefits June 5, 2012

Employees Know Less than Employers Realize About Health Benefits

June 5, 2012 (PLANSPONSOR.com) – A gap exists between what employers think their employees know about health and wellness benefits and what employees actually know, a survey found.
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While more than half of employers believe employees have a good understanding of their benefits and how they can participate, only 41% of employees say they had a good awareness of available programs, according to Virgin HealthMiles. Fewer than half say they understand how to participate. “If employees aren’t aware of their employers’ programs and how to participate, health behaviors won’t change,” said Chris Boyce, chief executive of Virgin HealthMiles. “This is a traditional problem with how employee health and wellness has historically been done. If organizations don’t get this right, they won’t get the business impact they seek from their employee health investments.”

One impact of health investments is seen in recruitment and retention. More than 89% of employees say an employer’s range of health and wellness benefits is either very or somewhat important in their choice of employer.

Despite the human resources advantage, just 9% of employers have adopted consumer-driven communication channels to promote their employee health programs. Instead, employers use traditional methods such as periodic e-mails, intranets and websites, on-site posters and signage, newsletters or company publications and health fairs or on-site events.

With these methods of promotion, employees are confused about the benefits available to them. Employers usually offer smoking cessation, health reimbursement accounts and physical activity programs. However, when asked if their companies offered those benefits, employees said, “I don’t know.”

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In addition, the survey found only 36% of employers say they get the information they need to make practical decisions about their strategies, and just 13% are very satisfied with their provider’s ability to help measure the impact of their investments. This lack of insight affects service provider satisfaction levels: only 16% of employers are very satisfied with their provider’s impact on helping employees change behaviors.

To help drive employees in their plans, more than two-thirds of employers say they offer incentives. Nearly 39% align incentives for a combination of program participation and outcomes; 26% align incentives for program participation only and 2% for outcomes only. Survey results show incentives work: 58% of employees said incentives are a very important factor in their participation.

The survey was conducted by e-mail April 25 to May 11. Employers were surveyed by Workforce Management magazine, which contacted 772 employers across the U.S. Participating employees were 6,756 members of Virgin HealthMiles. 

A copy of the survey is available here.  

Compliance June 5, 2012

Fee Disclosure Top of Mind for Plan Sponsors

June 5, 2012 (PLANSPONSOR.com) - Plan sponsor attendees of the 2012 PLANSPONSOR National Conference said new fee disclosure rules is the biggest issue that keeps them up at night.

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Michael Barry, president of Plan Advisory Services Group, said fee disclosures started as a project by the Department of Labor (DOL) to help participants make better investment decisions, but it has turned into a focus on helping plan sponsors make better provider choices and investment policies. He cited the recent court decision in ABB v. Tussey (see “Employer to Pay for Failing to Monitor RK Costs”); when a sponsor gets knowledge that it is paying more for a service than a consultant reports is the average, the sponsor must act on that information as soon as possible.  

When sponsors get fee disclosure information from providers, Barry said they need to ask three questions: 

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  • Did they tell me what I need to know? 
  • What did they tell me? 
  • What do I need to do about it?  

Barry suggested plan sponsors retain the services of an Employee Retirement Income Security Act (ERISA) attorney. Plan sponsors must compare their fees with industry benchmarks and document the process of comparison.  

On the positive side, Mark Davis, senior vice president and financial adviser at CAPTRUST Financial Advisors, contended sponsors should be confident that fee disclosures will arm them with the information to secure improved fees and less conflict of interest with vendors. In addition, he said he is optimistic this will drive prices of services down. The key for plan sponsors will be to understand how to read the information they are given. He noted that plan sponsors must fire providers that do not provide the right information.   

According to Barry, the timing of the decision in ABB v. Tussey is right to offer more insight to plan sponsors. A focus of the case was revenue sharing, about which most plan sponsors are in the dark. Plan sponsors should look for this in the fee disclosure information they are given.  

In addition, the ruling shows that investment policy statements (IPS), while good practice, can also get sponsors in trouble. The court ruled that ABB did not follow its IPS when deselecting and selecting investments. Barry noted that, in creating an IPS, plan sponsors are creating new rules they must follow, or risk being sued.

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