ARMing Employees: Attracting, Retaining, and Motivating.
Healthcare remains an employee benefit under most federal guidelines and internally with employers. However, employees are trending towards viewing healthcare as an expectation, similar to wages or salary. Regardless of the view, though perhaps influenced strongly by the shifting employee perspective of healthcare, a health and welfare benefits plan must at its core benefit the employee in exchange for said employees’ attraction, retention, and motivation to work for the employer.
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In the simplest sense, attracting, retaining, and motivating employees is achieved by offering the employee an incentive for their labor. Some incentives are mandatory (at least minimum wages for example), while some are discretionary (such as a retirement plan). Almost all incentives, however, are regulated and restrict employers’ flexibility in offering the incentive, or benefit. Health benefits walk a fine line between mandatory in certain cases and discretionary in others.
This lack of uniformity blurs the line between health benefits as a benefit or an expectation, as noted above. However, proper ARMing of employees can achieve the same effect with a health benefit as with other incentives. Furthermore, lessening a health benefit in favor of increasing an alternative incentive may better ARM employees. Ultimately, each benefit plays a significant role as a part of the whole benefits package for a given employee.
Setting aside the mandatory incentives, why do employers otherwise ARM employees with additional benefits?
This question can have complex and intangible responses, but for our purposes, a straightforward response is appropriate: because the employer profits greater than the cost of offering the benefits. By attracting the best talent, holding onto that talent, and keeping the talent happy and excited output work product or service on behalf of the employer, the business thrives from an employment perspective. Turnover decreases, along with the cost of training. Client/customer experience should improve as well, as smiling faces behind the register or on the other end of the call tend to convey a more positive message to the customer.
Not all positions within a company require the same level of ARMing. Typically, as responsibilities increase, the importance of ARMing increases in tandem. Finding the proper balance of attraction, retention, and motivation is a key employment consideration for all businesses. With respect to health plans, the best approach begins with a base level of coverage on which incentives can be added (avoiding nondiscrimination along the way). These considerations may have already begun with the designing of a health plan in Step Five.
Assuming a design has been settled, ARMing employees requires two simple steps:
- offer the benefit;
- communicate the offer.
Employees must know, in a clear manner, the benefits they are receiving to truly appreciate and be ARMed by the offer. For benefits such as wages, communication is simple and in the form of a paycheck or offer letter. For health benefits, with the myriad of confusing forms from multiple sources, communication can be a more complex endeavor.
Offering the benefit requires identification of an insurance product(s) or plan(s) to fit your business’s needs. Contracts for such products and plans must be scrutinized and approved (which we will cover in the next step), and an on-board process for the products and plans must begin. Different designs require different implementation periods, but at the end of that process (which should be guided by the service provider), the benefit will be offered formally to employees.
For most employers, this offering will entail an attractive health plan for higher level employees, a lower tier for lower level employees, and either no benefit or extremely low-cost benefits for part-time and seasonal-level employees. Though each business differs in demographics, financial health, and many other factors, the idea of providing an appropriate level of ARMing to different levels of employees is universal.
For example, a certain business may offer a rich major medical plan to its management and executive staff (heeding the potential for “Cadillac Plan” excise penalties to prospectively begin in 2018). Full-time workers at a lower level in the business may have a more detailed plan design, offering anything from minimum essential coverage only to a lesser major medical plan. Finally, part-time workers and other employees with no effect on employer mandate penalties (beyond initial classification) may see either assistance in applying for public exchange subsidies, access to voluntary benefit programs, or nothing at all.
The next step requires effective communication of the benefits. If employees do not know what they have, they will not feel motivated by it beyond perhaps a general sense. The employer’s goal should be employees who not only know they have healthcare, but employees who know why their healthcare is better than industry or local competitors. Frequently, the argument must be made by the employer itself to achieve this result. Employer-specific documents can make a great impression on employees as a simpler breakdown of the sometimes intimidating and often times boring set of materials employees typically receive. Of course, all documents concerning health coverage should be carefully vetted by professionals internal to the company or external as required.
To best communicate the features of a health plan, consider items which typically grab the attention of employees, such as deductibles, co-payments, and maximum out-of-pockets. If the health plan is a “gold” or “platinum” level plan, these demarcations, whether meaningful in reality or not, can make a good impression. Pay attention to provider networks as well.
A media storm was raised over PPACA and the ability to keep one’s doctor. As insurance company’s continue to adjust to PPACA, advertising access to a local major hospital system or a certain, well-regarded group of physicians could be quite impactful on employees. Some employers also include frank discussions of cost in employee communications. If premiums are rising or benefits are being cut, the employer honestly and earnestly communicates these facts. While this type of communication may not inspire motivation upon first read, downside can be limited through such an approach.
Some employers may consider a multimedia approach to communicating benefits. Besides mountains of paperwork, individual employer or employee portals are becoming increasingly popular as outlets for education on benefits plans. Some service providers or employers even go so far as to produce short videos or similar productions. Finally, presentations and face-to-face meetings can be critical to answering questions or condensing materials into a more palatable format.
With respect to PPACA, the employer benefits of employee benefits can go beyond the intangible benefits noted above. Though such intangible benefits are likely and powerful with respect to an employer’s ongoing operations and profits, specific PPACA employer benefits exist as well.
First, an employer, by ARMing employees on PPACA, can become the employees’ trusted source for information on healthcare reform. This position for an employer is critical, as numerous service providers for individuals may proscribe solutions for employees which result in detrimental outcomes for the employer. Furthermore, the strictures of PPACA itself serve to drive a wedge between the employer and the employee. For example, employers must offer minimum value and affordability to comply with the law. However, by offering such features, employees lose access to public exchange subsidies, which could potentially benefit employees to a large degree. Proper communication of the PPACA landscape, as well as ARMing employees, can remove such wedges and better align the interests of employer and employee.
Second, employers can gain a certain level of control over the employee enrollment process by ARMing employees. If employers are concerned with exchange subsidies for certain sets of employees, retention of such employees on an employer plan or direction to an alternative outside of public exchanges could save thousands per employee per year. (Note that all employers should have concerns with subsidy pre-qualification, which could cause even PPACA-compliant employers to pay employer mandate penalties. If employers have plans which require high participation, controlling enrollment may involve heavily marketing that plan to protect lower premium rates for both employer and employee. Control of enrollment is, in essence, the employer creating an efficient model and ensuring that employee participation does not upset the efficiency of that model. After all, the time spent designing a sophisticated response to PPACA can be wasted in cases that require employee action to achieve the best result.
Note that controlling enrollment does not entail complete control. Mandatory enrollment in a benefits plan has been disparaged by the federal government and will be policed. Mandatory enrollment is not viewed as a true “offer” of coverage, meaning mandatory programs do not satisfy PPACA’s employer mandates. Furthermore, mandatory enrollment could be a violation of the Fair Labor Standards Act. Thus, it is discouraged.
The effects of becoming the trusted resource for employees as well as assisting in the direction of their enrollment will translate quickly into savings for an employer. Avoidance of excise taxes, replacing third parties at adverse interest to the employer, retaining lower premium rates, or in some cases, potentially offering coverage without expectation of participation at all removes a number of monthly fees and potential penalties.
Employers ARM employees to benefit both parties. By creating a motivated, more aligned workforce, employers keep their best foot forward in their respective markets and locales. Employers can also make gains, or at least avoid losses, with respect to PPACA through proactively and intelligently ARMing employees. Though different levels of employees require different levels of attraction, retention, and motivation, all levels of employees can benefit, as well as the employer in turn, from the exercise of the employer offering benefits and communicating those benefits.
LBMC can help you navigate through the extensive ACA requirements, determine any penalty exposure, and develop strategies to eliminate or reduce future penalty exposure.