PLANNING AHEAD FOR A SUCCESSFUL BENEFIT OPEN ENROLLMENT

The substantial amount of labor and hours involved in open enrollment season is known all too well to benefit administrators. But, are you making it harder than it should be? Administrators can make the open enrollment process go much more smoothly, and with a lot less intensive labor, by simply assessing the effectiveness of past enrollment processes before the new season begins. Let’s look at four practices to help you assess your process and determine what adjustments can be made to make the process more efficient.

1. Taking Advantage of the Pre-planning Phase. Begin by clarifying your business’s objectives. You can then evaluate benefit plan designs. Whether it’s health savings accounts, consumer-directed plans, reimbursement accounts, or so forth, the important point is to determine what options best fit your business’s goals and employee pool.

Other considerations during the pre-planning period should include your budget for benefit administration costs, what and how technology will be utilized to make the enrollment process as efficient as possible, and whether the administration of benefits will be outsourced or done within your business.

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2. Developing and Fine-tuning a Project Plan. Your project plan should be defined clearly and stipulate the following elements:

• The dates for the enrollment period.
• What resources are at your disposal and how they are to be allocated?
• A checklist of all tasks.
• How much lead-time will be needed for the addition of new employees and, if applicable, changing vendors or carriers.
• The training schedule for customer service reps and benefit staff members.

Additionally, it’s always prudent to have a contingency plan in place and to oversee the development of the project plan at each stage.

3. Educating Employees on Maximizing Benefits. A 2010 MetLife Employee Benefits Trend Study showed that employees remain extremely interested in communications with their employers regarding financial advice, retirement planning, and other benefit options. In fact, the overwhelming percentage of employees feel that communication has become a very important piece of the enrollment process.

Employers should provide their employees with the education they need to make wise health care decisions and the tools necessary for them to navigate the health care system successfully. There are a number of ways you can accomplish these goals, such as benefit calculators, health and wellness fairs, in-service meetings, direct mail benefit information, and online benefit tools.

It’s also important for employers to communicate the overall value of offered benefits to employees. Your employees should be informed about trends in the insurance industry, whenever you add more value to their health care plan, and how much you are contributing for the offered benefits.

4. Foresee the Tasks to Follow Open Enrollment. Employers should foresee and properly plan for the tasks that will need to be accomplished during the post-enrollment period. If not properly planned for, these tasks can create just as many problems as those that need to be done before and during the open enrollment period. Make sure to address the following points:

• ID card distribution
• Payroll (payroll feed schedule, timing of the last payroll period, and payroll deduction automation)
• Quarterly audit schedule with the carrier
• Follow-ups on carrier inaccuracies
• starting a plan for the next year

INTEGRATED DISABILITY AND HEALTH PROGRAMS YIELD FEWER EMPLOYEE ABSENCES

Whether the economy and business is good or bad, employers in all industries pay careful attention to labor costs. As far as labor costs go, lost productivity due to disabling injury or illness is one of the main cost drivers. In fact, the 2010 Total Impact of Employee Absences survey by Mercer/Kronos showed that unscheduled disability absences account for around 8.7% of U.S. payrolls. This percentage is comparatively over half of the 13.6% of payroll that accounts for the cost of health care.

According to the 2010 CIGNA Integration Value Study, which compared both non-integrated and integrated medical and disability plans, employees who suffer a short-term disabling injury or illness and that have disability and medical coverage spent fewer days on medical leave and away from work than those that didn’t have an integrated program. Other key points from the CIGNA study included the following about employees that have an integrated health and disability insurance program:

• This group had a 20% lower absentee rate than employees with only disability coverage.
• When compared with employees without an integrated plan, this group had an 11% greater return-to-work rate.
• This group needed an average of 13 fewer days of short-term disability leave than employees without access to an integrated program.

Direct and Indirect Savings through Medical and Disability Programs. Each day of disability for a business with average benefit offerings, an average hourly loaded wage of $29.71, and a 60% short-term disability benefit costs the business approximately $159.00. A business with 5,000 medical and disability-covered employees could see around 2,500 fewer disability days, which would add up to a productivity and direct cost savings of almost $400,000.

Don’t Forget the Value of Chronic Care. It’s also important for employers to remember that illness and injury prevention doesn’t cease after the employee starts a long-term or short-term disability absence, as one medical condition can often lead into or cause another to develop. Multiple studies have shown that a chronic care program is an important aspect of an employer having an integrated approach. For example, a different CIGNA study on chronic care showed that employees participating in chronic care programs were absent four fewer days and had a higher return-to-work rate after a disability than employees not participating in chronic care programs. The benefits of a chronic care program, such as coaching, support, and education, can be instrumental in preventing employees already going through a difficult time from seeing their situation drastically worsen.

In closing, it’s clear that reining in employee absentee-related cost is vital to a company’s financial bottom line. Research like CIGNA’s Integration Value Study shows that integrated programs are key to having a coordinated effort in not only assisting employees to return to work, but also to stay on the job and healthy. The greater opportunity that integrated medical and disability programs offer to employees to lessen disability absence and improve their health is a win-win for employee and employer alike.

A BUY-SELL AGREEMENT MAY SAVE YOUR BUSINESS IN THE EVENT OF YOUR BUSINESS PARTNER’S DEATH

You spend much time together, and share the burden of difficult decision making. But it’s not your spouse - it’s your business partner. Your business partner is a tremendous asset to your company. So, how do you protect your business in the event of your business partner’s death? Planning ahead for this scenario may be one of the most important things you do as a business owner.

The death of your business partner can affect more areas of your business than you anticipate. You might be prepared to have conflict between your concerns and those of the deceased’s family. But you should also be prepared for problems such as suppliers wanting to back off; creditors requesting payments and refusing to extend additional credit; customers being afraid to do business; and maybe even some employees leaving your company.

It is beneficial to explore what choices you have should your business partner suddenly pass away. One of the first choices you consider may be to liquidate the business and distribute the assets. The obvious problem with this plan is that you are eliminating your own source of income! Furthermore, the assets of the business may sell for a small percentage of their worth.

A second option would be to take on the deceased’s heirs as your new business partner(s). The problem with this plan is that often it was the special relationship you had with your associate that made the business work. Replicating the chemistry, skill set, and perspective you shared with your business partner is unlikely to happen with their heirs.

A third option for the future of your business would be to sell your share to the deceased’s heirs. However, this option is usually not viable, as the disagreements begin with the purchase price and continue through the rest of the negotiations.

Finally, you could buy out the surviving heirs and maintain the business on your own. This might be the most desirable to you, but again, you will be subject to disagreements over purchase price and other terms. Plus, you will have to come up with the money to purchase the other half of the business.

So, what is the ideal solution? A properly funded buy-sell agreement. A buy-sell agreement is a legally binding contract which dictates exactly what will happen if one of the business partners dies or becomes disabled. You can make all the decisions ahead of time, so both you and your business partner can make the decisions for the future of your business. The contract can be as simple or complex as it needs to be, but most importantly, it will either set a purchase price or provide a formula that will be used to value the business in case of a buy-out.

The death of your business partner and friend will be a difficult time for you and their family. Having to negotiate the future of your business at such a difficult time can be avoided by having a buy-sell agreement already in place. With this agreement, you can provide fairly and adequately for the deceased’s family members, value the deceased partner’s share of the business, avoid placing a financial burden on the business, and prevent bad feelings between the parties. Consult an attorney or financial advisor to talk about planning for the future of your business, before it becomes a greater burden at an already difficult time.