Greg Judd

Whoa, one question at a time here! This "thread" doesn't seem to track very well. Is everyone reading the same messages? This response addresses the initial post. Hi Jeff, Re: benefits markup factor, There's not a standard factor, nor a very useful range to apply, because items like "health benefits" (a term interpreted in surprisingly varied ways) usually account for a large share of the factor and can be so different from firm to firm. If your calculations permit a variation in TOTAL compensation (cash pay + benefits) of +-10%, you're probably safe with a 35% midpoint, which would take into account statutory items (SS, UI, WC) health benefits, 401k, etc. So, for projecting benefits costs, multiply base earnings X 0.35. As for recruiting costs (another potentially major HR cost element), firms vary widely in their strategies/tactics here, too. The HR/staff ratios I've seen for Valley startups is in the range of 1/75 - 1/90 -- "richer" than "average industry" ratios, but probably sensible for firms in the fast growth stage. Pay for time not worked can be a wildcard if your firm would be generous with it, but frequently gets factored into base compensation budgets.

I believe HR 1180 got the job done on this subject. According to Thomas, the deed was done 3-4 days ago: 12/17/1999: Signed by President. 12/17/1999: Became Public Law No: 106-170.

Ahem. Not that I have any proprietary interest, mind you, but just why is 5500 data "recast" in a large, slow-loading Acrobat document "cool"? The recreated 5500 isn't the 'real' thing--it's not an image of the original, it's just the data poured into a recreated form. Isn't the data the cool thing--and if so, there are much better sources if all you're after is a handful of filings. And we won't require you to hand over any of your own info for them. It's just my opinion that moderators should be more mindful of being moderate--or at least more explanatory--when they wax enthused over offerings from firms in biznez for profit. [This message has been edited by Greg Judd (edited 12-21-1999).]

Are you referring to a feature in some sales force automation (SFA) applications that would allow scheduling of prospect/client phone calls, letters, etc? Scores of sales mgmt apps have such features. Here's one of many sales force automation info sites. Please don't take this as an endorsement; I visited the page & noted it offers downloads of eval copies of a number of well-known SFA apps.

The Kaiser Family Foundation, a font of terrificly useful information on healthcare policy issues, issued the results of a survey earlier this year (2/99) that provides some of the best free information I've seen on group health benefits design. Their 1999 Employer Health Benefits Annual Survey - released in October - provides average waiting period information in Exhibit 4.5 (page 36). Along with size, industry category seems to be the most important determinant of waiting period length (finance short, retail long). [This message has been edited by Greg Judd (edited 12-16-1999).]

While this terrific thread has examined almost every fundamental concept of the tradeoffs inherent in DB vs. DC plan designs, no one's squarely addressed the 'ownership' issue that pax touches on. If pensions are 'merely' deferred wages (as I understand it, this concept had a lot to do with the Sup Ct finding them a valid collective bargaining item, thus expanding corporate sponsorship of them, decades ago), then the tension between the 'ultimate owners' (those whose wages were deferred) and the 'custodians'(the plan's representatives)on all kinds of issues, investment strategy & results among them, is understandable and probably inevitable. So, big surprise, relationships among the stakeholders in the bundle of ownership rights that is a pension promise are complex. I lean toward the participants NOT owning the assets that generate payment of the deferred wages; I lean even farther toward setting stringent provisions to assure that the deferred payments are made, by an entity other than PBGC. Several others have asserted the validity and value of a DB pension promise vs DC benefits; in 'normal' times, the primacy of their position is much easier to recognize. That said, here's a holiday hope for a lengthy extension of our abnormal economic conditions, as regards implementing long term financial security plans.

To add a bit of statistics to the "20,000 lives/employees are not that many" sidebar, BLS (federal Bureau of Labor Statistics, for acronym-ophobes) reports that as of 1992 (latest available figures), just 668 US employers have even 10,000 + employees, compared with a total of over 4,600,000 US businesses of all employment sizes. The number with 10,000+ is about 0.15% of all enterprises. So, 20,000 employees/lives is a relatively unusual business situation. [This message has been edited by Brigid Anderson (edited 11-23-1999).]

Most firms I'm familiar with opt to arrange for prospectus distribution, whether their motive is 404c compliance or just the sense that it's the right thing to do. But do they pay for it? Most take the position, and "persuade" their vendors of it, that it's the asset entity (mutual fund, investment house, etc) that should pay--just like Valic would do for retail shoppers interested in prospectus info about its variable annuity products, or other investment options. For vendors, the "cost" of this marketing function is well worth the value of the information they acquire about those they mail to.

Batgirrl, cash can be offered in lieu of health benefits (see previous posters' remarks), and to my knowledge an employer has no official obligation to confirm an employee electing cash has coverage elsewhere. As to whether the option must be offered to all employees (all who are covered by benefits, I'm supposing), Benefish's comments tell you the answer--"no", if you aren't concerned about the tax consequences, "yes" if you want to preserve the tax favored treatment of the benefits. I'm leaving aside ERISA issues for the present. Basically, in the context of a group plan, your plan needs to behave equitably to preserve the federal, and usually state/local, tax benefits and to enjoy ERISA protections. Naturally, an employer CAN do a wide variety of things with its resources to compensate employees that are inequitable and would not satisfy ERISA standards. The problem, if it's a problem, from a business perspective is that the cost of doing so vs playing by ERISA and/or IRS rules makes such strategies unattractive to most businesspeople.

Herewith, info on the book: The 401(k) Provider Directory Averages Book . Looks interesting, tho if you're a service provider you probably want to know more about potential clients than other vendors' capabilities.... ------------------ [This message has been edited by Greg Judd (edited 11-15-1999).]

First make sure you abbreviate it HIPAA....Then, since you're right here at BenefitsLink, click on over to Dave's compendium of HIPAA stuff --lots & lots of it.

Hi Pax, Try WoPEc's Electronic papers in economics for a number of listings that seem to touch on your topic, including titles like "Retirement Trends & Patterns in the 1990's" & "Why Are Retirement Rates So High At 65?" [This message has been edited by Greg Judd (edited 10-25-1999).]

MoJo's talking truth here. The nature of the promise is the key; depending on your circumstances, the promise of a calculable benefit may be more valuable than the promise of a calculable contribution + 'market performance'. By the way, the quasi-libertarian position jlf takes (& one I subscribe to, most days, because I'm an opportunity costs buff) is one that labor's embraced & neglected off & on for years with regard to benefits of all kinds, not just retirement benefits. In other words, the notion is that benefit promises, when considered as deferred 'real' wages, have usually been discounted too greatly when offered unilaterally by employers. Said yet another way--in a hypothetical employer's voice-- "we'll offer benefits because benefits tomorrow are cheaper than cash today". Naturally, it's a position about which there can be endless discussion/analysis/debate. [This message has been edited by Greg Judd (edited 10-19-1999).]

To recap, it sounds like everyone can jump in the pretax contributions pool on day 1 (according to the entity's 125 plan) but some WILL jump sooner than others because they're eligible for health benefits sooner. I agree with the Joe P, who suggested that the new person seems to be asking the right questions for (maybe) the wrong reasons. I doubt you'd have an eligibility problem with the 125 plan, but you do have a strange relationship between 125 & health benefits. [This message has been edited by Greg Judd (edited 10-14-1999).]

OK Dave, I'll do my 5 min. worth of work: Naturally, there's the Internet Healthcare Coalition; Then there's the National Coalition on Healthcare , The National Business Coalition on Health , and the Health Benefits Coalition. The Coalition for Quality Patient Care is another. Regionally, there's The New York Business Group on Health, The Washington Business Group on Health, and The Pacific Business Group on Health, to name just three. And let's not forget The Employer Quality Partnership. Few of these sites contain references to one another; perhaps someone will volunteer to make introductions? Any way to 'bulk upload' this stuff to the library? I'm too slow a typist to deal with it myself. [This message has been edited by Greg Judd (edited 09-23-1999).]

So many surveys, so little time.... First check Benefits Link's links to surveys. Not only useful of themselves, but good hints for sources of other healthcare survey stuff: http://www.benefitslink.com/index/surveys.shtml Then there are the ones you pay for: Employee Benefit News has select survey results at their site, for paying customers: www.benefitnews.com Benefit Planning Guide, under Paid Services I always felt Mercer's (ne: Foster Higgins) annual healthcare was the best of the letterhouse lot; info & pricing here http://www.wmmercer.com/usa/english/resour...ws_topic40.html ; Finally, there's the simpler, small-scale/regional surveys--around 100 respondents--available free from smaller consultants/brokers. Contact me for more details. [This message has been edited by Greg Judd (edited 08-09-99).]

I generally second Kip's recommendation to "do the research and see what the effects are before going for a touchy-feely reduction in non-smoker premiums". It's not something to introduce just because you feel it's the right thing to do. Fortunately, there's quite a store of evidence for the correlation between smoking & higher health claims (ok, ok, I admit, correlation isn't causation. Just let me finish.)Employers who are self-funding and actively manage their plans--which means getting and using responsible access to claims data--can, with information about employees' smoking habits, determine if there's a correlation between smoking and above average health claims. Several employers have examined this issue over the years (Control Data was one of the first firms to do so, I believe, at least a decade ago), as have academic studies, and the results have generally demonstrated a positive correlation. On reflection, it's not hard to understand why--and also why experts would caution that ADA issues, or claims of discrimination along other collateral lines, might arise. Smoking correlates with other socioeconomic circumstances that comprise a policy powderkeg for anyone who would engage in social engineering. Benefits professionals are in the behavior change/social engineering business; plan design is about encouraging some behaviors over others. Where things get complicated is the area between the behaviors I'm allowed to try to modify and individual liberties. But that's the context for all sorts of business decisions, every working day.

I implemented a non-smoker discount plan as a benefits manager for a 3,000 employee firm about 10 years ago. We used the honor system; employees self-identified their smoking status, which was more accurately a tobacco use status--ANY amount of regular weekly use, as I recall, qualified one as a smoker (I may be able to retrieve the details if it's critical). We assumed employees would underreport their status; we figured about 5-10% of the total population would say they smoked, calculating that more like 40% did in fact use tobacco regularly. We found instead that people have a heap of integrity; the final count was around 35% smokers. We took pains to provide lots of information about the large body of evidence correlating smoking and higher medical treatment costs (even admitting that some studies had produced evidence to the effect that smoking LOWERED total long-term health costs because smokers expired more quickly, hence consumed less total healthcare services). They understood what we were trying to accomplish--the discount did not amount to a crushing sum--and we felt they appreciated our simultaneous sponsorship of smoking cessation programs, including a modest 'open' subsidy of virtually any cessation program employees completed with documentation (unfortunately, few takers on that part of the plan). Naturally, employees felt strongly about the issue--in all directions. Smokers were among the plan's proponents; some felt it would be just the incentive they needed to cut down or stop smoking. Some nonsmokers felt we were a) neglecting to give discounts for other deserving habits [teetotalling, running 15 miles/week] or b) going too far in invading people's privacy, tho a few came around when they understood that if smoking increased health costs, it affected everyone in the plan (this was still the era of double-digit annual healthcost increases, and our claims data suggested smokers' claims were disproportionately high for our covered group). We intentionally used this issue as a fulcrum for managing other controversial issues; we were just introducing smoke-free workplace rules, and the dialogue enabled us to make sensible modification in the way these policies were communicated and 'owned' by everyone--not just us benefits bureaucrats. It helped us come up with ways of making policy that a) had clear intent b) was not introducing 'smoking police'c)was a living, dynamic thing--not edicts tossed over the cubicle wall or hidden away in a 3-ring binder. In summary, I believe that, if the stage is set well, this kind of program can deliver real value to participants, the plan, and the plan's sponsor, beyond the issue of smoking & benefits costs. The goal after all is not to exact punishment on individual employees, but to motivate behavior change across the population. Be aware of the specifics, but on this one, preserve the spirit more vigorously than the 'law'. [This message has been edited by Greg Judd (edited 08-04-99).]

Need some clarification--how would the employer 'return half the deductible if it is not used'? Sounds like employer will pay out an amount equal to half the deductible to employees who don't have claims that exceed the deductible--meaning everyone who has treatment that would otherwise qualify for reimbursement, but the charge amounts don't exceed the deductible, would qualify for a windfall, whether they had zero treatment visits, or were just under the deductible amount. This convoluted description of the 'cashback' scenario should suggest the complications latent in this tactic. If, as your post suggests, the plan in question is a self-funded fee-for-service plan, why not simply adjust the deductible level? In terms of producing certain, forecastable use & payouts results, changing deductible levels is the most valuable tactic in the benefits pro's toolkit. Overutilization is almost never uniformly distributed across health conditions; what's going on with this population? Lots of births (your 'no claims over $10k, coupled with your statement that overutilization is the issue, suggests this)? Disproportionate numbers employees whose total benefits over the year are amounts equal to or lower than their deductibles? Unusual MH/SA claims? Running a magnifying glass over the claims may enable you to target the problem areas & devise a solution that minimizes pain for all employees while addressing the real needs of specific overutilizing populations. Any opportunities for setting up standard and premium levels of coverage, with stiff contribution requirements for the premium plan (which would keep your current deductible levels) vs the standard plan (a plan that features--surprise--higher deductibles) Selling 'bonuses' for not using health benefits is tough--employees usually smell a rat, even tho there may not be one to smell.

The concept that underlies the 'benefits bank' is what cafeteria plans are "really" all about. Essentially, the 'points', 'benefits bucks', or whatever they're called by the sponsor under consideration, are the currency used to purchase benefit items in the plan sponsor's 'benefits marketplace'. Basically, the allocation is a way for the employer to allow eligible employees to spend 'their share' of the firm's benefits budget. The plan sponsor controls the 'money supply' via its determination of the formula for allocating points. Sponsors have considerable flexibility in setting up their allocation formula: age, service, family status, are among factors commonly incorporated. Note that the allocation formula can be set up to intentionally stray from the 'true' costs of the benefits offered, to accomplish the sponsor's objectives--historically, to encourage employees to try health plan options with more ambitious care management features, or to give special attention to the availability of health benefits from other sources, such as a spouse's employer. The approach has been around a long time, but few surveys accurately capture the extent to which it's being used, thanks to the various ways in which employers interpret the meaning of terms like 'cafeteria plan', 'Section 125', and so on. Management of the issues surrounding the allocation formula can get complex, so this approach tends to be used mostly by larger employers. There are a variety of uses for 'specialty economies' like cafeteria benefits plans. One of the more plausible proposals for Federal election campaign finance reform contains budget distribution concepts that are similar to those described here.

G Burns remarks are accurate for insured health benefits. Sponsors of self-insured plans can and sometimes do exert some control over the plan's pre-existing condition provisions, even in HIPAA's wake. State law provisions may not play any role in such circumstances.

G Burns is probably referring to an article of this sort from Towers Perrin www.towers.com/towers/news/pr990106.html . There is no towersperrin.com URL; keying in that URL will, however, take you to Towers Perrin's home page, from which it can be difficult to find articles on specific subjects. BTW, the author's 'employer [healthcare] cost increases' are not 'medical inflation' rates, but are more akin to trend forecasts, since an employer's costs reflect both use of healthcare and changes in the costs of healthcare goods & services. Too few people in the business grasp the distinction between healthcare inflation and healthcare cost trend. If you assume a forecast of healthcare inflation is a safe proxy for trend, you'll likely end up budgeting too little for your future health benefits outlays--& most HR VPs, CFOs, CEOs, et al don't like surprises like that. So, it doesn't hurt to revisit the inflation/trend distinction now & again. [This message has been edited by Greg Judd (edited 07-31-99).]

Hi, Sounds like you may be confusing healthcare inflation with health claims trend projections--2 different kettles of fish. The latter can get especially fishy. For healthcare inflation projections, see HCFA's site: www.hcfa.gov/stats/NHE-Proj/ I particularly like this one, because it breaks out private insurance spending projections: www.hcfa.gov/stats/NHE-Proj/proj1998/tables/table3a.htm Simply put, trend is a function of inflation--cost change per unit--and use--number of units used. You'll find a wide range of opinions on this, and a critical point of variation depends on where most of your employees receive their care. You may get responses to this question, but weigh them carefully--what's trend for a firm with most of its employees in WI, for example, may not be what your firm should be ready for.

Perhaps more important than their prowess as seasoned shoppers, brokers can give smaller organizations the market clout they may not be able to muster on their own. Insurers value brokers who bring them significant & satisfactory business (a meaningful total number of covered lives who collectively do not generate an extraordinary volume of claims). Good group brokers manage their book of business to a) give their clients great service (plan design, communications, transaction & vendor management, etc) b)deliver enticing insurables to insurers. Smaller employers represented by such a broker may benefit rate-wise because the broker will have more negotiating capital with insurers than the organization would have on its own, thanks to the broker's existing, day-to-day business relationship with the insurer, the appeal of the broker's client roster, the insurer's eagerness to keep other existing business or to be considered for any of the broker's new accounts, etc. The key for smaller employers is to find a firm focused on group insurance/employee benefits, but not so big that its reps regularly forget your name & your organization's name. Thankfully, there are still a fair number of such firms in most areas of the country.

Hi, 2 places to start: Try using Benefits Link's search tool. Enter 'benefit survey', or something along that line. Check the DOL's online summary of survey results for medium/large establishments. Not perfect, but gives you an idea what's out there. http://stats.bls.gov/news.release/ebs3.nws.htm