June 23, 2008
Prepaid benefit cards
poised for growth
Experts are predicting more growth for prepaid debit cards linked to flexible spending accounts, health savings accounts and health reimbursement arrangements. Often, it's the health care equivalent of online shopping: quick, easy, paperless and hassle-free."More employers are open to offering employees a debit card. More employees are becoming card-savvy," observes Mary Liu, an FSA/HSA product director at WageWorks, a San Mateo, Calif.-based firm that administers FSA, HSAs, HRAs and health care cards.
Across the country, "we are seeing a lot of employer interest in implementing these cards," says Carol Tavella, a senior manager at SMART, a Devon, Pa.-based consulting firm. The employers that aren't interested are the ones with very high turnover, she adds.
Chris Byrd, executive vice president at Evolution Benefits, an Avon, Conn.-based provider of prepaid benefit cards, also reports that there has been an uptick in patients using prepaid cards, interest from employers and electronic validation rates. About 30% to 35% of FSA participants nationwide have a prepaid card for the account, Byrd estimates.
"The FSA market and the debit card market are much savvier than they were years ago," partly because of rising health care costs and the influx of high-deductible health plans, Liu adds.
Validating on the spot
Under rules the IRS issued in 2006, purchases made with FSA cards can be automatically approved if the charge occurs with a merchant that uses an inventory system to track the item name and purchase date. If that is not the case, the employer must require a receipt from the employee or additional information from an independent third party, such as an insurance company, before the charge is reimbursed. Self-substantiation, or a statement from the employee without a receipt, is not sufficient.
To qualify for automatic substantiation, supermarkets, grocery stores, discount stores and wholesale clubs that do not have a merchant category code related to health care were required to have the proper inventory system by Dec. 31, 2007. Pharmacies must have the inventory system in place by Dec. 31, 2008.
"There's no more of that pay-and-chase, or very little of it," Liu notes.
Another new, innovative feature available with some cards is the ability to pre-schedule payments. For example, if you have a monthly appointment with a physical therapist, chiropractor or orthodontist, you could schedule payments for the next six months so that you can take care of it faster and don't have to worry about missing one of the payments.
Stacking
Another recent development in prepaid debit cards is stacking, or linking multiple accounts to the same card. If an employee has an FSA and an HSA, the money will come out of the correct account when the card is swiped at the pharmacy or the doctor's office. The employee doesn't have to keep track of multiple cards or multiple card companies.
Stacking is "becoming more important and more popular," Byrd observes, partly because of the convenience. As a patient, "I don't want to have to figure out which card to pull out. I don't want to have to be such an expert in benefits."
Stacking has some advantages for employers, too, since they may be able to negotiate a better price based on having several plans with the same vendor, Byrd says. "[Employers] are starting to offer the combination of accounts more frequently," he adds.
Cards boost participation
According to Celent, a research and consulting firm based in Boston, there are 19,000 FSAs this year, and that's projected to jump to 20,000 in the next four years. Of those FSAs, 7,672 are card-enabled, and that's predicted to grow to about 12,000 next year and 16,000 by 2012.
There are 1,062 multipurpose, or stacked, cards this year, and that's predicted to grow to about 3,000 next year and 16,500 by 2012, Celent reports.
Debit cards have helped to increase participation levels in FSAs and HSAs because consumers "felt it was less hassle," Liu notes.
Tavella agrees: A prepaid card "usually doubles or triples their participation in an FSA account. As employers continue to shift more cost onto employees, the debit cards help employees by providing them with immediate access to funds. They don't have to take the money out of their pocket at the provider. It does sometimes help streamline the reimbursement process, and it does help employees save money on income tax. Employers have a win in this, as well, because they save money on FICA taxes."
In addition, the card "allows [workers] to manage their funds better," Bryd notes.
According to a 2007 survey from the Network Branded Prepaid Card Association, 81% of workers who have a prepaid health care card are extremely or very satisfied with their FSA, versus 66% of FSA users without a prepaid health care card. About 80% of consumers say the process of submitting receipts and being reimbursed is overly cumbersome.
Communication is a key to success for debit cards, as with other benefits, experts say. Some employees may get frustrated if they don't know where they can use their card or what items they can buy with the card. (See below.)
"The average participant may not be card-savvy and may just assume that they can use it anywhere," Liu remarks.
Tavella recommends using multiple communication formats and giving real-life examples. "The use of the card needs to be linked to everyday life in the communications," she says. "They need to have actual examples of how to use the card."
Looking ahead, Liu predicts a trend toward using online claims and electronic payments. Consumers "are looking for more ways to submit their paper receipts online, versus faxing or mailing," she says.
"I don't know if we're there yet, but I think that's where the industry is going next."
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Backup eldercare helps caregivers
balance work and family responsibilities
When UPS employee
Diane Davies needed
help in taking care
of her dad, who is
in his 80s, a
coworker told her to
try Senior Helpers,
a service provider
that offers backup
eldercare.
"My mom had gone
into the hospital to
have an operation,
and during the
procedure she had a
stroke," says
Davies, who works at
UPS's airline
division in
Louisville, Ky.
Her mother, also in
her 80s, went into
rehabilitation.
"During that time,
my dad really
couldn't stay at
home by himself, so
my brother and I had
to stay with him,
but I also had to
work," explains
Davies, who didn't
take the traditional
route of contacting
her employee
assistance program
for eldercare
advice.
Davies' experience
at UPS reflects how
employers are
recognizing that
workers who are
caring for an aging
relative need an
array of options to
successfully manage
professional and
family
responsibilities.
Yet in offering
eldercare programs
and services,
employers may
sometimes struggle
in communicating
those efforts to
their workforce.
Spreading
the word
Even though
companies have
eldercare programs
and services,
employees do not
always know about
them, says Kathleen
O'Brien, senior
gerontologist with
MetLife Mature
Market Institute.
The
Connecticut-based
institute, which
studies retirement
and aging issues,
conducted a survey
of employees who
were caregivers that
worked at three
Fortune 500
companies offering
robust eldercare
benefits.
"Two-thirds of the
respondents did not
know that the
employer had those
programs," says
O'Brien.
"The company may
announce the
services, but people
are not thinking
about them when they
are announced, and
when they become a
caregiver, it's not
upfront anymore."
The implication for
employers is to
increase employees'
knowledge about
eldercare services.
Citing research from
the Society for
Human Resource
Management, O'Brien
says about 11% of
employers train
their middle
managers about
caregiving programs
and how to work with
employees using
those services.
Research from the
institute also shows
nearly 63% of all
caregivers ages 51
to 64 work, with
most employed
full-time. About 75%
of them are the
primary caregiver.
In addition, male
and female children
of aging parents
alter their work
schedules to
accommodate
caregiving
responsibilities.
For instance, 54% of
men and 56% of women
have modified their
work schedules, with
78% of men and 84%
of women coming in
late and/or leaving
early. In addition,
38% of men and 27%
of women have
altered their
work-related travel.
Bottom-line
implications
More employers are
starting to
understand the
financial toll
eldercare may have
on their bottom
line, O'Brien
confirms.
In 2006, the MetLife
Mature Market
Institute and the
National Alliance
for Caregiving
reported that U.S.
companies pay
between $17.1
billion and $33.6
billion annually in
lost productivity
due to caregiving,
depending on the
level of caregiving
involved. That
equals $2,110 for
every full-time
worker who cares for
an adult relative,
notes AARP.
Historically, most
eldercare services
offered in the
workplace resembled
the childcare
benefit model in
terms of offering
information and
referrals to
agencies that could
help workers who
were caregivers.
Some companies have
moved to a more
sophisticated model
in which they
provide a care
management visit,
where a long-term
care specialist
talks with the
family to sort out
the caregiving
issues, explains
O'Brien. What's
more, some employers
have onsite support
groups, while others
provide substantive
resource materials
written by
caregiving experts.
"We don't really
think of flextime as
specifically for
eldercare, but the
ability [to take a]
leave of absence
without it impacting
your job, and the
ability to arrange
your schedule in a
different way, are
benefits that help
people deal with
eldercare," she
says.
Lending a
helping hand
Maryland-based
Senior Helpers
provides in-home
personal and
companion care for
seniors. This
includes help with
housework, meal
preparation,
errands,
transportation,
medicine reminders
and Alzheimer's
care.
UPS, which employs
about 358,000 U.S.
workers, offers an
employee discount
program where it
collaborates with
companies that
provide group
discounts on
services and
products, including
Senior Helpers.
"Employees who may
have the need to use
Senior Helpers for
services are offered
a discount through
Senior Helpers,"
says Jackie Blair, a
UPS spokeswoman.
In Davies' case, it
was a 10% discount
on services rendered
for a week. "It went
smoothly, but more
then anything, it
took a lot of
pressure off me in
terms of work and
taking care of my
dad," says Davies,
who has been with
the package delivery
company for 15
years. She is part
of its
administrative staff
in the international
support unit.
"I felt like he was
being taken care of.
He is at the point
where, if something
were to go wrong
with the services,
he would be able to
tell me," Davies
explains. "I never
felt, as a
caregiver, I was
under a lot of
pressure to retain
my job." Management
has been
accommodating, she
adds.
As the population
ages, more people
will start to have
loved ones who are
living longer.
Consequently, they
will need some extra
help in taking care
of those
individuals, says
Tony Bonacuse,
president of Senior
Helpers.
"We want to help
employers understand
the cost associated
with eldercare
crises and what
workers who are
caregivers are going
through," he
explains.
The idea for the
company originated,
in part, by watching
his mother, who was
working part-time,
struggle to find
professional help to
assist her with
taking care of one
grandmother with a
broken ankle and
another one with a
hip replacement.
Both women were in
their 80s.
"Unless you have had
a need for homecare,
you really do not
realize our industry
exists outside of
the general health
care industry,"
Bonacuse adds.
"In a lot of
respects, senior
care has been an
underground issue,"
says Cindy Carrillo,
president of
Colorado-based Work
Options Group, which
offers backup care
for infants,
school-aged children
and seniors.
"When someone has a
baby, employers see
the process unfold,
and then the
employee has the
baby and pictures to
show for it. You
don't talk about mom
falling and breaking
a hip," she adds.
"We're trying to
help educate
employers that
senior care is a
concern."
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Working
like a dog
This Friday, kick off the summer with some slobbery kisses and a whole lot of fur during Pet Sitters International's 10th annual Take Your Dog to Work Day. Corporations are being encouraged to partner with animal shelters to spread awareness about the benefit of having pets and to give needy animals a good home."There's nothing like the loyalty and unconditional love of a dog to balance the fast-paced, high-tech nature of life today," says Patti Moran, president of Pet Sitters International. "Whatever you have to deal with, when you come home and your dog rushes to greet you with his tail wagging, the troubles of the day melt away."
Pet Sitters suggests allowing employees to bring dogs to work as a morale booster for employees. If that is not feasible, consider partnering with a local shelter for a pooch-friendly event.
This year, more than ever before, dog adoption is growing increasingly important. A number of pets abandoned at shelters have become known as "foreclosure dogs," those that were left behind when families lost homes or were forced to move to non-pet-friendly areas during hard times. Shelters in hard-hit parts of the country have experienced a 30% spike in dogs needing homes.
For tips on how to keep your canine ready for his corporate debut, read the handy guide, here. Take Your Dog to Work Day was created in 1999 by Pet Sitters International. For more information, visit: www.takeyourjob.com.
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Employers wary of new role embodied in platforms
Employers understand that politicians have to offer proposals to reform the health care system, considering that escalating medical costs are straining the nation's and consumers' budgets.
Yet overall, employers are not rushing to revamp their health benefits in response to ideas floating around in the public policy sphere regarding universal coverage, private/public health insurance or a single-payer health system.
According to the National Business Group on Health and Watson Wyatt, 35% of employers say that health care reform proposals have no influence on their benefit plan designs, while 62% report that they are monitoring reform proposals but will continue to make changes to their benefits programs. The HR consulting firm and NBGH surveyed 453 companies that employ 8.4 million workers and spend $60 billion on health care.
"Rather then focusing on how the proposals will affect their benefit designs, employers are asking broader questions about how the proposals will redefine their role, and whether the [Employee Retirement Income Security Act] will change," says Steven Wojcik, vice president of public policy at NBGH.
In the know
As health care expenditures continue to soar, some observers believe proposals to overhaul the health care system may gradually start to reflect the concerns of employers.
"The presidential debate on health care with this election is the most sophisticated, well-informed discussion we have ever had on the national agenda in America," George Halvorson, CEO of Kaiser Foundation Health Plans and Hospitals, told attendees at the World Health Care Congress in April.
The event, held in Washington, D.C., gathered over 1,800 government officials and senior executives from the nation's largest employers, health plans and health care providers to discuss health care strategies.
Halvorson spoke at a session examining the presidential candidates' health care platforms. Panelists also included the health policy advisors of Sens. Hillary Rodham Clinton, Barack Obama and John McCain.
"In prior elections, the [health care] debates tended to focus on sound bites and simplistic proposals with elements of voodoo economics and wishful thinking," recalled Halvorson.
Clinton, Obama and McCain are talking about chronic care, health information technology, best practices for health care delivery, comorbidity, and racial and ethnic health disparities, he explained. All of those factors are key cost-drivers in health care.
"The debate has actually progressed to the point where the presidential hopefuls are almost ahead of the policy wonks relative to having an understanding of what the health care issues are and what needs to be addressed," Halvorson added. "I am not sure how often that actually happens in American politics."
Instead of blaming a policymaker or entity for the high cost of health care, the candidates' health care proposals take into account that Americans are becoming more obese and are facing more chronic health conditions, Halvorson said. "The presidential candidates are talking about health improvement as a function of our culture, so it's very encouraging when you look at their platforms."
Backing value-based health care
Employers have urged the government to transform the health care system by improving cost transparency and mandating quality-of-care standards. Therefore, it comes as no surprise that the presidential hopefuls and federal regulators are talking about health care policies that echo employers' concerns.
Health and Human Services Secretary Michael Leavitt knows his term will expire in a couple more months, but that doesn't mean HHS will slow down its advocacy of value-based health care initiatives, which many employers support.
"The value of care should replace the volume of care as the most important [factor] in the way we pay for health care in this country," Leavitt said during his keynote address at the World Health Care Congress.
Leavitt said that HHS will soon publicly disclose information on the top procedures by cost and by volume as part of an efficiency measure on health care spending in Medicare.
"We are hopeful that, by showing all of you specifically where efficiency measures are needed, it will speed up collaborative efforts to improve information on health care costs," he explained. The nation must start to challenge the basic assumption that health care is different from other things that we buy.
To Leavitt, improved quality and reduced cost can only occur when payers, meaning patients and employers, begin to send value signals in the market place. "A value symbol is a nice way of saying carrots and sticks,'" he said.
As more information on quality and cost becomes available, employers are better able to design benefits that will guide patients to value. The head of HHS believes that patients are better informed and motivated when they find value-based health care.
"In the future, we will see more ... employers explain to their employees that, If you will go to a high-quality and moderately priced physician, we will pay for most of it. If you insist, however, on going to your brother-in-law who is low-quality and high-cost, then you are going to have to chip in on that,'" he said.
E-prescribing is an area where HHS might consider using a combination of carrots and sticks. Leavitt hopes Congress will require Medicare physicians to use such a system.
First, "we need to ensure that people have the opportunity to make the transition, but there will be a point where we have to say, If you are not willing to work at the most efficient level with us, then we cannot continue to pay you at the highest level,'" Leavitt explained.
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