Defined contribution health benefits

This Issue Brief discusses the emerging issue of "defined contribution" (DC) health benefits. The term "defined contribution" is used to describe a wide variety of approaches to the provision of health benefits, all of which have in common a shift in the responsibility for payment and selection of health care services from employers to employees. DC health benefits often are mentioned in the context of enabling employers to control their outlay for health benefits by avoiding increases in health care costs. DC health benefits may also shift responsibility for choosing a health plan and the associated risks of choosing a plan from employers to employees. There are three primary reasons why some employers currently are considering some sort of DC approach. First, they are once again looking for ways to keep their health care cost increases in line with overall inflation. Second, some employers are concerned that the public "backlash" against managed care will result in new legislation, regulations, and litigation that will further increase their health care costs if they do not distance themselves from health care decisions. Third, employers have modified not only most employee benefit plans, but labor market practices in general, by giving workers more choice, control, and flexibility. DC-type health benefits have existed as cafeteria plans since the 1980s. A cafeteria plan gives each employee the opportunity to determine the allocation of his or her total compensation (within employer-defined limits) among various employee benefits (primarily retirement or health). Most types of DC health benefits currently being discussed could be provided within the existing employment-based health insurance system, with or without the use of cafeteria plans. They could also allow employees to purchase health insurance directly from insurers, or they could drive new technologies and new forms of risk pooling through which health care services are provided and financed. DC health benefits differ from DC retirement plans. Under a DC health plan, employees may face different premiums based on their personal health risk and perhaps other factors such as age and geographic location. Their ability to afford health insurance may depend on how premiums are regulated by the state and how much money their employer provides. In contrast, under a DC retirement plan, employers' contributions are based on the same percentage of income for all employees, but employees are not subject to paying different prices for the same investment.     

EAP Service Use in a Managed Behavioral Health Care Organization: From the Employee Perspective

Contemporary employee assistance program (EAP) services are typically provided in broad-brush programs delivered by large external vendors in a network model. Yet research has not kept pace with EAP evolution, including in terms of how EAP clients themselves view services. We surveyed a random sample of EAP service users from a national provider (361 respondents). About one-third of respondents reported getting help for workplace issues. Most learned about the EAP through employer communications such as the company website. The large majority reported that the EAP helped them "a lot" or "some," suggesting they valued this benefit.     

An Elder Care Training Needs Assessment Among Employee Assistance Program Staff

A mail survey of 95 EAP staff members explored the issue of elder care (employee informal care and company formal policy) and collected data pertinent to training needs, competence to handle employed caregiver problems/questions, and company commitment. Major findings were: (1) EAP staff members estimated that one in five employees currently provides care for an older dependent; (2) most (74.5%) staff have not received any training relevant to elder care; (3) self-assessed competence to handle elder care problems was low for 14 of 17 problem-solving domains constituting the Elder Care Competence Index (ECCI), less than half of the respondents felt competent; (4) the few (13.8%) EAP staff members with extensive (2 or more sessions) elder care-specific training experience achieved ECCI scores nearly double those of other workers, p < .01; (5) most (78.8%) companies have not dealt with the issue in any formal way and only 7.6% of their EAP staff believe this inaction to be appropriate; and (6) company commitment (i.e., formal policy- issue studied, offered programs/services or benefits) is directly related to EAP training (p < .01) and consequently to staff competence ( < .05). The implications for training, policy, and future research are discussed.     

Flexible benefits, choice, and work force diversity

This Issue Brief evaluates the prevalence of flexible benefits plans and their ability to achieve cost management goals and to meet the needs of diverse employee groups. In addition, it examines flexible benefits plans' current legislative and regulatory status and typical plan design features. Sec. 125 of the Internal Revenue Code allows employers to provide employees with a choice among benefits, including moving otherwise taxable cash compensation to the pre-tax purchase of benefits, without requiring them to include the value of the noncash benefits in their adjusted gross income unless they choose taxable options. Although the percentage of full-time employees in medium and large private establishments who are eligible for cafeteria plans has not increased appreciably, the percentage of employees eligible for freestanding flexible spending accounts (FSAs) nearly tripled between 1988 and 1991. Generally, the proportion of employers sponsoring cafeteria plans or FSAs increases with employer size. Recent surveys show that 27 percent of employers with 1,000 or more employees offered choice-making plans in 1991, 48 percent of firms offered health care FSAs, and 54 percent offered dependent care FSAs, either in conjunction with cafeteria plans or as a stand-alone option. Ten percent of full-time employees in private firms employing 100 or more workers were eligible to participate in cafeteria plans in 1991. Only 5 percent of full-time employees in state and local governments and 1 percent of similar employees in small private establishments were eligible for cafeteria plans in 1990. Recent Bureau of Labor Statistics' surveys show that, among full-time employees, 27 percent in private establishments with 100 or more employees, 28 percent in state and local governments, and 6 percent in small private establishments were eligible to participate in freestanding FSAs. In 1992, 21 percent of eligible employees contributed to a health care FSA, and only 3 percent of eligible employees contributed to a dependent care FSA. Contributions to health care FSAs averaged $651, and those to dependent care FSAs averaged $2,959. National health reform could have a significant impact on these plans if the tax treatment of health benefits is changed. Taxation of health benefits in excess of a standard benefits package would fundamentally reduce the ability to use FSAs.     

Small employers and health benefits: findings from the 2002 small employer health benefits survey

Overall, 19 percent of small employers offering health benefits made changes to their health plan between 2001 and 2002. Sixty-five percent increased deductibles and co-pays; 35 percent switched insurers; 30 percent increased the employee share of the premium; and 29 percent cut back on the scope of benefits. Twenty-six percent increased the scope of benefits offered. Nearly one-quarter of small employers offering health benefits think their firm would change coverage and 3 percent think it would drop coverage if the cost were to increase an additional 5 percent. Most small employers offer sound business reasons for offering health benefits to workers. Many report that it helps with employee recruitment and retention, and increases productivity. More than three-quarters report that offering health benefits is "the right thing to do." Most small employers that do offer health benefits report that it has a positive impact on various aspects of the business, such as recruitment, retention, employee attitude and performance, employee health status, and the overall success of the business. Most small employers that do not offer health benefits tend to think that not offering them has no negative impact on the above aspects of their business or the overall success of the business. However, those not offering benefits are more likely than those offering them to report that most of their employees are high-turnover and stay on the job only a few months. Small employers that offer health benefits tend to be distinctly different from those not offering them. Worker income in firms not offering health benefits tends to be considerably lower than in firms that do offer them. Employers not offering health benefits are more likely than those offering them to have a smaller proportion of full-time employees, and employers that do not offer health benefits have a larger proportion of females, workers under age 30, and minority employees. Of small employers that offer dependent coverage, more than 40 percent report that workers do not take coverage for their dependents because the dependents have coverage from somewhere else, but 35 percent report that employees decline dependent coverage because they cannot afford the premiums. Many small employers that do not offer health benefits are potential purchasers. Eleven percent are either extremely or very likely to start offering health benefits in the next two years, and 22 percent are somewhat likely to start offering health benefits.     

Health promotion and disease prevention: a look at demand management programs

This Issue Brief describes employers' efforts to contain health expenditures through demand management programs. These programs are designed to reduce utilization by focusing on disease prevention and health promotion. Demand management includes work site health promotion, wellness programs, and access management. Work site health promotion is a comprehensive approach to improving health and includes awareness, health education, behavioral change, and organizational health initiatives. Wellness programs usually include stress management, smoking cessation, weight management, back care, health screenings, nutrition education, work place safety, prenatal and well baby care, CPR and first aid classes, and employee assistance programs (EAPs). These programs are often viewed positively by workers and can have long-term benefits for employers above and beyond health care cost containment. Demand management can benefit employers by increasing productivity, employee retention, and employee morale and by reducing turnover, absenteeism, future medical claims, and ultimately expenditures on health care. Even though a growing number of employers are offering wellness programs, only 37 percent of full-time workers employed in medium and large private establishments were eligible for wellness programs by 1993. However, a recent survey found that 88 percent of major employers have introduced some form of health promotion, disease prevention, or early intervention initiative to encourage healthy lifestyles among their salaried employees. Distinctions must be drawn between short- and long-term strategies. Demand management can be thought of as a short-term strategy when the focus of the program is on creating more appropriate and efficient health care utilization. Disease prevention is characterized by longer-term health improvement objectives. Whether the purpose is to reduce utilization in the short term or in the long term, the ultimate goal remains the same: to reduce health care expenditures while improving overall health. This goal can be achieved through the use of health risk appraisals, organizational health risk appraisals, high risk programs, awareness programs, medical call centers, return to work programs, EAPs, and smoking cessation programs. Studies of a health program's cost effectiveness must disentangle the effects of many competing factors on cost effectiveness. For example, a health risk appraisal program may identify health problems of which the patient and the health care provider were unaware, resulting in the treatment of these health problems. At the same time, the employer may have switched from a nonmanaged pharmaceutical program to a managed program with incentives for participants to utilize generic and/or mail order drugs. As a result, when evaluating a health promotion program, the long-run impact on the program's cost effectiveness is most important.     

Case Studies of Federal Occupational Health's EAP Responses to Natural Disasters

Summary

Employee assistance professionals have increasingly been called upon to address the emotional and mental health needs of customer organizations and their employees in response to large-scale natural or man-made disasters. In doing so, employee assistance program (EAP) professionals must use a repertoire of responses that encompasses a broad range of interventions, generally anchored in an understanding of and focus on the organization and its culture, mission, management and labor concerns, and other critical characteristics. The EAP's fallback response to a crisis affecting the workplace is often a critical incident stress debriefing or close variant of it. However, EAPs can best serve their customers at all levels with interventions attuned to an understanding of the workplace culture gained through a consultative relationship with management, while factoring in the nature of the disaster, the length of time and characteristics of the disaster's aftermath, and the nuances of the employees' physical and emotional needs throughout the entire disaster response and recovery process.

This article highlights these issues through the presentation of two case studies, gained from the hurricane response activities of the Federal Occupational Health (FOH) EAP. FOH, a service unit within the U.S. Department of Health and Human Services' Program Support Center, has 60 years of experience working in partnership with its federal agency customers to deliver comprehensive occupational health services to improve the health, safety, and productivity of the federal workforce. FOH's EAP contracts with vendor organizations to provide direct employee assistance, work/life, and related services to more than 1.3 million federal employees. The first case study describes (from the first person perspective) an on-site, multi-focused EAP intervention at a federal facility. The second case study describes management consultation with the U.S. Postal Service in response to major hurricane activity.     

Selling EAPs Using Total Quality Management Initiatives

Qualify Management is striving to perform to standard work processes that will achieve the results customers are seeking. EAPs do just that by focusing their performance early in the healthcare delivery process to help insure a healthy and productive workforce. Selling Quality is educating employers, who are wrestling to maintain employee benefits at reasonable costs, to the fact that Quality Management of behavioral healthcare works. Promoting health and wellness at the workplace, intervening early and professionally, and managing care to healthy outcomes is what EAPs and managed care programs are doing today, and convincing employers through their performance that Quality Management works.     

Who Participates and Who Benefits From Employer‐Provided Child‐Care Assistance?

Support from employers to help parents balance work and family responsibilities has become an increasingly important issue, particularly in the United States, where public support for families is scarce. Little is known about the effectiveness of employer‐provided child‐care support. Who participates in these programs, and what are their benefits? This study is among the first to address these questions using a dataset that combines administrative with survey data from employees at a large organization. Findings indicate that employer financial support for child care can be structured so that employees with the greatest need benefit and employee participation is not associated with stigma. Results suggest the employer benefits from increased employee commitment and reduced employee stress, but employees do not report increased parent or child satisfaction with care. Although employer financial support alone cannot compensate for structural problems with regard to child care, it may reduce stress and increase employee commitment in the workplace.     

EMPLOYER CHOICES IN EAP DESIGN AND WORKSITE SERVICES

In today's complex private healthcare market, employers have varied preferences for particular features of behavioral health products such as Employee Assistance Programs (EAPs). Factors which may influence these preferences include: establishment size, type of organization, industry, workplace substance abuse regulations, and structure of health insurance benefits. This study of 103 large employer purchasers from a single managed behavioral healthcare organization investigated the impact of such variables on the EAP features that employers select to provide to workers and their families. Our findings indicate that for this group of employers, preferences for the type and delivery mode of EAP counseling services are fairly universal, while number of sessions provided and choices for EAP-provided worksite activities are much more varied, and may be more reflective of the diverse characteristics, organizational missions and workplace culture found among larger employers in the US.     

The Role of Needs Assessment in the Design of Employee Assistance Programs:

This paper describes the value of a multimethod needs assessment in developing and tailoring an employee assistance program (EAP) to the particular characteristics, problems, and resources of an organization and then provides an illustration of an EAP needs assessment conducted for a city municipality. Unique concerns of city employees, and the specific EAP programs designed to address these concerns, are highlighted.     

Experiences of internal and hybrid employee assistance program managers: Factors associated with successful,at-risk,and eliminated programs

Employee Assistance Programs (EAPs) originated as workplace-focused programs delivered largely by peer employees. Over the past 25 years, the once standard internal EAP has largely been replaced by internal/external hybrid programs or outsourced EAP vendors. Many long-standing internal programs have been downsized or eliminated, along with their internal program manager positions. This qualitative study examined the organizational, leadership, and programmatic characteristics associated with the internal and internal/hybrid EAPs from the perspectives of EAP managers working in programs that have thrived and those that have depreciated. Twenty-four current and former internal or internal/hybrid EAP managers were interviewed using a semistructured interview schedule. Qualitative methods were used to identify patterns and themes within the data to describe the experience of internal and internal/hybrid EAP managers and the critical success and risk factors associated with their positions and programs. Five final themes, with 15 subthemes emerged from the data, suggesting that both individual and organizational characteristics of EAP internal and hybrid programs are important to the program’s sustainability. These findings offer insights regarding best practices and critical success factors to EAP professionals, EAP purchasers, and the EAP industry.     

Total Quality Management in Contracted EAPs

Total Quality Management (TQM) is being implemented in many work organizations throughout the United States in an attempt to compete in a world market. Very few corporations possess the capacity in terms of resources, facilities and expertise to develop, and manufacture a product from inception to market without the use of outside resources. In many instances it is not economically desirable. As a result companies come to rely on a vast array of suppliers with the specific technology needed. Corporations committed to total quality management want suppliers who share the commitment. Employee assistance program vendors are one of these suppliers and as such have to meet the demands of client companies in the TQM arena. This article addresses one EAP vending firm's efforts towards implementing a TQM initiative within its own organization as a strategy to maintain a competitve market position as a supplier of EAP and behavioral health care services. Externally, the result has been to create a product differentiation when competing against other vendors. Internally it has resulted in the enhancement of a more cohesive and productive organization.     

Chapter 2: The Business Case for the Integration of Employee Assistance,Work-Life and Wellness Services

SUMMARY

Employee assistance programs (EAP), work-life programs and wellness programs are three commonly provided kinds of interventions that have the goals of reducing healthcare costs, improving employee performance and fostering a healthier workplace culture. The integration of these kinds of programs is a recent trend that has the potential to offer additional synergistic benefits. New studies have linked comprehensive delivery services that support human capital needs with bottom-line financial success of the company. This evidence can be used to make the business case for offering EAP, work-life and wellness services in an integrated capacity. However, while promising, the scientific evidence thus far in this area has methodological limitations and there are critical aspects that require further study.     

A Comprehensive Employee Assistance Program [EAP] for Educators

The traditional employee assistance programs [EAP] focus on early detection and assessment of the teacher at risk for a health-related disorder; the value, financial and human, of servicing the needs of the teacher already on leave with a health disabling condition tends to go unrecognized. This article proposes a wellness or employee assistance program with an empowerment focus that responds to both the preventative and the remedial needs of educators at different phases of their careers. Accountability to all stakeholders, based on a built-in evaluation, research and development process, is also emphasized.     

Health insurance portability: COBRA expansions and job mobility

This Issue Brief discusses continuation-of-coverage mandates under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). It provides background information on health insurance portability and job mobility, data on the cost to employers of providing continuation of coverage to former employees, and a summary of empirical research on COBRA's effect on employee benefits and job mobility. COBRA coverage can be considered advantageous for most workers, as it allows continuation of the health insurance policy they had in place at work when they lose or leave a job. Although employees can be required to pay 102 percent of the premium for COBRA coverage, they can usually realize significant savings compared with the cost of purchasing the equivalent insurance policy in the private market. Many employers consider COBRA to be a costly mandate for three reasons. First, premiums collected from COBRA beneficiaries typically do not cover the costs of the health care services rendered. Second, COBRA imposes an additional administrative cost on employers. Third, many employers view the penalties for noncompliance as excessively large. According to a survey conducted by Charles D. Spencer & Associates, of the 10.2 percent of employees and dependents who were eligible for COBRA coverage in 1996, over 28 percent elected it. In addition, average employer claims costs for COBRA beneficiaries amounted to $5,591, compared with $3,332 for active employees in surveyed plans. According to Employee Benefit Research Institute estimates of the Survey of Income and Program Participation (SIPP), the COBRA population is much older than the general insured population. COBRA beneficiaries also have higher personal income than the general insured population, with this difference being almost entirely due to differences in retirement income. Any attempt to expand COBRA coverage, either through subsidies or by allowing workers to choose from plans with lower premiums, would likely result in increased employer health care costs. As a result, employers may consider various alternatives to reduce, shift, or eliminate the impact of this increased cost. One alternative would be to continue requiring active employees to share in the increased costs through higher employee contributions. A second alternative would be to reduce or eliminate health care benefits for active employees and/or future retirees and their families. A third alternative would be to reduce the size of the work force eligible for health insurance benefits. Finally, employers may pass additional costs on to workers or consumers.     

Issues in mental health care benefits: the costs of mental health parity

This Issue Brief discusses issues in mental health care benefits. It describes the current state of employment-based mental health benefits and discusses studies and issues regarding full mental health parity. It also includes an analysis of the effect of full mental parity on the uninsured population and the effects of the limited mental health parity provision contained in the VA-HUD appropriations bill. The final section discusses the implications of mental health parity for health plans and health insurers. When employers began to provide health insurance benefits to their employees and their families, they extended coverage to include mental health benefits under the same terms as other health care services. Many employers continued to add mental health benefits through the 1970s and early 1980s until cost pressures required employers to re-examine all health care benefits that were offered. They quickly found that, while only a small proportion of the beneficiaries used mental health care services, the costs associated with this care were very high. As a result, employers placed limits on mental health benefits in an attempt to make the insurance risk more manageable. The general strategies employers have used to manage their health care costs are cost sharing, utilization review, managed care, and the packaging of provider services. Employers' cost management strategies may be restricted, however. Five states have mental health parity laws, but three of the states--Rhode Island, Maine, and New Hampshire--apply these laws only to the seriously mentally ill. In addition, 31 states mandate that mental health benefits be provided. However, state mandates apply only to insured plans, not to self-insured employer plans, which are exempt from state regulation of health plans under the Employee Retirement Income Security Act of 1974 (ERISA). A number of recent studies have examined the effect of mental health parity on health insurance premiums in a "typical" preferred provider organization and on the uninsured. In general, the studies concluded that mental health parity could increase health insurance premiums, decrease health insurance coverage for non-mental health related illnesses, and increase the number of uninsured individuals. All studies of mental health parity, and mandated benefits in general, assume that there is a strong likelihood that increased health benefit costs would be passed along to workers in the form of higher cost sharing for health insurance, lower wage growth, or lower growth in other employee benefits.     

Work-site health and fitness programs: Impact on the employee and employer

Physical fitness and health lifestyle habits have been reported to lower the risk of death from disease, foster healthy muscles, joints and bones, and enhance personal function and mental health. Given these benefits, many employers are implementing health and fitness programs into their workplace with the goals of improving and maintaining the health of their employees and increasing worker productivity. However, research is still being conducted to determine if these programs are an effective means of achieving these goals. OBJECTIVE: The purpose of this paper is to investigate the impact of these programs on employee physical and mental health, employee work performance, and the employer. This paper also investigates the effectiveness of the specific program structures and intervention procedures that were used in the employee health and fitness programs that have been implemented. STUDY DESIGN: This paper analyzed 15 previously conducted studies to investigate the impact and design of employee health and fitness programs. RESULTS: The reviewed literature suggests that the incorporation of an employee health and fitness program can have positive effects for both the employee and the employer. Programs that are structured using a variety of physical fitness programs, health education classes, outreach and one on one counseling with follow up contact have proven to be most beneficial in terms of employee and employer satisfaction. CONCLUSION: The implementation of an employee health and fitness program can have positive lasting effects on both the employee and employer. In addition to implementing programs that offer a variety of choices and one on one counseling, employers would benefit from targeting the at-risk population to ensure that the programs benefit the greatest number of employees possible.     

Needs Assessment for a University-Based Employee Assistance Program

Between 10-20 percent of the total employee population in any institution of higher education are troubled employees. The lack of visibility and the absence of structure, especially in faculty positions, are risk factors. Higher education has become proactive in developing Employee Assistance Programs (EAPs) in response to organizational personnel problems. A needs assessment survey was conducted to ascertain the need for a university-based EAP in a state university in southern California. The findings suggested that EAP services were needed.     

The workplace perspective on supporting family caregivers at end of life: evaluating a new Canadian social program

There is a growing realization that employers need to accommodate the issue of work-life balance for employees who are also providing care for family members or friends in palliative or end-of-life situations, as this phenomenon is only expected to increase within developed nations in the future given demographic trends and health care restructuring. This research aims to uncover the expectations that Canadian employers/human resources (HR) professionals have of the Compassionate Care Benefit (CCB), in addition to their experienced realities of having staff utilize this social program. The CCB provides employed family/informal caregivers with a job-secured work leave and six weeks of employment insurance benefits while they take time off to provide care to a dying family member or close other, often at home (in the community). Five focused discussions were implemented with employers/HR across Canada. Using thematic analysis, the data reveal how well (or not) the CCB meets caregivers' needs, as well as the informational and procedural needs of workplaces. In light of these findings, suggestions for program improvement, with respect to the CCB, are made in order to advocate for continued support of family/informal caregivers whose voices are rarely heard.