Benefits Buzz

Update - The Likelihood of You Being Forced to Provide Sick Time (in addition to PTO) in 2009 Just Increased...

Back in December, I riffed about the proposed Healthy Families Act (HFA), which would require employers with more than 15 employees to offer full-time employees seven days of paid sick leave.  The HFA would also mandate the sick time could be used for the employee's illness or to care for a child/parent/spouse/individual related by blood/domestic partner.   Here's some commentary on the merits of the bill....

UPDATE - The District of Columbia just passed something called the Accrued Safe and Sick Leave Act.  That can't be a good precursor to what might happen with the HFA.  Details from the Washington Post:

"The D.C. Council voted unanimously yesterday to make Washington the second city in the country to require employers to grant their workers paid sick leave, but not before council members added several amendments that business leaders applauded and labor leaders said significantly weakened the legislation.

Under the Accrued Sick and Safe Leave Act, full-time employees at businesses with 100 or more workers will get seven days of paid leave, and employees at businesses with 24 or fewer workers will get three days.

Advocates say the legislation could affect 200,000 workers who don't have paid sick leave, but an amendment will require new workers to wait for the benefit. That measure will require an employee to be on the job for 12 months before becoming eligible for sick leave."

As far as the HFA, it's a broad bill that is likely to get a lot of traction in 2008/2009, if Congress continues to be controlled by the Democrats and the White House goes "blue state" as well. 

Here's the catch and why more government isn't always the best solution - the HFA as currently written, would also prohibit employers from eliminating existing leave coverage in order to comply with the Act.  That can get complicated.  Early readings suggest that if you are an employer trying to do the right thing, by offering a Paid Time Off (PTO) plan, you couldn't adjust the total number of PTO days, to reflect the legal requirement, for a stand-alone sick-time policy.   You would have to simply add the seven to what you currently offer to be in compliance.  For those of us offering a great benefit, that's crazy talk...

Here's hoping someone gets to the bill's sponsors and explains that if an employer is already offering 3 weeks of PTO to new employees, they're taking care of people.   Otherwise, expect companies to start breaking out their PTO policies into vacation/sick designations, if it looks like the bill will pass. 

Wal-Mart Asks Former Employee for $471M for Past Medical Claims...

One thing that most HR people aren't aware of is that medical plans can ask for documentation from any third party action (that's a lawsuit for all my plain English friends), related to settlements that might be used to pay medical expenses.

Why?  Let's say you are involved in a crash with a drunk driver, and as part of the insurance settlement, the drunk driver's insurance provides a settlement that includes $$ for your medical care. From the insurers point of view, if there are other funds available to pay your claims, it's in their best interest to force you to utilize those funds.

I see requests for documentation flowing through our plans at least once a month.  That type of process is alive and well in plans that are self insured, as well as fully insured. 

Of course, it's best to ask for clarification before the claim is paid.  If you try and go back after the claim is paid, it's like asking someone to dig into their own wallet to pay the claim, regardless of the terms of the settlement.  The Blue Cross networks I've worked with are pretty sensitive to the negative press that can go along with this.

Then there's Wal-Mart - for every step it takes forward to repair its image, it seems like it takes two steps back.  Like this one, where the big retailer is seeking 470K from a brain-damaged ex-employee's trust fund.  CNN.com has the details:

"Debbie Shank suffered severe brain damage after a traffic accident nearly eight years ago that robbed her of much of her short-term memory and left her in a wheelchair and living in a nursing home.

It was the beginning of a series of battles -- both personal and legal -- that loomed for Shank and her family. One of their biggest was with Wal-Mart's health plan.

Eight years ago, Shank was stocking shelves for the retail giant and signed up for Wal-Mart's health and benefits plan.

Two years after the accident, Shank and her husband, Jim, were awarded about $1 million in a lawsuit against the trucking company involved in the crash. After legal fees were paid, $417,000 was placed in a trust to pay for Debbie Shank's long-term care.

Wal-Mart had paid out about $470,000 for Shank's medical expenses and later sued for the same amount. However, the court ruled it can only recoup what is left in the family's trust.

The Shanks didn't notice in the fine print of Wal-Mart's health plan policy that the company has the right to recoup medical expenses if an employee collects damages in a lawsuit."

Good call on Wal-Mart's part?  I report, you decide.  Here's one stat I'll provide.  Wal-Mart earned about 348 billion in revenue in 2007.  So what's 470K come to as a percentage of revenue?  Maybe some of my economics friends can run the numbers in the comments. 

Now say you are running a HR shop at a company with 100M in revenue.   What would a proportional claim be to your plan? 

I'd say most of us would walk away from that because of the internal PR damage alone.... Especially if we had to go back to the employee after the fact, once the claim had already been paid...

Posted by Kris Dunn on March 31, 2008 at 04:01 AM

One thing that most HR people aren't aware of is that medical plans can ask for documentation from any third party action (that's a lawsuit for all my plain English friends), related to settlements that might be used to pay medical expenses.

Why?  Let's say you are involved in a crash with a drunk driver, and as part of the insurance settlement, the drunk driver's insurance provides a settlement that includes $$ for your medical care. From the insurers point of view, if there are other funds available to pay your claims, it's in their best interest to force you to utilize those funds.

I see requests for documentation flowing through our plans at least once a month.  That type of process is alive and well in plans that are self insured, as well as fully insured. 

Of course, it's best to ask for clarification before the claim is paid.  If you try and go back after the claim is paid, it's like asking someone to dig into their own wallet to pay the claim, regardless of the terms of the settlement.  The Blue Cross networks I've worked with are pretty sensitive to the negative press that can go along with this.

Then there's Wal-Mart - for every step it takes forward to repair its image, it seems like it takes two steps back.  Like this one, where the big retailer is seeking 470K from a brain-damaged ex-employee's trust fund.  CNN.com has the details:

"Debbie Shank suffered severe brain damage after a traffic accident nearly eight years ago that robbed her of much of her short-term memory and left her in a wheelchair and living in a nursing home.

It was the beginning of a series of battles -- both personal and legal -- that loomed for Shank and her family. One of their biggest was with Wal-Mart's health plan.

Eight years ago, Shank was stocking shelves for the retail giant and signed up for Wal-Mart's health and benefits plan.

Two years after the accident, Shank and her husband, Jim, were awarded about $1 million in a lawsuit against the trucking company involved in the crash. After legal fees were paid, $417,000 was placed in a trust to pay for Debbie Shank's long-term care.

Wal-Mart had paid out about $470,000 for Shank's medical expenses and later sued for the same amount. However, the court ruled it can only recoup what is left in the family's trust.

The Shanks didn't notice in the fine print of Wal-Mart's health plan policy that the company has the right to recoup medical expenses if an employee collects damages in a lawsuit."

Good call on Wal-Mart's part?  I report, you decide.  Here's one stat I'll provide.  Wal-Mart earned about 348 billion in revenue in 2007.  So what's 470K come to as a percentage of revenue?  Maybe some of my economics friends can run the numbers in the comments. 

Now say you are running a HR shop at a company with 100M in revenue.   What would a proportional claim be to your plan? 

I'd say most of us would walk away from that because of the internal PR damage alone.... Especially if we had to go back to the employee after the fact, once the claim had already been paid...

Worst Benefit Idea of 2008 - The Gas Price Guarantee....

Gas prices are high.  Jeff Spicoli high.

With that in mind, companies are doing what they should - thinking about the burden carried by employees  who have long commutes.  For many, that means thinking about what, if anything, can be done to help employees out with the cost of fuel for the commute.

But there's a right way, and a wrong way.

First the right ways -

1.  Encourage car pooling.

2.  Find opportunities for telecommuting where possible.

3.  If you're up for spending some money, perhaps encourage car pooling or public transit with some mild incentives. 

Now for the wrong way:

1.  Provide a guarantee on the price of gas, creating a program that states the company will reimburse employees for gas prices that exceed $2.85 per gallon for travel on their normal commute.

You're kidding me, right?  While it's great for the employees, the program effectively discourages any type of car pooling or alternative travel plans and creates a burden for the company, when gas prices keep going up, and the company looks back and says the following - "Whoops - we thought this thing was going to top off at $3/gallon, now that it's at $5, the program's going away.  Sorry.."

Not to mention, the lovely employee relations issues that go with providing a greater benefit to employees with longer commutes, or those that choose to drive an Accord instead of an Excursion...

Gas prices are high.  Jeff Spicoli high.

With that in mind, companies are doing what they should - thinking about the burden carried by employees  who have long commutes.  For many, that means thinking about what, if anything, can be done to help employees out with the cost of fuel for the commute.

But there's a right way, and a wrong way.

First the right ways -

1.  Encourage car pooling.

2.  Find opportunities for telecommuting where possible.

3.  If you're up for spending some money, perhaps encourage car pooling or public transit with some mild incentives. 

Now for the wrong way:

1.  Provide a guarantee on the price of gas, creating a program that states the company will reimburse employees for gas prices that exceed $2.85 per gallon for travel on their normal commute.

You're kidding me, right?  While it's great for the employees, the program effectively discourages any type of car pooling or alternative travel plans and creates a burden for the company, when gas prices keep going up, and the company looks back and says the following - "Whoops - we thought this thing was going to top off at $3/gallon, now that it's at $5, the program's going away.  Sorry.."

Not to mention, the lovely employee relations issues that go with providing a greater benefit to employees with longer commutes, or those that choose to drive an Accord instead of an Excursion...

Airlines Ponder Charging Passengers by Weight - Opportunity for Health Plans?

Nothing makes us challenge our assumptions like cold hard economics.  Need Proof?  The airline industry is said to be pondering charging passengers by weight.  It seems crazy until you remember that extra bags cost more for the same reasons, and the airlines are losing hundreds of millions of dollars per day due to the cost of fuel. 

Wow.  From Bloomberg News:

"Imagine two scales at the airline ticket counter, one for your bags and one for you. The price of a ticket depends upon the weight of both.

That may not be so far-fetched.

``You listen to the airline CEOs, and nothing is beyond their imagination,'' said David Castelveter, a spokesman for the Air Transport Association, a Washington, D.C.-based trade group. ``They have already begun to think exotically. Nothing is not under the microscope.'' He declined to discuss what any individual airline might be contemplating, including charging passengers based on weight."

After U.S. airlines reported combined first-quarter losses of $1.7 billion and crude oil jumped to a record $133.17 a barrel on May 21, almost double from a year earlier, fares based on a passenger's weight may be a logical step, said Robert Mann, head of R.W. Mann & Co., an aviation consultant based in Port Washington, New York.

``If you look at the air-freight business, that's the way they've always done it,'' he said. ``We're getting treated like air freight when we travel by airlines, anyway.''

When you're losing millions on a daily basis, I guess there are no topics that are off limits.  Somehow I can't see the women I know stepping onto the scale and suffering the indignity of pulling out their credit card to pay the overage (disclaimer I just thought of in editing this - not that any of them would have to do that).  That would be ugly.  Guys on the other hand, would make a show out of rubbing their belly.  Venus vs. Mars at your local municipal airport.

Treating people differently based their individual stats is difficult, but worth examining.  If you are an employee who exercises, eats right and has positively impacted your health through your lifestyle, would you like to pay 30% less in medical insurance premiums when compared to someone who does nothing?

Sure you would.  The problem is the blowback that happens when the equivalent of the stick is presented to those who could positively impact blood pressure, cholesterol, blood sugar, etc. through healthy lifestyles. 

And, that's why you probably won't see that coming to your company-sponsored health plan any time soon.

Put The Krispy Kreme DOWN! Because Ulrich Says So...

Going through Medical Plan renewal in our company, so living healthy, and the cost of not living healthy, is kind of on my mind.  Then I got the latest issue of Time, which confirms that the unhealthy trend is a lot bigger than what I can influence with Consumerism in my medical plan...

From Time, focused on the supersizing of America:

"We're not only programmed to eat a lot," says Sharman Apt Russell, author of Hunger: An Unnatural History, "but to prefer foods that are high in calories." What's more, the better we got at producing food, the easier it became. If you're a settler, you eat a lot of buffalo in part because you need a lot of buffalo — at least after burning so many calories hunting and killing it. But what happens when eating requires no sweat equity at all, when the grocery store is always nearby and always full?

What happens is, you get fat, and that's precisely what we've done. In 1900 the average weight of a college-age male in the U.S. was 133 lb. (60 kg); the average woman was 122 lb. (55 kg). By 2000, men had plumped up to 166 lb. (75 kg) and women to 144 lb. (65 kg). And while the small increase in average height for men (women have remained the same) accounts for a bit of that, our eating habits are clearly responsible for most. Over the past 20 years in particular, we've stuffed ourselves like pâté geese. In 1985 there were only eight states in which more than 10% of the adult population was obese — though the data collection then was admittedly spottier than it is now. By 2006, there were no states left in which the obesity rates were that low, and in 23 states, the number exceeded 25%. Even those figures don't tell the whole story, since they include only full-blown obesity. Overall, about two-thirds of all Americans weigh more than they should."

The first thing I thought of after reading that is what a muscle-bound cat I would have been in college back in 1900.  6"2", 170, and I would have looked HUGE!!!

Second thing I thought of was that not many cats went to college back in 1900.  No Internet either...

Third thing, and the most sobering thought, is that I'm limited in my ability to control the lifestyles of employees via adjustments to our Medical plan.  It's a society thing, and the most progressive of programs are going to struggle against that.  Even with the headline focused on the guy losing 80 pounds eating nothing but McDonalds....

Dave Ulrich said it best in the most recent issue of Workforce when he said the following about his own weight loss - "Those who have not seen me for five or six years almost always remark that I have lost a lot of weight.  They want to know how I did it, and are suprised when I tell them that I have in fact discovered the secrets of losing weight.  With bated breath, they listen to my secrets: Eat less, eat right and exercise more".  As the reality of these "insights" sinks in, they are disappointed".

Everyone's looking for the gimick.  Ulrich's advice sounds simple, but it's hard to implement for so many people.  For a variety of reasons. 

So take your double digit trend increases to your Medical plan, and sit down... There's not a big turnaround in sight....

Going through Medical Plan renewal in our company, so living healthy, and the cost of not living healthy, is kind of on my mind.  Then I got the latest issue of Time, which confirms that the unhealthy trend is a lot bigger than what I can influence with Consumerism in my medical plan...

From Time, focused on the supersizing of America:

"We're not only programmed to eat a lot," says Sharman Apt Russell, author of Hunger: An Unnatural History, "but to prefer foods that are high in calories." What's more, the better we got at producing food, the easier it became. If you're a settler, you eat a lot of buffalo in part because you need a lot of buffalo — at least after burning so many calories hunting and killing it. But what happens when eating requires no sweat equity at all, when the grocery store is always nearby and always full?

What happens is, you get fat, and that's precisely what we've done. In 1900 the average weight of a college-age male in the U.S. was 133 lb. (60 kg); the average woman was 122 lb. (55 kg). By 2000, men had plumped up to 166 lb. (75 kg) and women to 144 lb. (65 kg). And while the small increase in average height for men (women have remained the same) accounts for a bit of that, our eating habits are clearly responsible for most. Over the past 20 years in particular, we've stuffed ourselves like pâté geese. In 1985 there were only eight states in which more than 10% of the adult population was obese — though the data collection then was admittedly spottier than it is now. By 2006, there were no states left in which the obesity rates were that low, and in 23 states, the number exceeded 25%. Even those figures don't tell the whole story, since they include only full-blown obesity. Overall, about two-thirds of all Americans weigh more than they should."

The first thing I thought of after reading that is what a muscle-bound cat I would have been in college back in 1900.  6"2", 170, and I would have looked HUGE!!!

Second thing I thought of was that not many cats went to college back in 1900.  No Internet either...

Third thing, and the most sobering thought, is that I'm limited in my ability to control the lifestyles of employees via adjustments to our Medical plan.  It's a society thing, and the most progressive of programs are going to struggle against that.  Even with the headline focused on the guy losing 80 pounds eating nothing but McDonalds....

Dave Ulrich said it best in the most recent issue of Workforce when he said the following about his own weight loss - "Those who have not seen me for five or six years almost always remark that I have lost a lot of weight.  They want to know how I did it, and are suprised when I tell them that I have in fact discovered the secrets of losing weight.  With bated breath, they listen to my secrets: Eat less, eat right and exercise more".  As the reality of these "insights" sinks in, they are disappointed".

Everyone's looking for the gimick.  Ulrich's advice sounds simple, but it's hard to implement for so many people.  For a variety of reasons. 

So take your double digit trend increases to your Medical plan, and sit down... There's not a big turnaround in sight....

The Cost of Commuting - Did You Know There's a FSA for the Morning Commute?

With the cost of a gallon of gas heading towards $5, you're no doubt hearing about the pain from your employees.  With that in mind, there's no such thing as a bad idea when it comes to thoughts to provide cost relief to commuting employees. 

Would you believe there is such a thing as a "Flexible Spending Account" for commuting costs?

It's got limited application, but it's there.  From Jerry at the Retirement Plan Blog:

"There is a way employers can help employees put more dollars in their paychecks at no additional expense to them. In fact, tax savings are available to both employers and employees.

So what is it, and how does it work? It’s an oft forgotten program that allows employers to offer employees the opportunity pay for certain transportation expenses on a pre-tax basis under Internal Revenue Code Section 132 and the Transportation Equity Act for the 21st Century (TEA-21).

Qualified transportation expenses generally include payments for the use of mass transportation, e.g., train, subway, bus fares), and for parking. Amounts are indexed for inflation. For 2008 the maximum monthly pre-tax contribution for mass transit is $115.00, and $220.00 for parking.

And there’s one more goodie. While Section 132 benefits are similar to the pre-tax flexible spending accounts available for medical expenses and dependent care under Section 125, there’s one important difference. The transportation benefit does not include a "use it or lose it penalty," as required with medical/dependent care flexible spending accounts."

If you deal with FSA's, you know Pre-tax means before income taxes and FICA, which is valuable to employees because they effectively increase take-home pay. A more minor benefit goes to your company since the employer avoids paying its share of FICA.

If you've read this whole post, you're probably thinking a lot like me.  It's a great benefit on paper, but doesn't help those who are driving to work, which seems like it covers 99% of America.  Still, if you are in a metro area, it's a good benefit to publicize to your workforce if public transit exists, or if you're in the core metro area where employees have to pay for parking.

I can't really advocate for expanding this FSA type program to the cost of gas for a personal vehicle.  I think to really impact the problem, we need to turn to telecommunting and other options.  Perhaps expanding the FSA-like benefits for the cost of fuel for employees who carpool?

With the cost of a gallon of gas heading towards $5, you're no doubt hearing about the pain from your employees.  With that in mind, there's no such thing as a bad idea when it comes to thoughts to provide cost relief to commuting employees. 

Would you believe there is such a thing as a "Flexible Spending Account" for commuting costs?

It's got limited application, but it's there.  From Jerry at the Retirement Plan Blog:

"There is a way employers can help employees put more dollars in their paychecks at no additional expense to them. In fact, tax savings are available to both employers and employees.

So what is it, and how does it work? It’s an oft forgotten program that allows employers to offer employees the opportunity pay for certain transportation expenses on a pre-tax basis under Internal Revenue Code Section 132 and the Transportation Equity Act for the 21st Century (TEA-21).

Qualified transportation expenses generally include payments for the use of mass transportation, e.g., train, subway, bus fares), and for parking. Amounts are indexed for inflation. For 2008 the maximum monthly pre-tax contribution for mass transit is $115.00, and $220.00 for parking.

And there’s one more goodie. While Section 132 benefits are similar to the pre-tax flexible spending accounts available for medical expenses and dependent care under Section 125, there’s one important difference. The transportation benefit does not include a "use it or lose it penalty," as required with medical/dependent care flexible spending accounts."

If you deal with FSA's, you know Pre-tax means before income taxes and FICA, which is valuable to employees because they effectively increase take-home pay. A more minor benefit goes to your company since the employer avoids paying its share of FICA.

If you've read this whole post, you're probably thinking a lot like me.  It's a great benefit on paper, but doesn't help those who are driving to work, which seems like it covers 99% of America.  Still, if you are in a metro area, it's a good benefit to publicize to your workforce if public transit exists, or if you're in the core metro area where employees have to pay for parking.

I can't really advocate for expanding this FSA type program to the cost of gas for a personal vehicle.  I think to really impact the problem, we need to turn to telecommunting and other options.  Perhaps expanding the FSA-like benefits for the cost of fuel for employees who carpool?

Why Wal-Mart Doesn't Treat Employees As Well As Costco, and Why You Don't See a Difference in Service Anyway...

Like many of you, I've been to Costco.  Like all of you, I've been to Wal-Mart.  On the employee PR front, it's not hard to find articles that say Wal-Mart is terrible at taking care of their employees.  If you pay attention, you'll also see information that heaps a good amount of praise on Costco for their treatment of employees.

So what's the difference, and does it result in better service to you?   Let's examine pay, benefits and retention at Wal-Mart and Costco, then think about whether the customer sees the difference.  From Slate:

"It's not hard to make a case that Costco pays employees more. The most relevant comparison is between Costco and Sam's Club, Wal-Mart's membership warehouse, since both business models rely on membership fees for a large percentage of revenues. A Sam's Club employee starts at $10 and makes $12.50 after four and a half years. A new Costco employee, at $11 an hour, doesn't start out much better, but after four and a half years she makes $19.50 an hour. In addition to this, she receives something called an "extra check"—a bonus of more than $2,000 every six months. A cashier at Costco, after five years, makes about $40,000 a year. Health benefits are among the best in the industry, with workers paying only about 12 percent of their premiums out-of-pocket while Wal-Mart workers pay more than 40 percent.

Another theoretical benefit is that Costco employees, being better paid, are less likely to leave the company. Again, some data back that up: Greenhouse points to Costco's low turnover rate, which is 20 percent and, among employees who stay at least a year, 6 percent. Wal-Mart's is about 50 percent (no separate data for Sam's Club). But is this a business advantage for Costco? While some point to the costs of training and hiring new employees, a widely leaked 2005 memo from Wal-Mart offers a different perspective. In it, Wal-Mart's senior vice president of benefits argued that the company's turnover rate was too low. After all, she explains, long-term employees are more expensive and not necessarily any more productive. Such reasoning—though sinister—may actually help explain why Wal-Mart's profit margins are twice as high as Costco's (3.36 percent compared with 1.75 percent).

Costco's revenues per employee are about five times as high as Wal-Mart's. (No separate financials are available for Sam's Club.) Then again, it's also the case that Costco sells more expensive stuff—high-end French wine, triple-cream brie, and Cartier watches, all of which presumably have high margins—along with the cheap toilet tissue."

So, what conclusions do you draw from that, both as a HR/management pro, and a customer?  I'll take the HR side first and say the obvious - Costco looks like they care about retention, both with the aggressive pay plan and the benefits.  That's a good thing. 

The difference in pay (assuming good performance) is startling, and while it's difficult to know the details around their benefits, enough bad stuff is out regarding Wal-Mart and benefit eligibility/employer contributions that it's easy to call it vastly superior.

Here's where it starts to get tricky from a business perspective.  Costco has revenues per employee five times as high as Wal-Marts, but Wal-Mart's margins are twice as high as Costco.  Here's why Costco's revenue per employee is higher - they have a dramatically different staffing model, and don't need nearly as many employees.  When's the last time you saw a Costco employee before you hit the checkout line?  Never - and the "try this snack people" at every isle don't count, they're contractors. 

As a result, I can't say the customer service I get from Costco employees is significantly better than Wal-Mart's, because there isn't really any service.  They roll it in on palettes, I throw it in a big cart, then go to a checkout line modified to handle the big cart, usually without a "how are you today?" from the checkout person.  All the manpower is focused on checkout/security, and the overall staffing per store is as lean as possible, and much leaner than a typical Wal-Mart.

As a result, Costco has the ability to treat their employees well.  Wal-Mart could do some of the same, but will never catch up.  It's economics, they need too many people per store because they don't roll it in and display it on palettes. 

So, I'm glad Costco treats their employees that well, and I think it's obvious that the business model allows them to staff lean and treat the employees they do have well.  That's cool.

I just wish I could feel the retention as a customer, because I can't...

Update - found the following staffing analysis for staffing levels at Sam's Club vs. CostCo at staffing.org.   Still looking for normal WalMart metrics.  "In 2004, a well publicized study of Wal-Mart's Sam's Club and rival Costco compared the HR policies of the two companies. The particular significance of this study lay in the fiercely competitive low-end market they both serve, where strict cost-control, a Wal-Mart specialty, was thought to be essential to success. The comparison showed that despite much more generous salary and benefit packages, Sam's Club's cost of labor and overhead as a percent of sales was 17%, almost double Costco's 9%. Added to that, Costco's sales were much higher on a per-store basis as it generated nearly as much total revenue with one-third fewer employees. Consequently, profit per employee at Costco was $13,467 compared to only $11,039 at Sam's Club."