Benefits Quarterly

• Embracing the Retirement Model for the Next Normal
  by Graham Cox
  As business leaders address new strategic priorities, more than 150 million U.S. workers continue to grapple with the effects of the pandemic. Many are now unemployed and, for older workers, involuntary job termination or “forced retirement” is causing worry about the loss of health insurance and other benefits as well as the prospect of outliving their retirement savings. Those who remained gainfully employed are likely concerned about the longer term impact that market volatility will have on their employment and retirement outlooks. This article looks at how the traditional retirement model had evolved prior to the pandemic and offers some recommendations that employers should strongly consider after the pandemic ends.
• New Approaches Needed to Save Retiree Benefits
  by Paul Kennedy and Darrin Bull
  Canadian employers still want to offer an attractive employee value proposition and help their workers in retirement but without incurring the significant long-term obligations of traditional group plans. Some employers have decided to manage their risk exposure by changing current plan designs and introducing measures to reduce liabilities, but this could have significant legal and collective bargaining consequences if employees and retirees are vested in existing benefits. Other options are available, including an employee life and health trust (ELHT) and voluntary buyout programs for retirees or soon-to-be retirees, which offer lump-time payments to plan members who permanently opt out of future retiree benefits. This article discusses what employers should know about these approaches and related considerations.
• Comparing Group Medicare Advantage Plans and Private Medicare Exchanges
  by Matthew A. Kersting and Kirsten Schatten
  Group Medicare Advantage (MA) plans and private Medicare exchanges can help employers and other sponsors of group health plans reduce costs and provide more value to retirees. This article describes group MA plans and private Medicare exchanges in general and in terms of how they differ regarding plan design determination, potential cost savings and value to retirees. The authors then discuss other variables that matter to plan sponsors and what else plan sponsors should consider when comparing group MA plans with private Medicare exchange options. Finally, they turn to critical factors in a successful transition when plan sponsors change how they provide coverage to Medicare-eligible retirees and share the experience of plan sponsors that have made the transition.
• Medicare Marketplaces: A Solution for Reducing Retiree Health Care Costs, Hiding in Plain Sight
  by Marianne Steger, CEBS
  As the health care director for the Ohio Public Employees Retirement System (OPERS) and during my 30 years with the American Federation of State County and Municipal Employees, I thought sponsoring a group Medicare Advantage plan with a prescription drug employer group waiver program (EGWP) was the most affordable way to provide our retirees with Medicare health care coverage. I soon learned that those who left our plan found more affordable and often more comprehensive options with individual Medicare products. Moving to a Medicare marketplace often results in a 30-50% reduction in other postemployment benefits (OPEB) liabilities and a 10-25% reduction in medical spend. In addition, it reduces the administrative burden, and the retirees often like the model. Before the number of Americans with retiree health care coverage declines even more, employers and plan sponsors would do well to explore the Medicare marketplace. It is likely that their retirees already have.
• Post-65 Retiree Health Care Coverage: Balancing Commitment With Cost
  by Gail Levenson and Brittany Neu
  For some employers, health care coverage obligations span both active employees and retirees. This article reviews the fundamentals of Medicare and groupsponsored retiree health insurance coverage and describes the type of employers that continue to offer retiree health benefits. The authors then delineate employers’ basic options for changing with the times in order to limit exposure and control costs while continuing to offer retiree health benefits. Choices include retiree drug subsidies (RDS) and employer group waiver plans (EGWPs). Armed with an understanding of EGWPs, employers may want to use them for their savings opportunity, ability to enhance retiree health plan design above Medicare requirements and reduced liability.
• Changes as We Age, Caregiving, Long-Term Care and the Family
  by Anna M. Rappaport
  Many people experience cognitive and/or physical decline as they age. Their first source of support when they need help is often the family, including their adult children. Caregiving adult children are often employed, and helping with the needs of their parents or other family members can impact their ability to perform their own jobs. Society of Actuaries (SOA) research provides insights about the challenges facing aging Americans and the impact these challenges have on their adult children. This article will highlight implications for employers and present ideas for helping employees deal with these issues as part of their financial wellness programs.
• Long-Term Care Insurance: An Underappreciated Postemployment Benefit
  by Tom Riekse, CEBS and Steve Cain
  Employers usually don’t help employees plan for a key part of financial wellness: health and long-term care (LTC) costs in retirement. This article explains why LTC is the biggest risk to a retirement plan, how insurance can help finance LTC costs and why employers should consider offering LTC insurance (LTCi) as an employee benefit. It also provides an overview of the types of LTCi policies available and their relative advantages and disadvantages. The authors then describe how employers can use lessons from behavioral finance to implement successful LTCi benefit communication and enrollment strategies. Finally, they explain how employees can utilize health savings accounts to finance LTCi, considerations for companies with existing LTCi plans, and noninsurance resources for companies and caregivers.
• Understanding and Navigating Declined Disability Claims
  by Jessica Gobran
  Navigating the costly impact of a disability absence is further complicated when a decision to decline benefits has been rendered by an insurer or third-party provider. This article reviews the difference between disability and total disability and how that difference should inform Canadian employers’ job descriptions. It also discusses employer accommodation strategies. Proposed strategies and practices are rarely addressed and often go unanswered in organizations looking to deliver on a favorable bottom line. However, employers implementing them will help deliver a favorable experience to their employees, remove barriers to their employment obligations and apply a consistent approach within their respective industry or sector.

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• Economic Costs of the Opioid Crisis for Employers
  by Stoddard Davenport, Matt Caverly and Katie Matthews
  Most U.S. employers have been affected by employee use of prescription drugs, primarily through absenteeism or impaired work performance. In a recent Society of Actuaries report authored by Milliman (including the authors of this article), the total economic cost of the opioid crisis was estimated to exceed $631 billion from 2015 to 2018. When considering other types of opioid crisis–related costs that are more difficult to measure, the total cost may be substantially higher. This article discusses key findings of this report as they relate to employers. Many employers are partnering with their pharmacy benefit managers, health plans, treatment providers and other community resources to address nonmedical opioid use and related substance use disorders. Strategies such as employee assistance and treatment programs, employee education and modifications to health plan benefit designs can be applied to help mitigate the effects of the opioid crisis on the U.S. workforce.
• Raise a Glass: The Socially Accepted Drug That’s Costing Your Business
  by Sandra Kuhn
  While the nation focuses on the opioid crisis, more people in the United States are dying from alcoholrelated events than opioids. Yet when employers think about the risks facing their businesses and the health of their employees, alcohol use tends to fall under the radar. The increasing use of alcohol, especially among women, minorities and lower income populations, presents an increasing risk for employers. More than three-fourths of the cost burden of alcohol use results from losses in workplace productivity, followed by health care costs. In addition to reviewing and revising alcohol use policies, raising awareness around the effects of consuming alcohol and promoting existing resources, it’s important to offer access to programs for differing levels of need. Traditional treatment programs often require a person to “bottom out” before receiving help and then require participants to abstain from drinking. These onesize- fits-all programs aren’t for everyone, and employers may find success in offering or promoting emerging programs that help individuals address unhealthy drinking problems before they hit rock bottom.
• Mental Health Parity Compliance and Enforcement
  by Matthew McKinney
  The Mental Health Parity and Addiction Equity Act (MHPAEA) generally prevents group health plans and insurance issuers that provide mental health and/or substance abuse benefits from imposing more restrictions on those benefits than they do with respect to medical/surgical benefits. The 21st Century Cures Act has impacted MHPAEA compliance and enforcement. Reviewing the enforcement statistics may provide some insight into the motivation of the agencies and may help plan sponsors and insurers in their compliance efforts. As the agencies have released additional regulatory guidance, it is clear they have placed a greater emphasis on identifying and eliminating nonquantitative treatment limits from plans subject to MHPAEA. Thus far, it appears enforcement efforts have primarily been aimed at correcting improperly denied or administered benefits. The agencies may decide to apply stricter penalties in the future, such as the imposition of monetary penalties. Plans and insurers subject to MHPAEA should take steps now to ensure they are in compliance.
• Different Perspectives on Phased Retirement, Retirement Ages and Working in Retirement
  by Anna M. Rappaport
  As people are living longer and private sector defined benefit (DB) plans are disappearing, many people need or want to work longer and retire later or work as part of their retirement. Society of Actuaries research indicates that retirees have retired about five years earlier than preretirees expect to retire, and Urban Institute research documents some of the employment challenges of workers as they near traditional retirement ages. There are vastly different ideas about appropriate retirement ages for different segments of the population. Many individuals are trying to decide whether they will reboot, rewire or retire as they leave longer term traditional jobs. Specialized organizations are helping them find new jobs, while many employers do not seem to have focused on how to deal with the aging workforce. Individuals are often finding their own solutions. This article provides research and implications for employers as they consider the aging workforce, the retirement security of their employees and their business realities.
• The First Word: The HIPAA Response to Malware Events, Including Ransomware Attacks
  by Tara Silver-Malyska, CEBS and Jason N. Sheffield
  Employers are faced with the never-ending onslaught of attacks against information security systems by malware, including ransomware. While no single defensive strategy will defeat the ransomware phenomenon, a defensive strategy centered on the Health Insurance Portability and Accountability Act (HIPAA) provides an employer plan sponsor with the means to identify, segregate and potentially exterminate a ransomware infiltration prior to the malware’s proliferation within a user’s network. In this way, while a single device may become corrupted, savvy device operators can reduce the potential for an attack to infect the user’s entire network. When paired with even the most minimal security procedures, the knowledge of a single device operator to proactively identify the signs of infiltration and to remove the infected device from the network can help to save an organization substantial dollars and hardships.
• Achieving Effective Plan Design and Communicating Change: A Case Study
  by Alyssa Hodder
  Benefits plans today face significant cost pressures— from rising drug costs to increased use of paramedicals— causing many plan sponsors to rethink their programs and make changes. Plan design change is always a challenge, and it comes with significant risks, including negative reactions from plan members and reputational risk to the plan sponsor. But every change is also an opportunity to inform and engage plan members. The key is to follow a thorough change management process, get buy-in from stakeholders at all levels and learn from the experience. This article explains how to effectively manage benefits changes to help ensure a successful implementation, including lessons learned from a real-life plan sponsor case study.

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• Expanding Access to Public Insurance Plans: Key Design Considerations
  by Cori E. Uccello
  Proposals to expand access to public health insurance plans are being put forward to provide a way to supplement efforts to strengthen insurance markets under the Affordable Care Act (ACA) or to replace the ACA marketplaces and/or other health insurance programs altogether. This article briefly outlines four general approaches aiming to achieve such goals: establishing a government-facilitated plan in the ACA marketplaces, creating a Medicaid buy-in, creating a Medicare buy-in, and extending Medicare eligibility to more or to all. The article highlights the key design elements that would need to be specified for each approach to be fully evaluated and implemented. How these details are decided would affect the viability of the plan and the impacts it would have on coverage availability and affordability—not only of the public plan but also of other coverage sources.
• The Impact of Single Payer Health Care and Other Public Policy Proposals on Employment-Based Health Benefits
  by Paul Fronstin, Ph.D.
  The employment-based health benefits system arose not from any deliberate national health care policy, but rather from a voluntary, market-driven response by employers to government regulations regarding wages and taxation during World War II. In the absence of more government involvement in health care, employer activism has increased through various types of coalitions. What we do not know is whether employers would trade off more government involvement in health care for less of their own involvement if given the opportunity, especially in a weak economic environment. Thoughtful consideration of policy proposals should not only evaluate their effectiveness in addressing their impact on health care costs, quality and coverage. Policy makers should also consider the impact on the voluntary, market-driven employment-based system.
• An Employee Benefit Professional’s Perspective on Medicare for All
  by James L. McGee, CEBS
  There is widespread and bipartisan agreement that our current health care system is broken. Agreement on a single solution or even approach is far more difficult. This article describes how the author’s career experience as a benefits professional has shaped his support for one solution and proposes a framework for evaluating policy proposals. That solution is a Medicare-for-all single payer system. It presents evidence that the current employment-based system does not, and perhaps cannot, meet the triple aim of health system performance described by the Institute for Healthcare Improvement: to improve the patient experience of care, to improve the health of the population and to reduce the per capita cost of health care. The article will discuss efforts to reduce the per capita cost of health care. It concludes with a discussion of interim steps to realizing Medicare for all, consistent with the author’s framework for evaluating such policy proposals.
• Evaluating Cost and Value in a Dynamic Health Care Marketplace: Key Considerations for Employers
  by Randall K. Abbott
  The purchasing process for employer-sponsored medical benefits has always been complex, but new market dynamics and financial arrangements are adding new layers of complexity. Failure to recognize these new factors can result in significant miscalculations of both overall costs as well as potential savings. This discussion examines— for a larger employer assessing either an incumbent service provider or marketplace alternatives—what remains the same, what remains but is increasingly problematic and what are new considerations. Each employer is different and will approach the purchasing initiative with different needs and priorities, but employers should consider what’s important to them and how processes should change to achieve maximum value during the search-and-selection effort.
• 401(k) Design: Participant Access
  by Kenn Tacchino
  Most 401(k) plans contain the option for plan participants to borrow from their vested retirement assets. This article discusses the pros and cons of allowing plan loans, as well as employer considerations when designing loan provisions and repayment features. The author then discusses potential employer decisions surrounding hardship loans, other in-service rules tied to age and service, and rollovers. Finally, he provides a checklist of 30 questions that may be helpful for plan sponsors and their advisors to consider when trying to determine the best way to allow in-service access for employees.
• High-Performance DC Pension Plans: Design, Technology and the Role of Public Policy
  by Gordon L. Clark
  Defined contribution (DC) pensions have supplanted defined benefit pensions in many Organisation for Economic Co-operation and Development (OECD) countries, with significant implications for the retirement welfare of plan participants. New models of management have come to market, promising customized solutions for the retirement aspirations of different kinds of participants within and without conventional DC plans. These developments are charted recognizing the coexistence of different models of management and the increasing sophistication of pension providers. The rudiments underpinning the latest model of management are explained, and the conditions under which this model may be successful are noted. As DC systems come to maturity around the world, significant challenges remain in making good on pension adequacy. Here, industry innovation and best practice are balanced against a significant role for public policy.

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• How Much Could Personalization Disrupt Retirement Plan Design? (A Lot)
  by Neil Lloyd
  Retirement plans have had some recent successes in participation rates, contribution rates and investment performance due to innovations in autoenrollment, autoescalation and default investment choices. Of these three developments, the use of target-date funds (TDFs) has notably been the most visible, given their use of onesize, simple glide paths that generally appeal to most participants. However, some practitioners are raising questions about whether TDFs could be disrupted through better personalization. How real is the disruptive threat to the TDF vaunted status from personalization? This article examines the question from a number of angles: the structural limitations of TDFs, the growing consumer demand for personalized products and services that “know them,” and foundational notions of trust and intrusiveness.
• Evaluating the Value Propositions of Health Plan Disrupters
  by L. J. (Mac) McCarthy and Edward M. Pudlowski
  Employers and other purchasers of large group health plans have a myriad of choices when it comes to proposed innovative solutions or disrupters designed to improve care and reduce the cost to the member participant and the plan. Coincidental with the expansion of these health care disrupters and failed promises of value from some of these entities over the years, large group health plan purchasers are demanding a greater level of support for the value propositions, including analyses that are specific to their populations and claim utilization profile. This article focuses on best practice approaches to establish actuarial credibility for the stated value propositions of health care disrupters, taking into account the design of the specific solution and available data, including the purchasers’ actual population and claim experience history. Achieving a successful partnership with a third-party solution provider does require the dedication to understand the unique characteristics of a health plan and development of study methodologies that align with the solution and the available data.
• Is It Time for Full Auto?
  by Jack M. Towarnicky, CEBS
  Less than 17% of 401(k) plans incorporated automatic features, according to a 2005 Plan Sponsor Council of America survey. Many deployed automatic enrollment only for new hires with a 2% deferral default rate, cash equivalent investments and without automatic escalation. Today, 60% of plans have one or more automatic features. However, only a handful have migrated to a “full auto” design. This article describes one plan’s transition—from a passive strategy of “access while employed” to a full auto design that includes behavioral economics/choice architecture designed to maximize enrollment, contributions, employer match, savvy investment allocation and asset retention.
• Why Employers Should Care About Their Employee Caregivers
  by Tami Simon
  Millions of Americans provide unpaid caregiving to their parents, siblings, children and others. A large percentage of those caregivers are employed full-time. According to a 2019 report by Harvard Business School, more than 80% of employees with caregiving responsibilities admitted that caregiving affects their productivity at work. This article provides insight on how caregiving affects the workplace and offers practical solutions for employers to consider. A thoughtful and well-designed unpaid caregiver benefit program that is properly administered and communicated will strengthen an employer’s connection with its workforce. This will lead to improved productivity, engagement and retention.
• The Role of Employer-Sponsored Primary Care in Improving Employee Health and Reducing Overall Health Plan Costs
  by Jeff Wells, M.D.
  Worksite health centers have been around for decades; however, in recent years this concept has seen growing popularity among companies looking to employer-sponsored primary care as a solution for reducing their health care costs and improving employee health and retention. As the market opportunity has expanded, so has the number of vendors and business models. And with the proliferation of available choices, employers are facing increasing complexity when choosing a partner. So how do employers know if their investment is, in fact, reducing their health care costs and improving employee health? This article presents research demonstrating the impact of engagement with employersponsored primary care services on employee health and employer health care costs. The analysis uses data from three companies of varied size and industry whose medical plan members engaged with OurHealth’s on-site and near-site primary care clinic services and presents results on utilization of services, health improvements and employers’ cost of care.
• Health Care Ate My 401(k) Contributions
  by Rocke Blair, CEBS and Peggy West, CEBS
  Plan sponsors can take a once-overlooked “lazy” or sleepy asset known as employee benefits and transform it into a strategic lever for workforce and organizational optimization. This article identifies health care cost challenges and describes how and why employers should find prescriptive solutions that minimize the negative impact these challenges can have on the long-term sustainability and viability of their companies. The authors identify a contemporary measurement approach that is a leading edge to population health management through its evaluation of noncompensationrelated employee expenses. They contend that continuous improvement via data and analytics fosters business excellence, but they also encourage plan sponsors to not rely on vendors for this information.

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