Workplace Wellness Programs

Friday, June 24, 2011

It is almost impossible to read a newspaper, professional publication or view much television without becoming aware of the lack physical health of the American population. The American public is constantly reminded that we eat too much and exercise too little.  Increasingly, organizations are faced with workforces which struggle with various chronic illnesses and poor behavioral and lifestyle choices.  For over forty years we have been told that smoking is bad for us, yet over 23% of adult males and 17% of adult females continue to smoke in America.

As part of the Patient Protection and Affordable Care Act (PPACA) $10 Million has been made available to fund creation of workplace wellness programs through the U.S. Department of Health and Human Services. These funds will be used to address risk factors associated with chronic diseases such as heart disease, cancer, stroke, and diabetes. The funds will be channeled through a competitive bidding process of contracts to a nationally based organization with the ability to work with employers to develop or expand workplace wellness programs. Efforts will be directed at educating employees about good health practices promotion of physical activity, proper nutrition, tobacco cessation, and changes in behavioral patterns and lifestyle choices.

Do workplace wellness programs work? The answer is both “Yes” and “No”.  In those workforces which are stable with low rates of turnover, an employer may have many years to work with employees to educate, modify behavior, and provide incentives designed to foster better health and healthy lifestyles. However, in those employers where turnover is high and the workforce is very unstable, the ability of an employer to affect change may be very limited.

Since employees join organizations at all stages of life, it is only reasonable to assume those employees will bring with them a varied lifestyle, health and exercise history, and nutritional culture. Workplace wellness programs must overcome years, if not decade’s worth of poor health history and lifestyle choices. Since it took years to establish an employee’s health behavior, it will require years to change many of the ingrained life style choices. Consider that at any given time over 30% of smokers are “attempting” to quit. If all of these smokers were to be successful, consumption of cigarette, pipes, and cigars would be virtually nonexistent. Unfortunately, it often takes several attempts before a smoker quits and the recidivism rates are high. In one study, “Smoking Cessation, by Sherri Sheinfeld Gorin, Ph.D., it was report that on average, it required 2-3 attempts before the smoker successfully quit.

Ultimately the individual must accept responsibility and accountability for managing their own health behaviors and lifestyle. While governments and employers can provide both disincentives and incentives for employees to change their behaviors, employees themselves are the only ones who can move to take action.

The State of 2011 Social Security

Friday, June 10, 2011

In a 244 page report dated May 13, 2011, the Social Security Board of Trustees released their 2011 report on the financial status of the Old-Age and Survivors Insurance and Disability Insurance (OASDI), otherwise known as Social Security. In their report, the Trustees Old-Age and Survivors Insurance (OAS) funds are projected to be exhausted in 2036. The Disability Insurance (DI) funds are expected to be exhausted in 2018. The report also projects that OASDI program costs will exceed non-interest income in 2011 and demand for program benefits are expected to remain higher than normal when compared to the program’s 75-year history.

The signcanace of the report, the 71st such report in the life time of the Social Security, is that those employer sponsored programs which are integrated with Social Security benefits could see a rise in their own costs if Social Security benefits are reduced. Take for an example a defined benefit pension plan which offsets 50% of the retirees monthly pension benefit with Social Security benefits. Assume two otherwise equal retirees, “A” who retirees before a reduction in Social Security benefits and “B” who retires after a reduction in Social Security benefits.

Assume the Social Security benefits for retiree “A” was unreduced at $1,300 monthly and one year later Social Security benefits for retiree “B” was reduced at $1,100 monthly. The plan’s simplified monthly pension benefit formula is: 75% of Final Average Monthly over 36 months, times Years of Service over 20, less 50% of the retirees estimated Social Security Award amount at age 65. Both retirees were age 65, their Normal Retirement Age for Social Security and the private pension plan.

*http://www.ssa.gov/OACT/quickcalc/index.html

In the above simplified example, a 15% reduction in the retiree’s estimated Social Security Award amount leads to a 5% increase in the retirees pension benefit and a 2% decrease in Income Replacement Ratio for “B”. While a 5% increase in the retirees pension benefit may seem small, consider this for hundreds or thousands of employees who will consider retirement in the coming years. Consider also the poor performance of the current financial markets and you may see that changes in Social Security benefits (Social Security Reform) has a potential ripple effect into any private employer sponsored defined benefit pension and long term disability plans which offset (integrate) Social Security Award amounts.

CMS Medicare Part D Creditable Coverage Notice Requirement

Friday, June 3, 2011

Effective with current plan years, Medicare Part D Creditable Coverage Notices which informs eligible members of plans which provide prescription drug coverage that those plan do or do not provide creditable coverage, must provided those members that notice no later than October 15th annually. Previously, Medicare Part D Creditable Coverage Notices were required by no later than November 15th annually. The Medicare Part D Creditable Coverage Notice requirement was a function of the Medicare Modernization Act of 2003 and is required of organizations and "entities" who provide prescription drug coverage to Medicare Part D eligible individuals.

The CMS has provided model Medicare Part D Creditable and Non- Creditable Coverage Notices in both English and Spanish. The change in the date is associated with the passage of the Patient Protection and Affordable Care Act (PPACA) which changed the Medicare enrollment period beginning in 2011. The new Medicare enrollment date is October 15 through December 7, annually. Thus the Medicare Part D Creditable Coverage Notices must be in the hands of Medicare Part D eligible members by October 15 to allow them time to make their enrollment choices.

CMS also provides access to the archives of 28 prior Creditable Coverage Guidance and Notices for those organizations or entities who are required to retroactively provide such notices. CMS also provides access to various instructions and related forms for use in determining creditable coverage and reporting coverage disclosure requirements to the CMS.

The Medicare Modernization Act (MMA) requires entities (whose policies include prescription drug coverage) to notify Medicare eligible policyholders whether their prescription drug coverage is creditable coverage, which means that the coverage is expected to pay on average as much as the standard Medicare prescription drug coverage. For these entities, there are two disclosure requirements:

A written disclosure notice is required for all Medicare eligible individuals on an annual basis who are enrolled under an organization’s prescription drug plan. (Prior to October 15th) Notices are also required at the time a Medicare eligible individual joins a covered plan.

A disclosure is provided to:

• Medicare eligible active working individuals and their dependents

• Medicare eligible COBRA individuals and their dependents

• Medicare eligible disabled individuals and their dependent

• Medicare eligible retirees and their dependents

The Medicare Modernization Act requires late enrollment penalties for those persons who fail to maintain creditable coverage for a period of at least 63 days following their initial enrollment in the Medicare prescription drug program. Thus, Medicare Part D Creditable Coverage Notices are essential to the individuals decision as to whether or not to enroll in the Medicare Part D prescription drug program.

Organizations sponsoring prescription drug programs, creditable or not are required to complete the Online Disclosure form disclosing to the CMS whether or not their program meets the creditable coverage guidelines under the Medicare Modernization Act.

The Disclosure must be completed:

• No later than 60 days from the beginning of each plan year

• Within 30 days after termination of a prescription drug plan

• Within 30 days after any change in creditable coverage status