With health care costs rising, companies routinely question how they can continue to provide health benefits to their employees without cutting into their bottom line.
Traditionally, these decisions are primarily made in the Human Resources department, which not only chooses what benefits to offer, but also must communicate those benefits – and changes in them – to employees.
These decisions, however, should not be made in a vacuum. Health benefits decisions made in one department can effect other areas of the company, and ultimately impact the company’s bottom line in ways that may not have been foreseen.
One example is the relationship between Human Resources and the person at the company responsible for risk management. That could be a risk manager per se, the chief financial officer, treasurer, or vice president of administration – whoever is responsible for managing risk. Changes that happen with employee health benefits by human resources ultimately can impact costs trying to be controlled by the risk manager. Both positions can help the company if HR and risk managers understand how changes to employee health benefits could impact risks to the company. It’s important to find a balance so everyone – employees and employer – come out ahead.
Here are some ways the HR department and the risk manager can work together to benefit employees and the company.
1. Consider the possible negative impact before cutting medical benefits: If medical benefits are cut and employees know they must pay more for doctor visits, they may be more likely to declare an illness or injury as a workers compensation claim. They might attribute the nagging back pain to an injury or overuse at work, rather than the weekend soccer game.
Since there is no co-pay or deductible for workers comp claims, it costs the employee nothing, but could end up costing the company much more than a traditional medical claim. Workers comp claims can also result in paid time off work or lost time, adding further to company costs as well as reduced productivity while the employee is away from the job.
Regardless of whether a claim is under the group medical or workers comp, HR and the risk manager can work together to reduce the amount of the claim through medical management and early return-to-work programs. Return-to-work programs offer the employee light or modified duty so the employee stays productive in the company. Such programs are quite common for workers comp, but not for short-term disability claims. With HR and risk management working together in a total disability management approach, effective cost containment measures such as this can be shared for the benefit of all.
Benefits communication to employees is another area of opportunity. This is more commonly done in HR, but rarely done for workers comp. The person in charge of risk management would be well-advised to work with HR to put together a communication package about workers comp so employees will better understand how it works, why it’s a benefit to them, and what it costs the company. Since HR is accustomed to communicating with employees about employee benefits, it would be a good communication avenue to discuss workers comp issues as well.
2. Medical management: This is where a company partners with a local doctor or clinic to provide medical treatment for employees. These doctors are invited to tour the workplace so they can see the work environment and learn about the work employees do, including physical requirements of the various jobs. Employees are then encouraged to use these doctors for treatment. Because these doctors understand the nature of the work, they are better able to treat these employees for specific work-related problems and will also help release them for modified or light duty work. This benefits both the employee and the employer and works best with a trusting employee population. Companies need to make sure they have the employees’ best interests in mind and are not just out to reduce medical costs without regard to the quality of the services. It’s important that the health care provided be as good or better at the same or lower cost.
3. Encouraging better health: Part of a risk manager’s job is to cut reduce the number and cost of medical claims from on-the-job injuries. One proven way to do this is to have a healthier workforce. Risk managers should join HR departments to offer programs that encourage employees to get and stay healthy. This includes fitness programs, nutrition counseling, smoking cessation plans, and health screenings. Such programs are often overlooked or not implemented because the relationship between them and reduced claims is difficult to prove. However, these programs ultimately can reduce medical claims and costs as well as increase employee productivity and job satisfaction, and reduce turnover.
Companies also should consider offering the new Health Savings Accounts (HSAs), which allow employees to manage some of their own health care dollars and derive additional benefits from being informed consumers. With these newly approved accounts, an employee chooses a higher deductible for health care, which allows the company and the employee to make deposits in an HSA in an amount equal to the deductible. Unspent account balances grow tax-free and eventually may be used for non-medical purposes. Since it’s their money, employees might take more responsibility for how they spend it and hopefully, choose a healthier lifestyle if it reduces their out-of-pocket health care costs.
4. Combine health and safety: Risk managers are concerned about employee safety, while HR managers focus on employee health. Combining these goals can help employees achieve both at the same time. We worked previously with a utility in Montana that had a safety program to keep workers safe in the field. We implemented a health program along with the safety program that encouraged employees to participate in a fitness program. This included blood pressure and cholesterol screenings so employees would become healthier overall. The result: the safety record improved because healthier employees had fewer on-the-job injuries.
Health care decisions are made by consumers. The more informed these consumers are, the better decisions they will make. The challenge and opportunity is for HR and risk management to work together to educate employees so they can make the better decisions for their own wellbeing as well as for the benefit of the company they work for.