Colonial Life white paper shows proven solutions to control benefits costs

Public and private employers can take steps to ensure competitive, sustainable benefits
 
COLUMBIA, SC – March 26, 2012 – Employers across America faceunprecedented challenges in providing competitive employees benefitswhile still controlling costs. Public sector employers face additionalobstacles from revenue shortfalls and increased public scrutiny ofgovernment spending. Yet employers — both public and private — haveaccess to many proven solutions that can help them control and evenreduce costs while continuing to offer a strong benefits package.
 
That’s one of the key findings in a new white paper released today byColonial Life & Accident Insurance Company. “Preserve and Protect:How Public Sector Employers Can Provide Excellent Benefits WhileControlling Costs” uses proprietary and industry research and casestudies to explain the reasons for the growing cost pressures and showthe effectiveness of multiple strategies to contain employee healthbenefits costs.
 
The cost of family health care coverage has doubled in the last decade,increasing 9 percent in 2011 over the previous year.1 At the same time,state and local governments are facing significant financial stress fromthe most recent recession: Their revenues declined 22 percent from 2008to 2009.2
 
“In today’s economy, most people realize changes in benefits programsare inevitable,” says Pat McCullough, assistant vice president andpublic sector practice leader at Colonial Life. “But many employers,especially those in the public sector, aren’t taking advantage of theopportunities available to them. They’re more likely to be able tocontinue offering competitive programs if they find ways to make themmore cost-effective.”
 
Top five cost-control strategies
The white paper examines five strategies research shows to be effective in controlling costs:
 

• Wellness initiatives — Wellness initiatives were among the topcost-control strategies implemented by employers in a recent survey ofgovernment financial officers. Nearly 80 percent of survey respondentshave added wellness initiatives to their benefits program, and 90percent of those recommend them to others; nearly two-thirds recommendthem strongly.3 That aligns with a Society for Human Resource Managementreport showing 75 percent of employers supply their workforce withwellness resources and information.4
• Pretaxing benefits/Section 125 participation — Equaling wellnessprograms as a highly implemented and recommended cost-control strategyis establishing Section 125 plans and maximizing employees’participation in pretax benefits programs. More than three quarters — 77percent — of employers in the government financial officers survey saythey offer pretax benefit plans, and 86 percent of those recommend thisoption.3 In fact, at 73 percent highly recommended, it was the mostenthusiastically endorsed strategy of the survey options, and only 3percent were unlikely to recommend it.
• Benefits communication and education — Employers can transfer thecost of benefits plan communication to their benefits suppliers and canoutsource an enrollment system and open enrollment management ratherthan maintaining these responsibilities in-house. Although this shift inbenefits communication and enrollment responsibilities iswell-recommended by those using it, it’s not yet widely implemented. Inthe government financial officers survey, only 31 percent of employerswere using an external service provider for benefits enrollment and 52percent had shifted benefits education and communication expense tosuppliers. However, 78 percent of those who outsourced enrollment wouldrecommend it, and 84 percent recommended using a benefits carrier tohandle benefits education and communication.3
• Voluntary benefits — One underutilized solution to the benefits costproblem is to move noncore benefits to employee-paid voluntarybenefits. This strategy is another example of a change that fewer publicsector employers have yet to implement, but those who do give it veryhigh marks. Only about a third of employers in the government financialofficers study said they have moved noncore benefits to employee-paidvoluntary coverage. However, 87 percent of those employers recommendedthis strategy, and 70 percent recommended it strongly.3
• Dependent verification — Providing insurance coverage for dependentswho are no longer eligible drives up benefits costs for employers.Health plan audits can reveal a significant number of ineligibleparticipants, including dependents who are over age or who aren’t ablood relative or a spouse, or former employees who haven’t been removedfrom the plan. The potential cost savings offered by dependentverification can be considerable, and the service is sometimes availableat no cost to the employer.

Dollars and sense
Government employers who implemented strategies such as these reportsignificant savings in their employee health care benefits. More thanhalf — 55 percent — of participants in the government financial officersstudy saved at least 6 percent, and 40 percent of them saved more than10 percent.3 Other studies show employer return on investment forwellness initiatives ranging from $3 to $6 for every dollar spent.5
 
The Colonial Life white paper illustrates how government employers cansave money and preserve the value of their benefits packages bycarefully selecting the most effective combination of strategies fortheir situations and needs, including enlisting the often-free supportof qualified benefits providers. By considering factors such as theorganization’s size, political environment, cost management goals,impact on employee health and access to care, government employers canselect from a range of options with the potential to significantlyaffect their health benefits costs.
 
“Focusing on the right cost-saving measures could have a significantimpact on the bottom line while minimizing the impact on employees,”says Tom Cochran, chief executive officer and executive director of theU.S. Conference of Mayors. “Thoughtful implementation of strategiesappropriate for each employer can help them continue to offer a stablebenefits package in a more financially sustainable way.”
 
The complete white paper is available in Colonial Life’s online newsroom at ColonialLife.com.
 

About Colonial Life
Colonial Life & Accident Insurance Company is a market leader inproviding insurance benefits for employees and their families throughthe workplace, along with individual benefits education, advanced yetsimple-to-use enrollment technology and quality personal service.Colonial Life offers disability, life and supplemental accident andhealth insurance policies in 49 states and the District of Columbia.Similar policies, if approved, are underwritten in New York by aColonial Life affiliate, The Paul Revere Life Insurance Company,Worcester, Mass. Colonial Life is based in Columbia, S.C., and is asubsidiary of Unum Group, one of the world’s leading providers ofemployee benefits. For more information, call Colonial Life at (803)798-7000 or visit www.coloniallife.com.Colonial Life offers exceptional opportunities to join its expandingsales force of more than 13,000 career agents in one of the fastestgrowing segments of the insurance industry. The company providesaward-winning training that has received national recognition forexcellence. For more information about Colonial Life, call the companyat (803) 798-7000 or visit www.ColonialLife.com