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An independent Advertising supplement by mediAplAnet to los Angeles times
employeesmake the most of what’s yours
take partHow employees can help control healthcare costs
not just an expenseconsider benefi tsan investment
eMPLOYee BeneFITs
offerinG more tHanJust a LiVinG WaGe
CEO of SAS Software, Jim Goodnight, discusses how hiscompany reached #1 on Fortune’s 100 Best Companies to Work For
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2 · october 2010 An independent Advertising supplement by mediAplAnet to los Angeles times
CHALLenGesThis is an age of economic insecurity. America is beset by fi nancialvolatility, rapid globalization and political polarization. With the unemploy-ment rate hovering near ten percent, Americans want and need jobs.
Better your businesswith employee benefi ts
The White House website affi rms that “President Obama’s first priority in confronting the economic crisis is to put Americans back
to work.” But many jobs off er more than just a living wage: employer-sponsored health and retirement benefi ts give workers and their fami-lies essential fi nancial security for whatever tomorrow brings.
It seems likely that tomorrow will bring substantial national debt, driven by ongoing shortfalls in fed-eral entitlement programs like Social Security and Medicare. These “safety-net” programs are an essential ele-ment of personal fi nancial security for older Americans, along with individual savings and employer-sponsored benefi t plans. When the music stops playing, many retirees may fi nd themselves without a seat.
Potentially painful changesThe president’s National Commis-
sion on Fiscal Responsibility and Reform, tasked with developing proposals to balance the federal budget, is expected to suggest sig-nifi cant, possibly painful changes to these entitlement programs. It might also suggest changes to the tax code to alter the incentives that make employer sponsorship of benefi t plans possible, since the tax-favored treatment of employee health and retirement plans is esti-mated to account for more than $1.5 trillion in federal expenditures over the next fi ve years.
But if the commission is wise, it will see that these plans are essential to the nation’s long-term economic health. The assets in employer-sponsored retirement plans alone currently represent more than $5 trillion in investment capital that is used to fuel the economy. But beyond that, employer-sponsored benefi ts represent a huge bargain to the government and, in turn, to all of us as taxpayers. The tax-favored treatment of workplace-sponsored
benefi ts allows Americans to obtain essential health and retirement security at far less cost than if our public entitlement programs had to be expanded to provide the same level of benefi ts directly. Policies that weaken the employer-based system will simply put more burden on both individuals and the government.
Of course, employee benefi t plans also provide tremendous value to participants because the employer sponsors serve as knowledgeable and powerful advocates, performing substantial due diligence on vendors, simplifying plan administration and obtaining lower costs through group purchasing. Employers voluntarily off er these benefi ts, not just because they believe it is the right thing to do, but because they attract talented workers in a competitive labor mar-ket. Our nation’s policymakers face tough decisions. They can help make the right ones by building on what is working and what most Americans rely upon: the employer-sponsored benefi ts system.
James A. Kleinpresident, American benefi ts council
Dr. Jim Goodnightexplains how he created an industry leading company.
We recommend
pAge 6
Make your benefits count p. 5tips on how you can take advantageof your benefi t packages.
emPloyee BenefiTs,1sT ediTion, ocToBer 2010
Country Manager: allan [email protected] Manager: Jackie [email protected]
responsible for this issue:Publisher: allison [email protected] Developer: rebecca [email protected]: mariel fitzgeraldmariel.fi [email protected]: John caulfi eld; James a. Klein; John W. lahr, od, faao; gwen moran; William l. scogland; Julie stich; Joe Willingham
Distributed within: los angeles Times, october 2010This section was written by mediaplanet and did not involve los angeles Times news or editorial departments.
Find out how on page 4.
“employer-sponsored health and retirement benefi ts give workers and their families essential fi nancial security for whatever tomorrow brings.”
BENEFITS HELP THE ECONOMYBENEFITS HELP
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As they are required to bear more expenses for company-provided healthcare cover-age, employees are appre-ciating their role in helping employers lower those costs.
“Gone are the days when you had a card in your wallet and thought ‘it’s not going to cost me any-thing,’” says Thomas Barcelona, executive director of the National Association of Employee Benefi ts Administrators in Palos Heights, Il. Employees “must be engaged in their own health.”
That starts with becoming “an educated consumer,” says Todd Miller, a benefi ts consultant who is president of the Seattle-based Employee Benefi ts Plan-ning Association. The Internet off ers a wealth of information
october 2010 · 3An independent Advertising supplement by mediAplAnet to los Angeles times
CHALLenGes
Find out how on page 4.
As they are required to bear more expenses for company-provided healthcare cover-age, employees are appre-ciating their role in helping employers lower those costs.
“Gone are the days when you had a card in your wallet and thought ‘it’s not going to cost me any-thing,’” says Thomas Barcelona, executive director of the National Association of Employee Benefi ts Administrators in Palos Heights, Il. Employees “must be engaged in their own health.”
That starts with becoming “an educated consumer,” says Todd Miller, a benefi ts consultant who is president of the Seattle-based Employee Benefi ts Plan-ning Association. The Internet off ers a wealth of information
about healthcare providers and facilities, which can be com-pared based on their respective economy and quality. (A common misnomer is that “higher-priced” automatically means “better” when it comes to healthcare.)
DIY preventionWorkers can take the initiative by choosing generic alternatives to brandname drugs that can cost between 25 percent and 80 percent more. They can also avoid trips to the emergency room by being better prepared at home to address sudden injuries or ill-nesses by having at the ready fi rst-aid kits and lists of after-hour con-tact numbers for 24-hour pharma-cies, doctors, nursing advice lines, and local urgent-care centers.
Employees should be receptive
to participating in company pro-grams designed to help them live healthier. In February, for example, a leading national retailer began assigning “Wellness Champions” to each of its 2,000-plus stores and distribution centers nationwide. These hourly workers are allotted two hours per week to discuss the company’s wellness initiatives. In early October, they focused on fl u prevention and supporting in-store mobile clinics that provide free fl u shots to all employees.
“Education, partnership and empowerment are the most power-ful equation if you want associates to do their part in helping to lower costs,” says this retailer’s senior director of Medical and Health Management.
emPLoyee actiVism is key
john caulfield
InsIGHT
In light of recent health care reforms, many small to mid-sized companies face challenges to expand their busi-ness while retaining employees.
Third party vendors, or Profes-sional Employer Organizations (PEOs), help these companies gain market share by taking on all or some of their HR management roles.
PEOs free up resourcesMid-sized companies currently comprise the majority of clients that outsource benefits manage-ment to third party vendors, an exchange that amounts to $5 billion in contracts across the globe. These contracts often operate under a sys-tem of co-employment, where the PEO provides specialized services while sharing liabilities with the cli-ent company. This allows the client increased opportunity for decision making, innovation, and expansion.
Outsourcing HR provides low cost benefits for employees Outsourcing HR further allows com-panies to deliver more competitive employee benefi t plans, thus foster-ing the loyalty of skilled employees. PEOs obtain lower rates on health care and retirement plans, thus pass-ing the savings onto their clients.
“By outsourcing to a PEO, many small and medium sized businesses fi nd that they can off er an employee benefi ts package that enables them to compete with Fortune 500 com-panies for the best employees,” says Barbara Drames, senior director of benefi ts at Oasis Outsourcing.
consider oUTsoUrcing Hr managemenT
Barbara Dramessenior director of Benefi ts, oasis outsourcing
4 · october 2010 An independent Advertising supplement by mediAplAnet to los Angeles times
InsIGHT
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Research has shown a link between benefits and employee attraction, engagement and retention.
A satisfi ed worker is more produc-tive, meaning a better bottom line and a better service experience for customers. Think of employee ben-efi ts as an investment in both your workforce and your company.
It’s important to identify the benefi ts being off ered by industry competitors. Likewise, an under-standing of the benefi t programs in your area is necessary as your com-pany competes for qualifi ed job candidates. Some employers want to become an employer of choice by going a step beyond and off er-
ing more generous or more unique benefi ts than their competitors.
Why are benefits necessary, even when available dollars are stretched?
Having a strong benefi ts package enhances a com-pany’s reputation and
fosters goodwill among its work-ers. For high-potential recruits, benefi ts are an important aspect of the job decision. More importantly, a relevant benefi ts package culti-vates employees’ fi nancial, physical and emotional well-being. Satisfi ed workers value their jobs, respect their employer, take pride in their accomplishments and want to stay.
Unhappy workers leave.
Employee turnover results in increased costs due to a variety of factors: advertising and interview-ing expenses, productivity loss, and training time and costs. The loss of an experienced worker cre-ates a knowledge gap that disrupts projects and the productivity of other employees.
How can a company provide top-notch benefits without breaking the bank?
While generous health and retirement benefits are appreciated, so too are ben-
efi ts that can be provided at little or no cost. Flexible work arrange-ments add no expense to the bot-tom line and may be the most
highly prized benefi ts. Let employ-ees take some time off for volunteer activities. Off er mentoring oppor-tunities that benefi t both new and experienced employees. Off er the occasional casual-dress Friday.
In today’s workplace, where four generations meet, a one-size-fi ts-all benefi ts package no longer works. Employees are seeking fl exibility and options. Just as a hefty life insurance death benefi t may not be appealing to a 21-year-old, a 55-year-old will likely not need the services of an onsite child-care center.
The key is discovering which benefi ts employees use and value. A detailed return-on-investment analysis is eff ective, but can be complicated and costly. Other
methods: assemble employee focus groups or directly survey employ-ees. Ask them which benefi ts are essential. Their answers will direct your benefi ts strategy, design and expense. The payoff will be a more engaged workforce producing a superior product and providing outstanding customer service.
Consider employee benefi ts an investment
julie stich
senior information/research specialist, inter-
national Foundation of employee benefi t plans
ATTRACT EMPLOYEES
WITH BENEFITS
ATTRACT
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october 2010 · 5An independent Advertising supplement by mediAplAnet to los Angeles times
Consider employee benefits an investmentnews
It’s fall, and time to sign up for next year’s employee benefits. With new health care reform changes, it’s more important than ever to consider the options. How can you make sure you’re taking full advantage of the benefits offered by your employer?
Typically, several different health benefit packages are available, varying in cost and coverage. When comparing them, make sure to do the math and research. Add together all of the different expense under each option. Include deduct-ibles, copayments for office visits and prescription drugs, and insur-ance premiums.
A healthy, young, single person may want to consider a plan with a higher deductible and lower pre-mium. A worker with a young fam-ily may look for a plan with no or lower office visit copayments. Think about the types of services that might be needed next year and the coverage and cost options available
from your spouse’s employer. How will that plan work with yours?
Some employers encourage work-ers to improve their health. Various wellness activities are offered, such as smoking cessation classes, and health screenings. If your employer offers participation incentives, take advantage. Your employer may ask you to take part in a disease manage-ment program if you have a chronic health condition. As you work with a professional to manage your dis-ease, you’ll gain a health advocate and may be eligible for discounted
medications, supplies and services.Other types of benefits are just
as important as health care. Many employers provide a retirement plan like a 401(k) that allows you to save tax-deferred money. The earlier money is set aside, the more it will grow. Often employers match work-ers’ contributions to the plan up to a limit. If you switch jobs, roll over your 401(k) savings into another plan. While tempting, taking that money too early will result in a penalty, plus income taxes will have to be paid. You’ll also lose potential
investment growth.Attend any financial planning
and retirement planning seminars offered; they’re usually free and may also be open to spouses. Make use of an employee assistance plan (EAP) if one is available. Most EAPs have expanded their services to include counseling for financial and legal matters, work/life balance, and family issues.
A worker who is well-informed makes better benefit decisions. Read the enrollment and other benefits information you receive. If possible, attend face-to-face enrollment meetings where ques-tions are answered immediately. Contact your benefits or human resources department with any additional questions or concerns. Since employers typically spend one third of their total payroll costs on benefits, they want you to make the most of them.
make your benefits countHealth Savings Accounts and the cousins provide an extra layer of financial protection.
Health Savings Accounts (HSAs) are buffering Americans against financial blows from unexpected out-of-pocket medi-cal expenses.
HSAs are tax-exempt trusts that anyone covered by a high-deduct-ible health plan can set up with an insurance company or other IRS-approved trustee. Individu-als can contribute up to $3,000 per year, and families $5,950, and the benefits from HSAs are manifold: you can claim a tax deduction for your annual contribution, inter-est from money in this account is tax free, as are distributions for qualified medical expenses.
Variations on HSAs include employer-established Flex-ible Spending Accounts (Health FSAs), that are built up though payroll deductions and have many of the same rules and tax benefits as HSAs.
john caulfield
saving for amedical rainy day
julie stich
senior information/research specialist, inter-
national Foundation of employee benefit plans
6 · october 2010 An independent Advertising supplement by mediAplAnet to los Angeles times
Dr. Jim Goodnight landed a plum assignment to work on the Apollo program at the National Aeronau-tics and Space Administration (NASA)—the dream of many who enter the sciences. But when he got there, he was shocked to fi nd an uninspired workplace with row upon row of grey cubicles in an aus-tere and infl exible environment.
“I think they had a vending machine out in the hallway you could go out and buy a cup of coff ee, but it was not very good,” he says. “It just seemed to me when I fi nally started SAS back in 1976, I thought it was important to treat everybody like they were really special people.”
Mission accomplishedSAS consistently appears on various “Best Places to Work” lists world-wide, including hitting the number-one spot on Fortune magazine’s 2010 list. And for good reason: SAS’s staff ers enjoy comprehensive medi-cal, dental, vision and prescription plans; on-site health care centers at the company’s Cary, North Caro-lina headquarters and Austin, Texas regional offi ce; on-site fi tness and recreation center at the Cary head-quarters and fi tness center reim-bursements for other locations; on-site or subsidized child care, based on region; fl exible working hours; on-site summer camp in Cary; paid fam-ily, maternity and paternity leave; no dress code; no limit on annual sick days; and a host of others. The headquarters building has some additional amenities, including a
café, hair and nail salons, dry cleaner, massage therapy practice, and UPS Store, among others. SAS has also invested heavily in creating pleasant work environments. Private offi ces are plentiful and a signifi cant art col-lection adorns the walls.
To keep his fi nger on the pulse of what’s important to his employees, Goodnight has an open-door policy and hosts informal monthly cof-fee meetings with small groups of employees. He also updates employees on the state of the com-pany via a regular webcast.
As a result, SAS enjoys a low four percent turnover in an industry where the norm is 20 percent, says Goodnight. SAS’s reputation also attracts a deep pool of prospective new talent. The company is routinely fl ooded with applicants for every job opening, allowing Goodnight and his team to pick from the best and brightest talent available. That, in turn, has led to 34 years of consis-tent revenue growth—and allowed Goodnight to vow to his employees in 2009 that there would not be any layoff s at the company, despite wide-spread economic uncertainty.
“I just hope that some of the pub-lic companies out there that are so concerned about their stock prices will understand that you either pay the benefi ts or you’re going to end up paying a headhunter [to replace employees],” he says. “I do believe that if you treat your employees like they make a diff erence then they will make a diff erence.”
The benefi ts of good benefi tsleader-To-leader
GWen MoRan
InsPIRATIOnIn today’s economy, employee engagement is critical to the success of a business. CEO Jim Goodnight explains how he created an industry leading company.
STAYING CONNECTEDIn 2004, Dr. Goodnight was named one of the 20th Century’s Great American Business Leaders by Harvard Business School.PHOTO: coUrTesy of sas sofTWare
SHOW YOU CARE
An independent Advertising supplement by mediAplAnet to los Angeles times
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october 2010 · 7An independent Advertising supplement by mediAplAnet to los Angeles times
PAneL OF eXPeRTs
Cost is the number one challenge. Rising health care premiums, as well as higher deductibles and co-pays, deeply concern employers. Many businesses choose to enhance their benefits packages by offering voluntary benefits, which are typically paid for by employees. These benefits complement an employer’s core package and give employees additional choices.
Today’s greatest challenge is rising medical costs, the exception being vision care benefits. Vision care costs remain relatively low and stable. Employers can offer a potentially life-changing benefit for employees that offers early detec-tion of major eye and general health problems like diabetes, hypertension, high cholesterol, glaucoma, cataracts and mac-ular degeneration—all through a comprehensive eye exam.
Question 1:What are the primary challenges facing employers when it comes to their company’s benefit packages? How can these challenges best be addressed?
Joe WillinghamvPs, West Territory,colonial life
John W. Lahr, OD, FAAOdivisional vice President and medical director,eyemed vision care
Question 2:How can employers communicate to their employees that they are prioritizing benefits?
Question 3:What should employees look for in their benefits packages?
By making sure employees understand their ben-efits. Today’s benefits are complex, and most employees simply don’t know a lot about the coverage they have. In order to fully appreciate what their employer offers, employees have to first understand their benefits and the value they provide to them and their family.
Employees need benefits that meet their individual needs, regardless of their stage in life. They also want variety and the ability to select affordable coverage that helps them protect their families and their lifestyle. In addition, employees need portable benefits they can take with them if they retire or change jobs.
Smart employers will encourage employees to enroll and maximize the vision benefits available to them and their fam-ilies to promote overall health and increase workplace produc-tivity. Employers should opt for vision plans that offer their employees more flexibility and choice for today’s demanding lifestyles. That means a diverse network of providers, includ-ing retail locations, as well as choice in vision correction for contact lenses, glasses or prescription sunglasses.
Employees want convenience in utilizing their benefits. A recent survey indicates 40 percent of consumers prefer to utilize their vision benefits during nights and weekends, which means employers should look for a contemporary plan that offers a wide selection of independent doctors as well as national optical chains. A good vision plan should offer annual comprehensive eye exams and an unrestricted choice of optical materials while limiting out-of-pocket costs.
Since no one can predict the future, the best we can do is prepare for it.
Preparation for the future, however, requires predictability—the ability to make informed decisions based on consistent rules and principles. As the current economic crisis poses a chal-lenge for individual savers and inves-tors, employer-sponsored retirement benefit plans must grapple with unpredictability on a massive scale.
The defined benefit pension system, which refers to traditional pension plans that provide par-ticipants with lifetime retirement income, is only now beginning to emerge from the market crash of
2008 and the resulting collapse of credit and interest rates. This “per-fect storm” wreaked havoc with the current law funding rules until Congress enacted legislation to give companies extra time to meet their funding obligations. More broadly, however, the episode revealed the chronic challenge of pension plan sponsorship: the prevailing fund-ing rules expose companies to the sort of financial volatility that thwarts predictability and makes
long-term sponsorship so difficult.
The promise of securityAs the defined benefit pension sys-tem struggles to remain viable, the 401(k) system has supplemented and replaced many traditional pensions, providing tens of millions of par-ticipants with tax-favored savings opportunities. But the heavy market losses over the past several years have raised serious questions: are indi-viduals equipped to manage their own retirement funds? Will 401(k) assets be enough to support potential decades of retirement living?
The future of defined contribu-tion plans depends on the answer to these questions. While studies have
demonstrated that each dollar of tax incentives results in multiple dollars in savings and investment capital, some have suggested that the current system be scrapped in favor of a gov-ernment-run savings plan. But given the current political atmosphere and ongoing concerns about the federal Social Security program, this is prob-ably not a viable alternative.
The employer-sponsored retire-ment benefits system provides an effective framework for the delivery of savings opportunities. To reduce the pressure on federal entitlement programs, the govern-ment should partner with employ-ers to give Americans the tools they need to plan wisely for their future.
This includes clear, simple disclo-sure statements, access to invest-ment advice and other financial lit-eracy resources. Most importantly, lawmakers can offer employers predictability in plan design and administration. And in return, employers can offer their workers the promise of security after work.
William L. Scogland is a partner in Jen-ner & Block’s Chicago office. He is Chair of the Firm’s Employee Benefits and Execu-tive Compensation Practice and member of the ERISA Litigation Practice. The views expressed are those of the author alone and not necessarily those of Jenner & Block LLP. This article should not be taken as legal advice. Employers should consult their legal advisers in specific situations.
William L. ScoglandPartner, Jenner & Block llP
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