About 23 percent of small and midsize companies do business internationally, bringing in a whopping $1.7 trillion in revenues from international operations, according to a 2011 report published by The Business Journals.

Strong international trade and globalization can lead to the need for more overseas staffing. A poll by the Hackett Group predicts U.S. and European companies will move 750,000 more jobs in information technology and financial services to other parts of the world by 2016 to take advantage of lower operating costs, according to a report inHuman Resource Executive Online.

While overseas staffing can offer companies the promise of lower costs, it shares some of the same challenges created by a domestic workforce, experts say. That includes the need to craft solid benefits that will attract and keep top talent.

In the future, “benefits will be an important battlefield in the domestic employee market and also in the attraction of foreign nationals, whether they be American or not, to the employer,” said Sheldon Kenton of Cigna Global Health Benefits in a recent interview with Employee Benefit News.

The secret to international benefit success often hinges on understanding the economic and cultural nuances of the host country, Imran A. Qureshi of Towers Watson toldEBN.

“You have to look at the total picture; you’ve got to look at what’s being provided by the government, by the individual on their own and by the employer,” Qureshi said, adding that employers shouldn’t just take their benefit package for their American workers and simply offer the same to overseas employees.

Health benefits are always desirable, no matter the location, experts note. However, the difference in heath costs and trends among nations requires employers to take special care when creating the plan design and coverage. For instance, HIV testing is considered essential in any benefits package in South Africa, while in India — a nation with a growing pool of talented workers — employers may want to offer more comprehensive health benefits to compensate for the country’s weak public health system, experts say.

Employers also may be wise to take note of what native companies are doing. A recent study by MetLife noted that employers in different nations have varying priorities when it comes to their benefits and workforce.

The study found that companies in established economies, such as the United Kingdom and Australia, rank the retention of employees as the primary goal of their benefits package. Companies in emerging economies — including Brazil, India and Mexico — see their benefits as ways to increase job satisfaction or productivity, the study found.

The old saying by Benjamin Franklin — “an ounce of prevention is worth a pound of cure” — has been taken to heart by many employers that want to better control the cost of their health care benefits.

Now, new research suggests that companies that promote a culture of prevention may want to preach an additional adage to their employees: When seeking a health care screening, look before you leap.

Numerous past studies and experts have pointed to the power of prevention in reducing health care costs by treating ailments before they bloom into significant conditions.  In recent testimony before a California state legislative committee, Alan Katz, executive vice president of SeeChange Health, noted that preventive screenings offer the best long-term strategy for reducing health care costs.

“Early-stage treatment of breast cancer costs, on average, nearly $14,000 per year, while late-stage treatment averages $61,000,” Katz told the committee, according to a report by the Society for Human Resource Management. Savings clearly can be realized from prevention, even if it means “increased utilization [of health care services] in the short term,” he said.

Not all preventive costs are equal, however. New research by Change Healthcare found that costs for some preventive exams can vary by as much as 700 percent, depending on where the patient seeks care. For instance, in an analysis of 15,000 consumers, the cost for a colonoscopy ranged from $786 to $1,819, according to a report on the study in USA TODAY.

The study cited a number of factors that can determine price, including whether a patient receives care in an urban or rural area; whether the patient visits a hospital, physician’s office or clinic; and whether the provider specializes in a particular test.

Companies can shield themselves from some of the high costs by educating their employees about this variance and actively helping them find the best options for the price, Change Healthcare President Doug Ghertner told USA TODAY.

Another key question that employees need to ask when seeking preventive care is: Is this test really necessary?

A number of procedures, such as some imaging scans, have long been criticized as overused and ineffective. Recently, a foundation affiliated with the American Board of Internal Medicine released a list created by doctor specialty groups that names 45 medical services as typically unnecessary, according to a report in The Wall Street Journal. For instance, the American College of Radiology said patients with uncomplicated headaches usually shouldn’t undergo an image scan. The same goes for those with general lower-back pain, the American College of Physicians recommended.

“We’re not saying they should never be done,” Dr. Christine Cassel, the foundation’s CEO, told the WSJ. “We’re saying these [screenings] are often unnecessary, and therefore the patients should ask the doctor, ‘Gee, do I need this?’”

Note that these Notices are considered interim and are subject to revision once finalized.  In practical terms, this means that several key elements contained within the Notices (such as the exact definition of the essential benefits and the exact calculation methods used for the MV Calculator) are not yet available, and will not be until, at the earliest, the Final Notices are released.

This process for valuing and reporting employer health coverage goes to the heart of the ACA’s individual and employer mandates. It will also help target a tax credit designed to help low-income individuals pay premiums for health insurance purchased through a state-wide insurance exchange. 

“Minimum Essential Coverage” Versus “Essential Health Benefits”

The “individual mandate” (the constitutionality of which is now under review by the U. S. Supreme Court) refers to the ACA requirement that most U.S. citizens either have “minimum essential coverage” or pay a penalty on their federal income tax return. The emphasis here is on “minimum.” This requirement may be satisfied through virtually any type of health coverage – individual or group, private or governmental, generous or stingy.

Minimum essential coverage should be contrasted with “essential health benefits,” another ACA-created term. This refers to the type of comprehensive health coverage that must be offered by any insurer whose individual or small-group policy is sold through an exchange. Essential health benefits must include at least a benchmark level of coverage for each of ten specific categories of benefits. Notice 2012-31 makes clear that self-funded employer health plans (as well as insured plans maintained by larger employers) need not meet this higher standard.

New Employer Reporting Requirements

To help enforce the individual mandate, a new Section 6055 of the Tax Code will require all providers of minimum essential coverage to report to the IRS on the individuals who receive that coverage. In Notice 2012-32 the IRS indicates that final regulations under Section 6055 will likely make a health insurer responsible for reporting minimum essential coverage under any insured employer health plan, relieving the sponsoring employer of that obligation. In the case of a self-funded employer plan, however, this reporting obligation will fall on the employer. The IRS anticipates that this Section 6055 reporting would be done on an employee’s Form W-2.

A separate reporting requirement will apply only to “large employers” (generally defined as those having 50 or more full-time employees). Under Code Section 6056, a large employer must report the information needed to administer two other provisions of the ACA. These are (1) a premium tax credit available to low-income individuals for the purchase of health insurance through an exchange, and (2) the “shared responsibility” penalty to be assessed against large employers that fail to offer health coverage meeting a “minimum value” standard, or that offer such coverage but charge a premium that is not “affordable.” Notice 2012-33 solicits comments on this Section 6056 reporting requirement.

Importance of “Minimum Value” Determination

Under the ACA, an employer plan fails to provide “minimum value” if “the plan’s share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs.” Citing a fall 2011 report by the Department of Health and Human Services (HHS), the IRS notes that approximately 98% of the individuals currently covered by employer-sponsored health plans receive coverage that meets this minimum value standard.

This minimum value determination is important to both employees and large employers. An employee may not claim the premium tax credit for the purchase of health insurance through an exchange if the employee (or a family member) is eligible to enroll in an employer-sponsored health plan that meets this minimum value standard – unless the premium for that coverage is not “affordable” (a determination to be made on the basis of the employee’s household income). This premium tax credit is also unavailable to any employee who is actually enrolled in an employer plan – even if that plan fails to provide minimum value or is not affordable.

If any full-time employee of a large employer receives this premium tax credit – either because the employer plan fails to provide minimum value or because it charges a premium that is not affordable – that employer may be assessed a “shared responsibility” penalty. As explained in our May 2011 article, the formula used in calculating the amount of this penalty will depend on whether the “minimum value” standard has been met. For this reason, large employers will need to value the coverage provided through their plans.

Proposed Valuation Methods

In Notice 2012-31, the IRS proposes the following three valuation methods:
• MV Calculator. HHS intends to develop a minimum value (MV) calculator that would allow sponsors of self-funded health plans to input a limited set of information on the benefits offered under a plan, including specified cost-sharing features such as deductibles, co-insurance, and out-of-pocket maximums. The IRS expects that this information would be required for the following four “core” categories of benefits: physician and mid-level practitioner care, hospital and emergency room services, pharmacy benefits, and laboratory and imaging services. According to the fall 2011 HHS report, these four categories of benefits are the greatest contributors to a health plan’s value.

• Safe-Harbor Checklists. Rather than using the MV calculator, an employer whose plan provides benefits in all four of the core categories described above could rely on any of several “safe-harbor checklists” to be developed by HHS and the IRS. Each such checklist would describe the cost-sharing attributes applicable to each of the four core categories of benefits. An employer-sponsored plan would be treated as providing minimum value if its cost-sharing attributes are at least as generous as those shown in any of the safe-harbor checklists.

• Actuarial Certification. Plans with “nonstandard” features, such as quantitative limits on any of the core benefits (e.g., a limit on the number of physician visits or covered hospital days), could start by using the MV calculator and then have a certified actuary make the valuation adjustments needed to reflect the nonstandard features. In certain cases, an employer would even have the option of engaging a certified actuary to make the entire calculation.

Under any of these three valuation methods, an employer could take into account any of its current-year contributions to an employee’s health savings account, or any amounts first made available during the year under a health reimbursement arrangement. Doing so should make it easier for the employer’s comprehensive health plan to satisfy the minimum value standard.

Requests for Comments

All three of these Notices solicit comments. Unfortunately, the deadline for submitting those comments is June 11, 2012. This is likely to be before the Supreme Court has issued its ruling on the constitutionality of the individual mandate – and perhaps the entire ACA.

Kenneth A. Mason, Associate
Spencer Fane Britt & Browne LLP

The IRS has just issued three notices concerning key aspects of the 2010 Affordable Care Act (ACA). Notice 2012-31 proposes three different methods by which sponsors of self-funded health plans could value the coverage they provide to plan participants and their dependents. Notice 2012-32 and Notice 2012-33 then solicit comments on two related employer reporting requirements.

Note that these Notices are considered “interim” and are subject to revision once finalized. In practical terms, this means that several key elements contained within the Notices (such as the exact definition of the “essential benefits” and the exact calculation methods used for the MV Calculator) are not yet available, and will not be until, at the earliest, the Final Notices are released.

Note that these Notices are considered “interim” and are subject to revision once finalized.  In practical terms, this means that several key elements contained within the Notices (such as the exact definition of the “essential benefits” and the exact calculation methods used for the MV Calculator) are not yet available, and will not be until, at the earliest, the Final Notices are released.

The Department of Labor reported that the nation added 120,000 jobs in March, down from the previous three months that saw 200,000 or more new jobs. Still, the stock market is up for the year, and U.S. employees appear to be more secure in their jobs. The Randstad employee confidence index — which measures how confident workers feel about their job security and the economy — rose in March to the highest level since October 2007, according toWorkforce magazine.

An improving economy, however, has a dark side: Talented but unhappy employees will seek better opportunities elsewhere, experts say.

“There is a storm brewing,” said Lynne Sarikas, executive director of the MBA Career Center at Northeastern University, in a recent Human Resource Executive online report. “Many people will be looking to make a change once they perceive improvement and stability in the job market. This will have a significant impact on their employers.”

More movement in the job market can spur hotter competition among employers for good talent. In addition to competitive wages, robust employee benefits can help employers keep their best workers happy and productive — and employers are taking notice. A recent study by MetLife found that 90 percent of companies say they don’t plan to cut employee benefits in the near future, according to a report by CCH.  A large majority (91 percent) of those polled expressed confidence that benefits work as retention tools.

While health, dental, vision and other stalwarts in the retention toolbox remain central to many companies’ overall offerings, employers may want to consider additional choices to sweeten the benefits pot.

For instance, companies that want to pull in younger workers may want to investigate defined benefit (DB) retirement plans, according to new research. A recent study by Towers Watson, reported in PLANSPONSOR, noted that 63 percent of workers younger than 40 said in 2011 that they chose their current employer because it offered a DB plan, compared with only 28 percent in 2009.

Education benefits are paying off for some companies, as well. United Parcel Service is sponsoring a program that pays up to $3,000 per year in tuition reimbursement for part-time employees. Executives say the program has spawned talented leaders who have stuck with the company.

“Enhancing the skills and knowledge base for our employees is a fundamental element of our success, and correlates directly with our policy to promote from within,” Susan Rosenberg, UPS public relations manager, told theAtlanta Journal-Constitution.

Several judges, including Justice Anthony Kennedy — perceived as a “swing vote” in tight cases — severely questioned the government over three days on the individual mandate that requires all Americans to have health insurance and whether other provisions of the law could stand without it.

The justices likely have already cast their initial votes on the case, but a formal decision on the Patient Protection and Affordable Care Act (PPACA) is not expected until June.

No matter how the Court rules, employers will face some tough benefit choices, according to a report in Business Insurance magazine.

If the court strikes down the law, employers would regain some lost plan flexibility, Steve Wojcik of the National Business Group on Health told BI. Employers again could design benefits “without worrying about compliance with the letter of the [health care reform] law as opposed to what makes sense for their employees,” Wojcik said.

But because many provisions — including the extension of benefits to workers’ children through age 26 — are already in place, parts of PPACA may prove more difficult to unwind, Chantel Sheaks of Buck Consultants told BI.

“Once you provide a benefit, even if legally you can take it away, as a sense of company morale, it is [very] difficult to take it away,” Sheaks said.

Employers may encounter financial challenges if the Court strikes down the individual mandate but leaves other costly provisions intact.  A law that requires insurers to grant coverage to patients with pre-existing conditions without a mandate could further drive up health care costs by prompting the carriers to raise premiums to guard against the increased level of risk, the BI report noted.

Yet in the long run, the fate of mandate may become moot, according to a report in Bloomberg Businessweek. From the start, the individual mandate’s bite was relatively weak (a $695 annual charge or 2.5 percent of household income for not complying), and the government likely could come up with alternatives — such as tax credits or enrollment deadlines — that would be just as effective without the constitutional hurdles, according to Paul Ginsburg, president of the Center For Studying Health System Change.

In the meantime, many experts suggest that employers make no sudden moves.

“I’ve been advising clients since the beginning that the prudent course is to assume that an act of Congress will be upheld,” Tom Christina, an attorney with Ogletree Deakins, told Workforce magazine. “Pundits are saying that it looks like the individual mandate is dead but I would think that imprudent.”

The political storm over the Obama administration’s rule on birth control tops a number of recent developments that affect employers and how they handle certain issues pertaining to the female portion of their workforce.

Following a backlash from religious groups, the Obama administration offered a compromise on its rule that will require employers’ plans to cover contraception services for women. According to a Business Insurance report, the government said nonprofit affiliates of religious organizations, such as universities and hospitals, will not be required to directly offer prescription birth control coverage. However, employees who wish to have access to those services will still be able to get them at no cost through their employer’s health insurer. The rule will apply to plan years starting on or after Aug. 1, 2013.

Before the contraception debate caught the big headlines, the government had been making some moves with a separate rule that stems from the Patient Protection and Affordable Care Act (PPACA). A regulation folded into that legislation requires employers with 50 or more workers to provide time and a private place for workers who are nursing mothers to express breast milk.

The rule hasn’t generated as much attention as other provisions of PPACA, but employers should take note of it, experts say. The Department of Labor has started to enforce the rule, investigating 23 companies and handing out 15 citations for violations in 2011, according to SmartHR Manager.

More than 64 percent of U.S. mothers with children under age 6 were in the workforce in 2010, according to the Bureau of Labor Statistics. The healthy percentage of working moms with young children suggests that this rule has a high likelihood of touching most employers now or at some point in the future.

While the new rule will impact policies for companies after their female workers become moms, some employers are seeking compliance help for conflicts that involve employees while they’re still pregnant.

Employers recently testified at a recent Equal Employment Opportunity Commission (EEOC) hearing and requested more guidance on how to comply with the Pregnancy Discrimination Act (PDA), according to a report inWorkforce. Deane Ilukowicz, vice president of HR for Hypertherm Inc. in Hanover, N.H., noted in written testimony that the complex web of PDA, the Family and Medical Leave Act, the Americans with Disabilities Act and other laws “can derail even companies who want to do the right thing.”

Ilukowicz suggested the commission rework its PDA fact sheet and provide more case study examples.

At the hearing, an EEOC spokesman reiterated the commission’s commitment to the enforcement of PDA, warning employers to avoid “stereotypes or presumptions about the competence and commitment” of workers who are pregnant.

Inevitably, however, a big chunk of the hand-wringing over a full-blown wellness program boils down to costs, experts say — specifically, the costs of starting and maintaining an initiative and the difficulty of measuring the financial benefits.

Recent research, however, suggests that wellness pays off for employers that are willing to stick with it. A report in the American Journal of Health Promotion finds that for every dollar spent on costs, employers can expect about $3 in overall medical savings within just two or three years.

“The study provides support for continued investment, but reminds employers that health management is a multi-year investment strategy,” Seth Serxner, the study’s lead author, told Health Behavior News Service.

Yet even those employers that currently support wellness programs have a hard time wrapping their minds around wellness ROI, a separate study suggests. More than three-fourths of employers who have initiatives in place remain in the dark about the ROI of their programs, according to aPLANSPONSOR report on a study by Fidelity Investments and the National Business Group on Health (NBGH).

Fortunately, employers can rely on a number of simple and low-cost ideas that can help them get over the ROI hump and create a program that improves workers’ lives, according to Tammie Brailsford, executive vice president and chief operating officer of MemorialCare Health System in California.

“Instead of building a fitness center, offer employees a pedometer, mealtime walking programs and sessions on achieving better health,” Brailsford said in SmartBusiness Orange County. “Costs can be minimal — from $50 to $500 or more per employee annually, plus incentives for health improvement.”

Those incentives can increase overall costs, but most employers remain committed to them, the Fidelity/NBGH study found. Seventy-three percent of companies with wellness programs used incentives in 2011, with an average value of $460. That compares with an average incentive value of $430 in 2010 and $260 in 2009.

But the real value of incentives shouldn’t be tied solely to cost, warns Renay Gontis of JRG Advisors. The incentive needs to be not only desirable but also in sync with the goals of the wellness program, she said.

“The last thing an employer wants to do is to offer counterproductive incentives such as membership in a cake-of-the-month club or a gift certificate to an all-you-can-eat dinner,” Gontis told SmartBusiness Pittsburgh. “A few positive incentive examples include fitness club memberships, new walking/running shoes, massages and paid time off.”

Most recently, the Department of Labor (DOL) issued a new proposed rule that would extend leave for family caregivers of U.S. veterans up to five years after the veterans leave the military, according to a DOL press release. Presently, the law only covers family members of service personnel who are currently serving.

The proposed rule also would make FMLA more accessible to airline flight crews by altering the eligibility requirements and changing how flight crews’ hours are calculated when determining FMLA leave.

This proposal adds yet another wrinkle to FMLA compliance. According to Steve Peltin of Foster Pepper PLLC, leaves of absence often are the most complicated – and frustrating – aspects of HR administration.

FMLA provides workers with up to 12 workweeks of unpaid leave within a 12-month period. However, who is eligible — and when — depends on a myriad of factors, including employer size, how long the employee has worked for the company and where employees put in their time, Peltin noted in a recent online posting.

Military service can make compliance even more tricky. The law contains seven “qualifying military exigencies” that affect the FMLA calculation for military personnel, all of which depend on a variety of situations and military obligations, according to Peltin. Then, of course, there is leave for caregivers of servicemembers, which the proposed rule would expand.

On top of all that, other laws – specifically the Americans with Disabilities Act (ADA) – often overlap and affect leave policies. Peter Susser, writing for SmartHR Manager, notes that terminations that follow FMLA leave can run against ADA.

Susser provides this scenario: “An employee is granted FMLA leave to treat a serious health condition that poses long-term restrictions and limitations; 12 weeks pass; the employee fails to return to work; company terminates employee under a ‘no-fault’ absence policy.” Because the employer provided 12 weeks, there’s no problem, right?

Don’t count on it, Susser writes. The employer could be violating ADA if the worker’s “serious health condition” is considered a disability. If both laws apply, the company might have to grant more leave as a reasonable accommodation or face serious consequences if it terminates the employee.

When grappling with FLMA and ADA questions, documentation is the best policy, according to Susser. “HR managers should document every telephone conversation, email exchange or letter sent to employees while they are on leave,” he writes, adding that any terminations should be executed carefully, keeping in mind the intertwined nature of FMLA and ADA.