Pressed between rising health care costs and mandatory health insurance rules, employers are showing renewed interest in adding “working spouse” provisions to their health care plans, according to the Society for Human Resource Management’s HR Magazine.
These provisions limit access to a plan when an employee’s spouse works for another employer that offers health insurance.
Before adopting such policies, however, employers should examine whether or not the savings will be sufficient to offset the administrative burdens and possible adverse employee reactions. Employers also must pay attention to the nuances of spousal exclusions because these details can determine whether or not they’re effective—and legal.
Working-spouse provisions—also termed "spousal carve-out" or "spousal exclusion" policies—generally take one of three forms:
1. A requirement that a working spouse pay a premium surcharge for coverage through the employer’s plan if the spouse’s employer offers health insurance.
2. A requirement that the spouse purchase health insurance through the spouse’s employer’s plan before also purchasing it through the employer’s plan.
3. An outright exclusion from coverage under the employer’s plan if similar coverage is available from the spouse’s employer.
The third option is not common, with only 3% of companies declining to cover spouses at all if they’re eligible to be covered by their own employers.
Many employers are receptive to working-spouse provisions because spouses can still obtain health insurance under their own employers’ plans.
Trending upward
In 2010, 19% of nearly 600 employers surveyed used spousal surcharges or waivers when other coverage was available for a spouse, according to a 2011 Towers Watson report. Another 3% of employers said they intended to implement such provisions in 2011, and 13% intended to implement them in 2012 or later.
Health care reform has likely spurred adoption of these provisions.
At the same time, consultants say surcharges or plan exclusions are only one way—and not the most common way—of addressing the costs of spousal coverage. Instead, more plans simply charge more to cover spouses than they charge to cover employees.
In addition to the issue of savings, concerns around spousal exclusions include matters of legality, enforcement, and employee acceptance.
Legal questions
Generally, working-spouse provisions are legal under the Employee Retirement Income Security Act (ERISA) and other federal laws. But many states have marital discrimination laws that could allow challenges to working-spouse provisions. Such state prohibitions are, in many cases, pre-empted by federal law if the employer’s plan is subject to ERISA.
Enforcement
Another question relates to enforcement of the policies. Employer options include:
* Ask employees whether or not their spouses work and have access to other health insurance.
* Require employees to notify the HR department if their spouse becomes eligible for coverage through another employer.
* Rely on the honor system.
Some firms impose surcharges on participating spouses unless the spouses can demonstrate they’re unemployed or not covered through their own employer’s plan. Others retain employment verification specialists to conduct compliance audits, often as part of broader audits.
Employers should temper enforcement of working-spouse policies with forbearance when verification is not possible, advises Michael Smith, president and CEO of ConSova Corp., an eligibility verification company.
“If the employee and the employee’s spouse have done everything an employer asked of them, and the other employer isn’t cooperating, it’s not fair to impose a surcharge or exclusion, though some employers still do,” Smith says.
Employee reactions
The way a working-spouse policy is communicated will determine how well it’s received. And, regardless of how the policy is communicated, some employees will be unhappy. Experts encourage employers to carefully design their working-spouse policies to minimize undesirable outcomes.
Consider how a working-spouse policy will affect corporate culture, morale, and recruiting. In some industries, health benefits are a major recruitment and retention tool, and they might represent a reasonable cost for keeping employees motivated.
When it comes to teams, less is sometimes more. In a recent paper, Wharton management professor Jennifer Mueller found that while larger teams generally are more productive overall than smaller ones, members of the bigger groups were less fruitful individually than their counterparts on the smaller teams. The research, "Why Individuals in Larger Teams Perform Worse," was published in the August issue of the journal Organizational Behavior and Human Decision Processes.
"There are costs to collaborating," says Mueller. "In larger teams, one of those costs is that people may not have the time and energy to form relationships that really help their ability to be productive." Mueller became interested in the issue of how team size impacted individual performance after reading through material collected from 26 corporate design teams as part of an ongoing research project led by Teresa Amabile, a professor at Harvard Business School. Through the research group, Mueller had access to journals and questionnaires provided by the 238 people on teams tasked with developing a host of products and services, including inventing a new type of dental floss, designing a new airline ticket purchase process and creating a cut-resistant fiber to be worn by factory workers. The content of the journals was eye-opening, Mueller says. "I started to recognize that employees in these larger design teams experienced incredible amounts of stress. People often said, 'I don't feel I can get the resources to do what they want me to do.' One person referred to the experience as a 'death march.'"
Mueller also began to see a pattern—the stress level seemed higher for members of larger teams. "On a smaller team, people knew what resources were available and felt they could ask questions when things went wrong. The situation was more controllable," Mueller states. "But in these larger teams, people were lost. They didn't know who to call for help because they didn't know the other members well enough. Even if they did reach out, they didn't feel the other members were as committed to helping or had the time to help. And they couldn't tell their team leader because [it would look like] they had failed."
The challenges of larger teams are well studied in academic literature. Mueller says that one meta-analysis showed that larger groups tend to perform better than small groups, but the group performance gains for every additional member are minimal because individuals in these larger groups perform worse than individuals in smaller groups. Previous work has focused on two culprits behind this: motivation and coordination loss. The first stems from the reality that people may not work as hard if their contribution is likely to be lost, or go unrewarded, due to the size of the team. Coordination loss refers to the difficulty getting all the disparate elements of a large team to work well together.
But Mueller suspected that there was a third force at work: relational loss. According to the paper, "Relational losses specifically involve perceptions about the extent to which teammates are likely to provide help, assistance and support in the face of struggle or difficulty." Mueller's theory was that this deterioration in connections between team members increased with team size, resulting in weaker performance on average by individual participants.
To assess the impact of relational loss, Mueller gathered questionnaires from the 238 team members from the Harvard study throughout their product or service development effort. The questionnaires included performance evaluations of each individual from both their peers and the team leader. The questionnaires also probed team members on their motivation, the team's coordination and the degree to which they felt connected to other people in the group. By creating models around that data, Mueller was able to show that the stress caused by a lack of connection to other members of the group was a key driver behind the lower performance of individuals on the larger teams.
"There was some evidence of coordination loss, but I did not see evidence of motivation loss," Mueller notes. "I saw compelling evidence for relational loss—it loomed larger than you might expect given how much emphasis is given to coordination." Less-than-optimal relationships make people on a team feel isolated and unsupported, Mueller says, particularly when problems surface. That anxiety can have a direct impact on a team member's performance. "Stress soaks up your cognitive resources and diminishes the extent to which you can hold information in your memory. That contributes to a decline in performance."
Mueller's findings offer important insights on how companies should be approaching team-based initiatives. Given the complexity of product development projects, it may be impossible to gather all of the needed expertise within a small group of people, necessitating the formation of a larger group. But Mueller says finding a way to enhance the connections between members of those large teams is critical to improving their individual effectiveness. "One thing teams could do is to have a person who has the role of troubleshooter—the one who steps in to help when stuff goes wrong." The troubleshooter knows what skills and resources are available to the team, and can bring the right people together to address problems. "This role could help lubricate these relationships that don't have the opportunity to form naturally," Mueller notes. She adds that the "problem solver" position should not be filled by the team leader because team members may be reluctant to go to the boss to discuss problems.
What about trying to foster connections between members of a large team by simply creating opportunities for people to get to know each other better? If a team is likely to be in place for years, that sort of effort—including offsite team-building sessions—makes sense, Mueller says. But for teams that will only operate for a more limited period, those steps can simply take too long to bear fruit.
Reprinted with permission from Knowledge@Wharton at http://knowledge.wharton.upenn.edu, the online research and business analysis journal of the Wharton School of the University of Pennsylvania.
Thousands of employers spend countless hours each fall developing benefits communications to their employees before open enrollment. Despite their best efforts, however, it appears many employees still don’t understand their benefits, reports Workforce.com.
But nearly 80% of employees say their benefits are one of the reasons they work where they do, according to the 2011 Mercer Workplace Survey released in October.
“Health benefits are critical for employees as part their overall work experience,” says Suzanne Nolan, partner and director of marketing and communications for the consulting firm Mercer. “Our survey shows 91% of respondents say that getting health benefits through work is just as important as getting a salary.”
Among the findings from recent benefits surveys conducted by eHealthInsurance, Harvard Business Review, and Aflac:
Fewer than 35% of those with employer-based health coverage know their medical plan’s annual deductible.
25% said they spend less than 30 minutes reviewing their benefits options.
42% of employees strongly agree that a well-communicated benefits program would make them less likely to leave their jobs.
“Most employees don't look at their benefits materials until they have an issue, and employers need to overcome that inertia,” says Helen Darling, president and CEO of the not-for-profit National Business Group on Health. “Employers need to make dramatic statements to get attention, and requiring an active enrollment can help.”
Making the communications simple and consistent is essential, according to HR experts.
“Information always needs to be sent home to the spouse, and with online communications, never underestimate a person’s impatience with technology—you need to have as few clicks as possible or you’ll lose them,” Darling says.
“Clients are using email and text messaging to send out short, targeted messages, and even providing QR codes that allow employees to view enrollment guides or other information on their smartphones,” Nolan says.
“Whether communications are specific to benefits or company strategy, employers make the mistake of communicating once around the time of the triggering event,” says Patrick Carragher, director of benefits for CheckPoint HR—a provider of Web-based HR management systems for small to midsize companies. “You want to communicate the same message to employees often, survey them after open enrollment, and then circle back to increase education on the areas they still don’t understand.”
Carragher recommends using employee meetings, combined with regular emails and other technology-driven communications, to repeat the message to employees.
“Most employees skim their materials, fill out forms, and are done with enrollment in about 15 minutes,” says Randy Hart, senior vice president at CBIZ Benefits & Insurance Services. “They can easily spend $2,000 or more on a benefits package, and a decision of that magnitude should require more than 15 minutes.”
Hart recommends planning communications six months ahead of enrollment, or right after open enrollment ends—a great time to assess what worked and what didn’t.
“If you really want your employees to understand their benefits, they need to be touched at least once a month,” Hart advises.
Avoid lengthy enrollment guides employees won’t read.
“Be brief and to the point, highlight key messages, and recognize that your employees find this information confusing,” Hart says. “Point them toward more information, if they want it, via an online portal, a printed summary plan description, or through a call center.”
I know, I know. I should be concerned about Googling candidates. After all, as many of you have pointed out to me, there are privacy issues, and what a person does elsewhere in their life shouldn't matter if they can do the job.
So, I Google anyway, and many of you disagree. I'm a pig—I'll own it. There's just this little thing that I can't get over: You are responsible for knowing everything you can know about people you bring into the company.
And if you don't know things you should, you'll suffer the consequences. Consider this cautionary tale via a conversation I had with an executive friend at another company:
KD: Rob, what's up?
Rob: KD, you'll never believe what just happened.
KD: Educate me, brother.
Rob: We had a controller candidate in today. I was the last guy up to interview him, and I had a resume, but I had a couple of minutes before the interview and no time to start anything else. So I Googled the guy—
KD (bracing for contact): And?
Rob: Turns out the guy was embroiled in a Sarbanes Oxley cluster scandal at his last company. First Google entry returned when I pressed "Search". So I march down to the guy who's running the search, and say, “By the way, did you bother Googling Finklestein?” The guy tells me no, and since it's a retained search, the big search firm is responsible for fully vetting, etc. I tell my guy that he might want to Google Finklestein. He declined, but I insisted. So he did and within 15 seconds let out a noise like he had just been kicked in the groin by a pointy-toed country western boot.
KD: Wow. What happened then?
Rob: The candidate was interviewing with the CEO. My guy calls down to see where it's at and is informed that the CEO requested another hour because it's going so well.
KD: Ouch.
Rob: The lesson, my Capitalist friend? Always Google before you buy that plane ticket for the candidate.
If I was defending the right to Google candidates in a court of law and told that story, I'd drop my microphone for dramatic effect after sharing that knowledge, like Randy Watson of the band Sexual Chocolate, leaving the stage in Coming to America.
Just Google people. Decide how you bring it up later.
Kris Dunn is chief human resources officer for Kinetix, an RPO firm for growth companies. Reprinted with permission from his blog at www.hrcapitalist.com.
Not Just Competitiveness, but Competitive Advantage
A competitive reward program is not simply about mimicking the pay practices of your labor competitors or about paying as much as (or more than) they do. It is about using the available reward dollars to create competitive advantage. It is about crafting programs and practices that attract the right workers to your company and engage them in making it successful.
Reward Success Is about Business Performance
The measure of reward plan success must ultimately be business results. Period. My friend Kris Dunn claims, in this article for the HRExaminer, that revenue per employee is the only performance goal HR leaders will ever need. Kris brings a compelling case to that assertion, but I'd like to modestly suggest a parallel metric: revenue per salary dollar. RPSD encompasses, but goes beyond, mere headcount and addresses how you are really managing the bottom line in what, in most cases, is the biggest cost center in the organization. Can't benchmark it against your peers? Not today maybe, but you can track whether it is going up and down over time relative to what you are doing with rewards—and with talent management overall.
Embrace Proaction
Economic uncertainty, labor market unevenness, and salary dollar scarcity are the new normal. We need to get past merely reacting to the squeaky wheels that these circumstances create (a habit that's become ingrained in many places over the last few years) and develop a proactive plan for actively monitoring and updating our reward plans. We need to minimize the proportion of our reward dollars that are spent reactively—fixing problems and quelling eruptions—rather than driving improvement or focusing on important goals.
Manage Expectations—Yours and Theirs
Your goal isn't (and can't be) to delight every employee. Your goal is to deliver rewards to the right people for the right reasons. Reasons that reflect who you intend to be as an organization and how you plan to win in the marketplace. The sign of doing this well may be that it makes some employees unhappy. Perhaps even deliberately so.
Not Crystal Ball, but a Plan and Priorities
Many of us are reluctant to stick a stake in the ground when it seems the ground is continually shifting under our feet. Committing to a reward strategy doesn't mean that you can predict the future. It simply means that you are wading into the unknown armed with a plan and a set of priorities for spending money, to guide you in dealing with the turbulence that undoubtedly lies ahead. It's a jungle out there—and will continue to be so in the coming year. Take some time as we cross into the New Year to get your strategy in order.
Ann Bares is author of Compensation Force and managing partner of Altura Consulting Group LLC. Follow her on Twitter at @annbares.
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