Employee Advisory Committees Promote Benefits Buy-In

When it comes to designing and communicating employee benefit programs, employee input and involvement can be a boon. After all, one of the best ways to gain buy-in for and to communicate employee benefit programs is to use peer-to-peer interaction. If a group of employees supports these programs and makes it a point to tell other employees, organizations can build buy-in for programs and make changes more readily.

How organizations structure this employee involvement varies. Some opt for the simplest type of employee input in the form of employee focus groups and surveys. Others establish a task force to promote a specific benefit offering, such as health promotion programs. Still others create broad-based employee advisory committees that assess an organization's total benefits mix.

Employee advisory committees, as the name suggests, are groups of employees who meet regularly or as needed to provide input on benefit programs and other issues affecting employees and the employment relationship. Some of these committees are highly formal, with set terms for members and with regularly scheduled meetings, with minutes taken and later shared. Many unions, colleges and universities, and public-sector employers maintain employee advisory committees. However, these committees can play a positive role in almost any organization.

Getting the Most Out of a Committee

A well-run employee advisory committee with engaged and knowledgeable members can be a good sounding board for organizations that are contemplating benefit changes or need to communicate new programs. “We find focus groups and surveys to be more common than advisory committees,” said Anita Doncaster, a partner with consulting firm Aon Hewitt in Charlotte, N.C. “However, when used strategically, employee advisory committees can have demonstrable, positive impact by providing the employee point of view on benefits.”

If an organization is going to use an employee advisory committee, it needs to be prepared to take the group’s feedback and concerns seriously. Not all employers are willing to do that. “The deterrent is that many employers may not always be in a position to take the advice of employees serving on an advisory committee so they are hesitant to seek their opinions,” said Doncaster.

This is certainly a risk, but an employee advisory committee can yield important insights into what employees want and value in a benefits program. “Employers do not want to be spending money on a program that few employees use or care about, and it can be a mistake to change or cut programs that are considered sacred cows by employees,” said Kelly Jones, senior vice president with Sibson Consulting in Cleveland. “If the committee tells you what programs fall into either of those categories, you can more confidently eliminate or cut back on less-valued programs and use that money to invest in something that is more important to employees.”

Picking the Right People

One of the most important decisions to make when establishing an employee advisory committee is deciding who will serve on it. The employees serving on the committee do not always have a strong grounding in employee benefits programs, how they work, and the issues and decisions involved in designing and administering these programs. This can make it difficult to communicate to the committee the employer’s rationale and decision-making around certain issues, such as plan design and cost sharing.

“Employers should consider choosing people who are natural leaders—not necessarily named leaders in the organization but people who have influence in the organization,” said Doncaster. “I would also choose people who are not natural leaders but who are thoughtful and who are considered high-potential employees.” The rationale is that keeping high-potential employees happy is a crucial role for employee benefits. By having these employees on the committee, the employer gains insight into what a high-potential employee wants from the benefits program.

Perspective is also important. In some cases, members of an employee advisory committee might come in assuming that the employer does not have employees’ best interests at heart. To overcome this, HR and benefit professionals need to be transparent and explain the issues. This requires time and effort that can pay off if it ends with the employee advisory committee’s support for planned changes and the programs the organization wants to communicate.

Committee members become de facto ambassadors who can help HR to communicate benefits issues to the rest of the employee population. Moreover, the messages these ambassadors send are likely to be well received. As employees themselves, committee members have had the same questions as their peers and will seek to answer those questions in a way that makes sense to peers. By working with committee members, HR can guide what content committee members emphasize when talking with their peers.

Taking It Seriously

Employee advisory committees can fulfill a number of roles for an employer. However, for the committee to thrive and its members to contribute wholeheartedly, the employer should be as transparent as possible in its dealings with the committee and should be ready to act on the committee’s findings and recommendations or to explain why the employer cannot or will not do so. “This needs to be a transparent process for there to be any credibility,” said Jones. “Make sure that it is open and honest.”

At the same time, employers need to be clear upfront about the committee’s purpose and mandate and how the company is going to use the committee’s input. This includes the rules for the committee: how frequently it will meet, where, and so on. “It is the employer’s job to help the committee understand what is happening in the organization and how the committee’s input will help resolve those issues,” said Doncaster. “Don't try to manipulate their data or input, and don't try to spin any negative messages that need to be delivered. If an employer does anything like this, the advisory committee members are likely to be less inclined to be open and honest.”

Joanne Sammer is a New Jersey-based business and financial writer.

Key Tax Provisions in the Affordable Care Act

Affordable Care Act Tax Provisions

The Affordable Care Act was enacted on March 23, 2010. It contains some tax provisions that became effective in 2010 or 2011, and more that will be implemented during the next several years. The following is a list of provisions now in effect; additional information will be added to this page as it becomes available.

Small Business Health Care Tax Credit
This new credit helps small businesses and small tax-exempt organizations afford the cost of covering their employees and is specifically targeted for those with low- and moderate-income workers. The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees. Learn more by browsing our page on the Small Business Health Care Tax Credit for Small Employers and our news release.

Changes to Flexible Spending Arrangements
Effective Jan. 1, 2011, the cost of an over-the-counter medicine or drug cannot be reimbursed from Flexible Spending Arrangements or health reimbursement arrangements unless a prescription is obtained. The change does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles. The new standard applies only to purchases made on or after Jan. 1, 2011, so claims for medicines or drugs purchased without a prescription in 2010 can still be reimbursed in 2011, if allowed by the employer’s plan. A similar rule goes into effect on Jan. 1, 2011 for Health Savings Accounts (HSAs), and Archer Medical Savings Accounts (Archer MSAs). Employers and employees should take these changes into account as they make health benefit decisions for 2011.

For more information, see news release IR-2010-95, Notice 2010-59, Revenue Ruling 2010-23 and our questions and answers.

FSA and HRA participants can continue using debit cards to buy prescribed over-the-counter medicines, if requirements are met. For more information, see news release IR-2010-128 and Notice 2011-5.

Premium Tax Credit
Starting in 2014, individuals and families can take a new premium tax credit to help them afford health insurance coverage purchased through an Affordable Insurance Exchange. Exchanges will operate in every state and the District of Columbia. The premium tax credit is refundable so taxpayers who have little or no income tax liability can still benefit. The credit also can be paid in advance to a taxpayer’s insurance company to help cover the cost of premiums. On Aug.12, 2011, the IRS issued proposed regulations that describe who will be eligible to receive the premium tax credit and how to compute the credit. The proposed regulations also describe how to reconcile any advance credit payments for health benefits purchased through an Exchange with the final credit amount. The proposed regulations provide numerous examples, solicit written comments and provide a notice of public hearing. Comments must be submitted by Oct. 31, 2011.

The portion of the law that will allow eligible individuals to use tax credits to purchase health coverage through an Exchange is not effective until 2014.

Exchanges will offer individuals a choice of health plans that meet certain benefit and cost standards. The Department of Health and Human Services (HHS) administers the requirements for the Exchanges and the health plans they offer. Additional information about the Exchange can be found at www.healthcare.gov.

Health Coverage for Older Children
Health coverage for an employee's children under 27 years of age is now generally tax-free to the employee. This expanded health care tax benefit applies to various work place and retiree health plans. These changes immediately allow employers with cafeteria plans –– plans that allow employees to choose from a menu of tax-free benefit options and cash or taxable benefits –– to permit employees to begin making pre-tax contributions to pay for this expanded benefit. This also applies to self-employed individuals who qualify for the self-employed health insurance deduction on their federal income tax return. Learn more by reading our news release or this notice.

Employer-Provided Health Coverage — Not Taxable; Reporting is Voluntary for All Employers for 2011 and Small Employers for 2012
Starting in tax year 2011, the Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan. To give employers more time to update their payroll systems, Notice 2010-69, issued fall 2010, made this requirement optional for all employers in 2011. IRS Notice 2011-28 provided further relief for smaller employers filing fewer than 250 W-2 forms by making the reporting requirement optional for them at least for 2012 and continuing this optional treatment for smaller employers until further guidance is issued. Notice 2012-9, issued Jan. 3, 2012, restates and clarifies the guidance provided in Notice 2011-28, including the information on how to report, what coverage to include and how to determine the cost of the coverage.

Express Scripts wins Antitrust Clearance

Mon, Apr 2 2012 (Reuters) — Express Scripts won U.S. antitrust clearance on Monday for its purchase of rival Medco Health Solutions following a contentious eight-month review, creating the clear leader in managing prescriptions for Americans.

The U.S. Federal Trade Commission announced it had closed its investigation into the roughly $29 billion deal, first announced in July, that combines two of the three largest U.S. pharmacy benefit companies, or PBMs. Separately, the companies announced they completed the deal.

Express Scripts shares rose 3.1% in Monday trading on Nasdaq. Before Monday's trading session, Medco shares were converted into Express Scripts shares and cash, based on terms of the deal.

Acquiring Medco more than doubles Express Scripts revenue base, and makes it significantly bigger than its closest rival CVS Caremark in terms of processing prescriptions.

PBMs like Express and Medco are supposed to cut the cost of medicines for their employers and health plan clients, in large part by encouraging more use of generic drugs.

But with generics already comprising about 75% of prescriptions, the combined company is going to need to show other ways they can give value to customers, says Jefferies & Co analyst Arthur Henderson.

"It is a space that is radically changing, and it is going to continue to radically change," says Henderson. The merger, he adds, "will give them more tools to work with to figure out how to continue to deliver lower costs to their customers."