Ah, healthcare costs. If you’ve changed carriers, deductibles, and co-payments more times than you care to remember, you may be discouraged. Take heart, says Jill Madison, there’s a better place to look for savings.
Madison is managing director of Consulting Services at Craford Benefit Consultants. Her comments appeared in a white paper on BLR’s all-things-compensation resource, Compensation.BLR.com.
Madison says that when you’re paying somebody who isn’t at work, or paying a disability claim that shouldn’t have been approved, or not carefully managing your leave program, you’re leaking dollars at the most costly level in the organization. And it’s busting the bank more than healthcare costs ever will, she says.
‘We Started Asking Questions …’
Madison cited the example of one of her clients, a 6,000-employee manufacturer in the food sector. “We started asking questions about leave management,” she recounts. “How do they coordinate, for example, short- term disability and Family and Medical Leave Act (FMLA) leaves?”
The problems quickly became obvious. They had delegated the administration of leave programs to HR generalists in their business divisions, but they weren’t all following the company’s rules.
One problem they found: The various types of leave don’t happen every day; an HR generalist in the field might see one every 3 or 4 months. “It can be hard to remember procedures that far apart,” says Madison.
Compensation.BLR.com, now thoroughly revamped with easier navigation and more complete compensation information, will tell you what’s being paid right in your state—or even metropolitan area—for hundreds of jobs. Try it at no cost and get a complimentary special report. Read more.
How to Fix It
A good way to start is to document everything about every kind of leave. “We talked about how family leaves were handled, how a work-related claim was handled, and military leave, and jury duty, and every single leave program they had. We identified who was responsible for administering each program, who was eligible for each one, how decisions were made, and how the information was recorded. If we spotted inconsistencies or gaps, we modified the programs.”
One of the things they had the most trouble with was FMLA, Madison found. They had had some employee complaints about how FMLA was handled, and they weren’t meeting the rigid time restrictions that FMLA dictates. Madison suggested that they talk to a vendor.
Clear Guidelines, One Point of Contact
Cigna now provides the company with a single point of contact for employees who go on leave, whether it is short- or long-term disability, family leave, or another kind.
A single point of contact means that, when an employee requests a leave, he or she makes just one call. “If for any reason someone is not going to be at work—other than a vacation day, probably, because that needs to be approved by the direct supervisor—they call an 800 number and participate in an intake interview,” Madison explains. “The intake person determines which leaves the person is eligible for, whether it is just disability or if there is a family-leave component or whatever.
“The intake people know all the leave programs the client offers and can make a preliminary determination based on the guidelines. They instruct the employee to have the attending physician fax or e-mail something immediately, and within 2 days all the details are there to make a decision.”
Having clear guidelines also saves money, Madison says, because there is no more guesswork and interpretation involved. “Oftentimes, in the past, once a leave or a disability was reported, it took a minimum of 2 weeks before the company got through all of the paperwork to decide whether or not the leave was approved.
Try BLR’s all-in-one compensation website, Compensation.BLR.com, and get a complimentary special report, Top 100 FLSA Overtime Q&As, no matter what you decide. Find out more.
“So many employers get in the trap of saying that, because it took so much time to make the determination, they will just pay for that period of time. They’ll say, ‘Beginning next Monday, no more pay is forthcoming.’ But in the meantime, they’ve paid, in some cases, between 5 and 15 days because they were plowing through the paperwork and making decisions.”
While the leave management system has been in place for only a few months, Madison says her client began seeing real savings almost immediately—cost savings are expected to be in the 15 percent to 30 percent range.
“Most organizations have no idea of the true cost for the disability and leave programs,” Madison says.
In tomorrow’s Advisor, we’ll look at some tricky FMLA questions and get a glance at BLR’s revamped “everything-compensation” website, Compensation.BLR.com.
Other Recent Articles on Compensation
Metrics ‘Gotchas’—Blindsided in the C-Suite
What Are HR Managers Worth?
2009 Pay Increase Survey: Results
Incentives or Disincentives? More Mistakes That Send Salespeople Packing