How to manage the cost of health benefits for retirees in an era of continued healthcare inflation

In 2009, average health care cost increases will continue to outpace the Consumer Price Index (CPI), as they have for the past decade. The rising costs are forcing employers to impose stringent controls or cutback entirely on their retiree health benefits plans. It is now imperative for employers to reevaluate their retiree health benefits plan and implement a new design that will keep the programs solvent in years to come.

Here are some tips on how to maintain high quality retiree benefit offerings that deliver immediate and near-term savings in this tough economy.

1. Modify your current retiree benefit design: Research other retiree health benefit plan designs and analyze different policies before selecting the most appropriate pre/post retirement benefit design for your business and retirees. When selecting a health care plan consider expanding your products to include all type of structures; group plans vs. individual plans (commercial Medicare supplements), HMO/PPO/POS, Regional PPO and Private Fee for Service. When selecting a drug plan there are just as many options such as Medicare Part D Subscirption and Medicare Supplement Plan K. Here are a few cost savings plans to consider:

• Medicare Advantage (MA) Regional PPO (RPPO): Employers whose retirees are concentrated in rural areas will find this plan to be a cost-effective coverage solution. The RPPO value is equal in each county throughout the region regardless of local market cost and health care practice patterns.
• Medicare Part D prescription drug coverage: Medicare drug benefits can reduce costs by coordinating the employer's retiree health strategy with Medicare prescription coverage. By contracting with a PDP or a Medicare Advantage Prescription Drug plan, employers will be able to provide more generous coverage to retirees for an additional premium, due to the federal government subsidizing a significant portion of the cost.

2. Create financing solutions for your retirees. A significant percentage of employers (predominately private sector) have implemented caps and have already hit them.

There are a number of modifications you can apply to the retiree health plans financial structure that will reduce retiree healthcare costs for your corporation. Here are some different financial opportunities to consider:

How to reduce employer healthcare costs by creating retiree awareness

Employers who provide health benefits to their employees are increasingly feeling the burden as healthcare costs consume an ever-growing percentage of corporate profits. According to the Towers Perrin 2008 Health Care Cost Survey, composite cost for active employees will rise by an average of $44 per month, to $796 in 2009.

The composite cost for retirees under age 65, also rising at an average of 6% will increase by $61, to $1,108 per month. In addition to those costs employers face the risk of medical costs due to preventative health issues. A heart attack can cost $45,000, and more importantly take a life. Our healthcare system is designed to treat sick people rather than keep people healthy.

Companies today are balancing affordability objectives with efforts to prevent illness and promote health. A wide range of wellness programs exist to promote health and prevent disease for active healthy employees and have had much success. These wellness programs that literally pay for themselves within the first year by lowering health care costs should be available for retirees as well.

Here are some wellness management and alternative approaches to healthcare that can positively impacts retiree's lives and the company's bottom line.

1. Educate retirees on how to live healthier lives: Most corporations are embracing the concept of wellness and awareness programs for their active employee population. Surprisingly a few of us are applying the same proven concept to our retiree population as a way to reduce costs. It has been reported that as much as 70 percent of the nation's healthcare cost is lifestyle-related and preventable. Comprehensive corporate wellness programs are the cornerstone of this preventive approach and have proven in multiple studies to be effective in reducing direct healthcare costs. An onsite health clinic should be offered to the active employees as well as retiree. Should you offer onsite health clinics to active employees you should consider expanding to retirees as well.

2. Enhance and strengthen the provider-patient relationship: It is important for the retiree to become a more informed healthcare consumer. Even though our nation's healthcare system continues to advance and evolve at an amazingly fast pace, having your retirees make confident decisions about personal healthcare issues is possible when armed with the right information and a solid, trusting patient-provider bond. Consider the cost benefit of providing advocacy support to their retirees and their healthcare decisions.

3. Teach retirees how to become make proper healthcare decisions: Phone and in-person programs should be available to provide care management, clinical expertise and individualized support and guidance for retirees living with complex conditions. These programs are best available either through employer provided onsite clinics or from your health plan administrator. These specialized services should be available to help the retiree:

• Identify when a real medical emergency occurs and the need to consult a physician
• Determine if diagnostic procedures are necessary and when and how to treat oneself
• Understand the correct time to seek a second opinion and whether it is necessary to question a provider''s recommendations

How to streamline HR processes to support retiree health & welfare administration

The near term challenge in today''s environment is to govern the manner in which high quality benefits are delivered while providing a system that allows an employer to better position themselves to survive and thrive. Transitioning from active to retiree status is often a complex and confusing task which typically drains the resources of your existing staff. Programs need to be initiated to support current retirees, as well as the active members transitioning to the retiree population.

Today's retirees are more sophisticated than ever. Responding to their expectations are increasingly complex and superior service requirements often places a burden on your internal benefits staff. With the 78 million members transitioning from an active employee to a retiree status, organizations need to be mindful that meeting the administrative issues will be a complex task that becomes increasingly difficult due to the verging retiree population. How do you manage this without draining all the resources of your existing team?

1. Leverage a third party administrator during this critical period: Increased burden will be placed on internal case managers as benefit inquiries triple during the transition of active members into retirement. To ensure your plan managers are prepared to effectively manage their plans rather than retiree issues, draw on a third party administrators high-touch services. 24x7call center support is a retiree benefit inquiries service that allows external case managers to act as a liaison between your retiree's and your retiree's health care plan, removing the burden from you and your internal benefits team. Retiree benefit disputes can now be answered immediately providing the highest standards of customer service possible; pressure is now lifted from your internal benefits team enabling you to focus on your population as a whole and other cost cutting strategies.

2. Develop interactive technology dependent on the employer's retiree culture: Effective communication and ongoing support with your retirees and their family members is a vital function for employers. Retirees should receive an integrated experience of technology utilizing online tools, calculators and benefits information programs as well as targeted mailings customized to help them plan for the future. This access to a wider range of retiree benefits administrative channels, particularly with a drive to provide better education, communication and billing options for retirees will help direct your corporation to the most appropriate combination of savings vehicles to encourage success.

3. Third party administrator assessment: Select a third party administrator with a solid infrastructure that will support your department budget. Your third party administrator needs to be responsive, reliable and a knowledgeable retirement advisor to you and your HR department. Build a support structure based on the total size of your members population. It is important to understand the peak period so the right amount of representatives are available to offer this personalized touch that backs a level of trust required from retirees. Keep in mind that this is not practical unless you have the support that assists in the development of a sustainable business model. Third party administrators external case managers and interactive technology gives the answers employees need quickly, and frees up time for your benefit managers to focus on other cost cutting strategies.

About Secova

Secova Inc. is a leading HR and Benefits Management Services company that delivers customized "Value-Sourced" solutions designed to enhance services and reduce operating costs. Our mission is to help employers control and drive down the cost of delivering Human Resources & Employee Benefit Services. Over 30% of Secova's client base is ranked among 2008's Fortune 500 List and contains 10% of the companies listed within the Dow Jones Industrial Average.

Secova's customized and flexible benefits administration solutions are designed to complement your company's overall benefit administration strategies to help lower costs and improve service quality while enhancing timeliness, accuracy and responsiveness to your staff and your employees. For more information, visit the company''s website at www.secova.com.

Secova''s Retiree Administration services include:

• Retiree Service Center - With their specialized training and skills in serving retirees, Retiree Service Representatives manage participant inquiries from the initial call. Secova offers 24x7x365 call center support in up to 150 languages.
• Retiree Benefits Administrative Support - Provides comprehensive back-office support of retiree population. Administrative support services to include forms processing, correspondence from direct billing issues, to final resolution.
• Retiree Event-Driven Changes - Supports all activities associated with specific scheduled and non-scheduled future events, including active-to-retirement processing, death processing, disablility-to-retiree processing, benefit change notification and Medicare processing.