Bill Makes HSAs More Flexible

The U.S. House and Senate on Saturday passed a bill that may increase the popularity of health saving accounts. The Tax Relief and Health Care Act of 2006 (H.R. 6408) awaits President Bush's signature.

Under the legislation, employees and employers can contribute up to $2,850 for single coverage and $5,650 for families, even if the deductible is lower. Moreover, companies can contribute more money to HSAs for workers making less than $100,000 per year than for higher-income employees.

The legislation allows a one-time transfer of funds into an HSA from an individual retirement account, health reimbursement arrangement or flexible spending account. The provisions also permit workers hired during middle of the year to enroll in an HSA and make a full-year maximum contribution at that time.

Barry Barnett, a principal at PricewaterhouseCoopers, comments, "I think it's good. I think it'll drive more employers to adopt these plans. It allows people to put in more cash. As they have more cash at risk, they'll be better consumers."

John Hickman, a partner at Alston & Bird law firm, predicts, "This is probably the last, given the makeup of the [new] Congress, favorable HSA legislation we're going to see for a while. We fully expect all of the provisions to be signed [by the president]. Most of these are improvements."

Christopher McFadden, deputy business unit leader for Goldman Sachs' U.S. health care group, notes that Sen. Edward Kennedy (D-Mass.) and Rep. Pete Stark (D-Calif.) are not fans of HSAs and will head key committees on health policy. "What I hope is that this doesn't antagonize these two increasingly powerful members of Congress in a way that incites them to [reverse] the progress that has been made," he adds.

An analysis from the Center on Budget and Policy Priorities states, "HSAs provide a tax subsidy for virtually any out-of-pocket health care costs, including elective procedures not normally covered by health insurance. By enabling individuals to overfund their HSAs, the bill could encourage some people to spend a portion of their excess HSA balances on elective services they would not otherwise consume. The change would primarily benefit high-income individuals, since they are the people most likely to make such a transfer" from an IRA.

The bill garnered praise from the U.S. Chamber of Commerce, the American Benefits Council and America's Health Insurance Plans.

The bill makes "several important improvements to help the growing number of Americans enrolling in these plans and to increase the number of people who will find these plans attractive," says James Klein, American Benefits Council president.

"If you want consumers to prepare for long-term care, they need to develop a long-term strategy," says Karen Ignagni, president of America's Health Insurance Plans. "With higher contribution limits that are indexed to inflation, HSAs will offer new opportunities for consumers to plan for their long-term care expenses."

Early Intervention Key to Reducing Workers' Comp Costs

Fairfax, Va. - The Public Entity Risk Institute (PERI), a Fairfax, Va., nonprofit risk management training and educational organization, has released a resource guide for controlling workers' compensations costs that focuses on using telephonic nurse injury reporting and triage as important early intervention.

The PERI Day of Injury Resource Manual outlines an effective strategy lays out a proactive approach for addressing rising costs of workers' compensation by establishing processes for responding to employee injuries starting right on the day of injury, says Gerard J. Hoetmer, executive director of PERI. "Our research presents compelling evidence that employer actions on the day of injury have a profound impact on the overall cost of workers' comp claims."

The PERI Day of Injury Resource Manual builds on the findings of a study PERI jointly sponsored with the Schools Insurance Authority (SIA), a joint powers authority based in Sacramento, California.

In partnership with SIA, the PERI Day of Injury study assessed the relationship between employer actions on the day an employee was injured and workers' compensation costs. The study focused on injury reporting, directing medical care, and early return to work initiatives. A major component of the research focused on SIA's use of telephonic nurse injury reporting/triage. The study demonstrated that the nature, duration, cost and eventual outcome of a claim can be largely shaped and controlled by the employer's response on the day of injury.

Based on the study, the manual details injury-reporting processes for organizations to put in place as part of an overall early intervention strategy. This how-to manual also highlights best practices for building a structured return-to-work program and provides organizations with sample forms, checklists, and training materials.

For more information go to www.riskinstitute.org.

http://www.insurancenetworking.com/protected/article.cfm?articleId=4416

Organizations Ripe for HR Outsourcing as They Seek Standardization, Ability to Focus on Business Issues

Hewitt Survey Finds Companies that Outsource HR are Realizing Benefits

Organizations are primed for human resources (HR) outsourcing as they look to standardize HR processes and focus on business issues, according to a new survey by Hewitt Associates, a global human resources services company. Hewitt’s research shows that companies that have already outsourced HR activities are satisfied with their outsourcing arrangement and are realizing the benefits they hoped to gain.

The survey of nearly 100 large U.S. companies representing 2 million employees finds that the top three pressures facing HR executives today are attracting, retaining and growing talent (67 percent), being able to better support the business by focusing HR on core capabilities (47 percent) and supporting business changes (41 percent). Talent issues and a focus on strategic capabilities continue to be priorities for the next two years.

In a likely effort to make HR more efficient and freed up to tackle the top issues facing HR executives, 91 percent of companies surveyed have undertaken steps within the last two years to improve the internal HR function, such as HR process re-engineering or standardization. In fact, nearly six out of 10 companies surveyed believe HR processes and policies must be standardized before implementing outsourcing activities.

“Companies are realizing that they need to standardize HR processes and policies as a first step in their HR transformation,” said Mark Oshima, director of HRO strategy at Hewitt Associates. “This is often a precursor to outsourcing, since outsourcing enables both HR and line management to focus on issues vital to the business’s strategic initiatives, instead of being burdened with HR administration.”

The Motivation to Outsource

Hewitt’s research finds that organizations consider outsourcing primarily to improve service quality (ranked 4 or higher on a scale of 1 – 6 by 74 percent of respondents). Other key drivers include access to outside expertise, the opportunity for cost savings and a desire to focus resources on core business (all ranked 4 or higher by 60 percent or more of respondents).

Of those companies that have outsourced, 65 percent surveyed reported that they are satisfied or very satisfied with their current HR outsourcing arrangement. Furthermore, 70 percent of respondents say their companies have realized the benefits they hoped to gain from HR outsourcing.

Still, barriers to HR outsourcing remain. Nearly two-thirds of respondents say there are barriers to HR outsourcing at their organizations, with the top three being concerns about losing control of key processes, concerns about employee reactions to an external service provider and difficulty building a business case.

“By and large, companies that have taken the leap and outsourced their internal HR activities are realizing the results and goals they hoped to attain,” said Oshima. “Remember, though, that outsourcing is a major commitment. Companies considering HR outsourcing should identify the business issues that outsourcing is expected to address, build a solid business case, involve key decision makers, learn from the experiences of their peers and proactively manage the change from delivering services internally to partnering with an outsourcing provider. These important steps can help make the outsourcing arrangement a successful one.”

Other key research findings:

* The majority of respondents (78 percent) prefer an HR outsourcing provider with in-depth HR consulting expertise versus a broad outsourcing provider that can provide services to multiple parts of the organization.
* Forty-four percent of respondents indicated that cost savings was not one of the primary objectives they hoped to gain by outsourcing. Among those for whom cost savings was a primary objective, nearly three-quarters (73 percent) said they had achieved their cost savings objectives.
* The majority of survey respondents include service level agreements in their HR outsourcing contracts. Data delivery and transaction accuracy are the most common standards included in agreements, each cited by more than two-thirds of companies surveyed.
* The CEO is the final decision maker when considering HR outsourcing, cited by more than half (52 percent) of respondents

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