UBP blog


Employee turnover costs more than you think

We’ve all probably heard of the traditional formula for calculating the cost of replacing a terminated (voluntary or involuntary) salaried employee, one and a half times the exiting employee’s annual salary right?

Well, according to Watson-Wyatt Worldwide’s model for calculating the true-cost of replacing a salaried employee, the one and a half times their salary figure is just a piece of the pie. Here’s why.

This figure consists of the actual out-of-pocket costs (i.e. cost of advertising your job vacancy, cost of working with recruiters to fill the now vacant position, extra pay for unused vacation time, etc.) that the accounting department uses to determine the cost of replacing an exempt employee. Watson Wyatt calls these costs the “green costs”. They also identify two other types of costs that employers should consider, these are:

  • Real (labor) Costs: the cost of labor to deal with an employee’s exit
  • Hidden Opportunity Costs: The costs of lost revenue resulting from the position’s vacancy as well as the lower team performance. For example, Watson Wyatt found that when a typical industrial salesperson leaves a company, his or her team’s sales production can decrease by 3 to 5 times the out-of-pocket costs of the exiting employees.

What does this mean for employers?

Time to ramp up your employee retention programs:

 How do employers retain key employees? One of the first and most obvious things that comes to mind is making sure compensation and benefits packages are strong (or at least in line with the industry average). However, having strong compensation and benefits package means nothing if your employees know nothing about them. How are you educating employees on the value of their incomes and their benefits?

The HR in a Box™ and online Total Compensation Statements are key for our clients:

Universal Benefit Plans custom creates online Total Compensation Statements for our clients’ employees that are easily accessible 24/7 through their unique, password protected platforms of The HR in a Box™. Employees who can see all the pieces of the total compensation pie, and the dollar amount everything adds up to, become more appreciative of what their employers are doing for them and may think twice about leaving for a competitor. If your employees only learn about their total compensation at their termination interview when you start explaining COBRA costs, it’s already too late!



One of these things is not like the other

Q: The following are used to store and/or communicate employee benefits information.

  1. Files on your hard drive
  2. A fax machine
  3. An HRIS system
  4. Email

Of these 4 options, 3 are encryptable and one is not. Which one is not encryptable?

A:  If you answered number 2, a fax machine, then you are correct.

Here’s why:

You can encrypt both the files you store on your hard drive containing personal employee information and the email you use to communicate it to other HR staff and your broker. All you’ll need to do is purchase file encryption software and email encryption software, then have IT install it on all computers where personal employee information is housed and communicated.

You can also purchase (or get for free through your broker) an encrypted Human Resources Information System (HRIS) to securely store all vital employee and benefits information and protect it from being lost or stolen.

However, you cannot encrypt a fax machine. This means that effective March 1, 2010 when the law Standards for the Protection of Personal Information of Residents of the Commonwealth (201 CMR 17.00) goes into effect, employers’ days of faxing claim and enrollment forms are over, and for a good reason.

Think of it this way, you have  a new hire enroll in a family plan for your health insurance, she fills out the paperwork and you fax it to your broker (or who you think is your broker) but you press a wrong key on the fax machine by accident. Who do you think your fax went to? It was certainly not your broker.

And, what do you think the person who received the fax did with it? Did they throw it away without shredding it (that’ll be a $50,000 check made payable to the Commonwealth of Massachusetts if the improperly disposed data gets stolen) or see the Social Security Numbers of your employee, her husband and two children and think, “Wow, four identities for the price of one!”?

How do you send employee personal information now that faxing it is obsolete?

You, the employer, can do one of two things.

  1. Scan the document containing employee personal information, purchase email encryption software and send it using your new encrypted email. 
  2. If your encrypted HRIS system has secure communication capabilities (between the HR/benefits administrator and broker), scan the document and send it through your HRIS. Universal Benefit Plans’ proprietary dual-encrypted online HRIS system, The HR in a Box™ has a feature called the Agency Help Ticket Center that will do just this.

Instead of encrypting file after file on computer after computer, or purchasing encrypted email just for the purpose of communicating personal employee information, you could get The HR in a Box™ dual encrypted online secure information storage vault and communication vehicle for free.

Call us at (617) 859-1777 to see if your company qualifies; the clock to March 1 is ticking.

Want to learn more about the law Standards for the Protection of Personal Information of Residents of the Commonwealth (201 CMR 17.00) and the many other things you must do to get your company compliant?

Register to attend one of our free 30 minute webinars:



Employee wellness starts with a positive attitude

In the midst of the worst recession since the 1930s, employers are doing more with less and employees feel the pressures of it every day. With employees overworked, stressed out and worrying constantly about their job and financial security, it’s no surprise that their overall well being is declining as a result.

The nonprofit organization Families and Work Institute recently reported that only 28% of employees say they are in “excellent health” (down from 34% 6 years ago). Businesses inevitably feel the effect of this decline too, both in terms of direct costs and indirectly as well. Research shows that employees in poor health are less likely to be loyal, engaged and satisfied with their jobs than their healthier counterparts.

Employer-sponsored health benefits do make a positive difference, as individuals with health insurance coverage are more likely to report sleeping well, being less stressed and being in excellent health than the uninsured. However, to truly achieve a healthy workplace, businesses need to go one step further, facing the issue with a holistic approach.

“Effective” workplaces are healthier ones:

So many employees go to work every day and face a demanding boss, have little to no support from supervisors and colleagues and have little to no access to learning and/or growth opportunities because they are simply not in the budget right now. On top of all this, employees, especially the ones who’ve seen several rounds of layoffs, still worry that their jobs are on the line.

Add this all up and what does it equal?  STRESS.

When employees are stressed and don’t have a supportive work environment, eating right and exercising are probably the last things on their minds.

On the opposite side of the coin are “effective” workplaces, where employees are trusted and supported. The Families and Work Institute study reports that at these workplaces, 40% of employees report being in excellent health. This is double the number of employees who report being in excellent health at the least effective companies.

What employers can do:

As you can probably see, achieving a healthy workplace goes beyond having an on-site fitness center and offering healthier options in your cafeteria. It starts with understanding and flexible senior management teams who make exercising and eating well easily accessible to everyone.

Employers’ efforts to make wellness accessible shouldn’t stop with diet and exercise or creating a supportive company culture; employers should also consider the physical environment of their workplace.

For example, studies have shown that natural sunshine and views of nature help workers boost productivity. Can you identify any ways to bring more natural light into your workspace?

Also, have you thought of ways you can make your workplace more green at little to no cost? A recent Boston Globe article discussed how a Vermont company reduced employee sick-days and had fewer reported allergies and colds just by moving into a green building.

After all is said and done, the one question that employers will need to ask themselves is, “How do I create an employee-friendly environment that makes everyone feel good about coming to work?”

A great way to start your answer is with a positive attitude– it’s good for your health.


What keeps employees up at night more than their debt and retirement funds?

How about providing health insurance to both themselves and their families?

The Certified Financial Planner Board of Standards’ 2009 National Consumer Survey on Personal Finance reveals that “generating current income” and “providing health insurance” are numbers 1 and 2 respectively on this year’s list of greatest consumer concerns.

Here’s their list of the top 5 concerns: 

  • Generating current income (59%)
  • Providing health insurance coverage (55%)
  • Managing or reducing debt (53%)
  • Building a retirement fund (51%)
  • Creating an emergency fund (47%)

What this means for employers:

Right now, employees’ greatest concerns are generating an income and insuring themselves and their loved ones. For employers, this means effective benefit and compensation communication is key.

1. Communicate total compensation:

One great way for employers to address the top two employee concerns is through online Total Compensation Statements. These statements show employees every dollar that you’re contributing towards their income generation and their insurance coverage. When employees see the big picture of these two figures put together, it will help them to appreciate everything you’re giving them that much more.

Through our proprietary online HR and benefits management platform, The HR in a Box™, Universal Benefit Plans gives our clients’ employees free access to online Total Compensation Statements 24/7/365. 

2. Offer helpful hints:

In addition to communicating employee total compensation in a streamlined, green and easily-accessible way, HR professionals can offer employees helpful tips for managing their incomes and debts. For example, there are numerous ways to pay down credit card debt faster, such as consolidating all of your credit card debt to a lower interest card and finding small amounts of everyday savings to apply to the principal.

There are many other helpful hints out there that employers can pass along to employees. To access these hints, HR professionals can subscribe to receive free daily or weekly tips from financial websites and select tips to pass along to their employees.

The Hr in a Box™ Employer platform is a great employee communication tool that HR professionals can use it to send financial tips (as well as other HR communications) to all employees.

To sum everything up, Total Compensation Statements highlight all you pay for your employees and the communication tool on The HR in a Box™ lets you help them manage their financial resources better. So now, you can show your employees you care about the things that are keeping them up at night without spending any additional money (which would probably keep your fiscal department up at night!).


Premium discounts for meeting wellness goals: Great incentive or employee relations nightmare?

If employees had the opportunity to get a 20% premium discount for achieving certain health goals do you think they’d want it to end there? What if they were offered a 30 or 50% discount, would that be better?

Congress is considering provisions in the health care reform legislation that would allow employers and insurers both to offer employees who meet specific health targets (i.e. keeping body mass index, cholesterol, blood pressure, etc. within the healthy range) premium discounts up to 50%. Under the current law, these discounts are allowable but can be no greater than 20%.

The Senate Finance Committee recently passed an amendment that would raise the maximum premium discount to 30% and allow the secretaries of Health and Human Services, Labor and Treasury to up the cap to 50% at their discretion.

What does this mean for employers?

Many employers have already designed and implemented workplace wellness programs with goals of keeping employees’ weight, cholesterol and blood pressure within a healthy range, encouraging workers to quit smoking, etc.

In light of the fact that nearly 40% of deaths annually can be attributed to preventable causes (i.e. smoking, lack of exercise and poor nutrition) and health care cost growth significantly outpaces both wage and inflation growth, workplace wellness programs are rapidly growing in popularity.

This year’s Kaiser Family Foundation “Employer Health Benefits Survey” revealed that:

  • 58% of companies offering employee health benefits had wellness programs
  • 93% of companies offering employee health benefits with 200+ employees had wellness programs

However, not all wellness programs are created (and designed) equally and this proposed legislation could significantly add to the number of employers that tie wellness programs to premium discounts. The Kaiser Family Foundation reports that just 4 percent of employers offering wellness programs do this.

Following the lead of this 4% may sound wonderful in theory but in practice, employers can run into some issues.

The issues are…

In any given workplace, keeping weight, cholesterol and/or blood pressure within the levels deemed healthy by the medical community might not be within everyone’s control. For instance, some employees may have a genetic predisposition towards obesity. These employees could be enrolled in your company’s wellness program and could be working just as hard, if not harder, than the others who are able to reach the “normal weight”.

Should these employees be penalized by having to pay more for health insurance just because they can’t reach a target “normal weight” or is there a way that they can be rewarded for their hard work?

What about employees who live in lower-income neighborhoods where only convenience stores and fast food restaurants are readily accessible? They might not be able to eat as nutritiously as others and may have a harder time reaching the employer’s health targets as a result. Should they be penalized just because of where they live?

 What employers can do:

In order to avoid having wellness program incentives perceived as discriminatory or unfair to certain employee groups, employers should prepare themselves to change the rules of the game a bit.

Let’s go back to the example of employees who are genetically predisposed towards obesity and may have a harder time reaching “normal weight” than others do. One thing employers can consider doing is giving incentives for efforts and not meaningful outcomes. For instance, they could give incentives based on the amount of weight these employees lost or for being consistent in their weight loss, as apposed to giving incentives for whether or not these employees are able to reach a target weight in a given time frame.


Three changes to Massachusetts Fair Share Contribution (FSC) law employers need to know effective 10/1/09

Effective October 1, 2009, the Massachusetts Division of Health Care Finance and Policy (DHCFP) has approved and adopted an amendment to the state’s Fair Share Contribution (FSC) regulations (114.5 CMR 16.00).

Among the amendments are several technical changes that clarify compliance requirements for businesses subject to the law (Massachusetts employers with 11 or more full-time equivalent employees). Although most of the amendments made are relatively minor, there are three notable revisions that employers should be aware of.

  1. Removal of the majority of time rule: The FSC regulations originally stated that, for the purpose of calculating the percentage of full-time employees enrolled in their health plan, employers would count an employee who worked both full-time and part-time hours during a given quarter as either full-time or part-time based on whether they were full-time or part-time for the majority of the quarter. The new FSC rules delete this confusing provision and now simply require employers to report both the number of full-time employees enrolled in their health plan and on their payroll as of the last day of the quarter under review.
  2. Group Health Plan Documentation Requirement: Under the FSC regulations, employers who offer and contribute to their employees’ group health plan must maintain documentation on it. This documentation must include a written plan description for each plan offered as well as copies of all written communication to employees about plan offerings. This documentation must contain information on benefits eligibility (including the minimum number of hours employees must work in order to be eligible for benefits) and information on premium contributions. Also, the written plan description must give evidence that the group health plan was in place during the quarter under review.
  3. Premium Reimbursement Arrangements are now recognized as group health plans: However, this is only true provided that employers have written documentation designating specific insurance plans for use by employers.

As mentioned earlier, these new FSC regulations are now in effect and employers will need to immediately take all necessary steps to ensure compliance with them.

Employers can find the full text of the newly revised FSC law on the Division of Health Care Finance and Policy (DHCFP) page of www.mass.gov.


“What’s fair is fair” may not always be the case

Two years after Massachusetts’ landmark health insurance law became effective in 2006, the state’s 4 Division of Unemployment Assistance auditors began knocking on business’ doors.

Their targets were employers who provided incomplete or inconsistent information to the state in earlier reports on their offering of and contribution to employees’ insurance.

As most of us, if not all of us know, the Commonwealth of Massachusetts requires companies with 11-50 full-time employees to either:

  • Have at least 25% of full-time employees enrolled in the employer’s group health plan

-or –

  • Offer to pay at least 33% of health plan premium costs for full-time employees working 90 days or more. 

Companies with 51 or more full-time employees are required to meet both of the above requirements or have at least 75% of their full-time employees enrolled in their group health plan.

As of late, the Commonwealth has audited 426 companies and found 172 (or 40%) had violated the above requirements and thus owed an additional $5 million to their workers’ health insurance premiums.

But is it really their fault?

The easy answer to this question is “yes”, however, the issue we are dealing with here is a complicated one. Here are a couple of reasons why.

Laws are confusing for employers:

Fair Share Contribution rules are so confusing that employers are having a very difficult time complying with them. 38 of the 172 companies who failed the audit have appealed.

On top of keeping their businesses afloat in a downturn economy, employers need to stay on top of very dynamic Federal and State laws and very often find themselves in way over their heads.

Some industries (and companies) have a harder time complying than others:

Companies in the staffing, restaurant and retail industries are among those struggling the most to comply with this law. Here’s an example how for some businesses it can be difficult, if not nearly impossible, to comply with these rules.

Let’s say you’re the owner of a local restaurant chain with 3 locations in Massachusetts and a total of 55 full-time employees as defined by the Commonwealth. Of these 55 employees, 28 are students and young adults still covered under their parents’ plans and 13 are ages 65+ and covered by Medicare. Of the 14 remaining employees, more than half are married to spouses that have employer-sponsored insurance.

What this all means is that employers such as this restaurant owner could offer to pay anywhere from 33 to 100 percent of employees’ premiums but if just one of the 14 employees not covered under their parents’ plans or Medicare waives coverage, they will not be in compliance with just a bit shy of 24% plan participation.

Consumer advocates are encouraging the state to make exceptions for employers that cannot entice 25% of their workforce to enroll in their plan but the state has yet to follow their advice. What are your thoughts on this?

Should employers be “penalized” for hiring workers that are covered elsewhere?


Quality Improvement and Market Reform top Employers’ health care wish list

In a recent survey done by HR consultancy firm Mercer, employers selected quality improvement and market reform as their top priorities for our nation’s health care overhaul.

First on the list of priorities was quality improvement. It was listed by 60 percent of respondents as a top priority and includes among other things:

  • Building more credible databases for evaluating provider performance and paying providers for outcomes
  • Adopting health information technology
  • Improving coordination of care for people with complex illnesses
  • Increasing primary care resources, especially in underserved locations

Linda Havlin, a Mercer worldwide partner stated that quality improvement is the number one option employers have for controlling rising health care costs. She suggested that the government can support this cost-control need “by aligning government-sponsored programs with private sector initiatives”.

The second item on employers’ wish list was the enactment of insurance market reforms. Fifty percent of employers cited market reforms such as elimination or pre-existing conditions exclusions and lifetime benefit caps as a high priority.

Two items that didn’t make the “wish list”

Within the healthcare reform proposals, two of the items employers oppose the most are:

  • Limits to the favorable tax-treatments of employer-sponsored health benefits (i.e. the proposed taxes on “Cadillac plans”)
  • Mandates for employers to offer coverage

Mercer’s survey results showed that 59 and 52% of employers respectively do not want these two items included in the final reform.

Massachusetts Senator John Kerry, who recently proposed a “play or pay” mandate for employers to offer health insurance coverage, recently stated his belief that more employers would terminate their offering of health care coverage if it wasn’t mandatory.

 As Massachusetts employers, has the statewide mandate for employers (with 11+ full-time equivalent employees) to offer (and pay at least 33% of) coverage or make a Fair Share Contribution to employees’ health insurance costs, affected your decision to offer insurance?

Also, how do you think lawmakers should define the so-called “Cadillac health plans”?

Should the upper limit for favorable tax treatment be the same in places with the highest costs of living as they are in places with the lowest or should there be no difference?

Create a free website or blog at WordPress.com.