A seven-year study of healthcare expenses shows where costs have been headed and claims to show what effect the Affordable Care Act will have on costs.

The study by the Commonwealth Fund – “State Trends in Premiums and Deductibles, 2003-2010: the Need for Action to Address Rising Costs” – found that during the ’03-’10 time period:

• The average premium cost for family coverage increased 50%
• The employee’s average annual share of premium costs increased 63%, and
• On average, single-person deductibles for private-employer health plans increased by 98%.

Note that the data are for years prior to enactment of the Affordable Care Act. The reason Commonwealth did the study was to show cost trends without reform measures. Commonwealth further projected that the average annual premium for family coverage would continue to rise 72% by the year 2020, to nearly $24,000.

The report asserts that the new healthcare law contains “several … provisions that could help moderate premium growth, make premiums more affordable, and provide improved financial protection for insured individuals and families who have benefit gaps, high deductibles, or limits on covered medical care expenses.”

Among those provisions are mandates that health plan

• in the large-group markets spend at least 85% of their premiums on medical care or services, and

• in the small-group and individual markets spend at least 80% of their premiums on medical care or services, or offer rebates to their enrollees.

These requirements, the report says, are intended to force insurers to reduce their administrative costs. In addition, the law mandates that insurers justify any “unreasonable” insurance premium increases.

The report includes a state-by-state analysis of healthcare cost trends.

To find out more about the Commonwealth Fund, go here.

Here’s a chance to compare your health costs against those of employers who took part in two nationwide surveys, and to see how some employers are saving money.

A survey of 1,600 employers by consultant Mercer shows:

• Employees’ share of healthcare benefit costs is expected to increase 5.4% next year. That’s the smallest rise in 15 years, but higher than the 3.9% rate of inflation or overall salary increases. The past two years have each seen increases of about 9%.
• The favorite cost-cutting measure by employers are raising deductibles, increasing paycheck contributions and moving employees to lower-cost health plans. One-third of survey respondents said they plan to raise deductibles or co-payments next year.
• The median in-network PPO deductible for an individual is $1,000 among small employers and $500 for large employers.
• This year, about 51% of large employers have consumer-directed health plans, or CDHPs, which high-deductible plans that offer tax-saving add-ons such as health saving accounts. They are also a lot less expensive than other plans. Next year, 58% of large employers plan to offer a CDHP.

A separate survey of 2,000 employers by the Kaiser Family Foundation looked at costs for 2011. The highlights of that survey:

• Premiums for family coverage rose an average of 9%, to an average of $15,703, and
• That compares with an average increase of 3% in the same survey in 2010.

Note: The Mercer survey in 2010 predicted a premium increase of 6.4% in 2011 — far less than what showed up in the Kaiser survey.

Related story: Court clears you to go this far to cut healthcare costs

OK, we know all about what President Obama proposes to help American businesses. Now, CNN Money asks 10 small-business owners what the president could do immediately to boost the economy in general and their companies in particular. Here’s what they said.

• Make credit and cheap capital available. As a consequence of the near collapse in 2008, banks have made credit so tight that small-business people are suffocating. How about government-backed loans? Too complicated, too much paperwork, and too time-consuming.
• Cut healthcare costs. The threat of more double-digit-percentage increases in the cost of health coverage stops many owners from hiring and expanding. Owners simply don’t want to add people for fear of adding to the company’s health-benefit costs — which keep going up, up, up.
• Boost tax credits for hiring. Every time a company brings in a newbie, there are multiple costs, such as training — and risks. Make sure companies get tax credits commensurate with the costs and risks that go into hiring.
• Streamline regulations. Or, as one owner put it, “Leave us alone and we’ll do fine.” One big problem: product testing and retesting to meet government standards. Another owner: “Don’t do anything.”
• Lower taxes. The talked-about $250,000 annual threshold is too low. The combined income of a lot of small-business owners exceeds that amount, and pulling taxes from their take will lessen investment in their businesses.

To read more of the owners’ ideas and profiles of their businesses, go here.

When it comes to fighting health costs, you have to know your enemy. The two chronic conditions that drive yours (and your peers’)  through the roof: smoking and obesity.

Both cause multiple chronic health conditions and both are behaviors that can be changed.

Ideally, your company works to attack both problems. But if you can only focus on one, make it your overweight employees. For one, it’s a bigger pool: 1 in 3 U.S. adults are obese (vs. 1 in 5 who smoke). Plus you’ll see a faster payoff: With tobacco cessation programs you don’t reap the benefits until the second year. But with weight loss programs, it can take only a few months.

There’s an app for that

All it takes is a 5% decrease in a person’s bodyweight for your organization to enjoy a decrease in healthcare costs. Which is why you want to do all you can to get employees eating less and moving more.

And while you can hold plenty of Biggest Loser-esque contests and form lunchtime walking groups til the cows come home, to see real success, you will have to make it personal for each individual.

That’s where smartphones and similar tech devices come in.

There’s no shortage of free apps that let employees track what they put in their mouths and when they put on their sneakers. Note: There are also plenty of websites that do the same from people’s desktops.

Why not allow that technology to do the work for you?

How it could work: Employees can select the program (or programs) of their choice, then submit weekly progress reports for your company to keep track of.

Once employees hit a milestone, you can reward them with whatever incentive your company’s chosen.

It’s one of the easiest wellness initiatives you can institute. The technology’s done the lion’s share, so your administrative costs are extremely low. And you enjoy the boost to your bottom line from a leaner, meaner workforce.

That’s the upshot of a critical new court ruling out of Florida. Of course, this case also comes with a few cautions for any company looking to cut its health expenses (and who isn’t these days?).

Check out the specifics of this new ruling and how you can use it to make employees and your company’s bottom line healthier.

The specifics

The employer in this case had started a wellness program in an attempt to get a handle on its health costs. A critical part of the plan: That employees complete a health risk assessment, consisting of a questionnaire and biometric screening.

That’s a common-enough practice. But the employer’s approach when someone failed to comply was a little less mainstream: It deducted $20 for every pay period that individual hadn’t done the screening or filled out the form.

One employee balked, and a class action suit followed, asserting that requiring a health risk assessment violated the Americans with Disabilities Act (ADA). Participation should be voluntary, employees argued, so it was illegal to financially penalize folks for refusing to participate.

The verdict

Not so, said the court.

The ruling: If a bona fide health plan exists, medical info can be collected. And a wellness program counts as part of a health plan. Which means that collecting data via health risk assessment doesn’t violate the ADA, and requiring them to comply doesn’t step out of bounds.

The learning for employers

This ruling is great news for every cost-conscious employer out there. Wellness programs remain one of the only strategies proven to lower healthcare costs.

So any tool at your disposal that can get more people participating is worthwhile. While some employers have done well by offering incentives for employees who participate, there are times when the opposite approach may nab the results you’re after. And now you can be more confident it’s a legal strategy.

However, nothing’s ever that neat and tidy. This verdict was strictly one court’s opinion. But you have plenty of  laws and agencies to worry about running afoul of: HIPAA, The Genetic Information Nondiscrimination Act (GINA) and the EEOC.

So when crafting your organization’s wellness plan, and how you’ll get employees to take part, you’ll need to watch all of these. And while the EEOC, for one, hasn’t ruled on the voluntary nature of health risk assessments, informally it has said requiring them would violate the ADA. But will they take an official stance soon in light of this new ruling?

Stay tuned.

Cite: Seff v. Broward County.

The key is IRS’s notice that says employers have the flexibility to determine hours worked for each employee. This count is important because the tax credit’s matching rate from 2010 through 2013 is highest for employers with 10 or fewer full-time equivalent (FTE) employees. (Employers with fewer than 25 FTEs qualify for a reduced credit.)

Let’s say it looks as if you have too many employees to qualify. Consider that the guidance allows you to choose from three different methods of determining hours. They are:

1. actual hours of service from records of hours worked and hours for which payment is made or due (e.g., vacation, holiday, illness, etc.)
2. an estimate of hours based on total days of service (i.e., the employee gets credited with eight hours of service for each day for which the person would be required to be credited with at least one hour of service), or
3. an estimate based on total weeks of service (i.e., the employee gets credited with 40 hours of service for each week).

You can determine the number of FTEs by dividing the total hours of service by 2,080. If the result isn’t a whole number, round to the next lowest number.

So, let’s say you have 25 or more employees. You can still qualify for the credit if some of your employees work part-time. For instance, an employer with 46 half-time workers (paid wages for a max of 1,040 hours) has 23 FTEs – and therefore qualifies for the credit.

For more IRS guidance, go here.

Once healthcare reform kicks in, most health insurance offerings are expected to look surprisingly similar. Which means your organization will need to start looking for a new leg up when it comes to both recruiting and retention.

One suggestion: voluntary benefits.

Offering employees everything from auto and home insurance to legal plans or even pet insurance is a growing trend among employers looking to stay competitive. That’s the assertion at the recent 2011 Health Care Benefits NY conference by Flagg Management held last month in The Big Apple.

But with so many possibilities, how can you know what the best options for your organization are? Take a look at what your peers are doing now, as well as what they have planned for the near future.

The most popular three voluntary benefits your peers now offer are:

• life insurance
• disability (long- and short-term), and
• vision.

If you’re looking to get ahead of the curve, consider embracing the top three voluntary benefits other firms have their eyes on for the near future:

• long-term care
• legal plans, and
• auto and home insurance.

Key to success lies in this department

But no matter which perks you decide to offer, have a sitdown with your CFO pronto.

There’s one secret to success, according to experts on voluntary benefits. And it has nothing to do with what you’re offering but rather how you’re offering it:

Make sure your company sets up a payroll deduction for employees to participate.

That does two things:

1. It helps employees sock away the money to cover the costs of premiums, etc., and
2. It further reinforces with employees that your company endorses that specific benefits plan.

Wellness programs are no passing fad – they’re one of the few strategies companies have consistently embraced to chip away at high healthcare costs in recent years.

One major flaw with wellness programs? The payoff is often slow to see. And that makes it tough to justify pumping a ton of money into wellness initiatives, when it could take years to see the fruits of the efforts.

Still, companies should want to dedicate dollars to this healthcare savings strategy.

To get an idea of how much other companies are spending to get employees healthier – and just what they’re spending on, take a look at these new benchmarks from Buck Consultants.

The magic number: 220

Certainly you don’t want to overspend on your wellness program, no matter how formal or informal it is at this point. But underspending could rob you of payoff, too.

To hit upon the happy medium, compare what you currently spend on wellness to this: On average, companies paid $220 per employee for wellness last year. That’s a big jump from the $163 they forked over in 2009 says Buck Consultants.

If your number is significantly higher than that, you’re one of the few – a scant 11% of companies spend more than $500 on wellness per person annually.

So what’s worth spending on?

Since your company is going to end up opening its wallet anyway, why not direct the dollars in the most fruitful ways possible? The three most popular, according to Buck:

• gifts or merchandise to reward employees for healthy behaviors (49%)
• discounts and subsidies for preventative health services, like annual physicals (49%), and
• raffles or prize drawings in health-driven contests or competitions (47%).

You hear it every day in the office, the break room, at the water cooler, on the radio and TV: “What Obama needs to do is …”

What follows usually has something to do with a range of topics, including: health care, unemployment, the deficit, Afghanistan, spending, equal rights, the housing market, or any other number of topics that have a direct (or indirect) impact on the economy.

With that in mind, the New York Times has created “The Budget Puzzle” – an interactive game that allows you to reallocate, redistribute, redirect, or wipe out spending for a number of different initiatives.

Among the choices players have:

• Adjust the amount of aid given to foreign countries
• Adjust farm subsidies
• Reduce public sector jobs
• Cut federal aid to states
• Reduce military spending (in a number of different ways)
• Make cuts to Federal healthcare spending
• Raise social security costs (or lower the amount paid out)
• Choose from a number of different tax cuts and increases,
• and a lot more.

The game basically gives players the same kind of bird’s eye view the current administration has over the economy, then gives them the freedom to choose their own economic recovery plan (without the stress or consequences of long- or short-term failure).

Once you’ve chosen which cuts or adjustments to make, you can save your economic plan, post it online, and/or e-mail it to friends and colleagues, and have them compare and contrast their ideas with yours.

To play the New York Times‘ “Budget Puzzle” game, click here.

The promise was that healthcare reform wouldn’t force employers to drop or change existing plans. A close look at the new regs could lead you to believe otherwise.

Specifically, following the reform rules will almost certainly lead to higher costs for employers. Because, essentially, the rules say you can keep your plan if you don’t:

• Significantly cut or reduce benefits. For example, firms can’t eliminate coverage for people with chronic conditions like diabetes.
• Significantly raise co-pays. Grandfathered plans can’t increase staff co-pays by more than $5 (adjusted annually for inflation) or a percentage equal to medical inflation plus 15 percentage points. For instance, a plan would lose grandfathered status if co-pays rose from $30 to $50 over two years.
• Significantly raise deductibles. Plans can increase deductibles only by a percentage equal to medical inflation plus 15%.
• Significantly lower employer contributions. Grandfathered plans can’t decrease the percentage of premiums that employers pay by more than five percentage points.

And as a result of the rules, according to Department of Health and Human Services estimates, in 2013, as much as 64% of large businesses will not be grandfathered and 80% of  small businesses will have to give up their existing plans.

Go here for the full details  on “Group Health Plans and Health Insurance Coverage Relating to Status as a Grandfathered Health Plan Under the Patient Protection and Affordable Care Act.”

Sounds like a pitch you’d hear on late night TV. No gimmicks here –  all your company needs to do is invest in some pedometers.

Pedometers are a low-tech but high payoff tool. Check out the results of a 12-week pedometer challenge, sponsored by National Grid.

The average employee participant logged 8,772 steps per day, translating into:

• 38 minutes of exercise daily, and
• 6.4 lbs. lost.

Seems simply making people aware of how much they are – or aren’t – moving during the workday gets them walking more.

Considering that it will cost your company around $10 per employee (buying in bulk can run as low as a buck apiece), it’s one investment no company can afford not to make.

Send employees a weekly e-mail, encouraging them to make healthy choices.

It really works, reports a recent study by the Kaiser Permanente Division of Research reported in the American Journal of Preventive Medicine.

All your company has to do is make a simple request of folks like choosing an apple as a snack or taking a 10-minute walk at lunch.

Turns out that’s enough to get employees making smarter diet and exercise choices.

And that’s good for everyone.

The survey, which polled more than 35,000 workers across multiple industries, based its results on what percentage of employees in each field felt their job was totally secure. According to the results, general surgeons and emergency room physicians have the least risk of losing their jobs (100% of those surveyed felt their job was completely secure).

While that may not come as a surprise, considering physicians are always in demand and surgeons are highly specialized, take a look at these everyday professions that landed just below them on the list:

• Marketing Manager (#3 on the list, 100% feel their job is secure): It takes time and experience to move to the top of the marketing department at most companies. But once you do so, the salary and security are worth their weight in gold (Marketing Manager was also #26 on CNN‘s list of the best jobs in America).
• Software Development Director (#5 on the list, 97% feel their job is secure): In the digital age, there’s no shortage of demand for high-level tech geeks. This is a niche profession where those fortunate enough to have the right experience are reaping the benefits.
• Director of Communications (#7 on the list, 96% feel their job is secure): Who would’ve thought it, right? But those execs who plan public relations campaigns and stand out front as the “face of the company” for press and media relations apparently have very little risk of falling victim to corporate cutbacks. In addition to providing job security, communication specialists also came in at #31 on CNN‘s list of the best jobs in America.

We’ve included the complete top 10 below. Are there any other professions you’d add to this list?

Top 10 most secure jobs in America:

1. Emergency Room Physician
2. General Surgeon
3. Marketing Manager
4. Nurse Practicioner
5. Software Development Director
6. Physician Assistant
7. Director of Communications
8. Physical Therapist
9. Speech-Language Pathologist
10. Attorney

Source: “The Top 10 Most Secure Jobs,” CNNMoney, November, 2009

If Congress and President Obama are looking to  employers for support for the latest healthcare bill, the best advice may be, “Look elsewhere.”

A recent survey of 160 employers revealed that most of the bosses believe healthcare reform will lead to higher healthcare costs and a weakening of control over how employers provide coverage to workers.

Here are the numbers from the survey, conducted by business consultant Watson Wyatt:

• 73% believe healthcare costs will increase if current reform legislation is enacted.
• 86% think the legislation would weaken the role and control of employer-sponsored plans.
• Only 29% would support a tax on high-income employees with high-cost plans as a way to fund health reform.
• Only 19% would support a tax on insurers of high-cost plans.
• Only 11% would support taxing employer contributions to health care as income.
• Only 10% would support a mandate for employers to provide coverage.
• 50% would support a mandate for workers to carry coverage.

On healthcare reform:

• Angela Braly, CEO of WellPoint (the nation’s leading health insurer): “The President is doing the right thing by bringing in leaders from hospitals, physicians, nurses, employers, advocacy groups, and private insurers, among others. Only by working together will we be able to develop a sustainable solution for America’s healthcare system.”
• Jeffrey Kindler, CEO, Pfizer: “Obama’s healthcare reform is making more progress than a lot of people would have predicted. We’re on the verge of a bill coming out of the House that’s clearly going to happen … The biggest challenge is this issue around the public plan. How do we pay for it? I do think we have to accept the reality that the vast majority of the people in this country get their insurance from employers and if we create a system that provides incentives for employers to not provide their employees with insurance, then under certain scenarios huge numbers of people under public option would move out of the employer system and into the public system. That would not be a good outcome because it would impose a tremednous financial burden on the taxpayers.”

On tax reform:

• Charles Schwab, Founder and Chairman, Charles Schwab: “What we haven’t done is restore the confidence of the people who create the jobs … The biggest uncertainty is: Where are taxes going to go? The quicker you can bring certainty[on that issue], the quicker you restore confidence.”
• Duncan Niederauer, CEO of NYSE Euronext, which operates the New York Stock Exchage: “A place where I do not think they struck the right chord is on the tax proposal regarding overseas earnings of multinational corporations headquartered in the U.S. The overwhelming view from that constituent group is that if the proposal were to go through, it would at best require a lot of U.S. headquartered companies to eliminate jobs to reduce costs and make up for the increased tax burden. More challengingly, it would encourage a lot of these companies to contemplate being incorporated elsewhere and potentially moving jobs out of this country.”

On business and regulation:

• Robert Greifeld, CEO, Nasdaq: “Within the leadership of the business community, there is concern and I would say that the attitude is not so much wait-and-see, but wary. They’re wary with respect to trade policy. They’re wary with respect to tax policy and obviously are also concerned with the burden of health-care costs. There’s a fair amount of trepidation in the business community and what the Administration policies might mean to their success in the future. In terms of the concern in the business community, I think, it is greater today than it was back in November.”
• Duncan Niederauer, CEO of NYSE Euronext: “We all know we need some regulatory reform here and to bring the opaque markets out of the shadows and into the light. But there’s a real danger, in our view, that there ends up being excessive regulation that stifles creation of new business and new jobs.”
• W. James McNerney, Jr.: “A level playing field for American companies and workers in international markets is more important than ever. I see clear evidence that the Administration understands the issue and its importance to U.S. economic health.”

Overall assessment:

• Donald Trump, CEO, The Trump Organization: “He’s handled the tremendous mess he walked into very well. He still has a daunting task ahead of him but he appears to be equal to the challenge. He has kept his eye on both national and international issues and his visits to foreign countries have shown him to be warmly received, which is certainly a change from the last Administration. I believe he should pay more attention to OPEC and what’s going on there, but overall I believe he’s done a very good job.”
• Michael Dell, Founder and CEO, Dell: “There are some aspects of what is in the economic recovery act around broadband, healthcare, and IT spending that we think are good things. We’re concerned, like many, that one word that seems to be missing from a lot of discussions is competitiveness. How do all of these things make America more competitive? It’s a word that should be used more in Washington.”
• Jeffrey Katzenberger, CEO, Dreamworks Animation: “I don’t think that any President in modern history has had to face a deeper or more difficult or more complicated set of issues from the first moment he set foot in the White House, and I think he has done an exceptional job of methodically working his way through that horrendous set of problems. He had to make a lot of decisions, and some of them will be wrong, but many, many of them will turn out right.”
• Mohamed El-Erian, CEO, Pimco: “On one side he has been able to stabilize the financial center and institute major structural reforms. And he still maintains enormous popularity with the American people. On the negative side, the jobs picture is worse than anticipated, and unemployment itself is becoming a big policy challenge. It’s going from being a lagging indicator to being a leading indicator. The major issue people are going to second guess in the next six months is his decision to pursue both agendas. Was that the right one or should have he done it sequentially?”

So what do you think? Which CEOs make valid points, which ones are off target? Where do you think the current administration’s succeeding, and where could it be more effective?

We welcome opposing (and parallel) points of view in the comments section below.

For the full article, including a complete breakdown of quotes from all 10 CEOs, check out “CEOs Rate Obama’s Performance,” by Joseph Weber,
Business Week, 8/3/09.

The Blue Dogs, a group of rightish Democratic House members, threatened to scuttle discussion of the healthcare reform measure unless cuts were made. Party leaders agreed to some compromises that would soften the blow for employers. The proposal now:

• exempts businesses with annual payrolls of under $500,000 from penalties for not providing health coverage to workers. Earlier versions of the bill set the ceiling at $250,000.
• still would impose an 8% surtax on companies that don’t offer health insurance, but would impose penalties on a sliding scale for payrolls between $500,000 and $750,000. The penalty on a $500,000 annual payroll: 2%.

Not surprisingly, Republicans and groups like the National Federation of Independent Business weren’t impressed with the changes, saying the proposal’s still too costly for small companies and will end up killing jobs.

One interesting omission in the Blue Dogs’ new deal: There’s no mention of the original bill’s proposed surtax on the rich.

Here’s how that breaks down:

• Individuals with incomes over $280,000 a year or joint-filing couples with incomes over $350,000 would face additional taxes,  figured on a sliding scale, of between 1% and 5%.
• Starting in 2011, a family making $500,000 would pay an additional $1,500 in federal taxes. At an income of $1 million, the surtax would be $9,000.

Finally, the Blue Dogs also convinced party leadership to postpone a vote on healthcare reform until September.

A lot can happen between now and then. We’ll keep you posted.

The potential tax consequences of President Obama’s healthcare reform have some surprises in store for employees — and not in a good way.

Congress is looking for ways to raise more than $1 trillion in new tax revenues to finance health care for the uninsured. At the top of the list: several proposals that would cut employees’ take-home pay 9% to 14%, depending on their household income and tax situation. Several of the plans under consideration would require Payroll to treat as taxable income:

• health insurance premiums
• dental premiums
• vision premiums
• flexible spending account deposits, and
• health reimbursement arrangement contributions.

Right now, employees don’t pay taxes on these benefits because they’re deducted from their paychecks on a pre-tax basis.

Specifically, the proposals the Employer Council on Flexible Compensation reports are under consideration include:

• capping this proposed group health tax exclusion at $6,800 for individuals and $17,240 for group coverage in 2013
• imposing the cap on all workers with group coverage, or
• imposing the cap only on those earning more than $100,000 per year (married couples, more than $200,000) per year.

For more info
To see how the proposals might affect your a paycheck, go to www.nohealthbenefitstax.com and click on “Worksheet: How the health tax impacts your paycheck” on the right-hand side of the screen.

You’ll enter data such as income and tax status; employer’s benefit contributions; and pre- and post-tax benefit contributions. The spreadsheet will show your take-home pay (as entered) as of today, then calculate how much it could decline under each of the proposals. Another chart shows the increase in employer FICA, based on the values entered.