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June 29, 2004
Five Tips for Assessing Your Benefits Plan
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ORLEANS--Gary Kushner offers some deceptively simple-sounding advice for companies struggling with the skyrocketing costs of healthcare and other benefits.

Speaking to the Society for Human Resource Management's (SHRM) annual conference and exposition in New Orleans, Kushner, president of Kushner & Company, Inc., in Portage, Mich., summed up his recommendations as follows:

1) Perform a strategic assessment on all of your plans. That should include:

  • Asking why you are doing things the way you do
  • Doing a gap analysis (figuring out where you are and where you want to be)
  • Developing a plan of action
Kushner questioned why, for example, so many companies offer accidental death and disability insurance. The reasons he gets most frequently are that it's cheap, the plan came that way, and "we've always done it this way." Those are hardly compelling arguments, he said, adding that the fact it is so cheap indicates it rarely pays out.

Gary Kushner
Employees won't want to leave at age 65 and employers won't want them to go, Kushner said.
The "vacation pyramid" is another benefit that should be reexamined, he said. Many companies offer 2 weeks vacation after 3 years, and 3 weeks vacation after 5 years. That doesn't seem to take into account the fact that the average tenure of an employee at a company is 3.5 years, he said.

Kushner suggested that if you wanted to corner the market in recruiting 22-year-olds, "throw out all of your other benefits and offer one more week of vacation."

2) Analyze plan design for long-term changes. "You are going to see an older workforce in the next 10 to 15 years," he said.

Benefits plans called "life cycle plans" recognize diversity within an individual over time, and allow employees to adjust their benefits selections as their status changes from single to married, or to senior citizen.

"Employees are not going to want to leave at 65," Kushner said. They are living longer and know that their 401(k) may not support them, and they place value on their relationships with co-workers.

Similarly, employers are not going to want older workers to leave, partly because they have the lowest absenteeism and highest productivity of any segment of the workforce, he said.

But the benefit that would be most attractive to these workers--retiree health plans--is the very one that many companies have eliminated or are in the process of dismantling, he said.

3) Implement education strategies for employees and family members. Kushner urged "data, data, data--for both employer and employee." Picking a health plan--or a physician within that plan--is not like buying a car. There simply is not as much statistical information available for choosing health plans or providers.

A recent study showed that the odds of surviving heart surgery are 70 percent better when the surgery is performed by doctors who have performed 200 or more such operations compared to doctors who have performed fewer than 50. Based on that fact, one company said that it would treat heart surgeries performed at a local hospital where only 39 such operations had been performed as "out of network," Kushner said.

The company expected a backlash from employees. Instead, employees were grateful that the company cared enough to make such a decision, he said.

4) Analyze systems and administration. There is nothing inherently wrong with the current trend toward outsourcing, provided it is being done for the right reason, Kushner said.

"The strategic reason for outsourcing is to retain more time for benefits strategies within the organization," he said.

5) Examine comprehensive solutions. A key to having a successful benefits plan is having a single vendor to resolve issues both for employers and employees, Kushner said.

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