Under the Patient Protection and Affordable Care Act (PPACA), companies are required to report the value of their employer-sponsored health care coverage on employees’ W-2s. This takes effect for most employers this year, meaning the values must be represented on the forms issued in 2013. Smaller employers — those with fewer than 250 W-2s to distribute, are exempt until at least 2014.

The IRS has issued a series of notices to help employers handle this new task. The guidance, according to Michael R. Durnwald of the law firm Katten Muchin Rosenman LLP, clarifies that:

• While the value of the plans must be reported, it does not affect the tax treatment of the health care coverage.
• Employers do not have to create a W-2 to satisfy this requirement for someone who normally would not receive a form (a retiree with health benefits, for instance).
• Employers can calculate the value in a number of ways, including using the COBRA premium.
• Flexible spending accounts, dental and vision plans should not be included in the value calculation.

The IRS added to that guidance shortly after the New Year’s holiday, according to a report by Business Insurance. The IRS further clarified that employers can include contributions to health reimbursement arrangements in the calculation, but are not required to do so.

Also, costs related to wellness initiatives, employee assistance programs and on-site clinics do not need to be included as long as the employer doesn’t charge premiums for them under COBRA.

Ultimately, however, the fate of this and other provisions of PPACA rests in the hands of the Supreme Court, which announced in December that it would start hearing oral arguments regarding the health care reform law in late March. A final ruling is expected in June, according to a Reuters report.

Organizations who offer these options want to maintain a certain level of participation that helps to drive down the cost of health care by offering preventive solutions to obtain those goals. After all, what business owner or CEO doesn’t want to have a healthier, and happier, work force? Employees who participate in wellness programs have a tendency to be healthier, and they also perform better on the job. Better performance leads to better results, and that typically can be translated to increases in productivity, promotion and income.

Business Insider reports 41 percent of workers said wellness programs made them happier and more productive at work, according to the latest Principal Financial Well Being Index. And better health means time on the job; about 35 percent said they missed fewer days, while 52 percent said their energy had increased.

Nearly half (45 percent) of the study’s respondents said the programs were worth it, but there’s still a bit of disconnect when it comes to what the companies are offering and what workers want. The most common wellness packages included online wellness information and educational tools or resources, but 25 percent of those without discounts to the gym said they would prefer a workout pass instead.

Respondents also said that on-site preventive screenings, access to nutritionists and weight management programs would ramp up their enthusiasm for an employer’s wellness program. Ironically, only 13 percent of the 1,121 workers surveyed said the programs were “very successful” in improving their actual health. Perhaps they have been eating the wrong food at their desk?

When offering incentives to employees, organizations must walk a tightrope at times. Being punitive can backfire. Some companies offer incentives — gas cards, cash, and discount rates — to get employees to live more healthfully and curb costs. But, increasingly, firms are punishing employees financially if they don’t take their own health more seriously, according to Scripps Howard News Service. The National Business Group on Health surveyed large employers and found 80 percent plan to offer financial rewards to employees who participate in certain health initiatives in 2012, up from 54 percent in 2011.

Its survey shows the share of companies “penalizing workers over health measures or lack of participation in wellness plans” is expected to double this year, to 38 percent, the survey shows. Most penalties involve a higher insurance premium. In other cases, employers are refusing to hire nicotine users as a way to create a healthier workplace.

Other surveys confirm this trend: Mercer, a national benefits consulting firm, found 24 percent of the largest companies — those with 20,000 or more employees — will charge higher health insurance premiums for smokers. And 12 percent of firms with more than 500 employees are doing the same, according to the 2011 survey.

How big does a penalty or incentive have to be to influence employee behavior? Would employees be more likely to lose weight if they got a guaranteed payment — say, a $150 gas card — or if they were entered into a lottery to win a much larger sum? Will a simple written reminder get more people to sign up for a flu shot? Finding out what works is paramount, especially as the federal government gives employers more latitude to tinker with premiums for those who quit smoking, lose weight or otherwise try to improve their health.

With “participatory” programs, in which someone might get $50 for completing a body-mass-index exam, there’s no limit on how much cash a company may dole out. But for “outcomes” programs — which reward or punish only if you lose the weight or reduce cholesterol or quit smoking — the amount is capped at 20 percent of the total premium. The new federal health care reform bill raises that limit to 30 percent and, in some cases, to as much as 50 percent, starting in 2014. For a family with a $12,000 health plan, $3,600 of that total could be tied up in outcomes-based discounts.

Critics call punitive measures a slippery slope: Testing for nicotine use today could lead to alcohol testing tomorrow. Employers could refuse to hire people if they don’t like their diet or their family’s history of heart disease. However, such programs could be viewed as biased: Poor people generally have a tougher time quitting smoking and have higher smoking rates to begin with, meaning premiums are being raised on the class of people who can least afford it.

The problem with this is that employees don’t all start from a level playing field in terms of personal health and socioeconomic background. People are helped more by employing effective, evidence-based incentive programs, not refusing to hire them outright. Research also shows that people who are healthier to begin with are more likely to get involved in “participatory” programs.

Employees, as a general rule, are going to be incentivized by monetary exchanges whether punitive or as a financial reward of some type. In many cases, those financial carrots or sticks are enough to motivate the majority of workers to take action. Although it’s possible to see positive change over time, delivering workable wellness programs that make a definite change in employee behavioral aspects take much longer to instill on a corporate basis. Will employees be happier and healthier in 2012? Hopefully so, but at what cost? The most important point is, the health of your company and the health of your team are paramount to the ultimate success of your business.

BY MARK ROBERTS

Leadership principles are the same, regardless if you are the head of a business, a church or synagogue, an organization or association, or your family. Knowing the right way to lead comes with experience, both good and bad, and with how you deal with these experiences. As well, wisdom to make the right choices is not gained overnight but rather through a lifetime process of developing insights from life’s path. This process can occur through the counsel of wise people, through knowledge gained from the study of great books and from individuals you have met, and through key insights into your personal relationships both spiritually and socially.

True leadership cannot be forced; it must be earned. Here are five leadership tips to focus on in 2012, courtesy of Managing Director and Chief Strategy Officer at N2growth Mike Myatt, author of Leadership Matters…The CEO Survival Manual.

1. Family matters. If you’re struggling with the family balance thing, the advice is simple: Don’t attempt to balance your family—make them your priority. Don’t believe the myth that success in the workplace will create happiness at home. While it makes for a nice sound bite to console those with a guilty conscience, it’s a lie. If your business is growing, but your spouse is crying and your children are neglected, it’s time to do a reality check on your priorities. If your assistant respects you, but your spouse doesn’t, you have serious issues that need your immediate attention. If you would rather spend time with your online “friends” than with your children, it’s time to pull the ripcord on your internet connection. Here’s the cold hard truth: If you cheat your family to invest into your career, you and your loved ones will pay a very heavy price. If your focus is on your family, your career won’t suffer, it will flourish. Get this wrong and not only will your family suffer, but so will you as you someday mourn the loss of what could have been, but cannot be recovered.

2. White Space. While the mind of a leader may be most comfortable being oriented toward the future, he/she can only act in the here and now. The knowledge and skills required to master any endeavor only happens when you focus on what you’re currently doing. This is the definition of presence, and it is only when you operate in the present that real creativity, growth and innovation occur. The problem with being present is that many leaders confuse this with having to do everything themselves. Have you ever interacted with someone who deals with silence by jumping in and filling the conversational void? This same thing occurs with executives who attempt to fill every open slot on the calendar with activity—this is a huge mistake. Smart leaders don’t fill their calendars with useless activities; they strategically plan for white space allowing them to focus on highest and best use endeavors. Leading doesn’t always mean doing. In fact, most often times it means pulling back and creating white space so that others can do.

3. Listen. Want to become a better leader? Stop talking and start listening. Being a leader should not be viewed as a license to increase the volume of rhetoric. Rather astute leaders know there is far more to be gained by surrendering the floor than by dominating it. In this age of instant communication everyone seems to be in such a rush to communicate what’s on their mind, they fail to realize the value of everything that can be gleaned from the minds of others.  Recognize the value of listening to others and avoid being a train-wreck in the making.

4. Unlearn. One of the most profound and commonly overlooked aspects of learning is recognizing the necessity of unlearning. You have acquired knowledge, beliefs or positions that, but for the protection of your ego, would easily admit are outdated. The definition for a closed mind is someone unwilling to change their opinions. Smart leaders recognize it’s much more valuable to step across mental lines in the sand than to draw them. Here’s the thing: No one has all the answers, so why even attempt to pretend that you do? A person that never changes their mind is a static thinker who has sentenced his mind to a prison of mediocrity and wasted potential. The smartest people are the most willing to change their minds. They don’t want to be right, they want the right outcome — they want to learn, grow, develop and mature.

5. Engage. Leadership isn’t about you—it’s about those whom you lead and serve. There are few things as limiting and frustrating as disconnected leaders. Smart leaders spend their time starting or advancing conversations, not avoiding or ending them. The more you engage others, the better leader you’ll become. It’s nearly impossible to engender the type of confidence, trust and loyalty a leader must possess without being fully engaged. In person, over the phone, via email, through the social web, or even by sending a good old-fashioned thank you note—ENGAGE.

And a bonus No. 6:

Read. There are few things which impact your thought life more than what you read. The message today is a simple one: If you want to improve your station in life, as well as the lives around you, read more. The greatest leaders throughout history have been nothing short of relentless in their pursuit of knowledge. Michelangelo said it best when he uttered the words “Ancora Imparo” which when translated from the Italian means “I am still learning.” By the way, his first public use of this phrase was noted to have been on his 87th birthday. Are you still learning (and unlearning)?

Are you a leader? If not, learn to be one.

BY MARK ROBERTS

SBC DELAY
The Department of Labor (DOL) has suspended a deadline for employers to comply with new rules regarding the Summary of Benefits and Coverage (SBC). The new rule, part of the health care reform law, would require employers to supply a variety of information in their benefit communications, including a glossary of common health terms and examples of how certain medical conditions would be handled. The DOL announced that employers will not be required to comply until further notice. Previously, the deadline was set at March 23, 2012. The DOL indicated that it would announce a new compliance date after final regulations are set.

MEWA RULES
The Department of Labor (DOL) has proposed new guidelines governing multiple-employer welfare arrangements (MEWAs) designed to protect small employers. Under the proposed rules, MEWAs would be required to register with the DOL. Also, the DOL would be able to issue cease-and-desist orders on MEWAs without prior notice and would be able to quickly seize assets from MEWAs if they fall into financial trouble.

PROTECTING WHISTLEBLOWERS
The Occupational Safety and Health Administration (OSHA) is beefing up its whistleblower protections. The agency recently revised its manual on whistleblower investigations and has budgeted $6.1 million to hire 45 new investigators. OSHA also has posted final rules on whistleblower provisions under the Sarbanes-Oxley Act, as amended by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.

NOT IN THE KNOW
Fewer Americans are actively seeking health information, according to an analysis by the Center for Studying Health System Change. The recent study found that 50 percent of American adults looked for personal health information in 2010, a decrease from 56 percent in 2007. Americans’ rate of searching the Internet or asking friends about health information remained stable, but the use of hard-copy books, magazines and newspapers dropped by almost half to 18 percent, the study found.

The idea of a wellness program seems clear-cut on the surface: Improve your employees’ health and lifestyles, and they’ll spend less on health care. That can translate into savings for employers on benefits.

Simple, right? Unfortunately for employers, setting up a wellness program is anything but a simple endeavor. A number of federal laws dictate how a program must be managed, and agencies review and revise the laws frequently.

Take the latest compliance hurdle for wellness programs: A regional office within the Equal Employment Opportunity Commission (EEOC) has ruled that incentives offered to employees’ spouses to complete a health risk assessment are a violation of the Genetic Information and Nondiscrimination Act (GINA). No one, however, seems to be able to get details about this decision, according to a report by Human Resource Executive Online.

GINA bars discrimination based on a program participant’s information — a broad definition that includes the medical history of employees and of their spouses, experts say. GINA allows incentives for wellness programs only if participants are not required to supply family medical information to get them. The EEOC decision means spouses can’t be required to supply such information when enrolling in a wellness program.

Summer Conley, an attorney with Drinker Biddle & Reath, noted in HREO that the decision “doesn’t necessarily jibe with the purpose of [the law] because there’s not really genetic information involved when you’re talking about your spouse.”

The final outcome of this decision, however, remains murky. EEOC’s national office has yet to make a formal announcement. Still, experts suggest employers play it safe and take out any incentive-based requests for family medical history information through a health risk assessment for both workers and their spouses.

GINA is just the tip of the iceberg for employers who want to sponsor a wellness program. According to Amy Gallagher, vice president of major accounts with Cornerstone Group in West Warwick, R.I., HIPAA has the greatest impact on wellness programs because it is broad and covers issues related to health, privacy and benefits. Although HIPAA prohibits employers from discriminating against workers based on their health, companies have some wiggle room, Gallagher noted in an article on GoLocal.com.

For example, while employers generally are barred from charging different rates for workers based on their health, they can award premium discounts for workers who exhibit healthy behaviors or participate in wellness programs.

Ultimately, how HIPAA impacts an employer’s wellness initiative depends on the type of plan, Gallagher wrote. Participation-based programs can reward workers for simply participating in a wellness initiative. Standards-based programs, however, grant incentives based on workers achieving a specific goal, such as weight loss or quitting smoking. The standards-based program is subject to much more regulation under HIPAA, according to Gallagher.

With a federal long-term care insurance program now shelved, the prospect for new federal action in the near-term is slim even as need for such services grows, industry observers and regulators said.

While the U.S. population continues to age as baby boomers move into retirement years, just 8-10% of Americans carry long-term care insurance, said Ron Calhoun , national health care practice leader at Aon Risk Solutions. While the Community Living Assistance Services and Supports program was a step in the direction of addressing that public policy problem, it had deep structural flaws, including a proclivity toward adverse selection that made it unsustainable, Calhoun said.

A March 2010A.M. Best report referenced federal proposals on LTC issues, including tax incentives for qualified policies and special LTC savings accounts. However, the current Congress has no appetite for taking up LTC legislation, said Jeff Lane , managing senior financial analyst for A.M. Best.

Amid congressional inaction, the outlook for long-term care insurance remains clouded by its lack of affordability and the challenge of accurately determining the cost of providing care, Lane said. With a sluggish market for the specialized product, some agents are stepping away from selling it, he said.

“The cost is so high. The most difficult problem with the product is the pricing,” he said.

Kansas Insurance Commissioner Sandy Praeger said in the current economy, “people aren’t going to make the decision to buy a voluntary product they don’t know if they’ll ever need anyway.”

The CLASS act, part of the federal health reform package, would have offered enrollees a benefit that, while a fraction of the estimated $75,000/year cost of nursing home residency, would have helped families cope with the costs of care, particularly services provided in the home. However, faced with the law’s requirement it be proved solvent over a 75-year period, the U.S. Department of Health and Human Servicesrecently suspended the program and reassigned its staff before a single dollar could be collected from potential beneficiaries (Best’s News Service, Oct. 14, 2011).

However, the Obama administration is not completely done with long-term care. In an Oct. 26 appearance before two House subcommittees, HHS Assistant Secretary for Aging Kathy Greenlee said a program to raise awareness of the need for long-term care solutions will continue. Also created by the Affordable Care Act, the outreach effort will cost $3 million annually.

A mix of actuarial and political concerns did in the CLASS program, Calhoun said. The political environment that had end-of-life counseling labeled “death panels” is not one prepared to address substantive LTC solutions, he said.

“It’s being celebrated by one side of the aisle as a victory,” he said.

It may be a political nonstarter, but CLASS could have been fiscally sustainable if it had been mandatory, not purely voluntary, Calhoun said. “Mechanically, it would have had more financial viability to it,” he said. “It will die an actuarial death if it’s voluntary because of adverse selection.”

Without CLASS, state Medicaid budgets will feel more of a strain, said Praeger, chairwoman of the National Association of Insurance Commissioners’Health Insurance and Managed Care Committee. Currently, half of state budgets for Medicaid – a federal and state-funded program that acts as a safety net for long-term care patients who have depleted their assets — go to long-term care, she said.

“The states will bear the impact and they don’t have the money for it,” said David Levy , chairman of theAmerican Association for Caregiver Education.

CLASS was flawed, but it was also bold and ambitious, said Jesse Slome , executive director of the American Association for Long-Term Care Insurance. “They at least tried something. There is nothing on the horizon,” he said.

(By Sean P. Carr , Washington Bureau Manager : sean.carr@ambest.com)

WHEN AGE COUNTS
New poll results suggest that employers would be well served by tailoring their retirement plan communications to specific age groups. However, most employers don’t follow through, according to the survey by Northern Trust. The study found that only 4 percent of retirement plans had created “specific goals for engaging younger workers in their defined contribution plans.” Only 24 percent targeted specific age groups.

DOUGHNUT UPDATE
The Medicare “doughnut hole” — the prescription coverage gap that exists under Part D — is shrinking, according to a new government analysis. Medicare’s Office of the Actuary estimates that the average American who falls into the coverage gap would have paid about $900 on prescriptions this year, down from the original estimate of $1,504. A bulk of the drop can be attributed to a 50 percent discount from drug companies on brand-name drugs, which generated an average savings of $581.

MATERNITY MATURITY
More first-time mothers have access to paid maternity leave than ever before, according to a report by the U.S. Census Bureau. A report by the agency in November found that more than half of women who gave birth for the first time between 2006 and 2008 received some sort of paid leave, up from 42 percent in 1996-2000. Not all women received similar benefits, however. Lower-educated mothers are nearly four times as likely as college graduates to be refused paid maternity leave by their employers — the widest gap in the past 50 years.

DESK VACATIONS
The average American receives 14 days of paid vacation but generally uses only 12 of them, according to a survey by Expedia. Add up the time and labor costs associated with those extra two days, and it equals about $34.3 billion, based on figures from the U.S. Bureau of Labor Statistics. Workers said the top reason for skipping vacation is that they don’t have enough money to travel, according to the Expedia report.

DATA BREACHES
The number of reported health information data breaches climbed 32 percent since 2010, according to a report by the Ponemon Institute. The report found that 41 percent of those breaches could be attributed to employee mistakes, while 49 percent resulted from theft of computers or devices.

According to a survey of 1,000 staff, 63% said they found out company news via Chinese whispers rather than being formally told by their employer.

It also found 46% of staff who had been through some form of restructure did not feel supported by their employer, with 40% saying their bosses did not make it clear how the change would affect them.

Stephanie Morgan, psychologist and director at Kingston University’s Business School, said companies are allowing a “lapse in communication between employee and employer”, adding that companies undergoing change must “have HR expertise in place to support communications”.

Alan Bailey, MD of Capita HR, said: “This survey demonstrates major organisational changes are not being well managed or communicated to their workforce.”

That’s a great human interest story and certainly lends some encouragement to companies considering instituting some type of wellness program.  Of course, wellness programs can also be a pain to implement.  Last week I had the opportunity to present a seminar on the legal requirements of wellness programs and identified many important issues, like discrimination and privacy concerns, which would seem to discourage implementation of wellness programs.

However, taking this story at face value, had the employee not been screened and simply developed full prostate cancer, the health plan costs to treat that cancer would likely have been higher than the treatment to cure the employee with the cancer caught early.  So there could arguably be some savings there.  Plus, over the longer run, statistics seem to support the conclusion that wellness programs decrease overall claims experience for health plans.  But they have to be done right and they have to be done legally (so as to avoid the unexpected costs associated with defending them later).

So consider adding a wellness component to your welfare plan.  But make sure to consult with your benefit professionals as you build the program so your plan does more good than bad.

by Keith R. McMurdy

The legal fate of the Patient Protection and Affordable Care Act (PPACA) is poised to take center stage at the nation’s highest court in the next few months.

The Supreme Court recently agreed to consider a number of lawsuits pertaining to PPACA and likely will start hearing arguments in March, with a final ruling expected in June, according to a report in Employee Benefit News.

The full impact of a ruling against PPACA will depend on whether the court strikes down the entire law or only sections of it. In fact, a partial ruling might create some big problems, according to Diane Boyle of the National Association of Insurance and Financial Advisors.

“If the court strikes down the individual mandate while leaving the law’s other provisions intact, it could create havoc in the health insurance marketplace,” Boyle told EBN. “[The] lack of a mandate would mean individuals would have no incentive to seek health insurance until after they become injured or sick. If only sick and injured people are buying insurance, clearly that’s not sustainable.”

As long as the law’s future remains unclear, employers are stuck in limbo regarding the main provisions of the legislation that are set to start in 2014.

One provision of the law that was initially welcomed by employers — and that is effective now — is a special tax credit for small businesses. However, the government’s effort to tout this benefit is falling short of expectations, according to a report by CCH. The government reported that about 228,000 small employers claimed more than $278 million in tax credits in the law’s first year. That’s far short of the estimated 4.4 million taxpayers who could possibly qualify for the credit.

William Dennis, a research fellow at the National Federation of Independent Business Research Foundation, told Bloomberg BusinessWeek that the low numbers are not surprising, arguing that the idea of the tax credit was simply “a talking point for political reasons; it wasn’t a serious thing.”

White House officials deny that charge and counter that few businesses accessed the credit because most companies weren’t able to adjust employee coverage in time to take advantage of it yet.

Still, others complain that the rules regarding the credit and eligibility are so confusing that most employers don’t understand it and don’t have the time or resources to sort it out, according to the BusinessWeek report.

Although the federal government has pledged to increase education efforts, it might all become moot if the right-leaning court throws out the law. However, the tax credit might survive the court’s moves, even if other provisions are tossed.

No matter which way the court rules, it will create some level of burden on employers, Keith R. McMurdy of N.Y.-based Fox Rothschild told EBN. “It will cause a significant rippling throughout what we’ve done the last two years either way,” he said.