MMAVL18 2.pmd VL18 2
User Manual: VL18
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THE IMPORTANCE OF EFFECTIVE
LEAVE OF ABSENCE MANAGEMENT
We welcome your comments
and suggestions regarding this
issue of our Viewsletter. For
more information, please
contact your Account Manager
or visit our website at
www.mma-mi.com.
Continued on Page 2
Volume Eighteen, Issue Two May 2015
WORLD CLASS. LOCAL TOUCH.
Absence management is the process
an employer uses to handle absences
whether they are due to illness or
injury. The process often includes
absences covered by the Family
Medical Leave Act (FMLA), and even
workers’ compensation. The goal of a
well-managed process is to control
unexplained, unscheduled or
excessive absenteeism. Employers
must take care as their process must
also meet legislative requirements
prescribed by the FMLA, Americans
with Disabilities Act (ADA) and state
leave-of-absence or short-term
disability laws.
According to Mercer’s 2013 Survey on
Absence and Disability Management,
the direct cost for incidental absence
and disability benefits on average is
the equivalent of 4.9% of payroll.
Unplanned absences result in indirect
cost such as replacement labor and
lost productivity. Mercer estimates
that indirect costs are roughly the
same as direct costs with the total
impact averaging 8% of payroll.
More and more employers are looking
for help managing leaves of absences.
Outsourcing FMLA compliance is
becoming more popular. In 2010, only
25% of respondents outsourced FMLA
administration. It has increased to
38% in 2013.
The absence management process
has become more complex over the
last decade. Many employers find the
FMLA confusing, especially when they
try to administer intermittent leaves.
What’s more, the ADA regulations
revised in 2009 define disability very
broadly. Employers must establish a
process to interact with employees in
regard to work and potential disability
limitations. They must also conduct
individual assessments and make
reasonable accommodations for
employees returning to work from a
disability leave. In Mercer’s survey,
90% of respondents manage and
track the interactive assessment
process under the ADA in house.
State laws differ as well, thus
complicating matters even further.
These factors really challenge
employers trying to manage the
process in-house.
Following best practices in absence
management is critical. Employers
that outsource part of the process
should make sure their vendors are
incorporating as many best practices
as possible. Below are five best
practices for absence management
programs:
1. Develop a written return-to-work
policy. The policy should clarify
that disability and workers’
Volume Eighteen, Issue Two May 2015, Page 2
Continued on Page 3
compensation programs are
separate from FMLA leaves. The
policy should include light duty
alternatives and state that these
alternatives may be required to
continue receiving benefits under
workers’ compensation or
disability. It should also state that
light duty
return-to-work
requirements
may not apply
to FMLA
leaves based
on a serious
health
condition. In
those cases,
employees
may continue
their FMLA
leave even if
they do not accept the light duty
alternative. They will lose
disability or workers’
compensation benefits, but they
may still be eligible for job
protection under the FMLA. Also,
the return-to-work policy should
include the ADA’s interactive
process. This process involves
using individual assessments and
making reasonable
accommodations as part of the
return to work.
2. Adopt a process to refer
employees to any health
management programs available.
For example, an employee on
leave who has cancer might
benefit from a referral to the EAP.
The process should simply make
referrals to help employees in
challenging situations.
3. Establish a central leave reporting
system. Ideally, all absences
would be reported to a single line
or a designated e-mail address.
Those staffing the line or receiving
the emails would understand how
all the leaves of
absence work, from
sick days to short-
term disabilities. The
intake person would
classify the type of
leave; for example,
sick leave, disability,
workers’
compensation or
FMLA leave. Once
the leave is
classified,
administrative staff can send out
the proper notifications and
paperwork for that type of leave.
4. Develop detailed reports on leave
of absence activity. Most
employers have some employee
abuse when it comes to absences.
By combining all the leave
instances and reasons into one
database, employers should be
able to identify potential abuses
more easily. A popular abuse is
consistently taking FMLA
intermittent leave on Fridays and
Mondays to extend weekends.
5. Use the same vendor, if possible,
to manage FMLA administration
and short- and long-term disability.
The advantage of using the same
vendor for both short- and long-
term disability is that the vendor
can intervene earlier and foster a
return-to-work mentality.
Unfortunately, most employers are
not using these best practices to
manage leaves of absence. They
also do not understand the impact of
the ADA on the leave process. This
law requires the return to work
process to include an interactive
assessment in order to discuss
potential accommodations.
Because disability carriers now
commonly offer leave of absence
administration services, employers
may want to consider outsourcing.
The carrier options vary widely.
Some offer software systems the
employer can use to help track and
manage FMLA issues and leaves of
absence. Others also administer the
FMLA for an employer. Still others
offer ADA administration or ADA
advice.
One of the clear benefits of
outsourcing is access to experts.
The carrier will take all the steps
needed under the FMLA. Most
carriers have resources to manage
state leave, disability and paid leave
laws. Because this area changes so
rapidly, multi-state employers will
benefit greatly from these resources.
DID YOU KNOW?
Employee benefit costs average 32% of payroll
For retirement benefits:
–32% of corporations offer a defined benefit plan; 75% offer a defined contribution plan
–90% of public employers offer a defined benefits plan; 59% offer a defined contribution plan
98% of employers offer a health care plan:
–97% cover prescription drugs
–76% cover chiropractic care
–75% cover mental health benefits
92% offer a dental plan with 58% offering orthodontia benefits
73% offer a vision plan
Source: 2014 International Foundation of Employee Benefit Plans’ Benefits Survey
Volume Eighteen, Issue Two May 2015, Page 3
Continued on Page 4
In most cases, employers will
outsource leave of absence
management to a life or disability
carrier. You should be aware of one
potential downside of this outsourcing.
If you need to change carriers, you will
have to find another absence
management vendor as well. This will
make the process of reviewing and
changing vendors more difficult.
Most employers admit they need help
administering leaves of absence.
Perhaps help means establishing a
more central process managed by
internal leave experts. It may mean
investing in software that will help
track and report on various leave
situations or it may mean outsourcing
to a disability or life carrier.
Outsourcing to a standalone
administrator is typically available only
to employers with over a thousand
employees.
It may be time to review your leave
administration policies and processes.
Your organization will likely benefit
from improving your process. MMA
PAINKILLER
PROBLEMS IN YOUR
PHARMACY PLAN
Prescription painkiller misuse is a
growing problem in the United States.
Accidental overdoses are an epidemic
according to the Centers for Disease
Control (CDC). Unfortunately,
employer-sponsored health plans are
paying for much of this abuse.
According to the CDC, non-medical
use of prescription painkillers costs
health insurers approximately $72.5
billion annually in direct health care
costs.
The problem occurs with prescription
opioid or narcotic pain relievers, such
as Vicodin (hydrocodone), OxyContin
(oxycodone), Opana (oxymorphone),
and methadone. Most employer
plans cover these painkillers and in
some cases employees actually need
these medications. In other cases,
these drugs are being abused.
Employer-sponsored health plans
can take steps to avoid paying for the
misuse of prescription painkillers.
The CDC recommends insurers set
up claim review programs to identify
potential
improper use of
painkillers.
Employers can
ask what
programs are
available to
help monitor
and control
prescription
drug use.
Insurance
carriers and pharmacy benefit
managers (PBMs) have a number of
programs to ensure appropriate use
of painkillers:
Quantity limits – The vendor can
impose recommended frequency
limits. For example, if Oxycontin
should be taken no more than
twice a day, the vendor would limit
coverage to two Oxycontin pills a
day.
Step therapy – Painkillers can
also be included as part of a step
therapy program. Step therapy
would require using a less
dangerous and less costly
painkiller first before it will cover
more addictive, more dangerous
alternatives. If a step therapy
plan includes painkillers, you
need to make sure the vendor will
quickly authorize a more powerful
drug if lower level painkillers are
not working.
Prior authorization – A plan can
also require prior authorization for
opioids or narcotics. They would
typically be approved for short-
term needs like post-surgery and
cancer treatment. Coverage
would not be approved for longer
term chronic pain, such as back
pain, migraines and fibromyalgia.
PBMs often have
programs designed
to identify potential
abuses. For
example, one
program may ensure
that opioids or
narcotics will not be
covered for off-label
uses. PBMs can
also track the
prescriptions by member rather than
pharmacy. That way, the PBM can
identify excessive use patterns.
Abuse of prescription painkillers is a
significant problem in the United
States. Employers need to be
mindful of how their plans may
contribute to this issue. If their
health plan covers these opioids or
narcotics, employers should make
sure it pays for these medications
only when they are needed. MMA
TREND TIDBITS
$ HMO plan costs are expected to increase 6.2% in 2015 (down from 7.2% in 2014)
$ PPO plan costs are expected to increase 7.8% in 2015 (close to the 7.9% in 2014)
$ High deductible health plans are expected to increase 7.9% in 2015 (down from 8.3% in 2014)
$ Prescription drug carve out plans are expected to increase 8.6% in 2015 (up substantially from 6.3% in 2014)
Source: 2015 Segal Health Plan Cost Trend Survey
Volume Eighteen, Issue Two May 2015, Page 4
TECHNICAL
CORNER
Technology has made working
remotely a real possibility for many
professionals. OnStar can now turn
certain vehicles into “wifi” hot spots.
These technological advancements
increase the likelihood that your
employees may be distracted while
driving.
According to the National Highway
Traffic Safety Administration, each
day in the United States, more than
9 people are killed and more than
1,153 people are injured in crashes
involving a distracted driver.
Distracted driving is doing something
that takes your attention away from
driving. It increases the chance of an
accident. Below are the three
common types of distractions:
Visual distractions: taking your
eyes off the road
Manual distractions: taking your
hands off the wheel
Cognitive distractions: taking your
mind off of driving
Cell phones, texting and in-vehicle
technologies (such as navigation
systems) can also distract drivers.
Although using any of these while
driving can cause an accident, texting
or replying to email is especially
Q: We provide health insurance through a fully insured plan paired with a self-funded health reimbursement arrange-
ment (HRA). We are preparing for the reporting requirements. We know we have to complete Form 1095 Cs for all
of our full-time employees. Do we also need to complete Part III because we have a self-funded HRA?
A: This question is not answered directly in the instructions for completing the forms. Hopefully, the government will
clarify this fairly common situation. Part III is used to verify coverage for the individual mandate. The insurance
carrier will provide your employee a Form 1095 B which will verify this coverage. The final regulations for Section
6055 reporting (Form 1094 B and 1095 B) discuss this situation. No reporting is required for plans designed to
supplement a primary health plan if either condition below is true:
1. The primary and supplemental coverage have the same plan sponsor.
2. The coverage supplemented is government-sponsored coverage such as Medicare.
It appears employers will not need to complete Part III if they offer an insured plan partnered with a self-funded
HRA. It would be helpful if the IRS clarified this issue as it relates to the 1095 C Form for employers.
YOUR QUESTIONS
3331 West Big Beaver Road, Suite 200
Troy, MI 48084
Telephone: 248-822-8000 Fax: 248-822-4131
www.mma-mi.com
Copyright Marsh & McLennan Agency LLC company. This document is not intended to be taken as advice regarding any
individual situation and should not be relied upon as such. Marsh & McLennan Agency LLC shall have no obligation to
update this publication and shall have no liability to you or any other party arising out of this publication or any matter
contained herein. Any statements concerning actuarial, tax, accounting or legal matters are based solely on our experience
as consultants and are not to be relied upon as actuarial, accounting, tax or legal advice, for which you should consult your
own professional advisors. Any modeling analytics or projections are subject to inherent uncertainty and the analysis could
be materially affective if any underlying assumptions, conditions, information or factors are inaccurate or incomplete or
should change.
Marsh & McLennan Agency LLC
250 Monroe Ave. NW, Suite 400
Grand Rapids, MI 49503
Telephone: 616-717-5647 Fax: 248-822-1278
www.mma-mi.com
dangerous because it combines all
three types of distractions.
Employees often try to work while
they drive. Employers that allow and
maybe even encourage this practice
face potential liability. They should
have a policy on distracted driving
stating clearly that employees should
pull over if they need to conduct
business on the road. The policy
should be broad enough to cover all
forms of distracted driving, not just
using hands-free devices. Most
important, the policy should be
practical and enforceable. MMA
