Executive’s Guide to 2016 Employee Benefit Trends

WINE SERGIINSURANCE

78% OF CEOS VIEW INCREASINGREGULATIONS TO BE THE TOP THREAT

TO BUSINESS GROWTH.

In 2015, we saw many new challenges affect the way organizations

manage one of their most important assets; their employees. In a

constantly changing environment made up of new rules and regulations,

daily advances in technology, rising healthcare costs, and increased

access to data and information, business executives must focus on three

key areas in 2016:

CONTAINING COSTSOn average, over $350 billion are lost every

year due to unengaged employees.

REMAINING COMPLIANTAccording to the Department of Labor, 95

percent of employers are out of compliance.

ATTRACTING & RETAINING TOP TALENTOnly 45 percent of HR executives are very

confident they will have access to the right talent.

THE IMPACT ON YOUR BUSINESS

Now, more than ever, business executives need to creatively, strategically

and pro-actively think about how they can effectively manage their

human capital to increase organizational health. This guide will help you

navigate key trends spanning five integral areas of your organization,

including compliance, benefits administration, HR technology, employee

benefits, and culture and performance.

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TREND 1

Compliance: Not Simply A Priority – A Must 4

TREND 2

HR Administration: Transform Your Data ThroughTechnology 6

TREND 3

HR Technology: Improve Employee EngagementAnd Compliance Through Effective Technology 8

TREND 4

Benefits: Customization Is The New Normal 10

TREND 5

Culture & Performance: Designing A Culture ThatFuels High Engagement 12

Conclusion 14

About Us 15

3

69%

4

ComplianceNot Simply A Priority – A Must

According to KPMG, 69 percent of U.S. CEOs

list compliance as one of the most important

issues to have an impact on companies, second

only to global economic growth (73 percent).

Navigating laws and compliance demands will

continue to be a challenge for executives this

year – especially since it’s an election year. With

recent changes to the deadlines for 1094/1095

Reporting, the delayed Cadillac tax, and

changes to DOL regulations and FLSA status,

business executives must take measures to

prepare and educate organizational leadership

and personnel in these areas. While regulation

and change may be daunting for organizations,

taking a proactive approach is paramount to

effective compliance management.

Cadillac Tax Delayed Two Years

The Cadillac tax, an annual 40 percent excise

tax on “rich” health insurance benefits that

exceed threshold limits, will be delayed until

January 2020. President Obama recently signed

off on legislation that would also make the tax

permanently deductible to employers, which is a

welcome change from the original legislation in

which the excise tax was nondeductible.

“Rich” in this instance refers to any healthcare

coverage exceeding $10,200 for individuals and

$27,500 for families, although the projected limits

will likely be higher by the time the tax becomes

effective in 2020.

The tax will be adjusted annually to the Consumer

Price Index (CPI) plus one percent initially and

then CPI.

Assume Employee A enrolls in self-insured family

coverage with an aggregate annual cost of

$30,000. With the current threshold limits for family

coverage, the administrator would be liable for a

Cadillac tax assessment equal to $1,000.

The delay is a relief for employers already

burdened with Affordable Care Act reporting

and requirements, but many experts believe that

most, if not all, employers will eventually be

covered by the Cadillac tax.

69% Percent of CEOs list compliance as one of the most important issues to have an impact on their companies.

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If the Cadillac tax had not been delayed,

employers would have needed to analyze their

benefits after the new year in order to give

themselves enough time to prepare for the

Cadillac tax in 2018. Now that employers have

been given two more years to prepare, it is

advisable to wait and see what the future of the

Cadillac tax holds to determine next steps.

This approach will be especially important

during the upcoming election cycle, when there

will continue to be attempts to reform or repeal

the Cadillac tax. Although there is now

additional time to understand the applicability of

the Cadillac Tax, it is important to remain flexible

and analyze current benefits strategy to get a

better picture of the impact that the Cadillac

tax could have on your company.

The Fair Labor Standards Act (FLSA):Measuring The Significant Impact ofProposed Exemption Reform

The Department of Labor proposed a provision to

the Fair Labor Standards Act, which would reform

the “white collar” exemption from minimum

wage and overtime pay for all hours exceeding

40 in a week.

If approved, the minimum salary to qualify for the

overtime exemption will increase from $23,660 to

$50,440 (annually), and the minimum threshold

for highly compensated employees to qualify

for the overtime exemption will increase from

$100,000 to $123,500 (annually). Should these

rules be adopted, approximately five million

more Americans would become eligible for

overtime pay because they would lose their

current exemption.

Before the proposed rules are finalized, HR and

payroll departments must analyze the exempt

status of each employee and identify which, if

any, salaries will be affected.

Some employers are simply increasing salaries

to meet the new minimum threshold, but for

employees in the middle of the new threshold,

finding a solution is more complicated. Many

options involve increased payroll costs and, in some

cases, increased benefit costs. It is imperative that

employers be proactive in their analysis of

current compensation strategies to properly

budget for the possible increases associated

with these changes.

IRS Extends Due Dates For ACA Form 1094/1095 Reporting

The IRS recently announced the deadline for

providing 1095-C (and 1095-B) statements to

individuals is extended from February 1 to

March 31.

• 1095-C (and 1095-B) statements now due to

individuals by March 31.

• 1094-C (or 1094-B) transmittals now due May 31

(for non e-filers) and June 30 (for e-filers).

KEY INSIGHTSTo prepare for key dates and keep up with constant changes, implement a compliance calendar and checklist to limit compliance risks.

6

HR AdministrationTransform Your DataThrough Technology

With the explosion of big data and analytics,

companies have access to more data and

information than ever before. Unfortunately, data

alone isn’t enough—it’s the ability to predict

employee behavior and recognize trends,

such as employee retention patterns, that truly

produces value. Successful organizations are

developing processes for leveraging data and

extracting key insights to implement strategic

change across the organization.

Many savvy organizations have migrated this

practice to HR administration in the form of

modern HR software. From tracking payroll to

aligning business goals, software makes it easier

to compile employee information, allowing

HR departments to extract insights and make

informed, strategic decisions to improve processes

that directly affect compliance matters.

With constant changes in technology and the

increased demand for HR executives to wear

more hats, there’s a movement to harnessing

data and creating human capital dashboards.

Implementing a human capital dashboard allows

your organization to measure work performance

and identify problem areas more efficiently.

Harnessing human capital metrics provides

executives with better insight into employee

performance, allowing them to make more

strategic business decisions and ensure company

goals are aligned throughout the organization.

Uncovering Value Within Your Data

A two-year study from Deloitte Consulting found

that although organizations spend more than $14

billion on HR software, “fewer than four percent

can perform predictive analysis on their people,

and only 14 percent perform statistical analysis

at all.” The study also investigated the financial

performance of the businesses in the top 14

percent of the research, and found they were

able to make better data-driven decisions about

hires, promotions and salaries.

A mix of predictive analytics and standard HR

metrics is the key to creating the most effective

human capital dashboard for the company.

Predictive Analytics• Employee Reviews

• Surveys

• Big Data Analysis

Standard HR Metrics• Cost Per Hire

• Turnover

• Retention Rate

• Absence Rate

• Annual Leave Revenue Per Employee

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Before setting up a dashboard, HR executives

should survey senior executives to understand

what human capital metrics matter most for

driving business strategy forward.

HR executives should also consider the type of

dashboard that would benefit stakeholders the

most. Certain organizations may prefer layouts

that display the same human capital metrics

company-wide; other organizations may benefit

from layouts that are individually customizable for

each employee. Visual components, such as bar

graphs or pie charts, can also be used to provide

detailed information in an easy-to- digest format.

When built with executive business goals in mind,

a human capital dashboard is an indispensable

tool for HR and organizations as a whole. Most

company leaders will agree—human capital is

the most important and expensive investment,

and there’s much to be learned (and gained)

from employee data.

$14B

4%

KEY INSIGHTSOrganizations spend $14 billion on HR software.

Percent of organizationsthat perform statisticalanalysis.

Percent of organizationsthat can perform predictiveanalysis on employees.

14%

“ Although

organizations spend

more than $14 billion on

HR software, fewer than 4% can perform

predictive analysis on

their people.

“

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HR TechnologyImprove Employee Engagement and Compliance Through Effective Technology

With the rise of mobility, HR executives have

turned to benefits administration technology to

support important compliance initiatives while

maximizing employee engagement.

Self-service platforms put the bulk of benefits

management directly into the hands of the

employees, allowing them to view their plans

at any time, in any location. The software helps

build a stronger commitment between the

employer and employee, and provides better

education of company benefits overall. Intuitive

HR technology platforms also offer a seamless

educational environment for employee job

development, which helps boost job satisfaction,

innovation and performance.

Additionally, giving employees advanced access

to their benefits affords the HR department time to

focus on initiatives that add value to the

company, boost team morale and address

problem areas. Before implementing software,

it’s important to compare and evaluate several

platforms based on the following criteria.

Mobile AccessAccording to Pew Research Center,

nearly two-thirds of Americans are

smartphone owners. Smartphone users

seek instant gratification, so it’s only

natural for employees to prefer access

to payroll, time off and benefits from

their smartphones in real-time. HR

mobility is helpful for speedy vacation

time approval, submitting expense reports

while on-the-go, and accessing benefits

and payroll from remote locations.

User Friendly Design It is important to compare functionality vs.

ease-of-use. Implementing an intuitive, user

friendly platform makes it easier for employees

to use the tool, ultimately saving HR resources.

A straightforward benefits platform helps

drive adoption and ensures HR systems

are being used properly.

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Support/ServiceMost employers know that a system is

only as good as its implementation and

ongoing support. HR executives should

ensure the platform provider can provide

support and solutions. Where applicable,

consider partnering with internal IT

departments to offer ongoing support.

Conduct a Needs Audit Prior to implementing a platform,

conduct an internal audit to determine

which features align with organizational

needs. Most providers sell multiple in

bundled packages, so preparing an

audit will allow you to strategically

select the appropriate implementation

for your organization.

Switching Platforms There’s much to be considered if

switching platforms is necessary,

especially in terms of data. Understand

the platform’s process for moving

historical data from one platform to

another. Additionally, it’s important to

align with key departments, stakeholders

and senior leadership.

Today’s HR executives wear many hats, and

administrative tasks can consume a great deal

of time that would be better spent on talent

management, job performance and other

functions that significantly impact the bottom

line. Additionally, implementing the right HR platform

empowers, educates, and aligns employees –

making HR technology a key contributor to effective

human capital management.

“ Giving employeesadvanced access to their benefits affords the HR department time to focus on initiatives that add value to the company. “

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Benefits Customization Is The New Normal

Effective human capital management in

2016 will require more customization, attention

to detail, and creativity when developing an

employee benefits program.

Today, retaining top talent requires much more

than a competitive salary and a 401(k) match

modern employees look for unique company

benefits that emphasize flexibility and ease

Work-life balance.

To gain a competitive advantage in recruitment,

company leaders should consider these cost-

effective options when creating a custom

company benefits package.

Voluntary / Worksite Benefits

Health, dental and vision insurance coverages

are considered core benefits, and voluntary/

worksite benefits generally include any benefits

that employers may offer outside of the core

group (such as short- and long-term disability

coverage, accident insurance, critical illness

coverage, etc.). Voluntary / worksite benefits are

individual-style benefits usually deducted from

payroll and used to offset out-of- pocket medical

costs. Worksite benefits are more popular and

critical to the overall plan that employees desire.

Consider establishing plans that complement

core benefits to increase your coverage offering.

Strategies Behind Selecting the Right Healthcare Plan

Senior executives and HR executives may

want to consider self-funded employee health

insurance to better manage healthcare costs.

Under self-funded plans, employers take on the

financial burden of funding their own health plan,

giving them more control over benefit administration,

healthcare customization and health plan reserve

capital. A high-deductible health plan (HDHP) also

offers employees more control over healthcare costs

by lowering insurance premiums. For employees in

good overall health, HDHPs are viable because

they avoid overpaying for health insurance that is

rarely used. An assessment of overall staff health

can help business leaders decide which plan

best serves the organization’s employees. In fact,

many organizations have designed programs

that promote and incentivize health initiatives.

Collecting data from these programs can assist

leadership as they search for the healthcare plan

that appropriately balances employee needs

with cost-efficiency.

KEY INSIGHTSInstill processes to better understand your team and set the standard for your ideal benefits program. Once you understand what’s important to your workforce, work with a consultant to get it work for you.

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Private Exchanges

A valuable resource for HR, private exchanges

are online insurance marketplaces where

employees can choose coverage based on

individual needs. Employers determine their

contribution amount, then offer a variety of

health plan options for employees. Employees

may use the employer’s stipend to purchase

a health plan that addresses specific needs.

Typically, this approach offers more variety and

freedom to employees while simplifying

administration. This shift can reduce overall

healthcare costs for companies because

employees can avoid paying for unnecessary

benefits, and ultimately, companies may be able

to avoid the Cadillac tax.

Flexible Hours / Telecommuting Options

In a survey from Indeed, 51 percent of the

respondents stated that flexibility in work hours

was a top reason they were interested in a new

job. Mobility has given employees more freedom

to work from remote locations, and employers

can provide leeway by cutting out commute times

and in-office distractions. Flexible schedules and

telecommuting options offer improved work-life

balance for employees with families, pets and/or an

active lifestyle outside of the office. Skyrocketing

health insurance costs and shrinking company

budgets have encouraged company leaders

to get more creative with customized company

benefits packages. In 2016, tailored company

benefits will be essential to creating a healthy,

dynamic work culture.

“ Custom benefitsthat complement a dynamic work culture is key to transforming comparable benefits packages into competitive ones. “

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Culture and PerformanceDesigning A Culture That Fuels High Engagement

As modern businesses become more

transparent, it’s important for executives to play

a central role in building a work environment

that supports high employee engagement.

Executives (in growing companies especially)

must set the vision and facilitate a culture that

sets a solid foundation for continued growth.

To understand what gets employees to interact

and feel connected to the company, it helps to

get straight to the source. A high engagement

workplace will always be in style, so here’s a list

of do’s and don’t’s for creating an environment

that sustains a positive work culture.

Make Organizational Changes Where Needed

Ask for employee feedback via surveys,

focus groups, social media communities and

employer-employee conversations. Even if an

employee’s suggestion is out of the employer’s

scope, being receptive to feedback encourages

employees to be open with management and

invites employees to take an active role

in workplace improvement.

Support Career Path Development

The Bureau of Labor Statistics recently found

that between 2.7 and 2.8 million employees quit

monthly. A high turnover rate is largely due to a

lack of empowerment and potential for

professional growth. Successful leaders create

a culture that invests in employee growth and

education programs.

Focus on Shared Organizational Values, Instead of Skill Alone

Successful organizations are altering formal

interview processes to assess values (in addition

to skills) to determine if prospective employees

align with core organizational values. For current

employees, core value workshops can be held

to ensure employees have the right approach to

aligning with corporate vision. Core values guide

work behavior and determine how employees

conduct business, so it’s essential for leaders to

ensure employees share similar values.

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Don’t Assume Money is the Sole Factor in Driving Employee/Recruit Decisions

Inclusion, peer engagement and camaraderie

will ultimately determine if your employees go the

extra mile. Employees who earn the trust, respect

and cooperation of their colleagues are likely

to outperform groups that lack working

relationships. Leaders must establish an

environment that fosters collaboration to build

a more connected work culture.

Don’t Let Hard Work Go Unnoticed

Large or small, achievements should be recognized

by both leadership and peers. Encouraging peer

recognition gives a stronger sense of teamwork

and freedom to appreciate hard work. Positive

feedback clarifies employer expectations,

making it easier to achieve continued positive

results in the future.

A lack of a high employee engagement in the

workplace can create a void between leadership

and workforce, hindering business goals and

organizational performance. When employees

work in an environment that drives engagement,

productivity is maximized, maximizing efficiency

and performance.

“ The Bureau of Labor Statistics recently found that between 2.7 and 2.8 million employees quit monthly.

“

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Conclusion

In 2016, business executives must address pressing

human capital management concerns and adjust

to an evolving corporate landscape. Leveraging

insights provided by the human resources de-

partment can help executives find long-term

economical solutions to three major challenges:

• Containing costs and maximizing the

HR budget

• Remaining compliant with changing

employment regulations

• Attracting and retaining top talent as

competition increases

With our help, senior executives and HR personnel

can benefit from the five key industry trends

discussed in this guide. By bringing their partnership

with HR to the next level, executives can build a

company that works seamlessly toward company

goals without losing sight of the bottom line.

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AP-HR-MGMT-PUB-012016

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