Hartford Business Journal

8 Hartford Business Journal • June 29, 2015 www.HartfordBusiness.com FOCUS EMPLOYEE BENEFITS Tuition reimbursement programs make a comeback By John Stearns jstearns@HartfordBusiness.com A nthem Blue Cross and Blue Shield has added a free tuition option to its education benefits pack- age for its 1,400 Connecticut employees, bolster- ing a perk that some companies are now reinstating and better aligning with their talent-management strategies as the economy improves and labor market tightens. "The big focus is on talent development and investing in our employees, providing them another means to higher education for career advancement," said Anthem spokes- woman Sarah Yeager. "It's another way to be able to do that." Through a partnership with College for America, an online education institution started by Southern New Hampshire University, Anthem is offering part- and full- time employees, who have been with the company at least six months and work at least 20 hours per week, the chance to earn an associate or bachelor's degree at no cost. In addition, Anthem provides up to $5,000 annually in tuition reimbursement for college classes at accredit- ed institutions, Yeager said. In that case, students incur out-of-pocket expenses for which they are reimbursed. With the online College for America program, Anthem picks up the $2,500 annual tab upfront. Anthem's new education benefit reflects a broader trend of more companies partnering with universities or colleges, particularly online institutions, to provide free or discounted higher education to employees, said Leon- ard "Lenny" Sanicola, a certified benefits consultant at WorldatWork, a nonprofit human resources association. Sanicola said education assistance programs are becoming less of a benefit and more of a talent manage- ment strategy. Companies are asking, "How can we use it to our advantage in terms of recruitment and retention and moving people to higher-level jobs?" he said, adding that tuition reimbursement programs are used as a business objective, "whether that be corporate social responsibil- ity, or being able to attract and retain employees as part of their talent management strategy." Tuition-assistance benefits have stabilized after many companies reduced or eliminated them during the recession, he and other HR experts said. The Society for Human Resource Management noted in a 2014 survey that 54 percent of companies offered undergraduate assistance and 50 percent offered it for graduate studies. That was down from 61 percent and 58 percent, respectively, in 2012. "The decline in the percentage of organizations offer- ing educational assistance benefits comes just when many organizations are reporting increased difficulty in finding jobseekers with the educational qualifications needed for many high-skilled jobs," SHRM's 2014 sur- vey said. "The decline in educational benefits offerings could lead to future skills shortages." SHRM research showed 55 percent of HR profession- als expect more demand for candidates with a bach- elor's degree, and 41 percent expect a need for more advanced degrees. The study said if minimum job education require- ments continue to increase in the future, employees will expect additional benefits to help offset the cost of education. Jay Titus, senior director of academic services for EdAs- sist, which designs and administers tuition assistance man- agement services for numerous Fortune 1000 companies, said Millennials especially value professional development, even more than regular pay raises in many cases. More employers recognize that's something they need to offer, no matter their size, he said. "We're seeing, whether you're a small company or a large company, investing in your workforce is some- thing that you need to be doing because you're compet- ing for the same talent, regardless," he said. Titus said companies are also getting more creative with their education-assistance programs, with many looking for shorter, faster ways to educate employees to cover skills gaps. He sees more short-term certificates, boot camps and certifications from academic partners. Bruce Elliott, SHRM's compensation and benefits manager, said he expects to see more large companies partnering with education institutions the way Star- bucks Corp. recently did with Arizona State University, offering full-tuition coverage for all four years of a bach- elor's degree through ASU's online degree program. "By implementing something like this, they're probably seeing a benefit that far outweighs the cost," Elliott said. Talent retention Do companies worry about paying to educate their employees only to see them leave for other employers? It is a concern, said Anthem's Yeager. "But it also might mean that they'll get a promo- tion or they'll be considered for a position in another department that they would not have been considered for," she said. "If you work at a company where they're truly investing in you and investing in their associates and providing them opportunities to learn and to better themselves and provide opportunities for advancement, I think that that speaks volumes." Dennis Binkowski, 28, quality assurance services team lead at Corporate Translations in East Hartford, can attest to that. He received tuition assistance from his company to help him obtain his MBA in May from the University of Hartford. "The assistance was huge for me," he said, not only financially, but also in scheduling flexibility the com- pany offered around classes. "We work in a very competitive business landscape today and to be able to have an employer who invests time and effort into you and sees value in you as an employee and a professional and is willing to assist you with your academic goals, it's huge," Binkowski said. "It signals that the company wants to invest in you and they have long-term plans for you." n EXPERTS CORNER Employers must prep for Cadillac health plan tax By Tom Simses T he Cadillac tax will soon become one of the most impactful and controversial provisions of the Affordable Care Act for employers. It introduces a non-deductible excise tax on high- cost health plans and is aimed at both stemming the tide of rising healthcare costs plus funding the expansion of health coverage. Right now, these high-end plans are mostly paid by employers with low or no deductibles and little cost-sharing by employees. Taking hold in 2018, this non- deductible excise tax will target health- care plans exceeding $10,200 of coverage for individuals and $27,500 for spouse or family coverage. The 40 percent Cadillac tax will be levied on the amounts exceed - ing these thresholds. It is a common misconception among employers that this tax will be appealed prior to 2018. However, in one way or another, the Cadillac tax is here to stay. According to Dennis Fiszer, chief compliance officer and practicing ERISA attorney at HUB International East Region, "Some Washington policymakers contend that the Cadillac plan tax concept offers a good way to mobi- lize employers to do more to control health- care costs, rather than simply passing on increases in the under- lying costs." He added "the problem is that the law never created a fair and uniform baseline for all employ - ers to start from. In this region, our medical costs are significantly higher than the national average so it is quite unfair for local employers already being hammered with higher medi- cal costs, being forced to address Cadillac tax pressures." Not sure if it affects your busi- ness? Think again. The tax applies to every size company with no complete exemptions for union workers. The government projects that 60 percent of employers will have some offerings within the thresholds, and will have to pay the tax between 2018 and 2022. Health plan costs subject to the Cadillac tax include: • Medical and prescription drug plan premiums • For self-funded plans, cost will mean premium equiva- lents inclusive of administra- tive services only (ASO) fees and reserves for incurred, but not reported claims • Employee contributions to a health flexible spend- ing account, plus employer reimbursements • Employer and employee contributions to health sav- ings accounts (HSAs) • Employer monies flowing through a health reimburse- ment account Businesses should create a three- to five-year strategic employee benefits plan to pro- actively address the Cadillac tax. Pillars of this strategic plan should include: a financial review of current healthcare programs and plans; the identification and subsequent reduction of associated extrane- ous costs; population health and wellness management; and tar- geted, multimedia employee com- munications to make sure workers at all levels understand the new plans/ benefits being rolled out. This strategic plan should also evaluate and model the costs asso- ciated with potential consumer engagement strategies. Over time, many employ- ers will begin moving their plan partici- pants to a low- er-value plan, maybe down- grading from a platinum plan to gold or even bronze. A nec- essary common denominator to the strategic plan will be employee ben- efits education — communicating with employees on why benefits are changing. Further guidance regarding thresholds and permissible adjust- ments will be forthcoming from the Internal Revenue Service. We anticipate further clarification on items to be included in deter- mining the cost of benefits, such as employer HSA contributions. Regardless, employers should con- tinue to focus on managing health- care costs by engaging employees in closely managing their health and healthcare costs. n Tom Simses is vice president of employee benefits at HUB Inter- national Northeast, with offices in Branford and West Hartford. Tom Simses ▶ ▶ Businesses should create a three- to five-year strategic employee benefits plan to proactively address the Cadillac tax. Dennis Binkowski, quality assurance services team lead at Corporate Translations Inc. in East Hartford, is grateful for the assistance the company provided him to obtain his MBA at the University of Hartford. P H O T O | C O N T R I B U T E D

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