Search This Blog

Wednesday, October 19, 2005

A Mid Year Health Insurance Update

September is mid-year for our healthcare plan. We are fully insured with United Health Care (UHC). We moved to a fully-insured plan two years ago after many years of more-or-less paying our own medical claims. In being quasi "self-insured" we saved the cost of insurance, paying only actual claims and administrative fees (about 16% of annual cost). The bad news was that we were on the hook for almost all the medical expense. This program lost us money for years, as an employee group this small cannot spread the risk over a large enough group of people to absorb a catastrophic health claim such as might arise from a terminal cancer, severe auto accident, or heart surgery.

With the move to full insurance, we track financial performance through "claims to premium" ratio. This is short-hand for how much in medical claims UHC pays as a percentage of the monthly premium we pay them. At mid-year, our paid claims were 81% of our premium. Add to that about 16% administrative fees, and UHC is paying 97 cents in claims + salary & overhead costs for every $1 we're paying them. So far, that's good but what does it mean for next year's premiums?

When a company renews health coverage the premiums for the following year are roughly a combination of claims experience (the 81%) plus administrative fees (the 16%) plus the anticipated trend line. Trend line is what the underwriters at the insurance company believe will be the increase in medical claims cost next year. We believe next year's trend line will be about 8 - 9 %.

Last year we were 92% claims to premium, and UHC's initial renewal quote was a 30% increase. We fought that hard and came in at about an 8% increase. UHC's renewal quotes were outrageous, and many of their customers didn't challenge them. As a result, UHC's corporate profits this year are expected to be about $2 billion; an amount so obscene that even they are embarrassed by it, according to some industry insiders. Still, we anticipate UHC will ask for double digit increases and we'll start negotiations downward from there.

In short, the plan seems to be working well, and as-designed should be stable into next year with a good probability of single digit increases again for fiscal '07. We may also have a design change or two that might help keep that in check. More as we know it, but for now it doesn't appear that a major price increase for you and your families is on the horizon at renewal in six months.


Tuesday, October 11, 2005

HR Automation

Over the past five years we've made great progress from mostly a pencil & paper system to something that resembles modern automation. This year we're working hard on two initiatives that we believe will make our work more efficient and help turn about one position from clerical work to more value-added work such as training administration. Our two projects, both on the verge of full implementation, are the Rrecruiting and Automated Employment system (RAE) and ADP iPay.

RAE is a home-grown, full-blown recruiting solution written by Ray Ritz, an outside programmer, under the direction of Nick VanMaarth in IT. The project was shepherded in HR by Jack Leichty and Kristie Cantrell who do the majority of the company's recruiting. Several months in development, the system quietly went live last Friday. We're cleaning up data from the conversion of our old database to the new system, but soon applicants using our on-line employment application will see pre-screening questions and receive automated responses within 24 hours acknowledging their application and telling them if they qualify for more screening or not. The screening questions are customized for each opening, and free recruiters to more thoroughly screen fewer and more qualified applicants. Qualified applicants' applications are emailed through the system to the hiring supervisors for review, and the successful candidate's new-hire information, captured during the screening process, is automatically uploaded into ADP payroll, eliminating a time-consuming manual data entry task. Unsuccessful candidates deemed unemployable are archived in a non-active archive; and candidates deemed employable for some future position are maintained in an active archive. Managers and candidates will see more of RAE as we move forward.

ADP iPay is our automated payroll system that makes direct deposit more robust by eliminating all paper from the payroll process. Employees signed up for direct deposit can designate "paperless option" through iPay and never receive a paper check or check stub again. Instead, you'll receive an email at noon each Thursday of pay week letting you know that your pay information is available on-line from ADP's secure server. Imagine, no more lost checks, checks waiting for you after vacation or a long business trip, and deduction or W-2 information available to you or your spouse 24/7. Once fully implemented, not only will direct deposit and iPay improve the flow of payroll information to employees and their families, but it will also free up 20 hours of staff time per month used to handle and distribute paper checks and check stubs.

Here's a prediction (not an announcement); we'll be 100% on direct deposit and 50% on paperless iPay by the end of this fiscal year. Only 45 employees still receive live checks, and 30 of those are in the warehouse. We're set up already to pay employees without bank accounts via rechargeable debit card, and the warehouse participation in direct deposit is increasing rapidly. Call you Payroll section and see how your life improves with direct deposit and iPay.

Once automation of these processes is complete, we believe that 3/4 - 1 HR position can be converted from clerical work to that of Training Coordinator. This position will champion company training for all positions, schedule training sessions, secure trainers and materials, reserve rooms, and update employee files once training has occurred. We may also revive on-line organizational charts as part of this position's responsibilities.

So, there you have it. We continue to innovate and try to return more value for the same or less overhead money each year. You can help by agreeing with us that your affection for a paper paycheck is not as important as improving our skills and competitiveness across the workforce through better training. Call or email Robin Amon or Amy Lindsey to kick the paper habit.


Thursday, October 06, 2005

We Need Craftspersons

Last Friday we held a joint reception to both graduate our first ever class of Nelson Leadership University (NLU), our accelerated development program for high-potential staff, and to welcome and kickoff our second NLU group. The first group started as a class of 40 selected from 67 applicants, of whom we graduated 24. This year's group consists of 24 participants, six of whom were carried over from NLU 1 since they started late as alternates to the program. That meant that we had only 18 new slots available, so the competition to get in was tougher this year. As a result, I've spent much of this week meeting with both people who made it into the program, and people who didn't get in, to talk about their futures.

Through these discussions a theme has emerged that I hope you'll agree is worth sharing. Namely, before you can be a leader in a work group, you have to understand the profession represented in that group. In other words, you need to be a knowledge leader, or a resource person (i.e. "go to" person) in your field before you can expect to manage or lead that group. So, while we can teach people how to manage others, inspire others, motivate others, discipline others, etc... there is not substitute for having the credibility of knowing your craft when it comes to leading.

So, for those of you in NLU, good for you! You'll learn much this year that we hope will help you along the way. For those of you who didn't, take this year to learn your craft. Nothing makes next year's nomination more compelling than multiple nominations from satisfied internal customers and admiring managers saying that you're the guru who needs developing. Let's be professionals first, experts second, and managers third; then the career ambitions will take care of themselves.