Talent Management - October 2008 - (Page 55)

COMPENSATION continued from page 31 What could the implications be of both candidates’ assertions that their health reform plans will result in new options for individuals to obtain health insurance outside of the employer setting? Employers may want to think carefully about the role health beneﬁts play in their overall compensation, recruitment and retention strategies. Depending on the circumstances, some employers may decide to encourage employees to exercise their choices in the individual market or to enroll in some other form of public plan or plan offered via a health exchange. Fortunately, employers need not make sudden decisions. There would be sufﬁcient time to weigh options, opportunities and their implications in terms of an organization’s ability to attract and recruit talent. Employers also would have an opportunity to provide oversight and leverage the quality of health care provided to employees and to reduce the time and effort required by employees to navigate health coverage choices in a new system that may look and function differently from what has long been familiar. Depending on employers’ decisions about new coverage options, the role and prominence of health beneﬁts in recruitment and retention could shift. Survey data has consistently shown employees value health beneﬁts more than any other beneﬁt provided by employers. If an employer were to cease providing health coverage and substitute a contribution to a public plan option or toward the purchase of an individual, non-employer commercial plan, would employees view such a contribution as being a health beneﬁt? Would they value it to the degree they value current employer-provided coverage? Many likely would not. Gains in overall workforce health and productivity due to employee wellness and prevention strategies could be lost. If employees largely or exclusively seek coverage outside of employer-sponsored plans, innovative employer programs that promote preventive care, wellness and chronic condition management might be difﬁcult to replicate. In addition, if employees purchase coverage on the individual market that provides lesser beneﬁts and higher cost sharing, they may be more likely to sometimes forego needed care, resulting in decreased productivity, more frequent absences from work and/or presenteeism, and increased short-term disability claims. The same may be true if access to medical providers through the health plans employees choose is more restricted or more time-consuming to access. If there is no individual mandate to buy coverage and an employer ceases to sponsor a health plan, how many employees will choose to go without coverage, and would that translate into negative workplace productivity effects? Workforce management issues also may arise. For example, if a company does not offer retiree health beneﬁts today and more purchasing options were made available for individuals to retire prior to reaching the age of Medicare eligibility, that policy change could induce more early retirements. At a time when the retirement of the baby-boom generation already may lead to a shortage of experienced talent, this development could exacerbate the anticipated talent shortage, and employers may need to consider additional strategies to retain those employees. If, as envisioned under both candidates’ proposals, health care coverage does become portable from job to job, that also could have positive and negative talent management impacts. On one hand, for employees who do not change jobs now out of fear of losing their employer-provided health coverage, portability of health insurance would open the door for them to consider other employment possibilities. Conversely, companies may ﬁnd more of their talent pool is willing to jump to another employer or competitor. No matter the outcome, employers and employees likely will have time to adjust to any legislative changes. Finally, one could anticipate compensation effects. If employer-provided health coverage is mandated, what would be the mandated level of coverage and spending, and how would that compare to what employers are paying now? And if the tax treatment of health coverage changes and employees are required to pay income and payroll taxes on their previously untaxed health beneﬁts, one could expect demands from employees to “gross up” their wages to offset the new taxes. Another compensation effect is the cost of additional payroll taxes employers and employees will pay on the newly taxable health beneﬁts. No matter the outcome, employers and employees likely will have time to adjust to any legislative changes. Even under an expeditious route to health care reform, it would take years before such a program could be fully implemented. In addition, employers and employees should expect to see a series of health reform changes over time, rather than a single “big bang” comprehensive health reform. The views of employers are actively being sought by policymakers in Washington, and it would increase the risk of counterproductive health reform legislation if employer voices are not heard during this upcoming national health reform debate. That debate will continue vigorously for months to come. Policymakers already are setting the stage, with a big spike in intensity expected shortly after the November elections. Frank McArdle is a principal in the Washington ofﬁce for Hewitt Associates, a global human resources consulting and outsourcing company. He can be reached at editor@talentmgt.com. October 2008 talent management magazine www.talentmgt.com 55 http://www.talentmgt.com

Table of Contents Feed for the Digital Edition of Talent Management - October 2008

Talent Management - October 2008 Editor’s Letter Contents Human Performance Leading Edge Foundations The Three Pillars of Executive On-Boarding Role-Based Assessment: Thinking Inside the Box Who's Going to Speak Up for Health Care? Obey the Push to Automate Managing the Star Performer No One Wants to Work With Adopting a Mutual-Funds Model for Talent Management Hewlett-Packard: Simple Talent Management in a Technical World Team Effort Pays in Talent at London Business School The Employee Survey: What’s in It for Me? Why Most Managers Are Stuck Advertisers’ Index Editorial Resources Full Potential

Talent Management - October 2008

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