Benefit Plan Analysis: Metropolitan Chicago Health Council - Term Paper Example

?Running Head: Benefit plan analysis Benefit plan analysis - Metropolitan Chicago Health Council (MCHC) Table of Contents Part one Organizational profile……………………………………………………………………….3 Benefits program…………………………………………………………………………...3 Characteristics of a sound benefit plan…………………………………………………….4 Part 2: Statement of the issue………………………………………………………………4 Part 3: Literature Review…………………………………………………………………5 Part 4: Issue analysis………………………………………………………………………..6 Part 5: Issue solutions……………………………………………………………………..6 Part 6: Solution and its implementation……………………………………………………7 Benefit plan analysis - Metropolitan Chicago Health Council (MCHC) Part one: Organization profile This report assesses and analyzes the benefit plan and design. It revolves around the profile of an organization called the Metropolitan Chicago Health Council (MCHC). This organization is engaged in the provision of valued added healthcare services, governmental advocacy and educational services. It has a wide range of hospital human resources section requirements which handles the benefit plan on behalf of the employees. The benefits that the employees accrue involve an indirect compensation designed to improve the quality of work together the personal lives of all employees. The benefits for the employees are approximately 43% of their total gross salary. Since these benefit programs are costly in nature, this report looks into their costly nature. It further acknowledges the need for a revision of these benefits programs in order to meet the current regulatory requirements and changing market needs. Benefits program The benefit program also requires development of structural choices at all levels. According to Bohlander (2009), the inclusion of defined or non-defined retirement schemes in the benefit plan leads to risks and more workload in terms of resource management. The project will consider the need of considering factors to be taken into consideration when implementing the benefit plan and the reason for stakeholder involvement. Main focus is centered towards the aspect of cost of the benefit program. Solutions relating to the cost issue are cost analysis, cost description and cost minimization. Cost minimization will be the preferred solution out of the three. Cost analysis and description are equally good though cost minimization ensures maximum and optimal benefits to both the employer and employee in the short and long run. Characteristics of a sound benefit plan A sound benefit plan should be the one that values all the needs of both the employees and the employer. It should also take into consideration the ever changing market expectations both in the short and long term and should also meet all the regulatory requirements (Rosen, 2005). Finally, it should be cost effective meaning that cost are easily managed and kept at a minimum. Part 2: Statement of the issue The issue in Metropolitan Chicago Health Council is the need for a revision of its benefits programs in order to meet the current regulatory requirements and changing market needs. Health benefits for employees are issued by insurance companies. The criterion used in deciding the kind of benefit to be given to each employee is that of expertise and skill. Most of the benefit packages are custom made by worksite solutions. Every staff member is given a custom benefit statement that included the salary. With the increased demand in healthcare benefit schemes, the cost of implementing and sustaining the benefit plans has increased. Therefore, cost minimization is a goal in most organization. An online system is an advantageous way of minimizing costs. This is because it helps employees to access their benefit program online. In case the employees want to reassess their present coverage level and make any claims, they can also use the internet. According to Issel (2009, pg 50), this is an advantage since employees have control of their health plan. Through the online benefits programs, flexibility in choosing the benefits is enhanced easily. In addition, it is cheap in terms of management and user friendly to both the employer and the employee. The employer also gets to focus on other important aspects such as benefit plan implementation. However, with continued use of the online system, security becomes an issue to be addressed accordingly. Consideration has to be taken with regard to the degree of safety when transmitting information. Information can be hacked during transmission and tampered with; thus proper security measures are to be taken into consideration. The system has to be ensured by use of encryptions and passwords. The human resource can use the software’s that are cheap in the administration of the employee benefits programs. This is a way of cutting cost and at the same time meeting employee needs. Part 3: Literature Review According to empirical studies done in 2007 by the National Association of colleges and employers, students preferred to have a good benefit package to an attractive salary or an advancement opportunity. A good benefit plan plays a major role in attracting and maintaining employees. Employees prefer benefits despite the existing challenges such as unfair wages, poor working conditions and continued challenging tasks. A benefits plan has to be designed, formulated; communicated, monitored and cost managed. There is a wide range of benefits for the employee that is provided by the employer. It is vital for the employer to give employees information with regard to the different kinds of benefits so that they can make a choice. The level of benefits is dependent on the employees needs. The benefit here plays a key motivating factor to employees with regard to its design and how it is communicated. This report will look at the Metropolitan Chicago Health Council, an organization which offers its employees with a benefits program. The organization was established in 1935 to help hospitals provide the best quality and affordable healthcare. It is located in Chicago, and it is the largest in the United States of America. The organization indirectly meets the needs of the community together with all the needs of its employees. Part 4: Issue Analysis a) Decision Issue First it is vital to assess the issue to address in the cost benefit analysis. The issue should illustrate to the present and desirable situation and should be states as a question. A good example of a problem is the cost minimization or compensation process. The main issue in Metropolitan Chicago Health Council is the need for a revision of its benefits programs in order to meet the current regulatory requirements and changing market needs (Anaheim, 2011). The benefits plan should be well designed, formulated; communicated, monitored and cost managed in a way which meets all regulatory requirements and changing market needs as this would make employees feel appreciated and part of the organization. b) Relevant Stakeholders Stakeholders are people who have a direct interest in the benefit plan and would be affected by it. They include employees, customers, suppliers, community and supervisors. In implementing the benefit plan, the employer should provide the stakeholders with information so that they can make informed choices and decision. The stakeholders should be varnished with detailed information on what the organization intents to do and how the benefit plan will be reformulated to meet the changing market needs. Part 5: Issue Solutions a) Cost description Cost description is an important aspect to be considered in the benefit plan as it enhances accountability. It is relatively simple to apply since it is a direct form of delivery in the implementation of the health benefit plan discussed above. An example of cost description is 40 percent cover for outpatient services or 100 percent cover on spine and heart surgeries. b) Cost minimization The benefit plan should be affordable to the employer. The employer should design a benefit plan that is affordable and at the same time it should be attractive enough to sustain employees in the organization. The plan should satisfy the needs of the employer and employee as well as concentrating on the budget to ensure costs are managed. c) Cost analysis An efficient benefit plan should concentrate at the benefits budget so as to satisfy both the employer and employee needs. This budget can be designed by doing a cost-benefit analysis. In a cost-benefit analysis, the benefits should outweigh the costs of implementing the benefits plan. A cost analysis will typically show a break even situation in the first year of implementation. Cost savings come in the future when the employer’s subsidies are assumed to increase at a slow rate than claims. Part 6: Solution and its Implementation Designing and implementing a benefit plan can be costly. The best way to have an effective benefit plan is by designing one which is flexible, cost effective and meets the requirement of the employer and employees. The costs should be minimized since the cost of healthcare has been increasing at an alarming rate. An online system can be an effective tool of minimizing costs as it reduces the workload borne by employers and benefit plans administrators in maintaining employee information. This way they are able to focus more on designing and implementing benefits which satisfy employee needs. An analysis of employee’s prior benefits enrollment patterns, benefit payments and demographics is crucial as it contributes to effective benefit plan design. A financial analysis is also vital as it helps the employer determine the degree of preference of employees and the consequences of each choice. All these ensure that costs are efficiently managed and minimized. In minimizing costs, some expenses and claim payments can be eliminated if they do not satisfy needs effectively. The plans cost-effectiveness can be improved by scrutinizing claims adjudication practices, risk management, supplier agreements and the plan design. Employer should manage supplier agreements by selecting a niche of suppliers that supply quality products and by utilizing the benefits delivery channel which has the lowest mark up. Claims adjudication practices involve the utilization of a pharmacy benefit where the manager can limit all the costs of claimed drugs without affecting the employee coverage, authorization for those therapies which are expensive in order to ensure that they are provided only when warranted and profiling providers can help identify fraudulent claims. Risk can be managed by underwriting and cash flow assessment in order to retain the reasonable ones which is usually based on cash flow and capital capacities and limiting liability for changes to the public programs allows you to strategically expand coverage. Finally, plan designs can include the utilization of plan design features like dispensing fee limits and multi-tiered formularies in order to encourage cost-conscious consumerism or the strategic use of benefit maximums which then minimizes the inflationary pressure as well as the need for catastrophic risk insurance. These techniques can reduce the long-term cost by reducing unnecessary services, excessive charges and leakage of funds to inappropriate claims. References Anaheim, CA (2011). Using Benefit Eligibility Reviews to Health Benefits Costs. Presented on 37th Annual Risk Managers Conference. Public Agency Risk Managers Associations. George Bohlander, S. S. (2009). Managing Human Resources. Mason OH, USA: Cengage Learning. Haycox, A. (2009) What is Cost Minimization Analysis? Issel, L. M. (2009). Health program planning and evaluation: a practical and systematic approach. Mississauga Ontario Canada: Jones & Bartlett Learning. JOHN H. JACKSON, R. L. (2007). Human Resource Management. Mason, USA: Cengage Learning. MCHC,. (n.d.). Metropolitan Chicago Healthcare Council. In Organizational Profile. Chicago Illinois. Pynes, J. E. (2008). Human Resources Management for Public and Nonprofit Organizations: A Strategic Approach. John Wiley and Sons. Rosen bloom, J. S. (2005). The handbook of employee benefits: design, funding, and administration. US: McGraw-Hill Professional. Slocum, H. &. (2009). Organizational Behavior. Mason, USA: Cengage Learning. Read More