Pay Equity Audits
This article is from RISQ Consulting’s Zywave client portal, a resource available to all RISQ Consulting clients. Please contact your Benefits Consultant or Account Executive for more information or for help setting up your own login.
It’s becoming clear that pay transparency is not a passing trend. Pay transparency is the practice of an employer openly communicating pay-related information through established methods to current and prospective employees. In 2021, Colorado was the first jurisdiction to enact pay transparency laws. Since then, more states and localities have enacted such laws; by the start of 2023, a fifth of all U.S. workers were covered under pay transparency laws. The nationwide normalization of pay transparency is leading employers to prioritize pay equity. Additionally, the recent dramatic increase in equal pay litigation, sometimes resulting in multimillion-dollar settlements, has more employers addressing pay equity issues.
Despite this increased focus, many employers may not know where to begin when implementing pay equity measures. For most employers, utilizing pay equity audits is the likely answer. These audits can be a powerful tool for employers to evaluate and ensure they comply with federal, state and local pay equity laws.
This article provides a broad overview of pay equity and discusses the importance of pay equity audits.
What Is Pay Equity?
Pay equity is the practice of compensating employees the same when they perform the same or similar job duties while accounting for factors such as experience, job performance and tenure. This practice takes into account all forms of compensation, such as salary, overtime pay, bonuses, stock options, profit sharing and bonus plans, life insurance, vacation and holiday pay, cleaning or gasoline allowances, hotel accommodations, reimbursement for travel expenses and other benefits.
Employees’ right to be free from discrimination in their compensation is protected under several federal laws, including the Equal Pay Act of 1963 (EPA), Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967 and the Americans with Disabilities Act of 1990. For example, the EPA requires that men and women be given equal pay for equal work in the same establishment. The jobs need not be identical, but they must be substantially similar. It is job content, not job titles, that determines whether jobs are substantially similar. Specifically, the EPA provides that employers may not pay unequal wages to men and women who perform jobs that require substantially equal skill, effort and responsibility and that are performed under similar working conditions within the same establishment.
Why Is Pay Equity Important?
Ensuring employees are paid equitably can help increase organizational efficiency, productivity and profitability. Employers who prioritize pay equity may experience the following benefits:
- Improved workforce productivity and morale
- Increased organizational commitment
- Reduced employee turnover
- Increased attraction of key talent
- Decreased risks of discrimination or pay inequity lawsuits
- Greater compliance with equal pay laws and regulations
What Is a Pay Equity Audit?
A pay equity audit is the process of analyzing compensation data of employees doing similar work within an organization. It can be an effective tool for providing employers with information to identify pay disparities among workers. Performing pay equity audits can help employers determine if any pay discrepancies are based on legitimate, nondiscriminatory reasons, such as seniority or education. If pay discrepancies cannot be explained by nondiscriminatory reasons, the audit allows employers to correct them.
The purpose of pay equity audits goes beyond just identifying whether pay disparities exist but helps explain why they exist. This can include reviewing specific pay decisions and policies. Such audits can help employers evaluate and improve their compensation practices, address pay gaps and limit potential legal risks. In some states, conducting a self-audit of pay practices can protect employers against legal claims based on pay inequities.
Benefits of Pay Equity Audits
Pay equity audits can help organizations identify and correct pay discrepancies, reducing potential legal risks. They can also increase employee morale and productivity. Ensuring employees are paid equitably for their work helps strengthen an organization’s culture. Employee morale, turnover and retention rates, and performance often improve when workers feel valued. Paying employees the same when they perform the same or similar jobs is a key component of helping workers feel valued, which can lead to generally more committed and productive employees. In turn, this helps drive organizational productivity and profitability.
Additionally, pay equity audits can help employers develop better workplace policies and procedures related to compensation. This can include establishing consistent starting pay ranges, factors for merit increases and promotions, as well as other incentives. Audit results can also inform an employer’s training efforts to ensure fair pay decisions are made throughout the organization.
Risks of Pay Equity Audits
While an organization’s intentions behind conducting pay equity audits are often noble—determining whether pay disparities are lawful and, if not, correcting them—audit results can be extremely damaging if disclosed. Inadvertent disclosure of audit results or analysis can harm an organization’s reputation and expose it to lawsuits or other legal action.
To protect against these potential risks, many employers utilize the attorney-client privilege or work product doctrine when conducting pay equity audits. Employers can do this by engaging legal counsel to initiate and lead the audit. Employers can also determine how best to communicate pay equity audit results to their employees and incorporate those results into organizational pay practices.
Takeaway
Conducting pay equity audits can be an effective way to ensure employees are paid equitably for the work they do. However, these audits are often only the first step for addressing pay equity issues in the workplace.
For more workplace resources, contact RISQ Consulting today.
- Published in Blog
Financial Safety Nets for Employees
This article is from RISQ Consulting’s Zywave client portal, a resource available to all RISQ Consulting clients. Please contact your Benefits Consultant or Account Executive for more information or for help setting up your own login.
Money is a top stressor for employees, and a looming recession has reinforced that fact. Employers are uniquely poised to help support employees with much-desired financial guidance and resources. When employees experience less financial stress, employers may see greater employee productivity and morale and lower absenteeism. Those positive feelings can also translate into a strong employee retention rate and help employers attract top talent. Economic recovery will take some time, but voluntary benefits could help decrease employees’ financial stress.
More employers are looking for ways to help employees save for unexpected financial emergencies. This article explores ways that employers can offer financial safety nets for employees.
Employer Considerations
The reality is that many Americans worry about covering living expenses and unexpected expenses. In fact, 57% of U.S. adults are unable to afford a $1,000 emergency expense, according to Bankrate’s Annual Emergency Fund Report. Lacking sufficient funds to pay for a major medical emergency or other urgent needs can jeopardize an employee’s food and housing security for several years.
A financial safety net will mean different things to employees, depending on their age and personal financial goals. The following common employee benefits can offer valuable financial protection:
- Life insurance—Employer-sponsored coverage can be offered in a variety of ways. Employers may offer a term policy, permanent coverage or both. Though life insurance is an important asset for future financial security, many employees don’t realize its importance. Teaching employees about the value of life insurance may increase loyalty to the organization as they better appreciate this benefit.
- Disability insurance—Disability insurance has become an increasingly valuable part of a comprehensive employee benefits package and can fill gaps in financial protection offered by other programs, such as Social Security. While employees appreciate the peace of mind they receive as their income replacement benefits are being paid, employers can use the resources offered by insurers to manage time and productivity losses and find the most effective ways to return employees to work.
- Retirement accounts—Whether employees are close to retirement or have decades left in the workforce, saving for retirement is a key component of their financial security. Offering a 401(k) account or other retirement benefits as part of employee benefits packages can increase employee loyalty, especially if employers offer a contribution match. Good retirement benefits are also a great recruitment and retention tool. However, benefits are only helpful if employees are aware of and understand them.
- Financial planning or coaching—Employee assistance programs support workers facing various challenges, including financial ones, by offering resources and counseling. Employees with access to financial education and tools are more likely to increase their savings and make progress toward their financial goals. Furthermore, employees with a plan or access to help are less likely to feel stressed or overwhelmed by their financial situations.
- Emergency savings fund—An emergency savings fund helps offer peace of mind and resources employees may use instead of their retirement savings or other accounts. Employers can offer guidance for starting an emergency savings fund regardless of how much employees may have for an initial investment. Many employees may believe they don’t have enough money to build one, but employer-provided education and guidance can help them understand that even a small amount of cash can help start an emergency savings fund. An alternative approach for employers may be to offer an employer-sponsored emergency savings account alongside traditional benefits. Although an emergency savings account is a top benefit wish of many employees, very few employers offer them. Still, by helping employees build emergency savings funds, employers can boost their workers’ confidence in navigating finances and increase happiness in the workplace.
- Student loan debt assistance—Student loan debt weighs heavy on many employees in the United States, but some employers are trying to help by offering student loan debt assistance. Employers can offer various forms of support beyond loan repayments, such as student loan payment counseling, third-party low-interest or interest-free educational loans, debt consolidation, and refinancing services.
Summary
Ultimately, having a financial safety net can translate into peace of mind for employees. As more employers consider ways to help employees save for unexpected financial emergencies, they can offer employee benefits that help workers achieve their financial goals and save more of their hard-earned money for both expected and unexpected expenses.
Contact RISQ Consulting for additional resources.
- Published in Blog
Virtual Second Opinions
This article is from RISQ Consulting’s Zywave client portal, a resource available to all RISQ Consulting clients. Please contact your Benefits Consultant or Account Executive for more information or for help setting up your own login.
There may be a time in employees’ lives when they receive a medical diagnosis or feedback they feel uncertain about. Second opinions allow patients facing medical challenges to seek additional medical information on their condition, which can provide clarity and other treatment options available. With the increase in the popularity of telehealth, there is even the option of virtual second opinions, which can provide convenience by saving employees time and travel.
A virtual second opinion can help ease some of an employee’s stress after a serious diagnosis or when looking for a diagnosis for ongoing symptomatic issues. It can be difficult for a patient to find an appointment, especially if they need specialty care. Therefore, offering health coverage that includes virtual care gives a more accessible and efficient option for care. This article explains the additional benefits of receiving second opinions virtually.
Benefits of Virtual Second Opinions
Access to a second opinion can help relieve worry about diagnosis or treatment uncertainty. A virtual second opinion can provide easier access to different opinions, creating peace of mind for a patient. Additional benefits to this virtual care option can include:
- Improved patient care—The most significant benefit patients find from seeking a virtual second opinion is an improvement in overall care. This is due to having access to a large library of doctors nationwide. No matter where a patient is located, they may potentially receive access to any specialist they need.
- Increased timeliness—Receiving a virtual second opinion is often more efficient than going in person to receive one. The virtual process may allow patients to receive in-depth care and a treatment plan from a physician in about two weeks; in contrast, in-person visits are booked months out in most cases.
- Individualized care—It’s easier to make informed health decisions when all the facts are present. With a virtual second opinion, doctors can take the facts and ease patient anxiety by answering questions and creating a clear plan.
- Expanded care—Offering the benefit of virtual second opinions to employees helps those who live in areas of the country that do not have adequate access to health care.
- Eased anxiety—Virtual second opinions can ease the anxiety and stress of employees that may have received a diagnosis or care option they’d like analyzed in-depth. It can also empower an individual to take charge of their health and increase overall health literacy.
It’s important to note that there are different virtual second opinion program levels available. For example, these programs can include quality care for cancer and musculoskeletal disorders. Other programs offer care from specialists and subspecialists, such as surgeons and oncologists, that may be required for a patient’s care.
Summary
The level of care offering needed at each organization will vary, so it’s important to survey the needs of employees to find out which coverage options will receive the most use. Providing the option of virtual second opinions can give employees comfort in knowing they have access to additional care when they need it most. For more information on virtual second opinions, contact RISQ Consulting today.
- Published in Blog
A Primer on Medical Stop-loss Insurance
This article is from RISQ Consulting’s Zywave client portal, a resource available to all RISQ Consulting clients. Please contact your Benefits Consultant or Account Executive for more information or for help setting up your own login.
Catastrophic and unexpected health care claims are on the rise. This increase in catastrophic claims is, in part, the result of medical and pharmaceutical advances, such as specialty drugs and cell and gene therapies, as well as medical price inflation. As a result, many employers with self-funded health plans are actively looking for ways to minimize their financial exposures to potentially catastrophic claims. A common strategy these employers have leveraged is purchasing stop-loss insurance.
This article provides a general overview of stop-loss insurance and outlines some considerations for employers to keep in mind when deciding whether to purchase this coverage.
What Is Stop-loss Insurance?
Generally speaking, stop-loss insurance helps self-funded employers protect themselves from higher-than-anticipated health claim payouts by limiting their exposure to employee medical claims that exceed a predetermined amount. In other words, such coverage can prevent abnormal claim frequency and severity from draining employers’ financial reserves.
Stop-loss insurance plays an important role in helping employers manage their health care costs and protecting against unexpected or catastrophic claims, as it sets a ceiling for the amount they pay in health claims. This coverage is not a form of medical insurance, but rather a policy employers can purchase to manage their financial risks.
How Does Stop-loss Insurance Work?
Under a stop-loss insurance policy, an employer’s claims liability is limited to a certain amount (also called an attachment point), therefore ensuring abnormal employee health claims do not drain the employer’s financial reserves. An employer can add stop-loss insurance to an existing plan or purchase it independently.
If an employer’s health claims exceed a predetermined amount, their insurer will usually reimburse them for all additional claims. For example, if an employer has a stop-loss insurance policy with an attachment point of $500,000, their insurer will typically begin providing reimbursement after the plan’s claims exceed $500,000. It’s worth noting that since stop-loss coverage only reimburses an employer for claims that exceed their policy’s attachment point, the employer is initially responsible for paying employee claims before they reach the established cost ceiling.
Types of Stop-loss Insurance
There are two types of stop-loss insurance: individual (or specific) and aggregate (or total claims). Understanding the difference between individual and aggregate stop-loss insurance can help self-funded employers evaluate and determine which coverage best meets their needs and reduces their financial exposures. Because health plan usage can be unpredictable, some employers choose to purchase both individual and aggregate stop-loss insurance to provide their organizations with maximum financial protection.
Individual Stop-loss Insurance
Individual stop-loss insurance limits an employer’s liability when an individual employee’s medical claims exceed the attachment point. As such, this coverage can protect employers against unexpectedly high claims from individual employees.
Aggregate Stop-loss Insurance
Aggregate stop-loss insurance can help safeguard employers from the total sum of health claims for an entire group of employees rather than any one individual. Under this coverage, an employer is usually reimbursed when their expenses for all employees’ medical claims exceed the attachment point for the plan year.
Stop-loss Insurance Considerations
Each organization is unique. Deciding whether stop-loss insurance is necessary depends on an organization’s specific needs, workforce characteristics and risk tolerance. Reviewing all relevant factors (e.g., rates, policy terms and potential exposures) can help employers decide whether purchasing this coverage makes sense. Employers can consider the following factors when evaluating whether to purchase stop-loss insurance.
Understanding the Attachment Point
The attachment points for individual and aggregate stop-loss insurance differ. Generally, the attachment point for an individual stop-loss policy is a specific dollar amount. As a result, an employer is only responsible for an individual employee’s claims up to that amount.
For aggregate stop-loss insurance, the attachment point is usually a percentage of expected claims. The typical attachment point for aggregate stop-loss insurance tends to be between 120% and 125% of expected health claims. In any case, a stop-loss insurance policy’s attachment point can vary depending on factors such as the employer’s size, employee demographics and overall risk profile.
Evaluating Coverage Limitations
Stop-loss insurance plans are medically underwritten; therefore, an insurer may refuse to cover certain conditions or require higher claim thresholds for those conditions. For example, if a plan enrollee consistently has high-cost claims, a stop-loss insurer may refuse to continue to cover that enrollee or require a higher claim threshold for the enrollee. This practice is known as lasering.
Additionally, since stop-loss contracts typically last for one year, an employer’s high-cost claimants may only be covered for a few months before the insurer excludes them from the policy upon renewal. Thus, the employer will likely be financially exposed to those claims the following year.
Monitoring Increasing Costs
While stop-loss insurance can help employers reduce their financial exposures when health claims are higher than anticipated in a given year, the cost of such coverage can increase annually. Rising claims can also make it more difficult to obtain rates from other providers.
Ensuring Stop-loss Coverage Aligns With Health Plan Provisions
Some stop-loss policies may exclude certain medical treatments or classes of individuals covered by employers’ health plans. Consequently, employers may be on the hook for expensive claims that aren’t covered under their stop-loss policies. Therefore, employers should consider reviewing their stop-loss policies and health plan provisions to ensure they align to limit their potential financial exposures.
Summary
Selecting the right insurance policies can have major financial repercussions for employers. Having sufficient coverage can lower employers’ insurance costs, reduce their risks and keep their workers healthy. Stop-loss insurance can make all the difference in helping employers mitigate their financial risks, especially as catastrophic health claims are increasing. Understanding stop-loss insurance will allow employers to make the best policy decisions for their respective organizations.
For more health care resources, contact RISQ Consulting today.
- Published in Blog
High Deductible Health Plans
This article is from RISQ Consulting’s Zywave client portal, a resource available to all RISQ Consulting clients. Please contact your Benefits Consultant or Account Executive for more information or for help setting up your own login.
Enrolling in a high deductible health plan (HDHP) allows you to place pre-tax earnings in a health savings account (HSA). Then, you can use these saved funds to pay for medical, dental and vision care, and most medications.
The Basics of HDHPs
Many people enroll in an HDHP, a health insurance option that does not cover your first dollar of medical expenses. Instead, these plans have a high deductible that must be met before most services are covered at 100 percent. In general, the deductible must apply to all medical expenses (including prescriptions) covered by the plan. However, plans can pay for “preventive care” services on a first-dollar basis (with or without a copay), including routine prenatal and well-child care, child and adult immunizations, annual physicals, mammograms, pap smears, etc.
HDHPs and HSAs: Their Connection
An HSA is an account that can be funded with your tax-exempt dollars, by your employer, or by both, to help pay for eligible medical expenses not covered by your insurance plan.
Anyone who meets the following criteria is eligible for an HSA:
- Covered by an HDHP, and not covered by any other plan that is not an HDHP
- Not entitled to Medicare benefits
- Not eligible to be claimed on another person’s tax return
After visiting your physician, health care facility or pharmacy, your medical claim will be submitted to your HDHP for payment. Then, you can use your HSA to pay for out-of-pocket expenses that were not covered by your plan. Or, you can simply save your money in your HSA for future medical costs.
For more information on HSAs, ask RISQ Consulting about their HSA flyer!
Why Enroll in a HDHP and Open an HSA?
- Once your deductible is met, most medical costs are covered at 100 percent.
- Contributions to and withdrawals from HSAs for qualified expenses are tax-exempt
- Ability to save for future medical expenses
- Funds roll over from year to year
- If the account is through your employer and you leave, you take it with you.
- You control and manage your health care expenses.
Contributions Are Easy!
Once enrolled in an HDHP, you (and your employer if the account is through your job) can make contributions to your HSA. Remember though, your total contributions are limited annually.
If you make contributions, you can deduct them (even if you do not itemize your deductions) when filling out your income tax return.
- Published in Blog
The Grinch Had the Right Idea
By Jennifer Outcelt, Creative Content Architect
My husband has an extreme aversion to the gift giving gambit of the holiday season. He’s by no means a Grinch when it comes to the decorations, feasts, time with loved ones, magic of Santa for our daughter, or general joy that the holidays can bring. Yet the capitalist consumer driven aspects of rearranging money into stacks of useless stuff to shove under a tree leaves him wanting… well, less.
To him, finding presents for the people he loves (and some he just likes) is the same feeling as John Travolta trying to find the intercom system in Pulp Fiction. Confusing, awkward, and unnecessary.
A few years back he requested a gift-less year. My poor indoctrinated brain could barely comprehend the concept, so I put up a bit of a fight. Eventually, we compromised and decided to condense our Christmas gifting to a singular special gift for each of us. At the time, our daughter was too young to understand Christmas and so we only got her a few essentials as well.
Much to my surprise, it felt better to get the one gift than it had in previous years getting a bunch of smaller gifts. Even more to my surprise, was how exciting if felt knowing that I had found just one awesome gift for my husband that he would love. In fact, that one gift is now considered the best gift he ever received and is talked about (and used) daily. Oddly, I don’t actually remember what gift I received… but I do remember having a wonderful, joyful, and playful Christmas. And I think those memories are more important.
Ever since, I have been looking at Christmas through a newly defrosted lens. We have continued the one gift rule between us and it has saved us stress, money, and time. We are now focused on the decorations, the food, the games, and the merriment of the family. After all, I’m an adult with a big girl job, and if I really want something, I can go buy it.
This attitude has even trickled down to other gift giving events. We have asked for experiences in lieu of toys at our daughter’s birthday. Now we have an amazing membership to the Anchorage Museum and can visit anytime we want to have a fun and active day out of the house. WAY better than a voice changing, battery operated, megaphone. Well… at least in my opinion.
The point is, that once we decided that material gifts should be limited or absent, the time we spent together became the goal and the reward. I found a cool article that dives into the money side of the holiday spending. I thought it complemented our recent gifting changes nicely and might offer you a new perspective on how to allocate your holiday funds.
https://moneywise.com/managing-money/budgeting/heres-why-you-should-stop-buying-christmas-presents
- Published in Blog
Quick Tips: Save Money on Energy in Your Household
This article is from RISQ Consulting’s Zywave client portal, a resource available to all RISQ Consulting clients. Please contact your Benefits Consultant or Account Executive for more information or for help setting up your own login.
According to the National Energy Assistance Directors Association, energy costs will reach a decade-long high this winter. Heating costs are predicted to rise 28% for U.S. households relying on natural gas and 27% for those using heating oil. Electricity costs are also anticipated to increase 10% per the U.S. Energy Department. Read on for tips on how you can lower the energy bills for your home.
Why Are Heating Costs Rising?
Many factors have contributed to the rapidly increasing energy costs this year including the following:
- A predicted colder-than-average winter
- Rising wholesale gas prices
- Depleted energy stores from increased demand during the 2020 and 2021 lockdowns
- Lowered supply stemming from financial sanctions put on Russian oil after the invasion of Ukraine
How Can I Reduce Energy Costs in My Household?
With skyrocketing prices, you may be wondering how you can reduce or control your winter utility bills. Many may be tempted to simply turn down the thermostat. Fortunately, there are ways you can lower your energy bills while staying warm this winter.
Here are some tips to help you lower your energy bills:
- Use a programmable thermostat to automatically lower your temperature when you’re not home.
- Seal areas where heat could escape from your windows and doors.
- Ensure radiators and vents are unobstructed.
- Open curtains and windows during the day and close them at night.
- Replace your furnace filter if it’s dirty.
- Have a professional inspect your HVAC systems for leaks.
- Close the vents and shut the doors to rooms you’re not using.
- Consider other sources of energy waste (e.g., leaky faucets, inefficient light bulbs).
Cold weather may make some increased energy costs inevitable. By using the above tips, and consulting the Department of Energy’s Energy Saver Guide, you can be well on your way to managing your winter utility bill.
For additional winter home safety tips, contact us today.
- Published in Blog
More Drugs, Less Money
By Alison Nelson, Account Manager
You may know him from Shark Tank or as the owner of the Mavericks, but you may soon know Mark Cuban as the man disrupting the pharmaceutical industry. It was recently announced that, billionaire Mark Cuban, has launched an online pharmacy boasting significant savings when compared to some traditional pharmacies. What makes this online pharmacy, Cost Plus Drug Company, stand out is their commitment to pricing transparency.
Cost Plus Drug Company is basing their prices on a 15% markup from the manufacturer cost and a $3 labor charge. This results in candid transparency on how much prescriptions costs to make. One of the medications listed on their website, estimates a $6,112.28 savings. The pharmaceutical industry is often associated with price gouging, prompting anticipation to see how other pharmacies respond.
To read more about Cost Plus Drug Company, read this NPR article or visit their website here.
- Published in Blog
