Question & Answer: Employers of all sizes and in a variety of industries have made changes in their benefits…..

Employers of all sizes and in a variety of industries have made changes in their benefits programs to deal with rising costs. How FedEx Corporation, a worldwide transportation and

shipping firm, responded to the cost pressures resulted in the firm receiving the Optimas award

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Question & Answer: Employers of all sizes and in a variety of industries have made changes in their benefits…..
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from Workforce Management magazine. The decisions made by FedEx provide some insights on approaches that other employers may wish to consider.

For years FedEx offered health-care benefits only through managed care programs such as HMOs and PPOs. But beginning in 2004, FedEx established a program that allows employees to use health-care providers inside or outside of the designated network of providers. Employees

who want “freedom of choice” have the higher co-payment and payroll deduction. Also, FedEx

expanded its health benefits plan to have four different levels of coverage, so that employees can choose a benefits package that fits their needs and their personal budgets.

But FedEx does not just provide health-care benefits; it also has established services to help employees improve their overall health. Many FedEx locations have wellness centers. Because many FedEx employees lift boxes and packages, the firm established a lower-back pain program to help reduce back injuries. For employees with chronic health problems such as arthritis, asthma, and diabetes, there is a disease management program to give them guidance, which also reduces their use of health-care services. A telephone hotline staffed by nurses is available around the clock for employees to call with health-related questions.

FedEx uses a variety of means to communicate benefits information, including an internal

TV network that features a variety of health-related programs. Employees can also access information electronically or contact a benefits call center.

Overall, FedEx employees have responded positively to these health-related efforts,   despite increases in their payroll deductions for health benefits. It is likely that FedEx will have to

keep making changes in its benefits because of increasing health-care costs. But through planning, continuing communication, and education, FedEx will likely continue delivering its healthcare benefits to meet both the company’s and the employees’ needs.

1. How does the availability of disease management programs, training programs, and a nursing hotline help with health benefits costs?

Expert Answer

In some countries, such as the United States, healthcare is very expensive. An average individual’s annual health care spending is $4,000, amounting to 8% of average personal income in the US (Source: Bureau of Labor Statistics). Additonally, the US Government spends $1,100 per individual per year. (Source: World Bank).

Organizations (such as FedEx) often provide healthcare benefits to employees, as, for a large organization, providing health benefits can cost significantly less than individuals running their own health plans. Healthcare expenditure is also tax deductible in many jurisdictions, and employers may provide comprehensive healthcare in lieu of a lower salary.

The availability of disease management programs,training programs, and a nursing hotline is manifold:

1. The above programs can lead to earlier diagnosis, and hence more effective treatment. Thus, it may reduce the number of sick days, and thus increase overall productivity, as well as reducing the cost to insure employees.

2. Earlier diagnosis, in general, also reduces spending on treatment. Symptoms detected earlier results in early corrective action, which may cost lower than treatment at a lower stage.

3. Economies of scale: Thousands or more employees calling a nursing hotline costs less than thousands of employees visiting a clinic individually, thus saving payments on doctor visits.

4. Effective disease management programs can keep away employees with contagious diseases.

5. Training and counselling helps individuals stay more healthy, thus leading to lower illness rates, and thus lower healthcare spending.

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