A team at Ohio State University concluded that, on average, smokers cost their employers $5,816 more per year than their non-smoking co-workers. And the bulk of that cost is due to lost productivity.

The findings were published in Tobacco Control, an international peer-reviewed journal for health professionals and others in tobacco control.

Attempting to keep their estimates conservative, the researchers figured smokers would take an average of two smoke breaks per shift, at an average of 15 minutes per break. And after determining that the average smoking employee earns $26.49 an hour and works 232 days a year, the total yearly average productivity loss due to smoke breaks came to $3,077.

Adding to that figure are the losses attributed to absenteeism and higher health costs. The study found smokers cost an average of $517 more due to the higher number of sick days they take. Researchers also estimated that smokers rack up an additional $2,056 in healthcare costs for self-insured employers.

In addition, it was projected employers lose an additional $462 a year due to smokers’ presenteeism — working, but at less than maximum efficiency — caused by working while sick and by withdrawal symptoms that can occur within half an hour of the last drag.

All of this added up to $6,112. But because smokers have shorter life expectancies, their average annual pension costs are $296 less than the pension costs for non-smokers, according to the study. This brought the estimated average total to $5,816.

The research team did admit that smoke breaks at some organizations might be shorter than their 15-minute estimate. But even an average of two eight-minute smoke breaks comes to an annual loss of more than $3,500 after all the other factors are added in.

Here are some figures Buck Consultants put together after surveying 123 insurers and plan administrators nationwide:

• Preferred Provider Organization (PPO) costs are projected to increase 9.7% in the first half of 2013
• High-Deductible Health Plan (HDHP) costs are expected rise 9.6%
• Point-of-Service (POS) plan costs are projected to increase 9.5%, and
• Health Maintenance Organization (HMO) costs are expected to rise 9.3%.

That’s the bad news.

Cost increases trending downward

The silver lining — if that’s what you want to call it — is that those increases are lower than what health plan administrators saw last year. And this is the first time since 2001 that Buck’s annual analysis has projected cost increases of less than 10% for any plan type.

Last year’s projected increases for each of the four plans were 9.9%. So projections are down between 0.2% and 0.6% across the board.

Questions remain

However, Buck did point out in its analysis that healthcare costs continue to badly outpace the rate of inflation. As a result, the HR consulting firm said employers will continue to struggle with questions like:

• Do we pass cost increases on to workers? and
• Should we drop coverage altogether and pay the impending penalties under Obamacare?

One aspect of healthcare where the cost increases are expected to climb above 2012 levels: Prescription drugs.

Buck’s projecting a 10.1% boost in prescription drug costs in the first half of 2013 — that’s a 0.5% increase over last year’s projection.

The university in question? Harvard.

The cost for the institution to provide benefits for the year that ended June 30?

• $901.5 million for retiree health care.
• $476 million for all benefits for current employees (of which health care accounts for the largest portion).

Those figures were reported by The Boston Globe.

Cost-cutting measures

Does Harvard’s financial doldrums make you feel a little better about the pressure you’re under to keep your company’s benefits cost down?

In its annual report, Harvard officials said its costs are growing at an “unsupportable” rate.

Last year, in the first overhaul of its health plan in several years, the university increased co-pays, deductibles and prescription drug costs in an attempt to control costs, reported The Globe.

For the upcoming year, it has got to do more.

And the kicker is its financial worries don’t end with healthcare costs. Harvard’s annual pension obligation for retirees has topped a whooping $900 billion.

The fallout from the financial pressure: The school is curtailing raises for existing employees and consolidating computer services, among other things.

A large poll of HR professionals has revealed they have a clear preference for who’d they’d like to see in the oval office following this year’s presidential election.

It was conducted Oct. 10-15 by our sister site HR Morning, and includes the responses of 1,273 HR pros (an infographic of the results is available here).

Who will benefit HR?

The main question: Whose election will most benefit HR?

Respondents said Gov. Mitt Romney by greater than a 2 to 1 margin — 65% to 23%.

When asked why they feel Romney is better suited to help HR, the primary reasons were:

• Less government interference
• Obama’s spending is out of control
• Romney will abide by the Constitution
• The Affordable Care Act needs to be changed/repealed, and
• Romney has a better understanding of how business works.

Support for President Obama was hard to come by in this poll, but those who supported him said it was because:

• The Affordable Care Act will help businesses and must be kept intact, and
• He’ll fight for worker rights.

What’s been Obama’s impact?

Question No. 2 asked: What impact has President Obama’s policies had on your job?

• Largely negative — 42%
• Slightly negative — 24%
• Neutral — 13%
• Largely positive — 9%
• Slightly positive — 9%, and
• No impact — 3%.

Some common reasons why?

• More compliance headaches/paperwork
• Higher healthcare costs
• Slow economic growth
• Growth of National Labor Relations Board
• Entitlement mentality
• Healthcare reform is not working, and
• Reductions in jobs/salaries.

Biggest challenges moving forward?

Question No. 3: What are the most critical issues HR will face during the next administration? (multiple responses were allowed)

• Complying with healthcare reform — 86%
• Staying competitive with pay and benefits — 60%
• Dealing with the National Labor Relations Board — 42%
• Hiring the best people — 32%
• FMLA — 19%
• ADA — 15%, and
• Bias claims — 9%.

Source: The full results of the survey can be found here.

The answer: Actively engage them at work. In a new study by The Principal Financial Group, retirement plan contribution rates were 9% higher among workers who participated in a one-on-one financial counseling session while at work, compared to 2% among those who didn’t.

So schedule a sit-down with your employees to set them on the right path toward a rosy retirement. And give them this list of nine common retirement planning mistakes to get the conversation rolling:

1. Waiting too long to start saving. Young people just starting their careers may not be overly concerned with retirement planning, but this is the best time to start.
2. Forgetting about healthcare costs. Medicare won’t cover everything. And out-of-pocket healthcare costs for retirees have ballooned 50% in the last 10 years.
3. Failing to save for unexpected life events. It’s best to have an emergency fund with 12 months worth of income in case something big comes up such as travel to help an ailing friend or family member, or a major house repair.
4. Splurging on expensive items such as cars, vacations or fancy electronics. Buy these things before settling into retirement so you don’t have to tap retirement funds to pay for them.
5. Assuming your spouse is on the same page. Revisit retirement plans on an annual basis to make sure both partners are in agreement about when to retire, what retired life will look like, etc.
6. Failing to plan strategically. To save enough to reach specific financial goals, it’s important to actually crunch the numbers and come up with a plan to get there.
7. Retiring too soon. Even though the typical retirement age as defined by the Social Security Administration is 66, many don’t wait that long. Working just a few more years can really boost retirement income.
8. Going it alone, without professional help. In a difficult economy, expert advice may be necessary to keep retirement planning on track. Also, spending money for professional retirement planning services may lead to a more comfortable retirement.
9. Underestimating life expectancy. The average woman lives until she is 84 years old. For a man, the average is 81. Many people live much longer, however. So to avoid running out of money, plan accordingly.

Strong participation in workplace wellness programs is known to reduce healthcare costs, aid in recruiting and retention and enhance workers’ productivity – all big concerns of senior execs. So, company-sponsored health centers located in-house offering flu shots, biometric screenings and preventive and urgent care are becoming increasingly popular with the C-suite – even in the absence of hard data to justify the expense.

Worker productivity is paramount

A new study from professional services firm Towers Watson indicates that execs support the creation of on-site health centers at their companies, even when the ROI isn’t quantifiable. Knowing their employees spend more time on the job seems to be a good enough reason for them to throw their weight behind such projects.

Towers Watson compiled the responses of 74 participants from its Health Employer Survey on the Value of Purchasing Health Care and its Staying@Work Survey that currently have an on-site health center or are planning to open one.

Sixty-two percent of the companies surveyed said their primary reason for opening on-site health centers — and keeping them open year after year despite the cost — is enhanced worker productivity. After all, employees can get back to work faster if they don’t have to leave work to see a doctor.

On-site health centers are a “win-win”

Fewer absences mean workers are healthier and, in turn, the workforce as a whole is more productive – a “win-win” for the employees and the company. Many execs appear to put this knowledge into action without being overly concerned with ROI.

Surprisingly, a significant number of the companies surveyed either don’t know (39%) or don’t bother to track (14%) ROI, suggesting a lack of hard data does little to dissuade execs from investing in on-site health centers. Rather “reductions in overall healthcare spending, as well as indirect savings attributable to reduced absenteeism and enhanced productivity” convince senior business leaders of their long-term value.

Additional insights from the survey include:

• On-site health centers do a good job of coordinating all of a company’s health and productivity initiatives.
• Companies are looking to telemedicine (via tele- or video-conferencing) to upgrade their wellness benefits. In fact, 28% of companies surveyed said they plan to offer telemedicine as a standalone service or in addition to on-site services to decrease travel and wait times that keep employees “away from the worksite.”
• Healthcare reform is expected to foster the growth of on-site health care centers “as employers aim to manage health care costs” while still complying with the federal reform law.

It’s easy to feel like your PBM holds all the power over you. In most cases, it does.

A landmark 2004 study compared what pharmacy benefits managers (PBMs) charge employers’ plans to what they actually pay pharmacies. Researchers found staggering overcharges – especially for generic drugs. Unfortunately, four years later, the situation has scarcely changed. All too often, PBMs improve their own bottom line at the expense of the plan sponsor’s.

Chances are, it’s your health insurance vendor – not yourself – who contracts with the PBM to administer the prescription drug portion of your health benefits. So how can you feel confident your firm is getting the best value and service? Start by asking your health-plan broker these four questions about the current or prospective PBM.

1. How does the PBM calculate price?

Many PBMs gain hidden profits off your plan through a practice called “differential pricing,” says consultant Gerry Purcell. In other words, the PBM pays one price to drug retailers and then sets a lesser discount off the average wholesale price (AWP) for your company’s plan. Example:

• the PBM pays the drugstore the AWP minus 18%
• your plan and employees pay AWP minus 15% for meds, and
• the PBM pockets the difference.

Now for some good news. You do have some leverage in this area. If your drug plan is covered under the ERISA umbrella, the PBM must disclose this info. Ideally, you’ll find the rates are the same on both contracts. But if there’s differential pricing, insist your firm get the full discount.

2. What’s the PMPM?

One key cost figure PBMs can’t manipulate is the per-member-per-month (PMPM) cost of your plan. This number will show if your plan’s costs actually increased or decreased. The PMPM is calculated by dividing the total costs spent by the number of employees enrolled in the drug plan.

It’s also a great tool for comparing different PBMs to see which is the most cost-efficient for the size of your organization, says Peter Reed of Managed Benefits Strategies.

3. Can we get rebates, too?

Some PBMs receive money from drug companies that your brokers won’t tell you about – but may be able to leverage to your plan’s advantage. Example: Many PBMs get rebate checks from drug companies (typically 50 cents to $1.25 per claim) for helping increase the sales of their products.

If you push hard enough for it, your broker may able to work an arrangement where you either:

• split rebates from your plan evenly, or
• let the PBM keep the entire rebate in exchange for a price break on administrative fees.

Important: Ask to find out all the payment types the PBM gets from the drug firms. Rebates are often couched in the form of grants or classified as access fees or formulary fees.

4. How do changes in the formulary work?

In most states, PBMs can change your plan’s list of approved medications without prior notice.
The problem: PBMs often make mid-year switches that save them money, but may not save your organization or employees a dime.

Example: If the PBM adopts a mail-order-only coverage policy on a certain formulary drug, an employee who needs same-day access to the medication may be forced to pay full price for it at a pharmacy. Meanwhile, your plan is still charged the formulary price.To avoid such unpleasant surprises, insist the PBM give written notice of formulary changes, including the addition of new generics.