JetBlue Employee Benefits Analysis
Dr. Drennan
12/08/2015
914974087
914456338
Table Of Contents
Introduction/Firm Information
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Inventory of Health and Welfare Benefits
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Analysis of Decision Making and Plan Design
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Healthcare Plan Design and Impact of the ACA
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Task One: Firm Information
Mr. Elliott, I would like to thank you for taking the time to meet with us and
discuss JetBlue’s approach on employee benefits. As the executive vice president of
JetBlue, your time is obviously extremely valuable. As you may know, JetBlue is the
fifth largest airline and prides itself on having the greatest amount of legroom,
which is a strong factor in attracting clientele. JetBlue got its start as a small airline
flying close knit routes, but has recently expanded to offer flights to places such as
the Mexico city, the Bahamas, Bermuda, and many more. As of August 2015, JetBlue
serves 92 destinations within the U.S., the Caribbean, South America, and Latin
America. JetBlue has 17,000 employees who are stationed throughout the United
States and the Caribbean. These employees tend to be younger and single; with an
average age of 32 years old. Their main hub is located out of New York’s John F.
Kennedy International Airport. JetBlue’s main competition is other major airlines
such as Southwest, Delta, American and United Airlines. Due to the fact that JetBlue
is an international corporation, employees are dispersed over numerous geographic
regions in many different countries. With this being said, JetBlue offers the same
coverage despite the different areas their employees work in. The employee benefits
plan covers 29,000 lives, with employees making up 12,000 of those lives. To
further enhance our knowledge of the benefits plan, we spoke with the director of
benefits Kristen Brown and the benefits analysis communication expert Eugenia
Rizzi. Eugenia Rizzi has expertise in answering questions on the matter of plan
communication and problems associated with communication. JetBlue made the
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decision to self-insure the employee benefits plan and their consultant Towers
Watson aided this decision. Sit back, relax and enjoy this JetBlue presentation.
Task Two Inventory of Health and Welfare Benefits
For employees to be eligible as a full-time employee, they have to work a 32hour workweek. According to the new ACA standards, employees will be eligible as
of a 30-hour workweek, so the plan will adapt in 2016. All of the benefits except fulltime medical and long-term disability are offered to part-time employees. Even with
the deduction in hours to be considered full time, numerous employees still do not
take advantage of the fact that benefits are available to themselves. JetBlue has gone
above and beyond their promise of a 75%/25% contribution approach to healthcare
and averages a contribution of 78%/22%. JetBlue self-insures their benefits plan so
they pay out of pocket for the coverage. Some of the key benefits covered in the plan
are: basic life and accidental death and dismemberment. This will address employee
concerns with loss of income. Long-term disability will help an employee with the
issue of loss of income, as well as medical expenses. One key benefit offered that is
unique to the industry is coverage for pilots in the scenario that they lose their pilots
license. This will shield the employee against loss of income and will assist the
employee on regaining that license. Medical coverage is obviously a key component
offered and JetBlue uses United Healthcare and Anthem Blue Cross for their
provider networks. Employees will have access to FSAs, HRAs, HSAs, and CDHPs.
This will help shield against the rising costs of medical care and expenses. Lastly,
JetBlue offers a retirement plan with up to a 5% match. Obviously when an
employee retires, they stop receiving income. This plan will help them plan for that
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loss of income and JetBlue even contributes money to this employee’s retirement. In
addition to these benefits, JetBlue offers a variety of voluntary benefits such as
group legal advisors and pet insurance. These benefits are offered on an employee
pay all basis. The consulting firm of Towers Watson assists JetBlue in a strict
discrimination testing of the plan to insure it passes all regulatory and compliance
standards.
Task Three: Analysis of Decision-Making and Plan Design
JetBlue offers employee benefits to attract and retain capable employees. A
big decision when examining plan design is to either go through an insurer, or to
self-insure. JetBlue choose to self-insure because they can adjust coverage to cater
to their needs. Kristen went on to say that self-insurance was the best option
because there is no contract that JetBlue needs to enter into. This allows the
company a great deal of freedom in choice when coming up with the plan design.
JetBlue is never bound into coverage that is rarely utilized by a small population of
employees.
When asked about benchmarking their plan against other corporations,
Kristen stated that JetBlue is above average in plan satisfaction and enrollment
compared to their peers. JetBlue is included in the transportation industry, but
Kristen stated that she desires to benchmark their plan to more progressive
companies such as IBM or Apple. Some ways that JetBlue has increased their
satisfaction ratings and employee enrollment have been through voluntary benefits.
Although Kristen does not believe that voluntary benefits attract employees as a
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regular benefit such as healthcare would, the voluntary benefits are needed to boost
morale and keep employees motivated.
Despite the fact that a very generous benefit plan is offered, JetBlue, just like
many other large international employers, struggles with communicating these
benefits to employees. The biggest challenge JetBlue has with plan communication is
choosing which mode of delivery to send a message to their employees. The
crewmembers prefer to have information delivered in a variety of ways such as
email, poster, and mailing. In addition to the fact that employees want the
information communicated in different ways, it is extremely difficult to be able to
reach all employees due to the fact that they are spread throughout the country;
either in the air or on the ground. Eugenia has found that family members are
typically the key decision makers, as opposed to the crewmembers. This is due to
the fact that the crewmember is on the road, or on the go, and they may not know
what will suit the needs of the family best. To combat this issue, JetBlue has created
an application for smartphones; called the blue benefits app, which allows
employees to store their plan ID cards, contact benefits specialist, review healthy
rewards, and most importantly get onto BlueCarpet. BlueCarpet works as an
employee benefits concierge service, with the main purpose of keeping employees
within their network to reduce to the increased costs of going out of network.
Another aid that Eugenia spoke of was the “life is better in blue” website that has all
of the information about the benefits plans offered readily available to not only
JetBlue employees, but their dependents as well. The website is outside of the
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company firewall so the general public can access it. This aids non-employee key
decision makers in choosing and understanding coverage.
Communicating the offered benefits to employees is obviously a crucial
element in plan operation, but is there a way for employees to get a say in what is
offered to them? The answer to that question is yes. JetBlue has six major groups
that meet once a month and discuss what employees within different sectors are
looking for in plan design. The leaders of each perspective group will then meet with
Kristen and talk about what is wanted by the employees. Typically, if a topic is
brought up from more than one group, it is given serious attention and Kristen will
communicate these ideas with her team to examine if adding this benefit is feasible.
Task 4: Healthcare Plan Design and Impact of the ACA
JetBlue has done a phenomenal job of anticipating the changes that the ACA
will bring, and actually started to change it’s plan design in 2012. The company
originally had four different health plans that covered nearly all of the same things,
but at four different price points. Employees would pay different contributions out
of their paycheck based on what plan they were in. One of the main problems with
these plans was that they had an adverse selection problem. For example, plan 1
would not have any of fertility coverage; therefore, everyone who needed that
coverage would enter plan for which offered full coverage. After examining these
plans in anticipation of a provision of the ACA that will go into effect in 2018, called
the Cadillac Tax, JetBlue realized they had very “rich” plans and estimated that over
the first five years of the Cadillac tax it would cost them over 90 million dollars.
Directly after acknowledging the impact of this tax, JetBlue redesigned its health
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care plan to a two-plan system. The plan utilizes consumer driven health plans that
feature high deductibles, co-insurance, and a health savings/reimbursement
account. Both plans have deductible maximum of $1,300 for a single person and
$2,600 for a family. JetBlue has found most of their employees enroll in the health
reimbursement account rather than the health savings account. Kristen Brown
states that out of all employees collectively enrolled in HRAs and HSAs, 80 percent
of those employees are enrolled in the Health reimbursement accounts. Kristen says
the reasoning for such high numbers is that their company demographic is made up
of younger single employees and these employees are not thinking long term, they
are just considering present conditions. The people she tends to see sign up for the
health savings accounts are the older employees with families that are thinking
about the future. JetBlue was the first of its peers to start to make changes to plan
design due the Cadillac tax. Kristen noted that a majority of employees were not
happy about these changes. Little by little, employees began to see that the changes
were not just enacted at JetBlue, but across the board in the industry and workforce.
To increase satisfaction JetBlue has added features to make these changes such as
the healthy rewards wellness program, less invasive. JetBlue offsets both plans with
cede money of $400 for single coverage and $800 for family coverage. This is
money employees can earn by taking the initiative to be healthy, which inherently
will reduce the amount of claims and costs JetBlue faces. These programs give
employees the opportunity to earn more money based on health lifestyle choices
through their wellness programs. The program utilizes 50 activities that engage
employees in promoting healthy lifestyles to receive credit and earn money. With
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the large variety of wellness programs offered, there is pretty much a way for every
employee to earn credit. Just a few examples of these activities are not smoking,
going to the gym, running a marathon, taking a CPR class, etc. Kristen stated that the
company has found that the best way to help employees get adjusted to new plans
due to ACA compliance is by implementing wellness programs. JetBlue outsources
all compliance and regulatory work to The Morgan Lewis law firm to guarantee that
they are in compliance of the ACA and ERISA. To follow their mission statement of
“to bring humanity back to air travel”, JetBlue believes that it is best practice to offer
coverage to employees regardless of whether or not their partner or spouse is
eligible at their place of employment.
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