August 05, 2020

EAP Models

A poll of call attendees (see Figure 1) revealed that just over half (52%) had one global vendor. Pros of this model were ease of administration and one point of contact; however, members felt that they often did not have line of sight into the quality of subcontractors at the local level. Some were wondering about moving to the regional model that 32% of call attendees had or even using all local vendors, like 16% of call attendees, to have more control over provider quality.

• One company has a mostly regional model, with a local model in some places. This company’s ideal, however, would be to have one global vendor. In particular, the company has seen how one globally consistent approach would be valuable since the COVID-19 pandemic began.
• Another company has one global vendor but has considered moving to a regional model. The global model has had the advantage of providing consistent messaging during COVID-19 to respond to mental health challenges. Also, the company has been able to have one website with multiple articles and resources available in local languages. In addition, the company likes the ability to run similar trainings across the globe. However, when the employer has issues in certain locations, it is unaware of them until they happen, and the company feels that the response level is slow. The employer thinks that going through the global contracting EAP (its preference), instead of going directly to the subcontractor, may be a barrier to a quicker response. In the past, when the company had interactions with the subcontractor, the process seemed more efficient.
• Another employer reports having a primarily global model with pockets of local vendors in certain countries.
• A manufacturing company has a single global vendor, mostly for ease of administration and communication, and the fact that pointing employees to one website makes it easy to communicate. Because this company has one person dedicated to EAP, it has been able to put in a more cumbersome process than other organizations may be able to do. For example, to ensure that the company is satisfied with the subcontractors that the contracting EAP provider chooses, it has opted to have a line item veto, if necessary, essentially customizing the employee experience at the local level. Each country also has its own access point person for critical requests, and employees are all aware of the country-level information. Vendors are empowered to respond to local needs, and the employer has direct access to all subcontractors, so they do not have to go through the regional or global account manager.
• This same employer provided some thoughts about the various models, pointing out that a global vendor should not be thought of as a true global provider, as the vendor doesn’t always have the capability to execute laws in each country; instead, the global vendor is more of a network of subcontracted providers and a vehicle for contracting. Access, intervention and services are done at the local level. Going through a centralized account manager generally can slow things down, so allowing employers and employees to contact someone at the local level when they need assistance is more efficient and effective. Furthermore, it may be the case that if there is only one highly skilled provider in a country, most EAP vendors will use that provider. While there are many upsides of having a global vendor-- economies of scale, assistance with selection of subcontractors, simplified administration, to name a few – the subcontractor’s allegiance to the employer may also diminish under this system.

Tax Implications and Funding of EAPs

• One company is covering the cost of EAP at the corporate level for the first year of the global program, but the company is not sure what it is doing next year. The company is concerned about the tax implications of continuing to fund the program from the corporate entity.
• There were other questions about taxation. For example, one company said that its internal tax colleagues say that in some countries, the tax on EAP is just as high as the actual price for the program itself.
• One call attendee has only found this to be an issue in the U.K. regarding dependents. However, its tax department was able to find a tax clause that allowed the company to offer EAP more cost effectively.
• Another company had the tax situation evaluated around the world, and it found that there was a low risk if the company does not pay taxes as a benefit in-kind, especially given the cost of the benefit and low utilization.
• For another employer, it was determined that there were certain kinds of activities that the global parent company can hold, and certain ones that it cannot. The determination came down to whether the value of the arrangement was to the company as a whole or to the local entity.
• Finally, one employer found that in Egypt, it was required to pay a tax and run a benefit in-kind through payroll to the employee but did not have to in other countries.
• Another company said that if it pays for global EAP at the corporate level, it can fully deduct the cost from taxes. There is also a tax implication for the participant receiving an economic value.
• It can be easier to get EAP funded when it is funded centrally, but the “skin in the game” is often not there for local buy-in and promoting utilization because the local business entity is not paying for it. Some employers offer central funding to launch the program and then turn it over to the local level. This, however, can be a problem if multiple entities or businesses are in one location and only some opt in. Then not all employees are covered, which makes for an inequitable situation. Central funding with a charge back can help.
• A large employer has always funded their EAP centrally and says it never had an issue with cost or funding. The company has seen great interest and support at the local level for the program; the biggest issue has been local countries saying that quality of services and vendors is not high. The quality issues reported are related to response time, in-network providers, poor webinar facilitation, bad feedback from critical incident response, poor counselor match and local service intake problems.
• Two companies that do not have global EAPs have put in counseling or crisis hotlines to respond to COVID-19. One has decided that for the 72 of 100 countries that don’t currently have an EAP in place, it will put in an “EAP lite” program over the next year that consists of online information and one available telephonic session for employees. Then, the company will work with the local team to either go out to bid or transition to a local program. The company also has a website that allows employees to write in their country information and then find access information for their local provider. This system allows employees to communicate both global and local messages.
• One company said that if a business unit opts out, it messes up the cost structure because the cost is based on a per person charge determined by overall headcount. Previously, EAP was discretionary, and managers could say whether they wanted it. Now it is included as part of the compensation and benefits cost of hiring an employee.

Satisfaction with Vendors

• Call attendees were asked about their satisfaction with their current vendor. Results are shown in Figure 2.

• One company just rolled out its global EAP in April and has been pleased with its account manager so far. The company feels that it may have been able to get better vendors at the local level, but from an administrative standpoint, it would not have had the local resources or bandwidth to manage the vendors or give enough attention to promotion.
• There was a discussion on the call about how, since most global employers attending did not have a dedicated resource focused on only EAP, the purchasing process could be improved so that companies knew what they were buying from the beginning. One employer said that it relies on benefits consultants during the RFP process since the company does not have that expertise. Still, it finds that there are frequent reporting issues in its EAP vendor relationship. The metrics and reports are confusing and do not make sense to the business, and the vendor is resistant to changing the reports. The employer would like better KPIs during purchasing relating to what is covered in reporting.
• Vendors mentioned include ComPsych, Optum, ICAS and Morneau Shepell, Workplace Options, as well as EAP Latina in Latin America. Some call attendees are considering alternative mental health vendors like Lyra and Modern Health.
• An employer using one global vendor has found that one advantage has been that the vendor includes a lot of common messages the employer can use throughout the world. However, the company has had quality issues and feels that there is a lack of direct access to providers. Before the COVID-19 pandemic, the company felt that the vendor was doing what it was expected to do. Post-COVID, the company has not felt that vendor is doing as much as it could. The program inside the U.S. is much more robust than outside the U.S., and there are a lot of inconsistencies.
• Another employer that uses the same vendor chimed in to agree that it has had similar experiences with contractors, especially in some areas. In India, this company launched a pilot with a local vendor to complement the existing EAP. The pilot has been very successful. Local colleagues are very involved and participate in the pilot; they feel a sense of ownership over the program. The vendor is very flexible and puts on webinars as well.
• One employer recently put out a regional RFP due to COVID-19 and uses a global vendor in EMEA, a regional vendor in Latin America, and local providers in Canada and Mexico. China already had a local EAP sponsored by government, and Australia and New Zealand had a local vendor that they kept in place. Greater Asia did not roll anything out due to cost. Utilization is not necessarily high, but it is less about utilization than it is providing a service that is needed at a moment in time.
• Another company has not been overly satisfied with its vendor, primarily because of response time from account managers. They have been particularly slow to respond during COVID-19 in the U.S. and globally. It seems they are reactive and that has not improved in the last few years. This company is looking at other options, taking its time doing so.
• One employer advised to go straight to a global vendor outside the U.S. versus contracting with a U.S. EAP or health plan vendor that contracts with the company for its global operations.
• Another employer chimed in to say that it also found that its vendor was not proactive and that vendors in general were often too complacent. As a result, employers needed to push them.
• An employer using one global vendor said it was satisfied both inside and outside the U.S. The vendor’s work is consistently high quality. The company feels the vendor is trying to innovate and co-build trainings with the employer that are relevant for employees. The vendor has a very robust work/life program in the U.S., but it is not as good outside the U.S.

In sum, members felt that the pros of having one global vendor were ease of administration, one contact for account management, more volume for economies of scale, assistance with selection of subcontractors and consistent messaging and offerings in all locations. The cons were the opposite and included less direct communication and ability to connect with the provider themselves; quality concerns since the employer cannot choose the provider (in most cases); and potential language issues calling into centralized sites. Employers also felt that global vendors needed to be pushed to be more proactive and really meet the needs of the global workforce. In our next call, we will delve further into the challenges of reporting, communications, metrics, and opportunities to push the market toward improved expectations and quality.

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Articles & Guides Global Benefits Management Vendor Management Mental and Emotional Well-being