Weight Watchers for business: What former executive knows about corporate wellness

Original article from https://www.bizjournals.com

By Brianne Pfannenstiel

Romy Carlson knows as well as anyone that getting corporate America on board with office weight loss programs is almost as challenging as actually losing weight.

The former Weight Watchers executive just signed on with corporate wellness company Retrofit as vice president of business development.

She'll be based here in Kansas City and will oversee the development and acquisition of new business. With about 17 years of experience in the field of corporate wellness, she said she knows that getting busy executives to commit to office weight loss or wellness programs comes with a unique set of challenges.

"It's an interesting arena because at first you would think that maybe people are just scared of it, maybe executives are nervous because they don't necessarily manage their own health so how do they push it out to their employees?" Carlson said.

Male CEOs are actually more likely to be overweight than men within the general population, according to one study from Michigan State University.

The study showed that between 45 and 61 percent of top male CEOs are overweight, and between 5 and 22 percent of top female CEOs are overweight.

"So far there really hasn't been a great technology-based program that serves the busy professional," Carlson said.

That's one reason she got on board at Retrofit — it's Weight Watchers, in a sense, tailored specifically for professionals in the workplace.

Companies sign up to partner with Retrofit and can subsidize membership fees for its employees. Retrofit then sends each participant a wireless activity tracker and a wireless scale, both of which automatically upload the data to a team of Retrofit professionals who meet individually with the employees to discuss personalized wellness programs.

 


IRS Issues Final Rule on Comparative Evidence PCORI Fees

This content was originally published by Stephen Miller on the SHRM website. 

Fees, due by July 31, will be charged to health care insurers, and to sponsors of self-insured health plans, to fund the new Patient-Centered Outcomes Research Institute (PCORI)

Revised Form 720 Issued

For sponsors of self-insured health plans, the IRS posted an updated Form 720 and accompanying instructions on its website. The new Form 720 (with a revision date of April 2013), along with related payment voucher Form 720-V, should be used to report and remit the "PCORI fee" to the IRS. Although the Form 720 is designed for quarterly payments of certain excise taxes, the PCORI fee is paid only annually.

The fee, as described below, is required to be reported annually on the second quarter Form 720 and paid by its due date, July 31, with the first fee payment due July 31, 2013.

PCORI Fee Is Deductible

In another development, the PCORI fee is an “ordinary and necessary business expense paid or incurred in carrying on a trade or business” and as result is tax-deductible, the IRS said in a May 31, 2013, memorandum.

The U.S. Internal Revenue Service issued a final rule on Fees on Health Insurance Policies and Self-Insured Plans for the Patient-Centered Outcomes Research Trust Fund, published in the Federal Register on Dec. 6, 2012.

The Patient Protection and Affordable Care Act (PPACA) establishes the nonprofit Patient-Centered Outcomes Research Institute (PCORI) to promote the use of evidence-based medicine by disseminating comparative clinical effectiveness research findings.

To fund the PCORI, the PPACA imposes a fee on health insurers and employer who sponsor self-insured health plans, for each policy or plan year ending on or after Oct. 1, 2012, and before Oct. 1, 2019, with the first fee payment due July 31, 2013. Subsequently, the PCORI fee will be due no later than July 31 following the last day of the plan year.

The fee will be $1 per plan participant for the first plan year ending after Sept. 30, 2012, and $2 per participant in succeeding years. For policy or plan years ending on or after Oct. 1, 2014, the fee will be increased based on increases in the projected per capita amount of national health expenditures.

Scope of Fees Clarified

Among other points, the final rule clarifies that the fee imposed on an employer sponsoring a self-insured health plan is based on the average number of lives covered under the plan during the plan year.

If an employer sponsors more than one self-insured arrangement, those arrangements may be treated as a single plan for purposes of calculating the PCORI fee, but only if the plans have the same plan year.

Several commentators had requested that the final regulations provide that PCORI fees do not apply multiple times if accident and health coverage is provided to one individual through more than one policy or self-insured arrangement (for example, where an individual is covered by a fully insured major medical insurance policy and a self-insured prescription arrangement).

The final rule does not adopt the requested change. For example, for an employee covered by both a group insurance policy and a health reimbursement arrangement (HRA), the group insurance policy falls within the definition of a specified health insurance policy and the fee applies to the insurer, while the HRA falls within the definition of an applicable self-insured health plan, so that the fee applies to the plan sponsor.

The final rule also applies PCORI fees to policies and plans that provide accident and health coverage to retirees, including retiree-only policies and plans. And it states explicitly that COBRA and other types of continuation coverage must be taken into account in determining PCORI fees, unless the arrangement is otherwise excluded.

However, in response to comments, the final rule permits a self-insured health plan that provides accident and health coverage through fully insured options and self-insured options to determine the fee imposed by disregarding the lives that are covered solely under the fully insured options.

What Plans Are Subject to the Comparative Evidence "PCORI" Fee?

Plans subject to the fee:

 Medical plans.

 Prescription drug plans.

 Self-insured dental or vision plans, if provided without a separate election or premium charge.

 Health reimbursement arrangements (HRAs).

 Retiree-only health plans (even though some are exempt from other PPACA mandates).

Plans exempt from the fee:

 Separately insured dental or vision plans.

 Self-insured dental or vision plans, if subject to separate coverage elections and employee contributions.

 Expatriate coverage provided primarily for employees who work and reside outside of the U.S.

 Health savings accounts (HSAs).

 Most flexible spending accounts (FSAs).

 Employee assistance programs (EAPs), wellness programs and disease management programs that do not provide "significant benefits in the nature of medical care or treatment."

Source: Pinnacle Financial Group, Patient-Centered Outcomes Research Fee Overview

Reconsidering Plan Designs

According to an alert from law firm Leonard, Street and Deinard, employers who sponsor multiple self-funded plans with the same plan year ends can aggregate those plans and pay the fee once on overlapping lives. However, because the fee is imposed on the plan sponsor and not on the plan itself, the employer must pay the fee outside the plan, meaning that plan assets cannot be used to pay the fee.

The law firm's alert also notes that:

Employers with self-funded high deductible health plans that are paired with self-funded HRAs can aggregate those plans and pay the fee once with respect to an individual covered by both the high deductible health plan and the HRA. In contrast, an employer that sponsors a fully insured high deductible health plan paired with a self-funded HRA will essentially be required to pay the fee twice on the same lives. The IRS concluded that because separate statutes impose the fee on plan sponsors of self-funded plans and insurance companies issuing fully insured policies, the IRS is unable to permit employers with both types of plans to combine them for purposes of determining the number of covered lives that they have.

Employers who sponsor self-funded HRAs with fully insured medical plans may wish to consider other plan designs to avoid this fee, such as self-funding the high deductible health plan or moving to a plan design that uses HSAs instead of HRAs. Alternatively, if there are relatively few people covered under the HRA and if the HRA has been an effective plan design, employers may simply decide to continue offering the plan and pay the additional fee.

 

 


Survey: Employees don't want control over health care

Report reveals a sobering gap in employee readiness to handle and take on the shift toward consumer-driven health plans

Original article from https://ebn.benefitnews.com

By Tristan Lejeune

As more and more employers look at defined contribution health care and other insurance shifts, will employees be ready? Last year, J.D. Power and Associates reported that 47% of employers "definitely" or "probably" will switch to a defined contribution health plan in the coming years.

The third annual Aflac WorkForces Report reveals a sobering gap in employee readiness to handle and take on the shift toward consumer-driven health plans and defined contribution health. A majority of workers (54%) would prefer not to have more control over their insurance options, citing a lack of time and information to manage it effectively, while 72% have never even heard the phrase "consumer-driven health care."

Aflac and Research Now surveyed 1,884 benefits leaders and 5,229 wage-earners and found arresting disconnects in their expectations, plans and views of the future. For example, 62% of employees think their medical costs will increase, but only 23% are saving money for those hikes. A full three-quarters of the workforce think their employer will educate them about changes to their health care coverage as a result of reform, but only 13% of employers say educating their employees about health care reform is important to their organization.

"It may be referred to as 'consumer-driven health care,' but in actuality, consumers aren't the ones driving these changes, so it's no surprise that many feel unprepared," says Audrey Boone Tillman, executive vice president of corporate services at Aflac. "The bottom line is if consumers aren't educated about the full scope of their options, they risk making costly mistakes without a financial backup plan."

Aflac reports what many benefits leaders instinctively know: Consumers already find health insurance decisions intimidating and don't welcome increased responsibility. Fifty-three percent fear they might mismanage their coverage, leaving their families less protected than they are now. And significant ignorance remains: Plan participants are "not very" or "not at all" knowledgeable about flex spending accounts (25%), health savings accounts (32%), health reimbursement accounts (49%), or federal or state health care exchanges (76%).

According to the report, 53% of employers have introduced a high-deductible health plan over the past three years, and that trend shows no sign of slowing. Yet more than half of workers have done nothing to prepare for changes from HDHPs, the Affordable Care Act or other system shifts.

"It's time for consumers to face reality," Tillman says. "Ready or not, they are being put in control of their health insurance decisions - and that means having to make choices that could have a big impact on personal finances. If employers aren't offering guidance to workers on how to make crucial benefits decisions, the responsibility lies in the hands of consumers to educate themselves."

The U.S. government estimates that by 2014, household out-of-pocket health care expenses will reach an annual average of $3,301. More than half (55%) of workers have done nothing to prepare for possible changes to the health care system, Aflac reports, and their savings reflect that: 46% have less than $1,000 put aside for unexpected, serious illness or injury. Twenty-five percent have less than $500.

Tillman says that what surprised her most about the data is how people seem to be ignoring such a large, tectonic shift in the landscape. It's not exactly like health care reform has been subtle and creeping.

"There's no greater awareness, no greater education, and it's a sea of change that's taking place," Tillman says. "It's all over the news; it's everywhere. But people aren't any more moved to action and education."

What happens with health care, she says, "seems to be evolving," and there may be a reluctance on the part of consumers to jump in because "hey, it may change." The shift to CDHPs, however, seems to be building in momentum, and employees would do well to wake up. The entire point of that shift, after all, is that they will be on their own, but employers do need to make sure they know that.

Benefits "are a great expense to your organization, and to have your workers and the people that you're charged with protecting not aware, not informed of how the benefits offering could impact their lives, to me that's not really safeguarding a very expensive and important benefit," Tillman says. "It benefits the employee, obviously, to know: What are my benefits, what is my employer thinking about doing, what do I need to be studying. But at the same time, it's very important to employers ... because otherwise they're not getting a very good return on their investment."

Tillman says "frequent communication is paramount" for instituting changes like this - don't send out the message once a year and then forget about it. And never underestimate the value of a personal example as a teaching method.

"A lot of times employers and HR get into a communicate-only-at-open-enrollment mode," she says. "And, even if health care reform weren't about to happen, I'd still say as an HR professional, communicate throughout the year. Communicate via every method that you can - to be sure, at open enrollment, but also on your intranet. If you've got a portal, including things in mailers, the paper tables in the cafeteria. ... the more we can highlight a benefit by showing how other employees have utilized it, that's a really impactful case."

 

 

 


ACA prep: Now, this year and in 2014

Original article from https://ebn.benefitnews.com

By Robert J. Lowe

The Patient Protection and Affordable Care Act includes many requirements applicable to employer group health plans.  Some of these requirements are already effective but some of the most significant requirements will become effective in 2014.  Employers should now be considering what they need to do to comply with ACA requirements that will become effective in 2014.

ACA provisions that are already effective

Employer group health plan should already be complying with the following requirements that are already effective:

  • Coverage for young adults to age 26
  • Deletion of lifetime and annual dollar limits
  • Limits on pre-existing condition exclusions and rescission of coverage
  • Medical loss ratio rebates paid by insurance companies
  • Summary of benefits and coverage provided to participants explaining the terms of the plan
  • W-2 reporting of cost of coverage
  • $2,500 limit on health care flexible spending accounts

In addition, plans that do not have “grandfathered” status under ACA, as a result of changes to the plans adopted since enactment of the Act, are already subject to the following rules:

  • Modified claims and appeals rules including external review requirements
  • No cost preventative care
  • Non-discrimination rules for insured plans (although these rules are not being enforced currently pending release of regulations)

What happens in 2014

Effective in 2014, employers that are treated as “applicable large employers” under ACA will have to comply with one of the central requirements of the Act, the requirement to offer employees health plan coverage that complies with ACA requirements or otherwise become subject to penalties under the Internal Revenue Code, referred to as “assessable payments.”

Assessable payment rules

There are two types of assessable payment under ACA.

Under one type of assessable payment, if an “applicable large employer” offers health coverage to all employees who work 30 or more hours a week and their dependents but the coverage does not qualify as “minimum essential coverage” or the employer offers coverage that is not “affordable” or does not provide “minimum value” and at least one employee enrolls in a plan offered through a state health insurance exchange for which a premium tax credit or cost sharing reduction is allowed, then the employer subject to “assessable payment” of up to $3,000 for each affected employee per year.

Compliance is determined on a monthly basis with a $250 assessable payment (one-twelfth of $3,000) due for each month for which the affected employee is entitled to a premium tax credit or cost sharing reduction as a result of the purchase of coverage on the exchange.   Not all employees will be eligible for the premium tax credit or cost sharing for purchase of this insurance.  Only employees earning less than four times the federal poverty limit will be entitled to these benefits.   However, employers will not have to make this determination.   If the IRS determines that the employee is entitled to these benefits, it will issue the assessment to the employer.   This assessable payment is determined only with respect to those employees who purchase the insurance on the exchange and are eligible for the premium tax assistance or cost sharing.

Another type of assessable payment applies if the applicable large employer fails to offer minimum essential coverage at all to 95 percent of its employees who work 30 or more hours per week and their dependents, regardless of whether it is “affordable” or provides “minimum value” and at least one employee purchases coverage through a state health insurance exchange for which a premium tax credit or cost sharing reduction is allowed.  Under these rules, the employer can be assessed a penalty equal to $2,000 per year, but multiplied by the number of full time employees employed by the employer reduced by 30.

Who is an “applicable large employer”

As in initial matter, it will be very important for each employer to determine if it is an “applicable large employer.”  For this purpose, an employer is an “applicable large employer” if the employer employed an average of at least 50 full-time employees on business days during the preceding calendar year.  The parent-subsidiary and brother-sister controlled group rules of the Internal Revenue Code apply in making this determination.  Thus, for example, in determining whether the 50-employee test has been met, all subsidiaries that are at least 80 percent owned directly or indirectly, by the parent corporation will be treated as a single employer with the parent corporation.  Also, two part-time employees who work an average of at least 15 hours a week are considered a single full time employee for purposes of making this determination.

There is an exception to the definition of “applicable large employer” for employers whose work force exceeded 50 full time employees only because of “seasonal workers” employed for 120 or fewer days during calendar year.

The determination for a particular calendar year is based on the employer’s average number of employees during the prior calendar year using the entire prior year for that purpose.   However, for 2014 only there is a special transitional rule that allows an employer to determine if it is an applicable large employer using any period of six consecutive calendar months during calendar year 2013 rather than using the entire year.

What is affordable coverage

If the employer determines that it is an applicable large employer, it will also be necessary to determine if the coverage it is offering is “affordable.”   If the coverage is not affordable, and an employee obtains coverage on an exchange for which it obtains a premium tax credit or cost sharing benefit, the employer will be liable for an assessable payment for that employee.

Coverage is affordable if the employee’s required contribution does not exceed 9.5 percent of the employee’s household income for the year.  The coverage to which this rule applies is the employee portion of the self-only premium for the employer’s lowest cost coverage that provides minimum value.  Thus, the employer can charge higher amounts for spouse or dependent coverage without having the coverage cease to be treated as affordable for this purpose.

The IRS regulations offer a variety of methods for determining the employee’s household income.  However, most employers will find it easiest to make this determination using the safe harbor method based on Form W-2 wages as set forth in box 1 of the W-2.

Determining if an employee is full-time

In most cases it will be clear if an employee is a full time employee or not.  However, in some cases, it will be difficult for an employer to make this determination.

The basic definition is that a full time employee for this purpose is an employee who is employed on average at least 30 hours of service per week.  However, in some cases, the employer will not know in advance if an employee will satisfy that requirement.  For this purpose, the IRS proposed regulations provide special rules for “variable hour employees” if it cannot be determined when the employee begins work if the employee is reasonably expected to work 30 hours per week.

Also, under a special transitional rule for calendar year 2014 only, a new employee who is expected to work initially at least 30 hours per week may also be a variable hour employee if, based on the facts and circumstances at the start date, the employee is expected to work 30 or more hours per week but the period of employment at more than 30 hours per week is reasonably expected to be of limited duration and it cannot be determined that the employee is reasonably expected to work on average at least 30 hours per week during the entire initial measurement period.  However, effective January 1, 2015, such a limited duration employee will have to be treated as a full time employee.

To determine whether coverage is required for these variable hours employees, the IRS provided the option to use a “look back/stability period” safe harbor.  Under this approach, the employer  “looks back” at a period of three to twelve months to determine if during the measurement period the employee averaged at least 30 hours per week.

If the employee is determined to be full-time during the measurement period, the employee is treated as full-time during a subsequent stability period of six to twelve months, regardless of the number of hours worked during the stability period.

There can also be an “administrative period” of up to 90 days under certain circumstances between the end of the  measurement period and the beginning of the stability period.

Variable hour employee examples

These rules can be illustrated by the following example of use of the look-back/stability period rules for ongoing employees:

Assumptions:

  • Employer uses a look-back period of 12 months ending October 15 and a stability period of the calendar year.
  • During the period from October 16, 2012 through October 15, 2013, an employee is tested to determine if he or she satisfies the full-time employee requirements.

If the employee works an average of 30 hours per week during the look back period, the employee would be entitled to coverage effective with the stability period beginning January 1, 2014.  Coverage would be available for all of 2014 regardless of hours worked in 2014 as long as the employee remains employed.  If, however, the employee does not work an average of 30 hours per week during the look back period, then the employer does not have to treat the employee as a full time employee for the entire stability period of 2014 regardless of the number of hours worked in 2014 and no assessable payment could be due with respect to the employee for that period.

Similar rules are applicable with respect to new employees as illustrated by the following example applicable to use of the look-back/stability period rules for new employees:

Assumptions:

  • Employer uses a 12-month initial measurement period from date of hire and 12-month stability period.
  • Administrative period from end of measurement period to end of first calendar month beginning after the measurement period.

If an employee has a date of hire of February 10, 2013, the measurement period would end twelve months later on February 9, 2014.

If the employee worked an average of 30 hours per week during this measurement period, the employee would be treated as full-time and would be entitled to coverage for the stability period from April 1, 2014 through March 30, 2015.  If the employee did not work an average of 30 hours per week during that measurement period, the employee would not be treated as a full time employee during the stability period.

In addition, the employee would have to be tested as an ongoing employee as well.  Therefore, using the look-back/stability period rules discussed above for ongoing employees and using the same assumptions as set forth above, then the employee would also have to be tested for the measurement period from October 16, 2013 through October 15, 2014 (applicable to ongoing employees) to determine calendar 2015 coverage.  If the employee was treated as a full time employee during the look back period beginning on the date of hire, but not during the look back period beginning October 16, 2013, the employee would be entitled to coverage for the period from April 1, 2014 through March 30, 2015, but would not be treated as a full time employee for the balance of 2015.

Conclusion

Employers who wish to avoid liability under the assessable payment rules that become effective in 2014 should be analyzing their health plans and employee populations to determine if they already comply with the new rules and, if not, what changes they will have to make before January 1, 2014.

 


New PPACA wellness rules include fat rewards

Original article from https://www.benefitspro.com 
By Allen Greenberg
May 29th, 2014

Workers who lose weight or quit smoking while enrolled in a workplace wellness programs could see their health care premiums drop under new rules issued Wednesday as part of the Patient Protection and Affordable Care Act.

Beyond lowering premiums, the Health and Human Services Department said the rules — released by HHS along with the Labor and Treasury departments — also are aimed at protecting individuals from unfair underwriting practices that could reduce their health benefits.

Wellness programs typically tie financial incentives to weight loss or reducing blood sugar.

As the mounting cost of health insurance continues to strain budgets, both employers and policy makers are increasingly turning to wellness programs as a way to help bring those costs under control.

Proponents say wellness programs can save employers as much as $7 for every $1 spent, as well as deliver higher employee morale, reduced absenteeism and increased productivity and retention.

The rules support “participatory wellness programs” that, for example, reimburse employees for the cost of membership in a fitness center, or provide some kind of reward to employees for attending a monthly, no-cost health education seminar.

The rules also outline standards to reward individuals who meet a specific outcome related to their health, say losing weight or cutting smoking.

Some Democrats in Congress worried that the outcome-based programs could allow insurers to discriminate against unhealthy people.

Businesses, meanwhile, expressed concerns about overly burdensome regulations, requiring them to provide tests to determine whether employees met wellness program benchmarks. Helen Darling, president of the National Business Group on Health, in a letter said she worried that "certain provision[s] of the proposed regulations will impede innovation and increase administrative and cost burdens for wellness programs, with little to no benefit to participants."

But HHS said it had "clarified" some "confusion" about how the new incentives would work, though it left intact the size of the incentive employees can receive for meeting wellness goals. Some had wanted the incentives reduced.

Under the rules, employers can bump up the maximum permissible dollar amount of the rewards offered to employees to 30 percent — it had been 20 percent — of the total cost of their health care coverage, and can raise incentives tied to smoking prevention or reduction programs to up to 50 percent of total coverage costs.

"Today’s final rules ensure flexibility for employers by increasing the maximum reward that may be offered under appropriately designed wellness programs, including outcome-based programs," HHS said in a statement.

"The final rules also protect consumers by requiring that health-contingent wellness programs be reasonably designed, be uniformly available to all similarly situated individuals, and accommodate recommendations made at any time by an individual’s physician based on medical appropriateness."

The intent, HHS said, is that, regardless of the type of wellness program, anyone taking part in the program should be able to receive the full amount of any reward or incentive, “regardless of any health factor.”

Above all, HHS said, it has tried to be reasonable.

"These final regulations state that a wellness program is reasonably designed if it has a reasonable chance of improving the health of, or preventing disease in, participating individuals, and is not overly burdensome, is not a subterfuge for discrimination based on a health factor, and is not highly suspect in the method chosen to promote health or prevent disease," agency officials said.

The rules will go into effect Jan. 1.

 


Employers test mix of strategies to avoid PPACA

Original article from https://www.benefitspro.com

By Allen Greenberg

Employers that have pruned the hours of part-timers in response to PPACA have generated plenty of headlines, mostly negative. But it’s not the only strategy they’re testing in hopes of sparing themselves the expense of buying health insurance for everyone.

Around the country, companies are beginning to share employees.

They’re also increasingly turning to temporary staffing agencies.

When and where possible, they’re using independent contractors.

And, in some instances, they’re turning to professional employer organizations.

Often, none of these options are ideal but are viewed as the best way forward, especially for businesses subject to the law because they employ 50 or more people.

Concerns have been running high about how PPACA will impact business. A recent Gallup survey found that 48 percent of small-business owners say the law is going to be bad for business, compared with 9 percent who say it’s going to be good, and 39 percent who expect no impact at all.

The headline-grabbing response from business has, in part, included trimming of the part-time workforce. The law requires large employers offering health insurance to include part-time employees working 30 hours a week or more. The Federal Reserve Bank of Minneapolis found that 11 percent of employers are shifting to more part-time employees or planning to do so in response to the new healthcare requirements.

But HR managers, small-business interest organizations and others say many companies also are doing what they can to preserve jobs.

It isn’t altruism alone; these business owners also are motived by a desire to keep their companies growing, if not thriving.

Kevin Kuhlman, the Washington, D.C.-based manager of legislative affairs for the National Federation of Independent Businesses, said few of his organization’s members like the idea of “shrinking their businesses.”

That’s why, he said, “we’re seeing a lot of creative strategies” when it comes to addressing the employer mandates of the Patient Protection and Affordable Care Act of 2010.

“Folks are concerned about the sustainability of their business,” Kuhlman said. “Some might try to survive by atrophy, which isn’t a great approach, or try to find ways to be more productive with fewer employees.”

But rather than “resisting growth” or overwork employees, many companies are trying out new ways of getting the job done.

Sharing, for example.

Some businesses, especially those in the food-service world, are increasingly banding together to split an employee’s workweek between themselves and competitors. In other words, a cook might work 15 hours at one restaurant, put in another 15 at another eatery and wrap up with 10 hours at a third.

Labor interests might object that this approach amounts to exploitation, but advocates say it helps keep people fully employed, if not insured by an employer.

Employers also are turning to temporary staffing agencies as a possible solution.

Many temporary staffing firms are going to be considered large employers under Obamacare, meaning they’ll be compelled to provide health benefits or pay the penalties. But employers who turn to staffing agencies can save money because the cost of the benefits will be lower for a large employer.

How well this strategy will work is unclear. “The issue, of course, is what will the temp agency charge?” asked Dwight D. Menke, the owner of an eponymous brokerage in Topeka, Kansas.

The same goes for professional employer organizations, or PEOs.

ESCO Communications, an Indianapolis-based audio/visual equipment installer, turned to a PEO, WorkSmart Systems, after it faced a 40 percent hike in the company’s health plan last year.

"Health insurance was the real driver" for making the switch, CEO Chip Roth told Entrepreneur magazine. "By joining a larger pool and spreading the risk around, we were able to keep our rates the same as they were."

PEOs also handle an array of administrative HR tasks, so it’s no wonder Matt Thomas, founder and president of WorkSmart, says his company is seeing solid growth. "A lot of that has to do with the Affordable Care Act," he said. "Even larger companies that wouldn't normally look at PEOs are looking now, so they can avoid some of the ramifications of (the law)."

The biggest loser when a company goes the PEO route? The in-house HR staff.

Meanwhile, employers also are turning increasingly to independent contractors to get work done.

Companies that use these “freelancers” generally don’t have to withhold or pay any taxes on payments they make to them and are not required to provide them with health insurance. The IRS, however, has been cracking down on the abuse by companies of the independent contractor classification and many employers have been fined.

Still, it’s a risk more employers are reportedly taking so long as they feel comfortable they can prove that the contractor’s services are not an integral part of their principal business.

Compliance, as the NFIB’s Kuhlman points out, is a big concern for most employers, and whether some of these strategies are ultimately seen as legitimate by the government remains to be seen.

In the end, many employers may decide they don’t like giving up the control they have over employees who suddenly are working for a temp agency, or a PEO or have become independent contractors.

Kuhlman expressed concerns that “some folks are throwing good money at bad advice.”

“They’re sick of waiting so they’re doing things like splitting up their businesses” into smaller units with fewer employees, he said. “But that’s not going to work, because they (the regulators) are aggregating business owners with multiple entities into one entity.”

In other words, those companies will still be subject to the law.

John Duczak, senior VP at The American Worker, a Hoffman Estates, Ill., benefits company, points out the law itself might offer relief to at least some employers, even those with thousands of workers on their payroll.

The legislation’s “variable hour accommodation” allows employers to determine whether someone is a fulltime or part-time employee by the average number of hours that person puts in over a 12-month period. “Some companies are going to become very skilled in their management of that position” as a way of avoiding Obamacare’s coverage mandate, he said.

Turnover in the ranks also will help a lot of companies, especially those in the retail and hospitality industries.

Duczak noted that one of his clients hires 18,000 people a year, 11,000 of whom have moved onto new jobs or situations after six months.

The problem, he said, “takes care of itself,” at least for those employers.


Companies can tie worker health premium cost to wellness

Original article from eba.benefitnews.com

By Alex Nussbaum

Businesses in the U.S. won more freedom to charge higher insurance premiums to workers who don’t meet health goals, or reward those who shape up, under rules released by the Obama administration.

Three years in the making, the regulations also require employers to offer a “reasonable alternative” for workers who can’t meet standards on weight, cholesterol or other measures, the U.S. Department of Health and Human Services said yesterday in a statement. That’s meant to protect employees from discrimination, although the agency rejected calls by consumer groups that companies provide medical evidence for claims that wellness programs improve health.

“The final rules support workplace health promotion and prevention,” the department said, “while ensuring that individuals are protected from unfair underwriting.”

Conditions such as obesity and diabetes account for three-quarters of U.S. health spending, and wellness programs have been gaining in popularity as businesses grapple with rising costs. The regulations, mandated by the Affordable Care Act, let employers charge workers as much as 30% of their medical-plan premiums if they fail to meet goals, an increase from the current 20%. The rules take effect Jan. 1.

Incentive programs

Almost half of U.S. companies with more than 200 employees now have wellness programs, according to the Kaiser Family Foundation, a nonprofit health research group based in Menlo Park, California. The incentives can be tied to activities such as joining a gym or getting a blood-pressure test or specific targets such as body-mass index.

While the administration eased some proposals, the regulations will still complicate wellness efforts, says Helen Darling, president of the National Business Group on Health. The Washington-based nonprofit represents large employers including Dell Inc., American Express Co. and PepsiCo Inc.

The rules give workers more leeway to seek changes in wellness targets they can’t meet due to health conditions and to have their doctors suggest alternative measures. There’s a danger that could tie up employers in protracted negotiations over health goals, Darling says.

“The more you put in terms of requirements and the more risk you make for employers, the more likely they are to say, ‘we don’t need this hassle,’” she says. “It’s making a lot more work for employers, and therefore, more expense.”

Consumer protections

Families USA, a Washington-based consumer group, welcomed the consumer protections.

“These rules will help ensure that wellness programs are designed to actually promote wellness, and that they are not just used as a backdoor way to shift health care costs to those struggling with health problems,” says Ron Pollack, the group’s executive director.

The health agency today also released a study of workplace wellness efforts, also mandated by the health care law. The report by the Rand Corp. found small yet promising changes in worker behavior and costs from programs at 600 businesses.

The measures “can reduce risk factors, such as smoking and increase healthy behaviors, such as exercise,” the Santa Monica, California-based research institute said in the report. Its analysis “confirms that workplace wellness programs can help contain the current epidemic of lifestyle-related diseases.”

The move to tie workers’ costs to their health is being examined by the U.S. Equal Employment Opportunity Commission to see whether such programs violate anti-discrimination laws. And California’s legislature is considering a bill that would bar linking financial rewards to a worker’s health status.

While some studies suggest $3 or more is saved for every $1 spent on wellness programs, the gains may come from shifting costs to less-healthy employees rather than changing behavior, according to a March analysis in Health Affairs.

 


Are You Ready for PPACA? Employers Count the Days

Original article from forbes.com

As the full enactment of PPACA approaches, there are many factors that business owners know to look out for.

  • Do I need to provide health insurance to my employees?
  • Should I go to an exchange?
  • How will the mandate impact my business and profitability?
  • How much are my health insurance premiums going to go up?

These are all questions that many business owners are starting to look. Below are some points that you may not have thought of that should go into your business planning.

We all know that health insurance premiums are expected to go up, but do you know how much? Small groups (2-99 employees) can expect to see price increases between 20% and 50% upon the full enactment of reform. When factoring in medical trend, taxes and fees, carrier and product changes and the introduction of community rating, your premiums will jump significantly. As a small business owner, asking your existing broker for a quote is not going to solve this problem as it will require a new method behind providing employees with health insurance. The objective of a health insurance plan should not be to carry you over to the next year with as little pain as possible, but to address your company’s healthcare expenses for the long term. You need a road map that will allow you to offer affordable coverage to employees while keeping costs in line.

Some employers are looking to drop plans in order to remain profitable. Unfortunately, this is not the answer either and can cause more pain than gain. With the Supreme Court upholding the individual mandate, all Americans will be required to obtain health insurance or pay a penalty. The cost of obtaining coverage for individuals is expected to jump 100% – 200% with an average increase of 116%. This is going to push many employees who either have individual plans or would ordinarily look at obtaining individual plans to go to their employer to obtain coverage. By not obtaining small group coverage, you risk losing your talent to other companies who are willing to absorb the cost. This can result in the loss of business and inevitably impact the bottom line more then not offering coverage at all.

The federal funding for health care reform is already facing challenges that will impact all small business owners. In the deal that was reached in the fiscal cliff debate, an agreement was made to cut the remaining $1.9 billion dollars that was set to fund Consumer Oriented Operated Plans (CO-OP’s) through the Affordable Care Act. $1.9 billion was already spent to fund the creation of CO-OP’s. These will remain in place; however no more federal money will be used to create any additional CO-OP’s at this time. This is another example of where PPACA has been modified in order to maintain its functionality. This will lead to higher costs in term of premium and taxes for small business owners and individuals seeking health insurance in the short term, to cover the high costs of implementing the systems and covering up all other budget shortfalls that would have ordinarily paid for these costs.

 


Putting off PPACA with early plan renewals

Original article from benefitspro.com

By Allen Greenberg

Why wait?

That’s the attitude a growing number of employers are expected to adopt this year when it comes to renewing their health plans and, as a result, putting off the day when they have to deal with the many provisions of the Patient Protection and Affordable Care Act.

“It’s actually not anything new,” said Cheryl Randolph, a spokeswoman for United HealthCare Group. “Employers have always had this option.”

Of course, that’s true. But this year’s different.

With the PPACA going into full effect Jan. 1, a number of employers are expected to pull the trigger on renewals in November and December. Just how many, no one knows right now.

But UnitedHealth, Humana and Aetna, among others, are all expected to offer early renewals, health insurance brokers say.

There’s plenty of incentive for employers to renew early.

Health insurance premiums on average could rise by 40 percent under the Patient Protection and Affordable Care Act, according to a study by Milliman, the consulting firm. The study was done on behalf of Center Forward, a bipartisan organization. It focused on premiums for individual and group comprehensive medical insurance plans in Arizona, Florida, Illinois, New Jersey, Ohio and Wisconsin.

Individual premiums, on average, will increase 25 percent to 40 percent due to PPACA, the firm said, while small market group premiums could increase by 6 percent to 12 percent.

Karen Harrison, a broker with Lakewood, Colo.-based Braddock Harrison Agency, said she expected to receive renewal packages from carriers in late August and was letting her clients know now they should consider early renewals this year.

“There are pros and cons to doing this,” Harrison said.

One con? Any employer renewing early this year would not be able to move their renewal date again.

The big pro? For companies with younger, healthier employees, renewing early could limit their rate increase to 15 percent or less, according to an estimated projection Humana shared with brokers.

Whether renewing early will work as a strategy is unclear.

The Illinois Department of Insurance recently warned health insurers it wouldn't approve policies with "arbitrary" renewal dates meant to "delay compliance with the reforms." Also, Rhode Island said it wouldn't approve early renewals of health plans for small businesses.

Harrison, for one, said she didn’t think regulators would have much choice.

“So long as everyone follows the rules, I think it would be very hard” to fight this, she said.

 


Will U.S. workers ever be able to retire?

Original article from usatoday.com

Despite the rebound in home prices and new all-time nominal highs in the stock market, many Americans are looking at an unpleasant retirement, if they even make it that far; according to the Employee Benefit Research Institute's latest survey on retirement confidence, the majority of workers have saved for their golden years, but the piggy bank is quite slim.

Excluding the value of a primary home and any defined benefit plans, 57% of households say they have less than $25,000 in savings and investments, while 28% say they have less than $1,000. Furthermore, the Center for Retirement Research at Boston College has warned that 53% of American households are at risk of not having saved enough to maintain their living standards in retirement.

Americans are still planning for retirement, but, as one would expect, how they have saved for retirement depends very heavily on age and on pre-retirement income.

Compared to other countries' retirement systems, that of the United States doesn't stand up well. In a recent report, the Mercer consulting firm and the Australian Center for Financial Service, gave the United States a "C" grade, a rating considerably worse than the A received by Denmark and the B-plus given to the Netherlands' retirement system, which combines a Social Security-like fund with a nearly universal pension system to which employers contribute. The study showed plainly that many other countries are more willing than the United States to mandate unpleasant steps by workers and employers to fund a stable system.

The United States does have some mandates; employers must pay 6.2% of each employee's salary into Social Security, and every employee must also contribute that amount. But the Social Security system faces the threat of a huge shortfall. One-third of America's retirees get at least 90% of their retirement income from the program, with annual benefits averaging a modest $15,000 for an individual.

Another important pillar of America's retirement system, the 401k, is voluntary and generally not accessible to low-wage workers, who may not have the income necessary to invest. Although some employers have embraced automatic enrollment for their workers, more than 58% of American workers are not in a pension or 401k plan. Those employees with such plans, whose payouts are dependent on contributions and investment returns, are exposed to the risks associated with the stock market, which after the financial crisis were quite great.

The problems associated with these two primary means of saving dictate which financial sources fund the retirements of lower-wage workers and higher-wage workers. Gallup's annual Economy and Personal Finance poll, conducted between April 4 and April 14 of this year, sampled more than 2,000 adults to discover how non-retired Americans expect to fund their retirement. The results show that expectations varied significantly by annual household income. Upper-income retirees primarily said that investments, such as 401ks, or individual stock investments would fund retirement, while lower-income respondents said that Social Security and part-time work would be major sources.

In fact, of those respondents earning $75,000 or more per year, 65% said that retirement savings accounts would be the "major source" of retirement funds, and only 17% said Social Security. Comparatively, 42% of respondents earning less than $30,000 per year said Social Security would be a major source of income, 27% said work-sponsored pension plans, and another 27% said part-time work.

Younger generations of workers, particularly the 18 to 29 year-old bracket exhibited uncertainty about the future of the Social Security. Gallup found that only about one in five young adults expected to receive a Social Security benefit when they retire. Fifty-three % of respondents from the youngest age group said that they expected to fund their retirement through 401ks, while 49% said savings accounts or CDs and 24% said part-time work.

When looking at retirement strictly through the lens of age, the poll's results show the changing nature of retirement funding. Young respondents are looking to sources outside of Social Security to support them after they stop working, but those nearing retirement age now see Social Security contributing significantly to income — the program is essentially tied with 401k plans as the top source among 50 to 59-year old non-retirees, and it is the number one source among non-retirees aged 60 and older.