Revisiting Medical Loss Ratio Rebates
Originally posted July 5, 2012 by Bob Marcantonio on https://www.shrm.org
The Patient Protection and Affordable Care Act (PPACA or ACA) requires insurers to report their Medical Loss Ratios (MLRs) to regulators and to meet certain MLR targets. If an insurer exceeds the minimum MLR, the insurer must issue a rebate to the policyholder. The first of these annual rebates is due in August 2012. How are rebates determined?
Rebates are determined according to the prior year’s MLR. Rebates issued in August 2012 will depend on 2011 performance and are not group or individual specific. They are calculated at the carrier and market segment (i.e., individual, small group and large group) level. In some instances the individual and small group markets may be merged.
The ACA defines a small employer as an employer having at least one but no more than 100 employees. However, it provides states the option of defining small employers as having at least one but not more than 50 employees in plan years beginning before Jan. 1, 2016.
Generally, if you have fewer than 100 employees (using the definition for full-time equivalents) you will be purchasing coverage in the small group market.
The MLR is calculated by dividing the medical expenses of the carriers’ segment by the net earned premiums. Medical expenses include claims and activities to improve health care quality as defined in the rules. Net earned premiums include premiums paid by the policyholder minus taxes, licensing and regulatory fees. The MLR threshold for large groups (51+ benefits eligible) is 85 percent and the threshold for small groups (50 or fewer benefit eligible employees) is 80 percent. Certain states have received exemptions until 2014 that allow the MLR to be lower than those levels. In the case of states having more stringent MLR requirements, those requirements supersede the lower federal requirements.
Below are answers to common questions about MLR rebates.
My plan’s paid loss ratio is less than the target. Do I get a rebate?
Not necessarily. Rebates are not issued based on a single plan’s performance. Rebates depend on the insurer’s performance in a given market segment as outlined above.
How will insurers issue rebates?
For group health plans, insurers must issue the rebates to the plan. The plan must then pay out the rebates to the plan’s participants. If a group health plan terminates after the plan year but before the insurer issues rebates and the insurer cannot locate the plan, the insurer must attempt to issue the rebates directly to participants.
Who may receive a rebate?
Only fully insured policyholders are eligible. A policyholder can be an individual or an employer-sponsored group health plan. In the case of a group health plan receiving a rebate, Employee Retirement Income Security Act (ERISA) regulations regarding fiduciary duty apply. If the rebate is small—$20 or less for a group health plan—the insurer does not need to issue the rebate to the plan.
What should you do if your group receives a rebate?
The Department of Labor (DOL) issued Technical Release No. 2011-04 outlining the proper handling of rebates. The release states that:
"If the participants and the employer each paid a fixed percentage of the cost, a percentage of the rebate equal to the percentage of the cost paid by participants would be attributable to participant contributions. Decisions on how to apply or expend the plan’s portion of a rebate are subject to ERISA’s general standards of fiduciary conduct. Under section 404(a)(1) of ERISA, the responsible plan fiduciaries must act prudently, solely in the interest of the plan participants and beneficiaries, and in accordance with the terms of the plan to the extent consistent with the provisions of ERISA.
"With respect to these duties, the Department notes that a fiduciary also has a duty of impartiality to the plan’s participants. A selection of an allocation method that benefits the fiduciary, as a participant in the plan, at the expense of other participants in the plan, would be inconsistent with this duty. In deciding on an allocation method, the plan fiduciary may properly weigh the costs to the plan, the ultimate plan benefit, and the competing interests of participants or classes of participants provided such method is reasonable, fair and objective. For example, if a fiduciary finds that the cost of distributing shares of a rebate to former participants approximates the amount of the proceeds, the fiduciary may decide to allocate the proceeds to current participants based upon a reasonable, fair and objective allocation method.
"Similarly, if distributing payments to any participants is not cost-effective (e.g., payments to participants are of de minimis amounts, or would give rise to tax consequences to participants or the plan), the fiduciary may utilize the rebate for other permissible plan purposes including applying the rebate toward future participant premium payments or toward benefit enhancements."
When will insurers issue the rebates?
Under the regulations, the first rebates are due Aug. 1, 2012, although the precise dates of receipt may be before the deadline, depending on the insurer. Insurers will send written notices to subscribers informing them that a rebate has been issued. Plan administrators should be prepared to field questions from employees who receive such notices.
Additionally, insurers not issuing a rebate must send letters to subscribers explaining the MLR rule notifying their health insurer had a medical loss ratio that met or exceeded the requirements.
How much might the rebates be worth?
The not-for-profit Kaiser Family Foundation released statistics garnered from insurers’ filings to the National Association of Insurance Commissioners. In the large-group segment, total reported rebates are $541 million nationwide. Among the insurers, 125 reported they expect to issue rebates to large groups covering 7.5 million enrollees. Insurers in 14 states do not expect to issue rebates in 2012. The largest average per-enrollee rebates projected are in Vermont ($386), Nebraska ($248), Minnesota ($146), New York ($142) and North Carolina ($121).
Among large group enrollees, 19 percent are projected to receive rebates nationwide. Taken in total, the average annual rebate in the entire large group segment per year will be $14 per enrollee, according to rebate estimates based on insurer filings to the National Association of Insurance Commissioners (NAIC).
IRS releases draft of employer reporting form for health reform law compliance
Originally post July 25, 2014 by Matt Dunning on www.businessinsurance.com.
The Internal Revenue Service has issued draft versions of the reporting forms most employers will begin using next year to show that their group health insurance plans comply with the health care reform law.
The long-awaited draft forms, posted late Thursday afternoon to the IRS' website, are the first practical application of employers' health care coverage and enrollment reporting obligations under the Patient Protection and Affordable Care Act since the regulations were finalized in March.
The forms are the primary mechanism through which the government intends to enforce the health care reform law's minimum essential coverage and shared responsibility requirements for employers.
Beginning in 2015, employers with at least 100 full-time employees will be required to certify that benefits-eligible employees and their dependents have been offered minimum essential coverage and that their employees' contributions to their premiums comply with cost-sharing limits established under the reform law. Smaller employers with 50-99 full-time employees are required to begin reporting in 2016.
Additionally, self-insured employers will be required to submit documentation to ensure compliance with minimum essential coverage requirements under the reform law's individual coverage mandate.
“In accordance with the IRS' normal process, these draft forms are being provided to help stakeholders, including employers, tax professionals and software providers, prepare for these new reporting provisions and to invite comments from them,” the IRS said in a statement released Thursday.
The IRS said it expects to publish draft instructions for completing the reporting forms by late August and that both the forms and the instructions would be finalized later this year.
Last year, the Obama administration announced it would postpone implementation of employers' minimum essential coverage and shared responsibility obligations under the reform law for one year, largely due to widespread complaints about the complexity of the reporting requirements.
Though several months have passed since the administration issued a simplified set of information reporting rules, many employers have delayed preparations for meeting the requirements until the forms and instructions are available for review, said Richard Stover, a principal with Buck Consultants at Xerox in Secaucus, New Jersey.
“A lot of employers really haven't been doing anything about reporting requirements, even with the final regulations in place, because they were waiting for these forms,” Mr. Stover said. “This is something they've been anxious to see.”
Conflicting Views Of Supreme Court’s Contraception Decision Cloud Other Cases
Originally posted July 8, 2014 by Julie Rovner on https://www.kaiserhealthnews.org.
The Supreme Court’s decision last week that some for-profit corporations don’t have to comply with the contraceptive coverage mandate under the Affordable Care Act may have raised more questions than it answered. Expect confusion – and arguments – as lower court judges and the Supreme Court itself apply the decision to other cases.
This became apparent soon after the Hobby Lobby ruling when the court granted a temporary injunction to Wheaton College, a Christian school in Illinois. The college argued in a lawsuit that the special provisions provided by the Obama administration allowing it to escape the mandate are still insufficient.
But the order for the college, citing the Hobby Lobby ruling earlier in the week, created some confusion over whether Wheaton employees would still get access to contraceptives under the law. And the order provoked a blistering dissent from Justice Sonia Sotomayor, joined by the court’s two other female members, Justices Ruth Bader Ginsburg and Elena Kagan. They argued that the majority was already breaking with the precedent it established only days earlier.
Here are some of the questions raised by the Hobby Lobby case and the remaining cases also challenging the contraceptive coverage mandate.
What is the contraceptive mandate?
As part of the Affordable Care Act, most health insurance plans are required to cover, with no cost-sharing beyond premiums, a wide array of preventive health benefits. For women, that includes all contraceptives approved by the Food and Drug Administration, as well as sterilization procedures and patient education and counseling.
The mandate does not include coverage of RU-486 (mifepristone), the drug used for medical abortions after a pregnancy has been established. But it does require coverage of emergency contraceptives and intrauterine devices, which some believe can prevent the implantation of a fertilized egg. (Newer research suggests that is probably not the case, by the way.)
Who has sued to try to block the mandate?
There have been two separate sets of court cases challenging the contraceptive coverage requirements.
The first set comes from for-profit corporations that, under the law and accompanying federal regulations, are required to provide the benefits as part of their insurance plans. According to the National Women’s Law Center, there have been 50 cases filed by for-profit firms, while the Becket Fund for Religious Justice, which is representing many of those suing, counts 49. Most of those companies charged that the requirement to provide some or all of the contraceptives in question violated their rights under a 1993 federal law, the Religious Freedom Restoration Act (RFRA.)
The cases filed by Hobby Lobby, a nationwide arts-and-crafts chain, and Conestoga Wood Specialties, a Pennsylvania cabinet-making firm, were the first of those to reach the Supreme Court for a full hearing.
Religious nonprofit entities, mostly religious colleges and universities and health facilities, filed the second set of cases. The NWLC counts 59 nonprofit cases; the Becket fund, 51.
The Obama administration, under regulations issued by the Department of Health and Human Services in 2013, is not requiring those organizations to directly “contract, arrange, pay for, or refer” employees to contraceptive coverage. But the organizations say the process by which they can opt out of providing the coverage, which involves filling out a form and sending it to their insurance company or third-party administrator, still violates their religious beliefs by making them “complicit” in providing something they consider sinful.
What did the Supreme Court rule in the Hobby Lobby case?
The majority opinion written by Justice Samuel Alito said that “closely held corporations,” including those like Hobby Lobby and Conestoga Wood Specialties, can exercise religious rights under RFRA. Further, because the Obama administration was requiring those firms to directly provide the coverage, rather than offer them the same accommodation it was offering religious nonprofit groups, the requirement was not “the least restrictive means” of ensuring that women can get contraception and thus a violation of the law.
In making the case for Hobby Lobby and Conestoga Wood, Justice Alito went out of his way to praise the accommodation for religious nonprofits, saying it “does not impinge on the plaintiffs’ religious beliefs that providing insurance coverage for the contraceptives at issue here violates their religion and it still serves HHS’ stated interests.”
What impact has the Hobby Lobby decision had on pending nonprofit cases?
A fairly substantial one. Later that same day the Hobby Lobby decision was handed down, a federal appeals court in Atlanta cited it in issuing an injunction against enforcing the mandate against the Eternal Word Television Network.
But the real fireworks erupted on July 3, when the Supreme Court granted its own injunction in the case filed by Wheaton College.
The unsigned order required the college to write to the Secretary of Health and Human Services, stating “that it is a nonprofit organization that holds itself out as religious and has religious objections to providing coverage for contraceptive services.” The order specifically said the college “need not use the form prescribed by the government, EBSA Form 700, and need not send copies to health insurance issuers or third party administrators.”
Justices Sotomayor, Ginsburg, and Kagan were furious.
“Those who are bound by our decisions usually believe they can take us at our word. Not so today,” Sotomayor wrote. “After expressly relying on the availability of the religious nonprofit accommodation to hold that that the contraceptive coverage requirement violates RFRA as applies to closely-held for-profit corporations, the court now, as the dissent in Hobby Lobby feared it might…retreats from that position.”
What happens now?
The court made clear that in granting Wheaton College its injunction (as it did earlier this year in a case filed by the Denver-based Little Sisters of the Poor), it was not prejudging the case. “This order should not be viewed as an expression of the Court’s views on the merits,” it said.
But what is less clear is whether people covered by the health plans of those nonprofit organizations that are still in litigation will have access to no-copay contraceptive coverage.
The Supreme Court majority appears to think they can be covered. “Nothing in this interim order affects the ability of the applicant’s employees and students to obtain, without cost, the full range of FDA approved contraceptives,” the order said. “The government contends the applicant’s health issuer and third-party administrator are required by federal law to provide full contraceptive coverage regardless whether the applicant completes EBSA Form 700.”
The Obama administration, however, seems not so sure that will happen. “An injunction pending appeal would deprive hundreds of employees and students and their dependents of coverage for these important services,” the Justice Department wrote in its memorandum to the court.
One thing that is clear: Many more of these cases are yet to be decided by many more courts.
Hobby Lobby ruling spilling over to corporate world
Originally posted July 10, 2014 by Alan Goforth on https://www.benefitspro.com.
Both proponents and opponents of the recent ruling by the U.S. Supreme Court in the Hobby Lobby contraception case agree on at least one thing: The case may be settled, but how it will play out in the workplace is far from certain.
The court ruled that the 1993 Religious Freedom Restoration Act prevents certain employers from being forced to pay for contraceptives they oppose for religious reasons. However, the definition of which types of corporations are excluded remains murky.
"Nobody really knows where it is going to go," said Richard Primus, professor of constitutional law at the University of Michigan. "I assume that many more businesses will seek exemptions, not just from the [Patient Protection and] Affordable Care Act, but from all sorts of things they want to be exempt from, and it will put courts in a difficult position of having to decide what is a compelling government interest."
About 50 lawsuits filed by corporations nationwide, which were put on hold during the Hobby Lobby appeal, must now be resolved or re-evaluated. "We don't know ... how the courts will apply that standard," Primus said.
The decision also has ramifications beyond the courtroom. Even closely held companies with sincere religious beliefs must carefully consider the potential marketplace ramifications of crafting health-care coverage according to religious beliefs.
"Many owners of companies don't want to distinguish the difference between what's good for them personally and what's good for their business," said John Stanton, professor of food marketing at Saint Joseph University in Philadelphia. "I believe that if a business owner believes something is the right thing to do — more power to them. That's his business. However, he's got to be ready for the negative repercussions."
Eden Foods of Clinton, Mich., a natural-foods manufacturer, has filed a lawsuit and is balancing religious beliefs and business concerns. Since Eden initially filed its lawsuit last year over mandates to cover birth control in PPACA, some customers have taken to social media to express disapproval and outrage, even threatening a social boycott. However, the corporation also has gained new customers who support its stance.
"It's very conceivable they could lose business," said Michael Layne, president of Marx Lane, a public relations firm in Farmington Hills, Mich. "And they could lose employees, too."
Experts agree that the myriad issues raised by the Hobby Lobby decision could take a while to play out. "I think there will be a rush of litigation in the next year or two," Primus said. "I think that the exemptions are likely to get broader before they are limited."
Major work needed before enrollment
Originally posted July 10, 2014 by Kathryn Mayer on www.benefitspro.com.
The fall open enrollment period needs some major work, as new analysis out Thursday finds low satisfaction and little results, with many consumers remaining “uninsured and underserved,” after the first shopping experience in the exchanges under the Patient Protection and Affordable Act.
The inaugural J.D. Power 2014 Health Insurance Marketplace Shopper Study, which looked at enrollment satisfaction among more than 1,600 consumers who shopped for coverage under PPACA November 2013 through April 2014, found that satisfaction during the first signup period averaged 615 on a 1,000-point scale.
The results indicate that health plans need to “retool” their efforts ahead of 2015 open enrollment, which begins Nov. 15.
“No doubt that ensuring a technologically error-free experience, along with streamlining the online enrollment process will be most impactful to future marketplace shoppers,” said Rick Johnson, senior director of the health care practice at J.D. Power. “While the uninsured are now a smaller group, they continue to be underserved, just as they were prior to the exchanges, and continue to need more information delivered in an easy-to-understand and personal way.”
J.D. Power found that many shoppers began the enrollment process but had problems completing their plan purchase at the time of the survey primarily due to three reasons:
- A combination of technical problems experienced during the enrollment process (40 percent);
- The application process taking too long (19 percent); and
- The website not having enough information about the plans to make a selection (18 percent).
Additionally, 49 percent of shoppers who didn’t complete enrollment did not choose a plan during their initial shopping experience because they had not yet decided which plan they wanted.
The technical problems for HealthCare.gov have been well-documented.
The survey found that satisfaction was higher among those enrollees who got in-person help from brokers and navigators.
When shoppers used a navigator — a certified agent or broker used by 17 percent of shoppers — during the shopping process, satisfaction rose to a score of 631 compared to 611 for those who didn’t use a navigator.
Though it was the least common way to sign up for a health plan, in-person enrollment had a higher satisfaction rate at 715 points. Online enrollment had a satisfaction score of just 597 while selecting a plan on the phone had a score of 623.
That’s in line with previous research from the Urban Institute and the Robert Wood Johnson Foundation, which found that brokers are the highest-ranked of all information sources on PPACA and enrollment help by consumers.
But that finding also means carriers and brokers have more work to do, too, in working to engage consumers. J.D. Power said that “health insurance companies and the exchanges should continue to find ways to personalize the insurance shopping experience for consumers.”
“When the dust finally settles later in 2014 and in 2015, for health insurance providers to thrive in this new environment, they will need to retool their marketing, information and enrollment efforts toward a new generation of uninsured to serve their needs,” Johnson said.
Thousands still lack PPACA coverage
Originally posted July 8, 2014 by Kathryn Mayer on www.benefitspro.com.
Just because consumers are paying for health care coverage though the exchanges under the Patient Protection and Affordable Care Act doesn’t mean they’re actually getting coverage.
According to a report from the Wall Street Journal on Tuesday, thousands of enrollees still lack coverage despite picking a plan and paying for coverage due to problems in the law's enrollment systems. The problems are prevalent in California, Nevada and Massachusetts, states running their own exchanges. The enrollment glitches are causing thousands to delay care and pay more out-of-pocket expenses.
The newspaper’s report follows findings from the Health and Human Services inspector general last week that detailed widespread data errors still plaguing the law. That report found the administration was unable to resolve 2.6 million inconsistencies in the federal exchange out of a reported 2.9 million because the CMS system for determining eligibility was “not fully operational.”
And of the roughly 330,000 cases that could be straightened out, the administration only resolved about 10,000, which is less than 1 percent of the total.
The Wall Street Journal also reported that many enrollees who requested life event changes in coverage — such as marriage or a new child — haven’t gone into effect yet, even months are the request. For example, Minnesota has a 6,500 backlog for coverage change requests because of life events, the report found.
The Journal doesn’t pinpoint exact numbers, but it’s likely a fraction of the 8 million people who enrolled in coverage through the exchanges.
According to a report from the Commonwealth Fund, 20 million people have been covered because of the law — an additional 12 million people who gained coverage through other provisions of the law along with the 8 million who enrolled in coverage through the exchanges since the spring.
Why the Hobby Lobby Case Puts Employees (And Your Happy Workplace) at Risk
Originally posted July 3, 2014 by Jeremy Quittner on www.inc.com.
The Supreme Court's ruling in support of Hobby Lobby on Monday may be a win for anti-abortion advocates, but it could also spell the end to long-sought anti-discrimination laws for other groups.
A case in point: the Employee Non-discrimination Act(ENDA), which would add LGBT workers to the roster of groups including racial minorities, women, and the disabled currently protected by federal non-discrimination statutes, such as Title VII of the Civil Rights Act.
The bill is aimed at granting these traditionally vulnerable groups protections against discrimination in hiring practices and in the workplace, among other things. And though ENDA has floated around in Congress without ever passing for close to two decades, it did enjoy some recent time in the sun, as recently as last year, when it passed in the Senate. Its proponents are hoping for another try this year. Yet after recent events, that optimism may now seem quaint.
Legal observers now say Monday's Supreme Court ruling in the case of Hobby Lobby Stores v. Burwell, basically renders that once-promising bill moot. Since the Court's decision effectively lets businesses object--on religious grounds--to most any federal mandate, not just the Affordable Care Act.
In addition to causing confusion and unease among business owners in general, this latest implication of the Hobby Lobby ruling indicates that owners might also expect significant problems in their own ranks. From discrimination against women and LGBT people to sexual harassment incidents, the ruling's repercussions could extend far and wide.
"The majority [opinion] said that you can't discriminate based on race. It did not mention same-sex marriage" or sexual identity, says Kevin Martin, a partner at Goodwin Procter in Boston, and a former clerk for Justice Antonin Scalia.
Speaking for the majority in Monday's 5 to 4 decision, Justice Samuel Alito suggests the Hobby Lobby ruling should not be construed to support racial discrimination:
The principal dissent raises the possibility that discrimination in hiring, for example on the basis of race, might be cloaked in religious practice to escape legal sanction. Our decision today provides no such shield. The Government has a compelling interest in providing an equal opportunity to participate in the workforce without regard to race, and prohibitions on racial discrimination are precisely tailored to achieve that critical goal.
Nevertheless, Alito leaves open to question discrimination based on gender, sexual identity, and sexual expression. There's probably a good reason for that, notes Daniel O. Conkle, an expert on constitutional law, the First Amendment, and religion at Indiana University.
Extensive case law has already provided a precedent that forbids religious groups claiming an exemption from race-based discrimination, as Bob Jones University had decades ago. The university had sued the IRS, which revoked its tax-exempt status as a religious organization, based on its discriminatory admissions policies at the time.
Despite getting a recent boost, ENDA had been languishing for some time. Last year, the gay rights group Human Rights Campaign, reportedly helped place a religious exemption in the legislation, to make the bill more palatable to conservative lawmakers. The added measure included broad exceptions for any religious organization that opposed hiring LGBT people, as well as broad exemptions for small business owners with fewer than 15 employees. While that strategy worked in the Senate this winter-- ENDA passed 64 to 32--the bill stalled in the House.
Although President Obama signed an executive order in June, forbidding discrimination against LGBT federal contractor workers, currently, there is no federal law protecting people in the workplace on the basis of sexual identity or gender expression. Twenty-one states have added their own protections, and about 175 municipalities have as well. But in 29 states, it's still perfectly legal to fire LGBT employees based on their sexuality or gender expression.
About 75 percent of LGBT people say they have experienced discrimination at work, with an equivalent percentage saying they have been harassed at work, according to the Williams Institute, a gender identity law and public policy institute. Sixteen percent say they have lost a job due to their sexual orientation. Williams estimates there are about 8.2 million lesbian and gay workers in the U.S.
And after 20 years, particularly after the Hobby Lobby ruling, it now seems like ENDA's time has come and gone. LGBT people must try a new approach for workplace equality.
Men’s HSA account balances far outpace women’s
Originally posted June 19, 2014 by Dan Cook on www.benefitspro.com. 
Women, on average, don't have as much money in their health savings accounts than do men. This nugget is among the findings of an Employee Benefit Research Institute study, which was conducted on the 10th anniversary of the creation of HSAs.
At the end of 2013, men had an average of $2,326 in their account, while women had $1,526, EBRI said.
While the male-vs.-female gap went unexplained by the researchers, that output was perhaps the most surprising to come from the study. Other findings were more or less in line with expectations about those who choose HSAs to pay for their health care.
EBRI reported that older individuals have considerably more money in their accounts that do younger HSA users: Those under 25 had an average of $697, while those ages 55-64 $3,780 those 65 or older had an average account balance of $4,460.
Younger ones used a small percent of their account balances for health-related expenditures, and they also tended to take fewer distributions from their accounts that did older individuals. Yet at a certain age, the likelihood of a distribution fell significantly.
“The likelihood of taking a distribution increased from 44 percent among individuals under age 25, to 66 percent among those ages 35–44 and 45–54,” EBRI said in a release. “That likelihood dipped slightly (to 64 percent) among those ages 55–64 and still further (to 49 percent) among those ages 65 and older.”
“The decline in the average amount distributed, as well as the likelihood of there being a distribution for health care claims at older ages, may have been a reflection of fewer people covered by the HSA-eligible health plan as fewer dependent children are covered by older account owners,” said Paul Fronstin, director of EBRI’s health research and education program, and author of the report.
Other findings:
- The average HSA balance at the end of 2013 was $1,766, up from $1,280 at the beginning of the year;
- On average, individuals who made contributions deposited $2,032 to their account. HSAs receiving employer contributions received $1,184, on average;
- Four-fifths of HSAs with a contribution also had a distribution for a health care claim during 2013;
- Looking at HSAs with claims, the average amount distributed for health care claims in 2013 was $1,953.
Input for the study came from data collected from HSA providers with total assets of $2.7 billion as of Dec. 31, 2013. This represents 14 percent of the universe of HSAs and 14 percent of HSA assets, EBRI said.
Employer-Sponsored Health Care Facts of Life
Originally posted May 23, 2014 by Donna Fuscaldo on https://smallbusiness.foxbusiness.com.
High deductible health insurance plans are a fact of life, particularly for the employees of small businesses. But it doesn’t have to hurt morale or loyalty among workers. There are ways small business owners can help defray some of the costs if high deductible insurance plans are all they can offer.
“With the Affordable Care Act there is clearly a movement toward higher deductible plans,” says Barry Sloane, CEO of Newtek, a health insurance agency for small businesses. “Unfortunately higher deductibles are a fact of life whether you live in New York or Nebraska.”
In an effort to keep costs down and incentivize employees to curb some of the unnecessary visits to the doctor or specialists, employers of all sizes are making high deductible plans an option, and in some cases the only one.
That’s particularly true with small business owners who can barely afford to offer health insurance, let alone plans with low deductibles and limited cost sharing. As a result, experts say the era of high deductible health insurance plans and more of the burden being passed on to the employee is here and will likely stay. That change in the way health care is offered to employees can breed resentment and anger among workers, which in turn can have a negative impact on the overall business.
But there are things small business owners can do to reduce the burden. One way, according to Kevin Luss, owner of Luss Group, is to offer employees a medical bridge policy to neutralize the deductible and other out-of-pocket costs employees face.
At Luss Group, brokers work with employers to create a health plan that limits the cost sharing for the least frequent things like hospitalization, surgeries and outpatient procedures and with the savings, a medical bridge policy is taken out to insure employees from high deductibles associated with those expensive but less frequent medical needs. There are numerous ways to design the plan, but one option could be if one of the employees is admitted to the hospital he or she gets a lump sum of $3,000 in addition to a daily amount for the length of the admission. In that case, an employee who has a $5,000 deductible would only pay part of that out of pocket because the medical bridge policy covers the rest.
“The employer saves money by offering high deductible plans and uses part of the savings for the bridge plan,” says Luss. “These plans aren’t very expensive and in the long rung the employer saves money.” The rules and what is offered varies state by state.
For many small businesses footing the bill for a medical bridge policy isn’t an option, but they can offer it as a supplemental choice for employees. According to Nancy Thompson, senior vice president and director of sales at CBIZ Benefits and Insurance, employers who are providing high deductible plans can also offer the option of hospital indemnity and critical illness insurance, which will defray some of the costs associated with the high deductible plan. While it will cost employees more money, albeit not a lot, in exchange they’ll get one-on-one counseling with a benefits consultant, so they are making the right choices when it comes to their healthcare.
“Employees are going to experience gaps in coverage that they haven’t in the past,” says Thompson. “The right supplemental product is paramount when you go to a high deductible plan.”
Hand in hand with offering high deductible plans is providing the ability for employees to use pretax dollars for medical costs, which is where health savings accounts come into play. With a health savings account, funds contributed aren’t taxed and the money accumulated can be rolled over to the next year. Some employers who contribute to health savings accounts can increase their contribution to offset any bad feelings from offering a high deductible plan, says Sloane.
Another option, according to Richard Mann, Chief Product Officer at PlanSource, is offering a defined contribution toward benefits. Basically it’s a predetermined amount the employer agrees to contribute to each employee’s benefits spending.
“This helps employers control spending because the amount is fixed, but allows employees to use the amount in whatever way they think is best,” says Mann.
At the end of the day, knowledge may be the best way a small business owner can help their employees with their health-care costs. The whole idea behind these high deductible health plans is to get people to think before they get that test done or have blood drawn.
According to Sloane, arming employees with all the information about the plan, ensuring they know which doctors are in network and out of network, and all the benefits associated with the plan (including preventive care), can go a long way in keeping out of pocket costs down. It’s also a good idea to give employees access to the actual costs of health-care services, adds Mann. Knowing, for example, that the cost of a MRI can vary by as much as $1,000 will make employees more savvy consumers of health care, he says.
“It’s very valuable for the business to make an investment in the HR department and educate their staff as to how to keep claims down,” notes Sloane. “People need to pay more attention to health care. It’s not as simple as it used to be.”
Survey: Diverse structures point to a more tailored approach in family benefits packages
Originally posted May 22, 2014 by Nick Otto on https://ebn.benefitnews.com.
Even against the backdrop of a stronger economy, modern families are still feeling the pinch of financial security, pointing toward the need to tailor products to the needs of specific family structures that are considerably different than the traditional nuclear family.
As a result, the increased diversity will require more comprehensive offerings on the part of benefits managers hoping to provide the best to an increasingly diverse workplace.
Traditional families — or those married to someone of the opposite gender with at least one child younger than 21 — were found to have fewer struggles with financial security than their modern blended, multi-generational or same-sex counterparts. Nearly 36% of modern families were reported to have collected unemployment versus 21% of traditional families, according to a recent report from Allianz.
The LoveFamilyMoney Study analyzed the financial security of a more diverse household landscape. According to the report, only 19.6% of today’s households constitute a “traditional” family, a drop from 40.3% in 1970.
The study included:
▪ Multi-Generational Families — Three or more generations living in the same household.
▪ Single Parent Families — One unmarried adult with at least one child younger than 18.
▪ Same-Sex Couple Families — Married or unmarried couples living together with a member of the same gender.
▪ Blended Families — Parents who are married or living together with a stepchild and/or child from a previous relationship.
▪ Older Parent with Young Children Families — Parents age 40+ with at least one child younger than 5 in the household.
▪ Boomerang Families — Parents with an adult child (21-35) who left and later returned to rejoin the family.
Each structure brings different dynamics to the inner workings of the family, Allianz says. For example, while traditional families provide hierarchy, collaboration and structure; boomerang families, while closely traditional, view their adult children more as friends.
Additionally, the study notes, only 30% of modern families feel financial secure, unlike 41% of traditional families. For example, twice as many modern families say they have declared bankruptcy — 22% compared with 11% of traditional families.
“New family structures have a direct impact on a family’s relationship with money and finances—and we found that, while modern families have similar strong emotional ties, they often feel financially less secure than their traditional counterparts," said Katie Libbe, Allianz Life vice president of Consumer Insights.
"While family structure plays a prominent role, our study of these different modern family cohorts uncovered a number of unique insights into each group’s attitudes, perceptions and beliefs around money and financial planning," she adds.
Although most employees understand the need for medical and dental insurance, the value of voluntary benefits is less understood and can open doors to the modern family structures seen in today’s society. Voluntary products are changing the employee benefits game and can help employers meet objectives while providing more choices for employees.