The Tomato Paradox of Health Care Reform
Original article https://analytics.ubabenefits.com
By Mick Constantinou
There is an old paradoxical adage that, “Knowledge is knowing that a tomato is a fruit, while wisdom is not putting it in a fruit salad.”
In terms of the promises of the health care reform law(keep, access and affordable), paradoxes like the tomato have come to light, but the Tomato Paradox relates directly to the difference between having knowledge and commanding wisdom.
Most Americans are aware of health care reform and the massive changes to how health insurance and health care will be accessed and regulated beginning this fall. Some companies and individuals have the knowledge (or think they have the knowledge) of how the law will impact them directly, but the variable is the source of their knowledge and whether or not that knowledge is based in fact, political rhetoric or meetings at the water cooler.
The other variable is wisdom. Employers may have the knowledge of “what they must do,” or “do not have to do,” based on the number of FTEs they employ, whether they are fully-insured or self-insured and other factors, but many have not been afforded access to the wisdom to answer the simple question: “What should we do?”
Regardless of whether an employer decides to “play or pay” in 2014 and beyond, there are other subjective factors (hidden costs) of health care reform that will impact company culture and strategic direction. These factors need to be considered in concert with the results of modeling and compliance tools orchestrated by a trusted advisor, including but not limited to:
- Increased reporting burdens, whether you “play or pay”
- Recruitment and retention challenges related to changes in total compensation
- Impacts to employee productivity and morale
- Changes in taxable income for both employers and employees
In simple terms, knowledge is information and facts of which someone is aware, and wisdom is the ability to make correct, common sense judgments and decisions based on the facts. Wisdom is an intangible quality gained through experience and expertise.
What separates insurance sales people from trusted advisors is the experience, expertise and wisdom brought to the unique challenges faced (and overcome) during the benefits renewal process in the era of health care reform.
What’s Ahead this Year as Health Insurance Exchanges are Rolled-out Nationwide
Original article https://www.theihcc.com
By Cindy Gillespie
Exchanges are a key component of the Affordable Care Act (ACA). Here’s a snapshot of exchange developments across the country, potential regulations to watch for, and where exchanges might be by October 2013 for open enrollment and by January 1, 2014, when they are slated to “go live” nationwide.
Health Insurances Exchanges: The Vision
The ACA directed each state to establish two types of exchanges or have the federal government do so on its behalf — the American Health Benefits Exchange (AHBE) for individuals and the Small Business Health Options Program (SHOP) for small employers. Under the statute, individuals are eligible to buy insurance on the AHBE if they are:
- a U.S. citizen or legal alien
- not incarcerated
- a resident of the state in which the exchange is based
AMERICAN HEALTH BENEFITS EXCHANGE
The ACA includes robust premium and cost-sharing subsidies for individuals who purchase insurance through the individual exchange who are living at levels between 100 and 400 percent of the federal poverty level — between approximately $12,000 and $46,000 a year — and who are not eligible for other public insurance programs (i.e. Medicaid, Medicare, Tricare) and who do not receive “affordable” insurance coverage through their employers (that meets minimum value standards).
Employers which have more than 50 employees whom are eligible for tax credit subsidies, either because the employer does not offer coverage or because the coverage offered is unaffordable to the employee according to ACA standards, or not of minimum value, will be subject to a penalty.
SMALL BUSINESS HEALTH OPTIONS PROGRAM
Meanwhile, the ACA allows employers with up to 100 full-time employees to purchase insurance through SHOP, although the state has the option to limit access to employers with 50 employees or less for the first two years. Most states have taken advantage of this option in order to maintain consistency with the outside market’s definition of “small employer.” States also maintain the option to allow employers with more than 100 employees to purchase insurance through the SHOP beginning in 2017, with approval of the U.S. Department of Health and Human Services (HHS).
Tax credit subsidies are also available to employers who purchase coverage on SHOP for employers with less than 25 employees who have an average taxable wage under $50,000 per year. Employers cannot claim the tax credit for more than two consecutive years.
Health Insurances Exchanges: 3 Primary Models
Although the ACA envisioned 50 different exchanges championed by individual states, the reality of ACA implementation has been far different. Indeed, political, logistical, and operational challenges faced by both HHS and the states have led only a subset of states to embrace exchanges. The update below provides a snapshot of how exchanges are developing across the country.
1. STATE-BASED EXCHANGES
Seventeen states and the District of Columbia are developing State-based Exchanges as envisioned under the ACA. These states have received “conditional approval” from HHS to operate them for the 2014 plan year. Under these exchanges, states execute all functions but may turn to the federal government for issues such as tax-credit eligibility determination, risk adjustment, and reinsurance.
While several of these states have been making great strides toward October 1, 2013 open enrollment, others are relatively behind in the planning process and may struggle to meet the impending deadlines. For example, some states still lack legal authority to operate a State-based Exchange, while others have yet to procure any IT-related services necessary to make the exchange function.
2. STATE PARTNERSHIP EXCHANGES
Seven states have received conditional approval from HHS to operate State Partnership Exchanges. This exchange model, not envisioned under the ACA, is an option created by HHS for states that may want to play a small role in exchange operations either permanently or as they move toward a State-based Exchange. States have two primary options for pursuing State Partnership Exchanges: a plan management partnership or a consumer partnership. States also have the choice to participate in both partnership models.
States participating in a plan management partnership assume responsibility for issuer account management and issuer oversight as well as monitoring, quality reporting, and data collection. In addition, these states also play a key role in determining qualified health plan (QHP) certification. Plan management partnerships will recommend which plans should be certified as QHPs to HHS, which has the legal authority to make QHP certifications.
States also have the option to pursue a consumer partnership exchange. States choosing this approach control the day-to-day management of Navigators and in-person consumer assistors, and will have the option to engage in outreach, education, and branding activities. Navigators and in-person consumer assistors will be the “boots on the ground” in states to help educate consumers about plan choices and coverage options. For states choosing a Federally-facilitated Exchange (FFE), consumer partnership states oversee and provide technical assistance to Navigators, but HHS retains authority over the Navigator programs.
3. FEDERALLY-FACILITATED EXCHANGES
Twenty-six states have decided not to pursue a State-based or Partnership Exchange. In these states, the federal government is establishing a Federally-facilitated Exchange (FFE). Under an FFE, the federal government performs all exchange functions with states, maintaining the option to make final Medicaid determination and operate its reinsurance program. Although the option to operate reinsurance programs has yet to gain traction, many FFE states have expressed interest in maintaining the responsibility to make final Medicaid determination for individuals assessed as eligible for Medicaid.
Marketplace Plan Management
Several federal requirements necessary for health insurance plans to be qualified in order to be offered on the exchange are already criteria commonly examined as part of routine, state insurance regulatory activities. HHS has indicated that its preference is to integrate states’ existing regulatory activities into its decision-making for qualified health plan (QHP) certification, even in states with an operating FFE.
To further facilitate this relationship, HHS has indicated it will offer states a marketplace plan management option, essentially allowing states to perform activities associated with a plan management partnership but without requiring them to submit a formal exchange blueprint. HHS guidance dated February 20, 2013 also indicates that states can apply for federal funds to support these activities, similarly as it did for the State-based and State Partnership models.
3 Issues to Watch in 2013
As the clock ticks on the path to open enrollment, there are several issues still under consideration that are worth tracking, particularly for the small and large employer communities.
Recent guidance from HHS indicates that employee choice and premium aggregation will not be required of SHOP exchanges in the 2014 plan year. In the same set of proposed rules, HHS also indicates that federally-facilitated SHOPs (FF-SHOPs) will not offer these services in their first year of operation.
As you may recall, employee choice and premium aggregation (the process of collecting premiums from qualified employers and delivering a single streamlined payment to insurers) are two tools at the disposal of SHOP exchanges to help drive enrollment. This recently proposed approach could potentially undermine the viability of SHOP exchanges and the small business market nationwide.
Additional rules from HHS surrounding 10 essential health benefits indicate that to meet these requirements outside the exchange, health insurance plans will need to either embed pediatric oral services, the tenth category of essential health benefits coverage, or be “reasonably assured” that the individual has obtained dental coverage from an exchange- certified, stand-alone dental plan. This is a new proposal from HHS and is therefore receiving significant scrutiny from several stakeholder groups, as the requirements could cause operational challenges in the market. Stay tuned.
HHS released additional details regarding employers’ interface with the exchange in January. Most interestingly, the rules verify that there is no central databank containing details on employer-sponsored health insurance plans. As a result, until that information is available, exchange applicants must attest to the details surrounding their employer-sponsored health insurance plans when seeking health insurance on the exchange. The exchange will then use available data sources to attempt to verify individuals’ claims. Absent inconsistencies in available information, the exchange will be permitted to proceed to enroll the applicant in a health insurance plan along with the applicable subsidies. Employers will be notified of employees who claim a tax credit on the exchange. However, exchanges must select a valid sample of people for whom employer coverage details could not be verified and verbally call employers for additional information. If the exchange cannot obtain information within 90 days, eligibility will remain unchanged.
Looking Toward 2014
The issues described above are only a select set of developments that have emerged in recent months. Indeed, there are a host of unanswered questions and operational challenges that stand between today and open enrollment. ACA implementation process has passed the window for planned delay. Employers and the health benefits industry should expect for exchanges to “go live” and for tax credits to be available beginning January 1, 2014. The Stakeholders should prepare for implementation, albeit with hiccups along the way, as scheduled.
Health law’s mandate, tax credit could help or hurt employers
Original article https://www.upi.com
By Andrew Hedlund – Medill News Service
Business owners view the new health care law through many different paradigms. Some see it as onerous, while others find it helpful. Research suggests that one of its most contentious provisions, the employer mandate, will have minimal impact.
Joe Olivo is a small business owner who finds the new health care law costly and confusing, particularly next year’s employer mandate. Mark Hodesh is a small business owner who finds the law to be a boon to his business.
Some business owners like Hodesh, the owner of Downtown Home and Garden in Ann Arbor, Mich., qualify for the tax credit, which is available to businesses with fewer than 25 employees to offer health insurance, and do not worry about the mandate, which only kicks in at the 50-employee mark.
Others like Olivo, who is a co-owner of Perfect Printing in Morristown, N.J., do not qualify for the credit and say the requirement that businesses with more than 50 employees must provide health insurance or face fines prevents them from growing.
Starting next year, employers that have 50 or more workers that are full-time, defined in the law as those working more than 30 hours a week, are required to provide coverage for their workers. For those with fewer than 25 employees, they receive a tax credit now of 35 percent of the cost of their employee health insurance costs, and that will increase to 50 percent next year. According to the Congressional Research Service, more than 90 percent of businesses had fewer than 50 employees.
Olivo’s business has 40 full-time employees and offers health insurance. With that number of full-time workers, he will not be subject to the mandate, but it gives him pause when deciding whether to expand the business.
In fact, Olivo is purposely avoiding hitting the 50-employee mark. Any new employees he hires work on a part-time basis. This decision is rooted in the uncertainty surrounding health care costs.
“If I see premiums are not going through the roof,” he said, “and I see there is a stable known situation where I can reasonably expect what will happen, I will have a better incentive to take the risk with my money and grow.”
What he has seen so far is not promising though, he said.
“(What) we’ve already started to see is how the regulation, the amount of work, for a company just under 50 employees,” Olivo said, “that we have to decide to make sure we’re in compliance — start looking at our employee’s hours, making sure we don’t go over the 50 mark because of the severe ramifications,” referring to law’s penalty of $2,000 per employee for any companies with 50 or more employees that don’t provide health insurance. The penalty would not apply to the first 30 employees.
Olivo also said the lack of finality in the IRS’s rules further confuses employers as 2014 draws closer. The agency will hold a public hearing on this provision Tuesday.
However, research on similar employer requirements in San Francisco and Massachusetts by the Urban Institute, National Bureau of Economic Research and the National Opinion Research Center found that the notion the requirement to provide insurance would lead to job loss or could lead to fewer employers offering health insurance was overstated.
In fact, the National Opinion Research Center found in its 2008 study that businesses with three or more employees offering health insurance in Massachusetts increased from 73 percent to 79 percent, though employers were less inclined to consider terminating coverage than national companies.
A study sponsored by the National Bureau of Economic Research found that, based on San Francisco’s efforts, employers nationwide will be less likely to choose the penalty option of this requirement because the Affordable Care Act lacks a public option. San Francisco does offer the equivalent of a public option, which some employers may find preferable.
Elise Gould, a health care economist at the Economic Policy Institute, said she expects the effects of the employer mandate to be minimal.
“I don’t think that it is going to lead to much job loss,” she said. “There may be some shifting in hours to avoid the mandate. I think that would be small though.”
Gould also added that she expects employers to take many different factors into account when considering expansion, with the insurance requirement being just one small factor.
The law attempts to aid small businesses with tax credits as well, though several restrictions come with them: firms must have fewer than 25 employees and pay them less than $50,000 in wages each year, meaning Olivo’s business is ineligible for a credit while Hodesh’s business qualifies.
He met the requirements and received a tax credit, allowing him to hire another employee.
Hodesh has 12 employees so he doesn’t need to worry about crossing the mandate’s 50-employee threshold soon.
“There are pluses and minuses to all issues,” Hodesh said. “And I think that people are focusing on the minus side of the requirements of the Affordable Care Act. They are missing out on all the positives of the law.”
Offering health insurance to his employees is also an important strategy for his store.
“We provide health care as a business tool,” Hodesh said. “We attract and keep good long-term employees, and we don’t have high turnover and we don’t have to train a lot.”
Starting around 2000, though, his company’s health care costs tripled, but the tax credit eased that cost.
“(The credit) gave us the confidence to hire a new person,” he said. “It’s a good deal for me.”
6 key compliance deadlines for 2013 and beyond
As PPACA moves forward, employers must keep track of 6 key compliance deadlines for 2013 and beyond
Original article https://ebn.benefitnews.com
By Kathleen Koster
For plan sponsors, 2013 is a year of crossing Ts and dotting Is on PPACA compliance for their health care plans and strategizing for next year, when the employer mandate and public exchanges go into effect. The health care reform law has many moving parts and a great deal of regulations yet to come, which will keep benefits professionals on their toes all year.
"Employers have never experienced this complexity and oversight in compliance for their health plans. Employers are used to a compliance-rich environment around their retirement plans, but they need an equally robust and hands-on approach to managing the compliance of their health plans," says Mike Thompson, a principal in the human resources services practice of PricewaterhouseCoopers. He adds that "the rules, regulations and level of enforcement have never been greater."
Thompson believes "2013 is a period of strategic re-evaluation of whom the employer will provide benefits to in light of the changes in the individual market allowing guaranteed issue and subsidies for lower- and middle-income Americans."
He believes that employers will also transition around financing as "more employers look at community-type programs with the interest of moving away from their own programs and potentially contributing towards a private exchange or facilitating access to coverage in the open market."
To help employers keep all their compliance ducks in a row while managing and determining long-term strategies for their plans, EBN asked legal and health care experts for top issues to keep in mind for 2013 and beyond.
1. Preparing for the 2014 employer mandate
"At the top of the list is the interpretation of employer responsibility provisions that includes what constitutes minimum essential coverage that employers have to provide or be subject to penalties. Along with that, there are very important issues around the minimum value of the coverage they provide as well as who they have to provide it to," says Paul Dennett, senior vice president of health care reform at the American Benefits Council.
The employer mandate applies only to large employers. Whether an employer is defined as large under PPACA (generally companies with 50 or more employees) depends on the number of its full-time equivalent employees. Companies with 50 or more full-time workers (averaging at least 30 hours per week) must offer minimum health care coverage that is affordable.
In 2013, an employer ought to be determining whether it is a large employer and, therefore, subject to the mandate. "If they offer coverage in 2014, the coverage must meet the minimum value standards and the contributions the employer requires of employees cannot be so high the coverage is unaffordable relative to the employee's household income," says Jean C. Hemphill, practice leader of Ballard Spahr's health care group.
To determine the minimum value, fully insured plans will rely on their insurance carrier for information on whether they meet the minimum value of 60% for their plan. Self-insured plans can turn to an actuary or determine their value with the aid of a government-provided calculator or government-provided checklists.
When it comes to determining the affordability of the plan, an employer cost-sharing arrangement must be affordable relative to the employees' household income, as stated under PPACA. So, "the employee's contribution and cost-sharing obligations can't exceed 9.5% of their household income," says Hemphill.
However, the IRS acknowledges that employers don't know workers' household income, and suggests employers use W-2 wage information instead to determine their plan's affordability.
Hemphill expects more guidance on this issue since employees' contributions are typically much greater for dependents coverage than their own. An employee offered otherwise qualifying coverage by their employer can't use the public exchange unless they prove their employer-sponsored coverage is unaffordable.
The affordability issue may be of greater concern to employers with fairly low-income workforces or for employers not offering comprehensive plans to employees or all employees, such as the mini-medical plans sometimes offered in the retail industry. Employers only need to offer one affordable plan with minimum value to satisfy the rules, however mini-medical plans will be illegal after 2014.
Actuarial experts predict that most high-deductible health plans with deductibles in the $2,000-$3,000 range will most likely qualify, however those with much higher cost-sharing may not meet the minimum value.
While sponsors can vary the deductible and coinsurance amount of HDHPs, they should remember that the higher the deductible, the lower actuarial value of the plan.
"There are variables that can be adjusted in the plan design, but the most important one is where to set the amount of the deductible," says Dennett. He adds that guidance so far has indicated employer contributions toward HSAs or credits toward HRAs will count toward the minimum value. The question is whether the amount contributed is counted 100% to the plan or if it is discounted in the actuarial value formula that HHS would use in the calculation of actuarial value coverage.
Overall, "the Affordable Care Act was designed so employers don't need to make too many plan design changes to their plan," says J.D. Piro, national practice leader for Aon Hewitt's health and benefits legal department. "They may need to open it up to more employees but, generally speaking, they should be able to meet the affordability and minimum value requirements."
2. Public exchanges
Employers are required to provide employees with notice alerting them of the existence of public insurance exchanges. It is thought that the government will issue a model notice for this purpose. At press time, the government had yet to produce this model notice or other guidance about the notice requirement. The March 1 notification deadline has been extended until "late summer or fall," according to a recent FAQ announcement from the Centers for Medicare and Medicaid Services.
"There may still be unanswered questions about whether the state exchanges, partnership exchanges or the federal exchanges are really at an operational readiness stage to be able to go live as of October 2013," says Dennett.
Assuming the exchanges are on track and sponsors receive the guidance they need, they should expect many questions from workers about how the process affects them.
"While most major employers will continue to offer coverage to employees, there will be some confusion around the availability of coverage in the public exchanges and what the implications are [for employees] getting coverage from their employer, says Thompson.
He suggests employees will primarily want to know:
* Do I still have coverage through my employer?
* Am I eligible to get coverage through the exchange?
* Can I potentially get subsidies through the exchange?
* Is it in my best interest to go through the exchange?
3. Waiting periods
Another design-related issue employers must factor into their plans is that under PPACA, waiting periods for health care coverage cannot exceed 90 days. The 90-day period begins when the employee is otherwise eligible for coverage. Employers with a high-turnover workforce that currently have long waiting periods will have to shorten them.
If an employer requires employees to work a minimum number of hours to qualify for coverage, it may need to monitor workers' timesheets in 2013 to determine if and when coverage needs to be offered in 2014; this may be complicated for seasonal employees and other employees with variable hours.
Thompson believes this is part of a larger question of meeting qualifications for providing coverage.
"It's part of a package in my mind," he says. "Employers must evaluate employee classes when looking at whether they meet the minimum threshold of providing coverage to full-time employees. Seasonal, temporary, or contract workers are classes that need to be evaluated in order to avoid or at least understand what the penalties might be."
4. Pre-existing and non-discrimination prohibitions
"The non-discrimination rules are new for insured plans in 2014," says Hemphill. Even though these prohibitions should already be in effect, government agencies have delayed enforcement until they release regulations.
"It will be an important issue because right now there is no requirement to offer coverage to part-time employees, but with the definition of full-time employees as an average of 30 hours per week and new non-discrimination testing rules, the employer obligation may be different," she says.
Either way, employers can expect notice and guidance well before implementation because, "it is a big plan design issue," says Edward I. Leeds, counsel in the employee benefits and executive compensation group at Ballard Spahr.
5. Wellness programs
PPACA includes rules that prohibit plans from discriminating against individuals based on a range of health-related factors. Plans cannot impose restrictions on eligibility or increase employee costs for coverage based on these factors.
"When the government issued guidance under ACA, they actually revised the HIPAA regulations. So now the ACA and HIPAA rules ... will be the same," says Leeds. "By and large the rules follow HIPAA with some changes, the most significant of which is that the potential reward for meeting requirements under the wellness programs will increase as of January 1, 2014."
The potential reward for meeting a wellness requirement will increase from 20% of cost of coverage to 30% of cost of coverage. Incentives related to tobacco cessation will increase up to 50%. (For more details, read "Regs increase wellness rewards," page 28.)
6. Upcoming fees and taxes
Patient-Centered Outcomes Research Institute, established by PPACA, will collect and publish information about clinical effectiveness of treatments for patients. It will be paid for through fees assessed against insurers and self-funded plans equal to $2 ($1 in the first year) per covered life. The assessment will last seven years and eventually be adjusted for inflation. Employers with self-funded plans will need to report and pay these fees starting in July 2013.
The Transitional Reinsurance Program aims to stabilize the individual health insurance market as insurers provide coverage, starting in 2014, to large numbers of individuals who do not currently have coverage and present uncertain risks. The program will provide reinsurance payments to insurers that take on high-risk individuals. The program is funded through a three-year tax (expected to be $63 per covered life in the first year.)
The Additional Medicare Tax, in effect this year, is an additional 0.9% tax applied to high-income individuals. Employers are responsible for withholding the tax from wages or compensation it pays to an employee in excess of $200,000 in a calendar year.
The wellness path not taken
Original article: https://ebn.benefitnews.com
By Kathleen Koster
With full implementation of health care reform marching along, the landscape of employer-sponsored health benefits will never be the same. As employers turn to private and public exchanges beginning in 2014 as allowed under the Patient Protection and Affordable Care Act, the purpose for and implementation of worksite wellness programs also are likely to change.
Dr. Matthew Liss, East Coast medical director of NBCUniversal Health Services, fears that employers may not see wellness as their responsibility or employees will be less engaged in wellness initiatives because employers won't work as closely with vendors in the exchange.
Employers may not have access to health data as in the past, which could influence their investment in wellness programs, as well as impact incentives for healthy behavior. Liss points to premium reductions for nonsmokers or incentives for going to the gym that are currently offered by working hand in hand with health care providers. Employers may lose this ability to work with vendors while developing wellness incentives if employees receive coverage through a public or private exchange.
Certain populations could lose out
Bryce Williams, the president and CEO of Extend Health, Inc., which operates the nation's largest private exchange recently acquired by Towers Watson, believes that the most likely demographic to move employees into public exchanges would be small employers with 500 or fewer employees. Employers in this situation would be more likely to stop providing or lessen wellness services to workers than those entering private exchanges, he says.
In general, small employers don't have data to show them the best practices in wellness programs, explains Dave Ratcliffe, a principal at Buck Consulting. This could remain the case for small employers whose workers enter the public marketplaces. Ratcliffe adds that the more employers measure their initiatives, the more investment they make into wellness.
In the retail industry, where part-time workers outnumber full-time workers, some employers will reframe their total reward strategy for a post-2014 health care reform world. Some of Ratcliffe's clients in this sector are considering restructuring jobs and recalibrating total remuneration in order to attract, retain and motivate the workforce. For example, he says an employer may limit part-time workers to clock fewer than 30 hours each week, while rewarding top talent with over 30 hours of scheduled work so they can receive the best health benefits as defined under PPACA. While such a workforce restructuring may require more part-time employees who work under 30 hours per week, this framework could be a motivational carrot to drive talent.
Instead of developing wellness programs exclusively to drive down the health cost curve, employers will use wellness to improve population health and the overall productivity.
"Even if your employees are getting coverage through the exchange now, you want to make sure that they are healthy because a healthier employee is a more productive employee," says Julie Stich, research director at the International Foundation of Employee Benefit Plans.
Williams adds that large employers could leverage any savings they absorb through an exchange setup by reinvesting them into employees, especially into their wellness component.
Giving up a global edge?
According to a recent report from Buck Consultants, 87% of global employers recognize managing employee health as their responsibility in 2012, up from 75% in 2010. Further, 49% of multinational employers now have global health promotion strategies, up from 34% in 2004.
Based on these results, employers believe they need a healthy and productive workforce to have an edge in a global economy.
"If you look globally, the universal responses from all of the countries that productivity and reducing presenteeism was the No. 1 goal for their wellness program, [whereas] for U.S. companies, the No. 1 goal is reducing health care costs," Ratcliffe says. For most employers outside the U.S., employees receive coverage from a government-sponsored system, yet they continue to view wellness initiatives as paramount to driving a profit.
Further, the 2014 reinsurance tax (which could increase employers' health insurance costs by 1-2%), a looming 2018 excise tax, mandated benefits and auto-enrollment could all cause employers to consider shifting cost downward and investing more into wellness. In recent years, plan sponsors have managed a 5% trend rate by predominantly cutting benefits or cost-shifting. "From an attraction and retention standpoint, how much more can we afford to continue to cut benefits? So we're left with wellness to manage costs instead of shifting costs," says Ratcliffe.
In the new health care reform environment, Ratcliffe believes incentives and disincentives will play an even larger role in motivating employees to participate and succeed in wellness. PPACA permits an increase of allowable incentive dollars from 20% to 30%, and more employers are using outcomes-based incentives to drive results.
Overall, the U.S. spends roughly 18% of their total GDP on health care, while the rest of the world spends 9.5% on average. However the U.S.'s average rate of obesity is nearly double the rest of the world's (28% compared to 15%), according to 2012 OECD health data.
"Regardless of health care reform, we're not going to be able to compete in the future without making a change," says Ratcliffe.
Vendor relationships also will morph
The private exchange market, whether insured or self-funded, will function more like a group exchange, where the employer contracts with the exchange instead of sending people individually to a public exchange. For these private exchanges, "employers are not losing access to that data because they are still in a group world in 2014," Ratcliffe explains.
Public exchanges may tell a different story. Employers won't get data for people sent to public exchanges, but Ratcliffe doesn't expect many employers will go this route initially in 2014. Farther down the road when there's a viable individual market similar to Medicare, vendor relationships may change.
Employers' relationships with health vendors, in addition to how they measure and run wellness programs, are sure to change in coming years as employers consider private and public exchanges as options to provide insurance coverage to workers. It remains to be seen how exchanges will change wellness initiatives, but it's clear that wellness programs will always be a business imperative to keep workers healthy, productive and satisfied with their employer.
Many workers aren’t ready for health care reform
Original article https://www.kansascity.com
By Diane Stafford
National health care reform and cost-cutting by employers is changing the way many workers get health insurance, but a majority of employees may not understand what’s ahead.
The Aflac WorkForces Report, the insurer’s third annual employee benefits study, polled 5,299 employees across the country and found that three-fourths said they had never heard the phrase “consumer-driven health care.”
That’s a problem. Consumer-driven health care is the direction the nation is moving. It’s the underlying concept that requires individuals to take more control over their health care spending.
“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,” said Audrey Boone Tillman, executive vice president of corporate services at Aflac.
There’s another problem. The survey found that more than half of the workers polled said they preferred not to have greater control over their health insurance options. Fifty-four percent said they don’t have the time or knowledge to manage the responsibility.
How will workers learn to navigate the world of health care and insurance choices? Seventy-five percent said they expect their employers to educate them about the details of reform.
There’s another problem. Only 13 percent of the 1,884 “benefits decision-makers” in organizations reached in a companion poll said they thought educating employees about health care reform is “important” to their organizations.
At least most employees realize they’re not ready. About half said they fear they will leave their families less protected if they make poor insurance plan choices.
The poll, released Wednesday, emphasized the education challenges as employers shift away from their health care benefits.
One-third of the employees polled said they weren’t knowledgeable about health savings accounts, three-fourths said they weren’t knowledgeable about the impending federal or state health insurance exchanges, half said they weren’t knowledgeable about health reimbursement accounts and one-fourth said they weren’t knowledgeable about flexible spending accounts.
All of those are benefits options for employers to subsidize employee health care in different ways or exit health benefits entirely.
“It’s time for consumers to face reality,” Tillman said. “The responsibility lies in the hands of consumers to educate themselves.”
Survey finds majority of employees want customizable benefits
Original article: https://ebn.benefitnews.com
By Tristan Lejeune
As employers increasingly cost-shift benefits, an inevitable consequence is employees wanting a larger say in how their benefit dollars are spent - making tailored and personalized benefit packages another step in the evolution of the consumer-driven paradigm.
"Once you get into the situation where employees now are all of a sudden consumers and [they]'re bearing a fair amount of the cost, with that comes a desire to be able to make a decision," says Mike Fish, vice president of voluntary benefits with The Hartford.
In a December 2012 survey of nearly 1,500 U.S. workers by TNS Omnibus, 86% say it is important to be able to customize all of their benefits to fit their individual lifestyle. Seventy-six percent of those surveyed by TNS Omnibus say it's important for them to design their own disability insurance instead of one-size-fits-all coverage chosen by an employer, and 82% would likely sign up for a disability plan that allows them the chance to choose the size of their payments.
Women and younger workers were particularly likely to favor customizable benefits. Only half of men, but 56% of women, agree that it is extremely or very important to be able to customize benefit choices to fit their lifestyle. Americans in their 40s are more likely to value the option than older workers, and millenials are more likely than any older group to say personalization is important.
"Consumers today can customize everything - from music and TV to clothing and cars, and our recent survey shows they want to customize their benefits, too," Fish says.
Five tips for saving on prescription drugs
Original article https://www.benefitspro.com
By Kathryn Mayer
No two pharmacies are alike.
According to an analysis by Consumer Reports, prescription drugs vary widely in price depending on where you shop. Failing to comparison shop could result in overpaying by as much as $100 a month or even more, depending on the drug.
The consumer group says shoppers need to compare prices. Here are five other tips on how to save money on prescriptions, according to Consumer Reports.
Request the lowest price. Consumer Reports analysis reveals shoppers weren’t always given the best, lowest price. Make sure you ask.
Go generic. Generics are copies of brand-name medications whose patents have expired. The Food and Drug Administration requires generics contain the same active ingredients in the same strength as the brands they copy. In addition, a generic must be “bioequivalent” to its corresponding brand, meaning that it delivers the same amount of active ingredients into a person’s bloodstream in the same amount of time as the original brand.
Leave the city. Some grocery store and independent drugstores had higher prices in urban areas than rural areas, according to Consumer Reports. For example, CR shoppers priced a 30-day supply of generic Actos at a pharmacy in Raleigh, N.C., for $203, while another pharmacy in a rural area of the state sold it for just $37.
Get a refill for 90 days, not 30 days. Most pharmacies offer discounts on a three-month supply.
Look for additional discounts. All chain and big-box drugstores now offer discount generic-drug programs, with some selling hundreds of generic drugs for $4 a month or $10 for a three-month supply. Just make sure your drug is on the list. Offers vary and check the fine print.
Supreme Court Issues Decision in U.S. Airways vs. McCutchen
Source: https://ebn.benefitnews.com
By Andrea Davis
The Supreme Court ruled 5-4 last week that James McCutchen, a U.S. Airways, Inc., employee does not have to pay his health plan back all of the money he recovered following a car accident.
The case raised the issue of whether a benefit plan administrator is entitled to full reimbursement for payments made to a plan participant injured in an accident where the participant sues and recovers damages from a third party.
According to the decision, the health plan has a right to be reimbursed, but McCutchen should be able to charge his health plan for part of his lawyers’ fees.
“The Court basically said two things: the plan is a contract between the employer-plan sponsor and the employees and, pursuant to that contract, if the plan says ‘we’re going to recover, dollar for dollar, what we paid you as soon as you recover, regardless of the circumstances,’ that should be enforced,” says Myron Rumeld, a lawyer with Proskauer. “That’s the broad proposition the employer community is taking from the case.”
Secondly, and more specific to this particular case, “the majority of the justices said ‘look, in this case, we don’t find the plan language so clear as to whether it was intended to mean a recovery before taking into account the attorneys’ fees that were spent, or after,’” says Rumeld. “… in this particular case [the justices said] ‘we’re going to limit the reimbursements to take into account the fact the plan should pay a share of the attorneys’ fees that were spent to generate the recovery. That’s called the common fund doctrine.”
Rumeld believes the decision is favorable for plan sponsors for two reasons. “The simple reason is it creates more certainty. It tells employers that if you draft your plans a certain way and you make them clear enough, you don’t have to worry you won’t get your own terms enforced … there’s certainty in knowledge. You can draft the plan document and know it’s going to be enforced,” he says. “It also means that if you want to have the ability to recover dollar for dollar what you paid, you’re going to have the ability to do that if you draft it into the plan language.”
The Exchanges Really will Open Oct. 1st
Source: https://www.benefitspro.com
By Allison Bell
Photo: United States Mission Geneva / Wikimedia Commons / CC-BY-2.0
U.S. Health and Human Services (HHS) Secretary Kathleen Sebelius on Friday assured yet another congressional panel that the Patient Protection and Affordable Care Act exchanges will be opening on schedule.
"We are moving ahead," Sebelius said at a House Energy and Commerce health subcommittee hearing on the HHS fiscal year 2014 budget request. "We are definitely going to be open for open enrollment starting Oct. 1 of 2013."
Federal fiscal year 2014 will start Oct. 1.
Sebelius has given similar assurances about progress at the HHS PPACA exchange development program at HHS budget hearings organized by the Senate Finance Committee's Health, Education, Labor and Pensions (HELP) Subcommittee and at the House Ways and Means Committee.
PPACA calls for HHS to work with state regulators to start exchanges, or health insurance supermarkets for individuals and small groups.
Senate Finance Committee Chairman Max Baucus, D-Mont., suggested at the HELP hearing Wednesday that it looks as if the exchange program may be headed for a "train wreck."
Congress has provided only $1 billion of the $10 billion that analysts originally said HHS would need to set up the exchange program, Sebelius said.
"We've judiciously used those resources," and efforts to set up the "Hub," the data center and call center to be at the heart of the exchange system, are going well, Sebelius said.
HHS will transfer money from prevention programs to fund exchange education and enrollment efforts, Sebelius said.
Rep. Frank Pallone Jr., D-N.J., said Sebelius should speak more frankly about the funding obstacles that Republicans have put in the way of PPACA implementation.
"They can't come back and criticize if the outreach doesn't occur if they're not funding it," Pallone said.
Republicans on the subcommittee asked whether Sebelius really has to use prevention fund money to pay for PPACA exchange outreach programs.
Rep. Michael Burgess, R-Texas, a medical doctor, asked Sebelius about the HHS decision to abruptly suspend enrollment in the Pre-existing Condition Insurance Plan (PCIP) program, a health insurance program for uninsured people with health problems that make buying medically underwritten coverage difficult.
He referred to a woman with lymphoma who said she learned HHS had shut down the PCIP program the day before she had been about to submit her application.
"Is it Obamacare or Obamadon'tcare?" Burgess asked. "Rather than spending [prevention fund money] on advertising for a program that may not even work on Oct. 1, or Jan. 1, why should we not transfer money from that fund to actually help the people that you promised to help -- the people with pre-existing conditions?"
Sebelius said Americans like the woman with lymphoma will benefit greatly starting Jan. 1, 2014, because, after that date, "no American will ever again be locked out of a health program because of a pre-existing condition."
PCIP was always supposed to be a temporary program, not a permanent solution, and it would not exist if the Republicans had succeeded with their many efforts to repeal PPACA, Sebelius said.
At another point, an exchange between Sebelius and Rep. Joe Pitts, R-Pa., the chairman of the health subcommittee, hinted at the problems that even members of Congress and their staffers may be having with keeping up with PPACA implementation details.
Pitts asked why the PPACA exchanges would not give small businesses a choice of health plans in 2014.
Sebelius had to explain that HHS has decided to let the Small Business Health Options Program (SHOP) small-group exchanges put off giving employers a chance to offer employees a multi-carrier coverage option.
Each SHOP exchange will still offer the employers themselves a chance to choose from a menu that includes plans from all of the carriers that have agreed to sell plans through that exchange, Sebelius said.