Benefit package critical for small businesses
Originally posted July 11, 2014 by Alan Goforth on https://www.benefitspro.com.
Small businesses are taking a cautious approach to hiring, compensation and employee benefits, according to the 2014 Aflac WorkForces Report for Small Businesses. The study of businesses with three to 99 employees also found that benefits are a key component to employee hiring, retention and satisfaction.
Although 63 percent of small-business employees are extremely or very satisfied with their job, many believe there is room for improvement when it comes to their benefits packages. Only 12 percent are extremely satisfied with their benefits, while only 14 percent believe their benefits package meets their current family needs extremely well.
These numbers are vital to employers, because 50 percent of small-company employees said they are likely to seek a new job in the next year. Of that number, 57 percent said they probably would accept a job with slightly lower pay but better benefits. On the other side of the coin, 47 percent said improving their benefits packages is one thing their employers could do to keep them in their job.
"Employees at a small business might be satisfied with their pay, enjoy their company environment, their colleagues and the work itself, but that doesn't mean better benefits offerings elsewhere won't entice them to leave," said Teresa White, executive vice president and chief operating officer of Aflac Columbus. "These findings should alert small-business decision-makers that robust benefits, including voluntary insurance, are an important way to keep employees engaged, productive and loyal."
The study found that 85 percent of small-business employees consider voluntary benefits to be part of a comprehensive benefits program. Six in 10 workers at small companies see a growing need for voluntary insurance benefits today, driven by:
- Rising medical costs (71 percent);
- Increasing price of medical coverage (63 percent);
- Increasing deductibles and copays (58 percent); and
- Reduced number of benefits and/or amount of coverage by their employers (29 percent).
Small-business leaders are well aware of employee concerns and the importance of benefits. Although 84 percent said they either maintained or grew sales and revenues in 2013, they are concerned about taking care of employees and continuing their benefits options. This may be one reason why they hired at a slower pace than medium or large companies last year.
Health care employers need cure-all for retirement epidemic
Originally posted Jully 11, 2014 by Michael Giardina on https://ebn.benefitnews.com.
Like other industries, health care employers and benefit plan managers in the health care sector are struggling mightily with their ability to address the retirement preparedness of their evolving workforces.
Whether it’s the remnants of the baby boomers or introduction of millennials, the workforce dynamic in the health care industry is going through a change as the it continues to cope with the ongoing hiccups of the Affordable Care Act. Plan fiduciaries at health worksites also caution the need to motivate their employees to save adequately and helping them learn how to invest wisely.
The health care segment includes more 4,000 defined contribution plans, with approximately 5,200 retirement plan participants. In total assets, the health care sector has more $317.8 billion, which is about 40% of the overall DC not-for-profit market.
Ty Minnich, vice president, not-for-profit institutional markets at Transamerica Retirement Solutions, says the root of the problem is the “pendulum shift” from defined benefit to DC retirement plans, which adds to the retirement confusion.
“The aging population, although affecting all industries, is creating a workforce management issue – particularly in health care, where the demand for younger employees is there,” says Minnich. “The technical expertise, the knowledge they need with the sophistication of the changes in medical delivery [is critical], yet they have employees entering the retirement period of their careers and they are not retiring because they are not ready to retire, from a financial perceptive.”
According to health care retirement plan sponsors, approximately 75% say that employee engagement is one of the most significant challenges in managing a retirement plan. Of the more than 100 hospital administrators and chief financial officers surveyed by Transamerica and the American Hospital Association, most agree that helping employees save for retirement and retaining employees are top goals for their retirement plan.
Another wrench in the operation of health care businesses has been the ACA, and its overnight transformation – according to some in consultancy space – of how business is done in the field.
“[Health care] is undergoing an enormous change, from the perspective on how they get reimbursed for their delivery model,” says Minnich. “What you seeing is that the smaller regional community-type organizations just can’t exist in this marketplace.”
David Zetter, of Zetter Healthcare Management Consultants, explains that he is seeing similar shifts in all aspects of benefits and services – from small practices to large groups and health systems that the health care accounting and consulting firm works with.
“I don’t see how health care practices are going to do it,” explains Zetter, also a board member of the National Society of Certified Healthcare Business Consultants. “It’s just getting so expensive, and reimbursements are going down. It’s tough for a doctor to make ends meet at this point in time and if they keep wanting to be the employer of choice they are going to have to ante up. Unfortunately that’s going to cost them quite a bit of money, especially from a benefits standpoint.”
Meanwhile, there has been a change in how plan sponsors measure plan success in the medical industry. There is more of a focus around retirement readiness rather just solely participation rates, according to the study. And this intensified focus on improving employee interaction and tailoring print and electronic education touch points exemplifies how health care retirement plan sponsors are reacting.
“It all indicates that the plan sponsors are not only realizing they have to do more to help participants get ready for retirement, but also helping participant to help themselves,” says Grace Basile, assistant director of market research at Transamerica Retirement Solutions. “There’s no more ‘set it and forget it,’ there’s no more just getting into the plan.” Instead, she says it’s all about “increasing [engagement] over time, [and] making sure your investments are appropriate for where you are in your age and career.”
Overall, employers and their employees have been riddled with uncertainty of retirement since the recession. However, according to the Employee Benefit Research Institute, retirement confidence reported some meager gains from the losses over the past five years. Approximately 18% of Americans are very confident and 37% are somewhat confident with the future financial needs.
Nevin Adams, co-director of the Employee Benefit Research Institute Center for Research on Retirement Income, adds that all employers – not just those in the health care space – are faced with the challenges of finding the sweet spot of automatic enrollment, default rates and participation.
“One of the things that we are really hearing from employers is that employee benefits are going to continue to be sort of a differentiating factor,” Adams tells EBN. He says that demographic shifts are one of the biggest challenges for employers to deal with.
“The baby boomers [are] kind of hanging around, and the millenials looking for a place to come in,” he notes. “The benefit package and how it’s put together really will make a difference.”
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."
High court nullifies contraceptive mandate for family-owned businesses
Originally posted June 30, 2014 by Jerry Geisel on www.businessinsurance.com.
Family-owned for-profit employers cannot be forced by the federal health care reform law to provide coverage for prescription contraceptives, the U.S. Supreme Court ruled 5-4 on Monday.
The decision, written by Justice Samuel Alito for the majority, came in a challenge to the prescription contraceptive mandate filed by three companies owned by Christian families — Oklahoma City-based Hobby Lobby Stores Inc. and Mardel Inc. and East Earl, Pennsylvania-based Conestoga Wood Specialties Corp. — which argued they should be exempt because of their religious objections to a Patient Protection and Affordable Care Act provision that requires employers with 50 or more full-time employees to provide group health plan enrollees with cost-free coverage of contraceptive prescriptions and services as part of the ACA preventive care mandate.
The mandate as it applies to privately held corporations violates the 1993 federal Religious Freedom Restoration Act, which bars the federal government from actions that substantially burden the exercise of religion, the court ruled.
“We hold that the regulations that impose the obligation violate RFRA, which prohibits the federal government from taking any action that substantially burdens the exercise of religion,” the majority ruled. “The plain terms of RFRA make it perfectly clear that Congress did not discriminate this way against men and women who wish to run their businesses as for-profit corporations in the manner required by their religious beliefs.”
“Protecting the free-exercise rights of closely held corporations thus protects the religious liberty of the humans who own and control them,” the court ruled.
The high court noted, however, that that the ruling applies only to family-owned businesses, not to publicly traded corporations, which the justices said would be unlikely to assert religious rights.
“The idea that unrelated shareholders — including institutional investors with their own set of stakeholders — would agree to run a corporations under the same religious beliefs seems improbable,” the high court ruled.
The court also said there could be alternative ways to provide contraceptives to people who work for family-owned organizations with religious objections to contraceptives — ones that would not violate corporate owners' religious rights.
“The most straightforward way” of accomplishing this, the court said, would have the government provide contraceptive coverage to women who work for employers with religious objections to prescription contraceptives.
Another alternative approach, the justices said, could be businesses' third-party administrators obtaining contraceptive coverage without payment from the employer. The government already extends that option to nonprofit organizations with religious objections to prescription contraceptives.
Several organizations, though, are challenging that approach.
While the justices struck down the contraceptive mandate for companies whose family owners have religious objections to contraceptives, they said it does not negate all insurance-related mandates, such as vaccinations or blood transfusions.
Most employers to keep health benefits for workers but some may drop spouses
Originally posted June 9, 2014 by Jerry Geisel on https://www.businessinsurance.com
Most employers will continue to offer health care coverage to their employees, but some will eliminate coverage for employees' spouses, according to a survey released Monday.
Just 6% of employers surveyed by Willis Group Holdings P.L.C survey say they will not comply with a Patient Protection and Affordable Care Act mandate that requires employers with at least 50 employees to offer coverage to their full-time employees or be hit with a stiff financial penalty. Sixty-two percent said they will comply with the mandate, and 32% said they were undecided.
That requirement goes into effect in 2015 for larger employers and in 2016 for smaller firms.
“The results of the survey underscore that organizations recognize the value of offering competitive medical benefits to employees and, despite concerns over health care reform, appear poised to continue to offer employer-sponsored health plans as part of a total rewards package,” said Jay Kirschbaum, St. Louis-based practice leader of the Willis human capital practice's national legal and research group, in a statement.
On the other hand, 12% of employers already have added a special surcharge or eliminated coverage to employees' spouses if the spouse is eligible for coverage from his or her own employers, while 3% plan to take such action between 2015 and 2018, and 20% will likely do so but haven't set a date yet.
The motivation behind such action is financial. Employers can reap significant financial savings when employees' spouses are not covered or are required to pay premium surcharges when they are eligible for coverage through their own employers but don't take it.
For example, the average premium in 2013 for employee-only coverage was $5,884, according to the Kaiser Family Foundation in Washington. Adding a spouse easily will double that premium, experts say.
Other findings
The health care reform law also gives employers a further incentive to pare their health plan enrollment numbers.
In 2014, employers have to pay a $63 reinsurance fee that is imposed for every health care plan participant, while a $44 per participant fee will be assessed in 2016. The amount of the fee in 2017 — the last year such fees will be imposed — has not been set yet by federal regulators. Revenue generated by the transitional reinsurance program fee will be used to partially reimburse insurers for covering high-cost individuals through health exchanges.
The survey also found that just 37% of respondents have calculated the cost of the reform law on their health care plans.
That relatively low percentage “demonstrates that for many organizations, determining an accurate assessment of these figures is still a challenge,” the survey said.,
Among respondents that have calculated the cost impact, 54% said the law would boost costs between 0% and 5%, while 22% put the increase in the 5% to 10% range.
The survey is based on the responses of 1,033 employers, including 36% with between 100 and 499 employees and 26% with less than 100 employees.
One-Third of Workers Say ACA Will Delay Their Retirement
Originally posted May 27, 2014 on https://annuitynews.com. 
Although the Congressional Budget Office projects a smaller U.S. workforce in coming years as a result of the Affordable Care Act (ACA), the majority of American workers don't believe that the ACA will allow them to retire any sooner, according to a new survey from https://MoneyRates.com. On the contrary, the Op4G-conducted survey indicates that one-third of workers expect that the ACA – also known as Obamacare – will raise their health care costs and thereby force them to retire later than they previously anticipated.
One-quarter of respondents felt that Obamacare would have no impact on their retirement date, and another one-quarter weren't sure how it would impact their retirement. Those who felt Obamacare would allow them to retire earlier were the smallest segment of respondents at 17 percent.
Many of the workers who indicated that Obamacare would delay their retirement said that the delay would be lengthy. Seventy percent of those respondents said they expected the delay to be at least three years, including the 39 percent who said it would be at least five years. The respondents who said they expected an earlier retirement were more moderate in their projections, with 71 percent indicating it would hasten their retirement by three years or less.
Richard Barrington, CFA, senior financial analyst for https://MoneyRates.com and author of the study, says that the purpose of the survey wasn't to determine whether Obamacare would truly delay or hasten anyone's retirement, but rather to gauge the fear and uncertainty that surround the program today.
"It's too early to tell whether Obamacare will actually delay people's retirements," says Barrington. "But what's clear at this point is that the program has created a lot of concern about health care costs as a burden on workers and retirees."
Barrington adds that whether or not these concerns are warranted, there are steps workers can take to better manage their health care costs in retirement, including budgeting for health insurance within their retirement plans, shopping regularly for better deals on insurance and using a health savings account as a way of handling out-of-pocket medical expenses.
"The poll reflects a high degree of uncertainty over the impact of Obamacare on retirement," says Barrington. "One way to reduce the uncertainty is to take active steps to manage how health care will affect your retirement."
Upcoming PCORI Fee Due July 31
Source: https://www.irs.gov
The Affordable Care Act imposes a fee on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans to help fund the Patient-Centered Outcomes Research Institute. The fee, required to be reported only once a year on the second quarter Form 720 and paid by its due date, July 31, is based on the average number of lives covered under the policy or plan.
The fee applies to policy or plan years ending on or after Oct. 1, 2012, and before Oct. 1, 2019. The Patient-Centered Outcomes Research Institute fee is filed using Form 720, Quarterly Federal Excise Tax Return. Although Form 720 is a quarterly return, for PCORI, Form 720 is filed annually only, by July 31.
Specified Health Insurance Policies and Applicable Self-Insured Health Plans
The fee is imposed on an issuer of a specified health insurance policy and a plan sponsor of an applicable self-insured health plan. For more information on whether a type of insurance coverage or arrangement is subject to the fee, see this chart.
Calculating the Fee
Specified Health Insurance Policies
For issuers of specified health insurance policies, the fee for a policy year ending before Oct. 1, 2013, is $1, multiplied by the average number of lives covered under the policy for that policy year. Generally, issuers of specified health insurance policies must use one of the following four alternative methods to determine the average number of lives covered under a policy for the policy year.
- Actual Count Method: For policy years that end on or after Oct. 1, 2012, issuers using the actual count method may begin counting lives covered under a policy as May 14, 2012, rather than the first day of the policy year, and divide by the appropriate number of days remaining in the policy year.
- Snapshot Method: For policy years that end on or after Oct. 1, 2013, but began before May 14, 2012, issuers using the snapshot method may use counts from the quarters beginning on or after May 14, 2012, to determine the average number of lives covered under the policy.
- Member Months Method and 4. State Form Method: The member months data and the data reported on state forms are based on the calendar year. To adjust for 2012, issuers will use a pro rata approach for calculating the average number of lives covered using the member months method or the state form method for 2012. For example, the issuers using the member months number for 2012 will divide the member months number by 12 and multiply the resulting number by one quarter to arrive at the average number of lives covered for October through December 2012.
For more information on these methods to determine the average number of lives covered under a policy for the policy year, please see the final regulations (PDF).
Applicable Self-Insured Health Plans
For plan sponsors of applicable self-insured health plans, the fee for a plan year ending before Oct. 1, 2013, is $1, multiplied by the average number of lives covered under the plan for that plan year. Generally, plan sponsors of applicable self-insured health plans must use one of the following three alternative methods to determine the average number of lives covered under a plan for the plan year.
- Actual Count Method: A plan sponsor may determine the average number of lives covered under a plan for a plan year by adding the totals of lives covered for each day of the play year and dividing that total by the total number of days in the plan year.
- Snapshot Method: A plan sponsor may determine the average number of lives covered under an applicable self-insured health plan for a plan year based on the total number of lives covered on one date (or more dates if an equal number of dates is used in each quarter) during the first, second or third month of each quarter, and dividing that total by the number of dates on which a count was made.
- Form 5500 Method: An eligible plan sponsor may determine the average number of lives covered under a plan for a plan year based on the number of participants reported on the Form 5500, Annual Return/Report of Employee Benefit Plan, or the Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan.
However, for plan years beginning before July 11, 2012, and ending on or after Oct. 1, 2012, plan sponsors may determine the average number of lives covered under the plan for the plan year using any reasonable method.
For more information on these methods to determine the average number of lives covered under applicable self-insured health plans for the plan year, please see the final regulations (PDF).
Reporting and Paying the Fee
File the second quarter Form 720 annually to report and pay the fee no later than July 31 of the calendar year immediately following the last day of the policy year or plan year to which the fee applies. Issuers and plan sponsors who are required to pay the fee but are not required to report any other liabilities on a Form 720 will be required to file a Form 720 only once a year. They will not be required to file a Form 720 for the first, third or fourth quarters of the year. Deposits are not required for this fee, so issuers and plans sponsors are not required to pay the fee using EFTPS.
Please see the instructions for Form 720 on how to fill out the form and calculate the fee. If for any reason you need to make corrections after filing your annual Form 720 for PCORI, write “Amended PCORI” at the top of the second filing.
The payment, if paid through the Electronic Federal Tax Payment System, should be applied to the second quarter (in EFTPS, select Q2 for the Quarter under Tax Period on the "Business Tax Payment" page).
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.”
Employer Mandate Repeal Won’t Relinquish Employers From ACA Compliance
Originally posted May 13, 2014 by Melissa A. Winn on https://eba.benefitnews.com.
Eliminating the Affordable Care Act’s employer mandate would not significantly reduce the number of insured Americans, according to a recent analysis by researchers at the Urban Institute in Washington. But, it would also not eliminate your employer client’s need to maintain an ACA-compliant plan, one industry expert notes.
Completely abandoning the employer shared responsibility rule would reduce the number of people in 2016 with health insurance from 251.1 million to 250.9 million, a decrease of just 200,000 people, the report says, adding that it would also eliminate labor market distortions in the law and lessen opposition to the law from employers.
Regardless of whether the mandate is eliminated, however, work will remain for benefit advisers helping employers meet ACA compliance, says Jessica Waltman, senior vice president of government affairs for the National Association of Health Underwriters.
“Maintaining an ACA-compliant plan requires a lot of other components,” she says. “Employers have to comply with all of the market reforms and notice requirements and offer all of the benefit mandates, as well,” requirements brokers and agents can assist employers with, she says.
“There are significant penalties for not maintaining ACA compliance” with other requirements of the health law, such as limits on mandatory waiting periods, she adds.
Also, employer-sponsored health plans will not go away if the employer shared responsibility rule is eliminated, she says, noting that the value of benefit advisers will remain there, as well. “The vast majority of businesses affected by the mandate offered coverage before the mandate.”
The authors of the analysis — Why Not Just Eliminate the Employer Mandate? — agree. About two thirds of American workers now have offers of employer coverage when there is no mandate to do so, they write. “Most employers would not drop coverage if the penalties were eliminated,” the report says.
Downfall?
Ending the employer responsibility rule would, however, eliminate the federal revenue expected from penalty payments that employers would pay under the law, which the authors estimate at just less than $4 billion in 2016. Slight increases in Medicaid and marketplace subsidies due to the elimination of the employer requirement would also cost the government about $46 billion between 2014 and 2023.
Alternative sources of revenue would have to be found to compensate for the federal loss of penalties, the analysis notes.
The Internal Revenue Service in February issued final guidance saying that employers with fewer than 100 employees won’t have to provide health insurance coverage until Jan. 1, 2016.
Previously, on July 2, 2013, the Obama administration delayed the need for all employers with 50 or more employees to provide health insurance coverage until Jan. 1, 2015.