IRS Issues Proposed PPACA Rules on Employer-Information Reporting
Originally posted September 6, 2013 by Stephen Miller on https://www.shrm.org
On Sept. 5, 2013, the U.S. Department of the Treasury and the Internal Revenue Service issued two proposed rules intended to streamline the information-reporting requirements for certain employers and insurers under the Patient Protection and Affordable Care Act (PPACA or ACA).
The PPACA requires information reporting under Internal Revenue Code (IRC) Section 6055 by self-insuring employers and other health coverage providers. And under IRC Section 6056, information reporting is required of employers subject to the employer "shared responsibility" provisions, also known as the employer mandate—meaning those with 50 or more full-time equivalent workers, who must provide coverage for employees working an average of at least 130 hours per month (or 30 or more hours per week) looking back at a standard measurement period of not less than three but not more than 12 consecutive months—or pay a $2,000 penalty for each full-time worker above a 30-employee threshold. The shared-responsibility mandate, which was set to take effect in January 2014, has been delayed until January 2015.
One proposed rule, “Information Reporting of Minimum Essential Coverage,” pertains to IRC Section 6055, while the other proposed rule, “Information Reporting by Applicable Large Employers on Health Insurance Coverage Offered Under Employer-Sponsored Plans,” pertains to IRC Section 6056.
“These reporting requirements serve distinct purposes under the ACA,” Timothy Jost, a professor at the Washington and Lee University School of Law in Virginia, explained in a commentary about the proposed rules posted on the journal Health Affairs’ blog. “The large-employer reporting requirement is necessary to determine whether large employers are complying with the employer-responsibility provisions of the ACA and will also help identify individuals who are ineligible for premium tax credits because they have been offered coverage by their employer. The minimum-essential-coverage reporting requirement will assist the IRS in determining whether individuals are complying with the ACA’s individual-responsibility requirement and also whether they are eligible for premium tax credits because they lack minimum essential coverage.”
Once the final rules have been published, employers and insurers will be encouraged to report the specified information in 2014 (when reporting will be optional), in preparation for the full application of the reporting provisions in 2015.
“The absence of these rules was the reason given by the IRS for delaying the employer mandate until 2015,” Jost noted. “The IRS is encouraging voluntary reporting by employers and insurers, subject to the requirements for 2014, and should have no trouble getting the final rules in place for mandatory reporting in 2015.”
Statutory Requirements
Specifically, the PPACA calls for employers, insurers and other reporting entities to report under IRC Section 6055:
- Information about the entity providing coverage, including contact information.
- A list of individuals with identifying information and the months they were covered.
And under IRC Section 6056:
- Information about the applicable large employer offering coverage (including contact information for the company and the number of full-time employees).
- A list of full-time employees and information about the coverage offered to each, by month, including the cost of self-only coverage.
Proposed Reporting Options
The proposed rules describe a variety of options to potentially reduce or streamline information reporting, such as:
- Replacing Section 6056 employee statements with Form W-2 reporting on offers of employer-sponsored coverage to employees, spouses and dependents.
- Eliminating the need to determine whether particular employees are full time if adequate coverage is offered to all potentially full-time workers.
- Allowing organizations to report the specific cost to an employee of purchasing employer-sponsored coverage only if the cost is above a specified dollar amount.
- Allowing self-insured group health plans to avoid providing employee statements under Sections 6055 and 6056 by furnishing a single substitute statement.
- Allowing limited reporting by certain self-insured employers that offer no-cost coverage to employees and their families.
- Permitting health insurance issuers to forgo reporting, under Section 6055, on individual coverage offered through a government-run health care exchange, or marketplace (set to launch in October 2013), because that information will be provided by the marketplace.
- Permitting health insurance issuers, employers and other reporting entities, under Section 6055, to forgo reporting the specific dates of coverage (instead reporting only the months of coverage), the amount of any cost-sharing reductions, or the portion of the premium paid by an employer.
According to Jost, the IRS is attempting to avoid duplication and collecting unnecessary information. “Large employers need only report the employee’s share of the lowest-cost monthly premium for self-only coverage, since a determination as to whether employer coverage is affordable for adjudicating eligibility for premium tax credits is based on the cost of self-only, rather than family, coverage,” he wrote. “Entities that must report minimum essential coverage can report birthdates, rather than Social Security numbers, for dependents if they are unable to secure the Social Security numbers after reasonable efforts.”
The IRS is soliciting comments on the Section 6055 and 6056 proposed rules through Nov. 8, 2013. The agency will take the public comments into account when developing final reporting rules on further simplifications.
Separately, the process to challenge an insurance exchange's finding that an employer's plans are unaffordable or fail to provide minimum essential coverage (thereby triggering penalties against the employer) is presented in a final rule published in the Federal Register on Aug. 30, 2013, by the U.S. Department of Health and Human Services.
Be Prepared For Fall Open Enrollment Changes
Originally posted September 3, 2013 by Amy Gallagher on https://www.golocalworcester.com
The healthcare reform law requires employers to notify employees of available health exchange options by October 1. That means employees will face new health plan choices - and decisions - during open enrollment this year.
Education is Key
With new options comes the need for more education. And that doesn't just mean the health exchange option notice employers are required to provide, which is likely to confuse employees.
Since employees will get to choose between employer-sponsored plans or those offered by the exchanges for the first time, employers should make an extra effort with their communication plans for this fall's open enrollment. And employees should step up their participation in the process as well.
Employee questions...and answers
Employers should provide informative, detailed materials that will enable employees to evaluate their choices and make the best decisions. When reviewing open enrollment resources, employees should follow these five steps:
1. Review the benefits and costs of the employer-sponsored plan. Understand what the employee’s share of the cost is in dollars - an amount that's deducted pre-tax from your paycheck at whatever tax bracket you fall in. For example, an employee who pays $250 monthly of a $500 total monthly individual plan cost will have a deduction (assuming a 30% tax bracket) around $175 monthly.
2. Compare the employee costs above to an individual plan offered through a state-run exchange.Employees who are Rhode Island residents may visit www.HealthSourceRI.com and those who reside in Massachusetts can go to www.mahealthconnector.com for details. Keep in mind that employees who purchase an individual plan through the exchange must pay the full cost of the plan unless you qualify for tax credits to offset, or eliminate, the cost.
3. Determine tax credit by using an online tool and estimating family income for 2014 (before taxes), telling the age of the oldest adult in the family, and entering the total number of adults and children in the household. Generally, employees may be able to get a subsidy if they are single and make up to $45,960, or are a family of four and earn up to $94,200. The exact amount of the subsidy is determed by size of family and level of income, so the less someone makes, the more they will receive.
4. Employees who receive the subsidy should subtract the earned tax credits from the total cost of the exchange plan to determine their total premium cost. Then compare this amount to what you would pay for an employer-sponsored plan.
5. Last, all employees must understand that, starting January 1, 2014, they are mandated to be insured.Whether through an employer or exchange plan, it’s up to you to get coverage, or pay penalties at tax time.
Does out-of-pocket delay actually apply to you?
Originally posted September 3, 2013 by Tristan Lejeune on https://ebn.benefitnews.com
Yet another Affordable Care Act delay is in the spotlight: limits on out-of-pocket spending.
According to the law, starting in 2014, health plan participants will be spending no more than $6,350 in total out-of-pocket costs for individuals and $12,700 for family plans. That cap on out-of-pocket spending has been delayed until 2015, however, if an employer is using two separate vendors for its medical and pharmacy benefits. Sandy Ageloff, southwest health & group benefits leader for Towers Watson, says the rule only applies “to nongrandfathered plans” and emphasizes that the delay only applies to those who split their services.
“So the biggest piece of the legislation,” Ageloff says, “is that compliance is still required for Jan. 1, 2014 if the benefit plan – whether it’s a self-funded employer plan or a fully insured carrier program – is using a single vendor for the administration of both medical and pharmacy. The nuance comes in when you have multiple vendors, you get a one-year deferral in total compliance. You still have to comply in pieces, but you don’t have to comply in total.”
The number of plans that maintain their grandfathered status in the face of ACA continues to shrink, but Ageloff estimates that 35% or 40% of large employers use different vendors and thus have the extra year. Complicating things, she says, is that “a number of carriers actually have, behind the scenes, carved out that relationship with a pharmacy vendor,” so two can masquerade as one. Figuring out compliance may require more than just a phone call to your provider.
“For example, if you look at Anthem Blue Cross Blue Shield, they have a subcontracted relationship with ESI to manage their pharmacy benefits,” Ageloff says. “Same is true of a lot of other broad-based medical insurance carriers. So the health plans themselves are taking different interpretations on whether the full mandate for 2014 applies to them, or if they get the deferral. So that’s complicating this. As an employer, if I say, I use Anthem BCBS as either my [third-party administrator] or I’m buying an insured product from them, I’m relying on them to tell me how they interpret their own program. So that’s creating some challenges, particularly for self-funded employers who control their own plan design.”
The National Business Group on Health Vice President of Public Policy Steve Wojcik says, like the employer mandate delay, the out-of-pocket postponement was done to allow systems to catch up to what is required of them in terms of processing and accounting. And, like the employer mandate delay, he says it’s good news.
“It means that employers and their plans have another year to consolidate and coordinate,” Wojcik says. “In many cases the issue is that the PBM handles the pharmacy benefit separately and the medical expenses are handled through the health plan, so a lot of times their systems don’t talk with one another, and then the patient or plan member doesn’t have up-to-the-minute information on where they stand toward their out-of-pocket limit.”
Wojcik says “by and large, most people don’t approach their out-of-pocket limits in a year, so for most people, it’s not going to affect them.” For those who do – usually those with chronic conditions or highly expensive pharmacy needs or both – “it will just be another year before they get relief.”
PPACA expected to aggravate job absences
Originally posted August 23, 2013 by Dan Cook on https://www.benefitspro.com
Under pressure to meet the basic requirements of the Patient Protection and Affordable Care Act, employers may be overlooking the law’s implications for employees’ attendance at work.
This observation comes from a survey of employers and insurance providers sponsored by the Disability Management Employer Coalition and Pacific Resources.
The researchers polled 169 benefits policy decision-makers in large organizations and 118 senior professionals in the insurance industry involved with absence management and disability issues. It asked a series of questions designed to measure their employers’ preparedness for the act’s full implementation, including whether they had thoughtfully considered how the reforms might change employee attendance at work and issues around worker disability.
Most have not, the researchers concluded. “While organizations may be prepared for the changes to health care and health insurance, most were not thinking about the impact of PPACA on disability and absence management,” the study said.
Another major finding: both employers and insurers surveyed anticipate “increased incidence and duration of long-term absences.”
Both employers and insurers tended to believe that employee absences will be more frequent and longer. The reason? With more Americans enjoying the benefits of health coverage, there will be longer waiting periods for access to care providers. This will be exacerbated, the report said, by the dwindling numbers of primary care physicians entering the profession.
“Most respondents believe access to routine care will change – 42 percent believe that the ability of employees to see a physician for routine care in a timely manner will get worse, while only 21 percent believe it will improve,” the study reported.
But when it came to questions about the act’s influence on disability issues, there was less clarity among respondents.
“There is more uncertainty about how PPACA will impact the number of disability claims, although those who feel knowledgeable enough to predict what will happen are more likely to believe the number of claims will rise due to employees no longer fearing a loss of health care coverage from a long-term absence,” the study said.
Overall, insurers took a more pessimistic view of the ways in which Obamacare might influence attendance and disability.
“Carriers are more likely than employers to think that PPACA will have an impact on absence and disability,” the study said. “A third of employers and a majority of carriers believe PPACA will increase the incidence and duration of absences and disability. However, many have not yet considered this aspect of the law, as a quarter are not sure what will happen to absence and disability outcomes.”
9 tips to help employees transition to public exchanges
Originally posted on https://ebn.benefitnews.com.
According to the Obama administration, the state insurance marketplaces set up under ACA are on schedule to begin open enrollment on Oct. 1. To aid in communicating health care reform changes this fall, here are nine tips for transitioning employees into the public marketplace from Sara Taylor, health solutions development leader at Aon Hewitt.
While the model notice provided by Health and Human Services helps employers comply with provisions of the Affordable Care Act, the notice itself is likely to generate confusion and more questions from employees than it answers. Employers should supplement the model notice with additional education on the ACA and proactively answer the question, "What do I need to do with this notice?"
Explain your benefits strategy and provide context on how the public marketplaces fit within your benefits strategy.
The ACA and marketplaces may impact different employee groups in different ways. Think through the messages that impact all employees and those messages that affect only specific audiences.
What do employees need to do and by when? This information can get lost. Be sure to clearly call out specific required action steps and deadlines – both for your benefits plans and for marketplaces.
Public marketplaces are only one option for employees to obtain medical insurance. With many states expanding Medicaid eligibility, Medicaid or other public programs may be viable alternatives for some employees.
No matter how well you communicate, some employees will have questions or need additional assistance and they will likely look to you for help. Ahead of time, determine who will be handling questions, identify likely questions and have answers and others resources prepared ahead of time.
Enrolling in health benefits can be overwhelming for many individuals, and the introduction of the marketplaces adds a whole new layer of complexity. There are resources and tools available today that can help individuals understand their options, model program eligibility — including whether they may qualify for a premium tax credit (or subsidy) in a marketplace — and in some cases, enroll in a health plan.
Ensure that your leadership is aware of and on board with your benefits strategy and how the public marketplaces fit into that strategy. Encourage your HR team and managers to be advocates for your strategy to employees.
Employees that apply for financial assistance in the marketplaces need to provide information about any health insurance available to them from an employer (e.g., cost of "you only" coverage). Individuals will be instructed to ask their employers to fill out the employer information section of the form. Know how you will handle these requests. Or better yet, give employees self-service access so they can complete the application themselves.
Five Things You Don’t Know About Health-Care Reform
Originally posted August 21, 2013 by Susan Salka on https://www.businessweek.com
Insurance sign-ups are just around the corner for millions of Americans under health-care reform, yet there’s still much people don’t know about this landmark legislation, particularly those changes occurring over the next decade inside hospitals, clinics, and doctors’ offices.
It’s a workforce thing. All the attention is on politics, or who will receive what benefits and where the money will come from. But the most important question is who will deliver the care and how it will be done. Most of the change will be accomplished by the health-care workforce. Transforming health care is a huge management challenge. Many clinicians and staff will have to fundamentally change their professional objectives and standards, daily routines, compensation, patient relationships, and employer relationships. The scope of health-care reform and current market pressures are unparalleled in any other industry; the re-engineering of health-care workforce roles now underway may completely change relationships between patients and clinicians in the next decade.
Biggest long-term problem: clinician shortages. An additional 30 million Americans will receive health-care coverage by the end of the decade, during a time when a further 15 million patients will become eligible for Medicare. Who will take care of all those people? By 2020, a shortage of 91,500 primary care and specialist physicians is predicted. Shortages of nurse practitioners and physician assistants, who could help fill in the gaps in primary care, also are predicted. Without enough clinicians, effective health-care reform could be stifled.
Getting paid to keep you well, rather than cure your illness. Changes in compensation for doctors and nurses will dramatically transform from quantity of work to quality of work. Until very recently, compensation and reimbursement were entirely based on the volume of patients and treatments. Now they’re beginning to reflect value-based benchmarks that will increase every year. Some of these include patient satisfaction, readmission rates, health risk assessments, and patient wellness, among other benchmarks. For hospitals, making sure patients are satisfied will become a pocketbook issue. For clinicians, careful disease management and preventive care to keep patients out of the hospital could directly affect how much they are paid.
Independent doctors’ practices are quickly fading. Physicians who hang a shingle outside a private office are becoming rarer. A recent survey showed that 55 percent of practicing physicians work for someone else, usually a hospital or a practice owned by a hospital or health system. That figure grew 8 percent in one year. Meanwhile, nearly 40 percent of physicians younger than 45 have never worked in private practice. Doctors are moving to employed positions in hospitals and health systems in search of greater stability in the rapidly changing health-care environment.
Your doctor may not be a doctor. One of the most striking changes for consumers may be team-based care, with physicians, nurse practitioners, physician assistants, psychologists, pharmacists, and others working together to improve quality of care and lower costs. If your health-care provider employs a team approach, when you make an appointment with your doctor you may instead see a nurse practitioner or physician assistant, depending on a quick assessment of your health status. In more than a dozen states, nurse practitioners can diagnose, treat, or prescribe with no physician involvement. Laws and regulations on the scope of practice for these clinicians are changing rapidly.
Health-care reform isn’t just about getting coverage for millions of people who don’t have it. It’s also about changing the way health care is delivered to reduce costs and improve patient care. Unless we can accomplish those two goals, increasing coverage will become prohibitively expensive. Transforming health-care delivery requires the active participation of America’s 16-million member health-care workforce.
Health Care Reform Heightens Employers' Strategic Plans for Health Care Benefits
Original article can be found at https://online.wsj.com
Original source: Towers Watson
NEW YORK--(BUSINESS WIRE)--August 21, 2013--
The breadth of health care reform is prompting changes and ushering in emerging opportunities for employers, according to a survey of 420 midsize and large companies by global professional services company Towers Watson (NYSE, NASDAQ: TW). While employers remain concerned about a predicted 5.2% increase in 2014 health care costs and the risk of triggering the excise tax* in 2018, most (82%) continue to view subsidized health care benefits as an important part of their employee value proposition in 2014.
However, the 2013 Health Care Changes Ahead Survey found that a majority of employers do anticipate making moderate to significant changes in their health benefit programs for all employees and retirees by the beginning of 2016. It also revealed a clear disparity in how employers view public and private exchanges. Nearly 30% of employers have confidence in public health insurance exchanges as a viable alternative to employer-sponsored coverage in 2015. In contrast, private exchanges are more appealing, with 58% having confidence in them as a viable alternative. In short, employers are intrigued by the potential of private exchanges to control cost increases, reduce administrative burdens and provide greater value.
Employers remain committed to sponsoring health care benefits, and nearly all (98%) plan to retain their active medical plans for 2014 and 2015. However, they will look to private exchanges as a potential delivery channel. This arrangement enables them to maintain their role as plan sponsor, but outsource certain aspects of plan management to an exchange operator. Nearly three-quarters (74%) of companies surveyed reported that as they evaluate private exchanges for active full-time employees, they will want evidence that private options deliver greater value than the current self-managed model.
"The health care landscape is changing rapidly thanks to health reform, continued cost escalation, the emergence of health benefit exchanges, and new provider contracting and care delivery arrangements," said Randall Abbott, a senior health care consultant at Towers Watson. "While employers are grappling with how to comply with health care reform right now, they are evaluating new health care designs and delivery approaches for their employee and retiree populations that will ultimately transform the look of employer-provided health plans over the next three to five years. In particular, employers recognize the impact of the excise tax requires strategic planning now to create a glide path to 2018."
Initiatives to Avoid the Excise Tax
More than 60% of employers believe that they will trigger the excise tax in 2018 if they don't make adjustments to their current benefit strategy. Nearly the same percentage also say the excise tax will have a moderate or significant influence on their strategy.
To combat the increase in employee health care costs and avoid the excise tax, nearly 40% of employers will be changing their plan designs for 2014. In addition to emphasizing employee wellness and health improvement approaches, employers are looking to increase their use of supply-side strategies and aggressive vendor management techniques. For 2015 or 2016, they are considering providing outcome-based incentives (49%), offering a benefit differential for use of high-performance networks (47%) and using value-based benefit designs (40%). Employers will also be focused on reducing coverage subsidies for spouses and dependents, as well as implementing spousal coverage exclusions or spousal premium surcharges when other health coverage is available.
"Employers are balancing many competing factors as they revisit their financial commitment to health benefits and their ability to maintain a sustainable plan in the face of annual cost increases and the excise tax. They see health care benefits as an important part of their total rewards mix. And as they weigh new options, they will be looking to keep their plans affordable and viable for the long term," said Ron Fontanetta, a senior healthcare consultant at Towers Watson. "In the next two years, many employers will evaluate their strategic options for active employees, and wait to see how exchanges evolve and the broader market responds. We are likely to see a much different -- and much faster -- pace of change in retiree medical plans."
Health Care Coverage for Retirees and Part-Time Workers
With the existence of proven exchange solutions for Medicare-eligible retirees, the percentage of employers that are somewhat or very likely to discontinue their employer-sponsored plan for post-65 retirees will grow from 25% in 2014 to 44% in 2015. And with the advent of public exchanges making new solutions available for pre-65 retirees, the percentage of employers that are somewhat or very likely to discontinue their plan for pre-65 retirees will jump from 10% in 2014 to 38% in 2015.
Less change is expected for part-time employees. Only 11% are considering changes to their total rewards mix or design for part-time employees. Many part-time employees are likely to seek coverage through public exchanges.
Other Notable Trends and Data Points from the Survey
-- CEOs and CFOs have become increasingly involved in health care strategy decisions (36% and 46%, respectively).
-- Seven in 10 employers have a stronger commitment to improving employee health because of health care reform, while 71% have a stronger commitment to work with health care providers and suppliers to improve health care delivery and quality.
-- The use of personalized digital technologies to improve employee health engagement is on the rise. Forty-three percent of companies plan to use the technologies by 2014, and another 31% are considering its use for 2015 or 2016.
-- Half the companies surveyed provided employee communications that go beyond meeting compliance standards in educating employees on the law and its implications; 36% meet minimum compliance standards, and 14% go significantly beyond compliance to prepare employees for planned and potential strategic changes.
*Excise tax: According to the Patient Protection and Affordable Care Act, the federal government will impose an excise tax of 40% on insurers of employer-sponsored health plans, including self-insured employers, with an aggregate value of more than $10,200 for individual coverage and $27,500 for family coverage.
About the Survey
The 2013 Towers Watson Health Care Changes Ahead Survey offers insight into the focus and timing of U.S. employers' planned response to the Patient Protection and Affordable Care Act and the start of open enrollment for health insurance exchanges in the fall. The survey was completed by 420 employers during July 2013 and reflects respondents' 2014 -- 2016 health care benefit decisions. The responding companies comprise a broad range of industries and business sizes, and collectively employ 8.7 million employees.
More on the Oct. 1 ACA notices: Who has to provide them
Originally posted by Keith R. McMurdy on https://eba.benefitnews.com
After last week’s reminder about the Oct. 1 deadline for Affordable Care Act communications, the following question came up frequently — Does the notice requirement apply to employers with less than 50 employees?
Further clarification is provided in Technical Release 2013-02 called “Guidance on the Notice to Employees of Coverage Options under Fair Labor Standards Act 18B and Updated Model Election Notice under the Consolidated Omnibus Budget Reconciliation Act of 1985.” Section 18B of the FLSA was added as a result of the ACA. And it is 18B of the FLSA that contains the notice requirement that employers must communicate about the ACA with their employees. Overall, it says that every employer that is subject to the FLSA must provide the notice about coverage options. Fact Sheet 14 from the U.S. Department of Labor tells us that businesses covered by the FLSA must have at least two employees, and are those that have an annual dollar volume of sales or business revenue of at least $500,000 or are hospitals, businesses providing medical or nursing care for residents, schools and preschools or government agencies.
So, if your business is subject to the FLSA, you have to give the notice to employees of coverage options to existing employees by Oct. 1, and to all new hires within 14 days. It does not matter if you have 10 or 35 or 50 or 100 employees. If you are subject to the FLSA, you have to provide the notice.
Keith R. McMurdy is a partner with Fox Rothschild, focusing on labor and employment issues. He can be reached at kmcmurdy@foxrothschild.com or 212-878-7919.
This alert is intended for general information and educational purposes and should not be taken as specific legal advice.
5 most popular voluntary benefits
Originally posted by Kathryn Mayer on https://www.benefitspro.com
As employers consider their health care and total rewards strategies with the context of the Patient Protection and Affordable Care Act, nearly half expect voluntary benefits and services to become more important than ever over the next five years, according to the Towers Watson 2013 Voluntary Benefits and Services Survey.
The survey also found that the importance of voluntary in companies’ total rewards strategy will grow 27 percent in the next half-decade.
For now, these five voluntary benefits are the most commonly offered by employers.
5. Accident insurance
Accident insurance is among the most prevalent voluntary benefit offerings provided by employers: 68 percent offer the protection to their employees.
Other voluntary products that might be making the list in the next couple years? Towers Watson reports critical illness, identity theft and financial counseling are the top voluntary benefits to watch in the coming years.
4. Dental
Dental insurance remains a popular voluntary benefit, with 80 percent of employers offering the benefit.
Diabetes, heart disease, blindness and pregnancy complications all can be affected by dental hygiene and inflate health costs overall.
3. Disability
Benefits experts have long argued disability insurance is just as important as life insurance. And employers seem to agree: Eighty percent of employers surveyed by Towers Watson offer it.
According to the Social Security Administration, a staggering 30 percent of people will encounter a disability of three months or longer at some point during their working years.
2. Vision
Employers also see big value in vision insurance: 84 percent offer it.
Voluntary vision coverage is typically a popular product.
“We use it as a recruiting tool,” Spencer Peery, business manager at Bailey Lauerman & Associates, an advertising agency in Lincoln and Omaha, Neb., told Benefits Selling in August.
“These benefits keep our employees healthier," he said. "They use dental and vision coverage almost as much as they use health insurance, for both prevention and general care.”
1. Life
The survey reports that life insurance is the most popular voluntary benefit: 94 percent of the 320 large employers surveyed offer it.
Individual life policies were some of the first voluntary products sold in the U.S. workplace. Today, 81 percent of individuals with life insurance have workplace coverage, while half of individuals look to their employer as the only source for coverage, according to a 2012 ING study.
But despite life insurance offerings at work, industry experts say most Americans are underinsured, if they're insured at all.
Five misconceptions that come with health care exchanges
Originally posted by Samuel H. Fleet on https://ebn.benefitnews.com
The creation of health care exchanges has done little to quiet the noise. Exchanges require that retirees navigate this uncertainty on their own, buying directly from the carrier with no familiarity or direction. Additional options come with more questions, but working with the right partner helps ease the minds of an organization’s former employees so they can enjoy their retirement. Group plans have customer advocacy centers that cater specifically to an elderly population and can reinforce trust during such an ambiguous time.
The following misconceptions about health care exchanges will help shine light on some of this misinformation and show how group plans are a better option that individual plans in the post-65 space.
1. Individual plans are cheaper than group plans
Not necessarily. A retiree who is 65 may be able to find an inexpensive individual plan, but that likelihood decreases exponentially as an individual ages. One reason is because individual plans have costs built into them to help the carrier recover adverse selection. And because there is a “take it or leave it” component built into individual plans, meaning the individual can always go look for another plan if one isn’t to their liking, they will often have a charge (usually around 10%) to protect themselves.
Some carriers try to build-in other underwriting characteristics in an attempt to circumnavigate this situation, often with a questionnaire. Individuals who “pass” the underwriting questionnaire may then receive a preferred rate, but it isn’t an exact science. This maneuvering doesn’t exist with group plans, which are rated across the entire retiree segment rather than on an individual’s particular characteristics. Additionally, multiple plans are available to a retiree in a group setting, but with literally hundreds of individual plans available it can be difficult for one to feel assured that he or she is choosing the right plan. A retiree can certainly pick the most inexpensive plan, but going that route almost guarantees poor coverage.
2. Moving to an exchange eliminates employer financial liability
FASB106 liability is based on an obligation to pay for retiree benefits, regardless of whether these benefits are offered to the individual or a group. The reality is that these liabilities will continue to exist as long as the employer makes contributions in any form, and in any amount, to a retiree’s plan. This standard requires reporting of costs as well as advance mechanisms that ensure future payments to retirees will be available.
3. Retirees want more coverage options at different price points
Choice is a good thing, but too much choice is often overwhelming. In a recent survey conducted by AmWINS Group Benefits, a pool of more than 1,500 retirees enrolled in a group plan was asked if they wanted more options, and responses came back 50/50. Of those who wanted more, 82% said they only wanted two or three options at the most. Health care is critical to an aging population, and retirees are likely to have many questions when it comes to choosing their individual plans. Retirees want comfort in not only their coverage, but the stability that comes with consistent care.
4. Exchanges eliminate the employer’s administrative burdens
Because health care is critical to an aging population, they are likely to have questions and concerns along the way. A large American auto manufacturer switched to an exchange model and knew what to expect – the noise level from retirees was deafening and it continued for nearly a year. The company had no choice but to take it. If administrative obligations and burdens are a concern, consider changes to the administrator, not the plan.
5. The move to an exchange won’t cause any disruption for the retiree
The confusion that comes with a shift to an exchange model is likely to have a detrimental impact on the retiree, which can cause great disruption within the employer’s organizational structure. Retirees, the same group that built the company and carried it through hard times to prosperity, can feel forgotten once they are thrown into the exchange model. Often the people who made promises to former employees about their health care needs in the future are long gone, replaced by players in a management structure with no relationship with these retirees.
While inevitable, change is never easy. It’s not too late to support loyal, former employees in the midst of health care reform by removing some of the anxiety around change and overwhelming choices.