Employee Benefits Blog

The healthcare landscape looks quite different than it did 20 years ago. In the 1990’s, getting decent health insurance through your employer wasn’t unheard of — it was assumed. But back then, healthcare wasn’t nearly as expensive; rates have increased every year for nearly two decades and it’s unlikely they’ll reverse course anytime soon.

In order to afford health benefits for employees, many businesses have had to restructure their offerings, causing a rise in the popularity of high deductible health plans (HDHPs). In 2015, nearly one-third of large employers chose to only offer high deductible health plans to employees and over 80 percent added HDHPs to their list of health insurance offerings.

Because HDHPs don’t seem to be going away anytime soon, it’s important that all business owners and employees familiarize themselves with how these plans function.

The History of High Deductible Health Plans

Healthcare costs began to increase noticeably (and more consistently) around the year 2000. In 2009, the Kaiser Family Foundation reported a 131 percent increase in family premiums (105 percent for individuals) over the previous decade. Since then, premiums have continued along the same path. Between 2009 and 2013, family and individual premiums each increased about 78 percent — with no realistic end in sight.

In the early 2000’s, as health insurance prices increased, businesses providing healthcare for employees began looking for ways to save money. At that point, high deductible health plans were few and far between, but some companies picked them up, believing that it was their best option.

There’s no doubt that the healthcare industry has shifted dramatically since the early 2000’s. Anyone dealing with health insurance has noticed the difference, from HR Directors to CFOs to employees and individuals shopping in both the group and individual markets. Perhaps the most apparent and imposing trend we’re seeing is the increase in overall cost, which has caused everyone to search for more economical solutions.

The Current Trend: Consumer Driven Health Plans

For qualified large employers, an increasingly common solution is to offer consumer driven health plans (CDHPs), which are better known as high deductible health plans (HDHPs). HDHPs are sometimes called “catastrophic-only” and, as the name would indicate, they always come with higher deductibles. In turn, these plans typically come with lower premiums, which saves the employer (and in some cases, the employee) money. With HDHPs, the employer may even be able to take on a larger portion of the premium due to lower costs overall.  

In addition to lower premiums, many HDHPs are eligible for health savings accounts (HSAs), allowing both employer and employee to contribute tax-free funds to a real savings account. These funds can be used to pay eligible medical, dental, and vision expenses, but unlike flexible spending accounts (FSAs), there is no “use it or lose it” clause. The funds stay in the account until they are used — even if decades pass. In fact, unspent funds can eventually be converted into retirement accounts with unique tax-saving advantages.

What Consumer Driven Health Plans Mean for Policyholders

At first glance, it might seem as though these two ideas are a bit contradictory. High deductible health plans are still chosen by employers, so what makes them “consumer driven” health plans?

The first of two confirmation hearings for Georgia U.S. Rep. Tom Price for Health and Human Service Secretary will come just two days before Donald Trump is set to be sworn in as president.

The Senate Health, Education, Labor and Pensions Committee plans to hold a hearing on Price’s nomination on January 18, according to the office of the panel’s chairman, Tennessee’s Lamar Alexander. The Senate Finance Committee will also be holding its own confirmation hearing for Price. That’s also expected in the weeks ahead.

Majority Leader Mitch McConnell has expressed his desire for the Senate to confirm many of Trump’s Cabinet nominees on Jan. 20, the date of Trump’s inauguration, as has been custom in recent years. But the Kentucky Republican has not divulged his specific plans for Price.

Democrats are not happy about the Roswell Republican’s selection as Trump’s health chief, but they likely don’t have the votes to kill the nomination. They can, however, draw out the Senate’s consideration process for a day or two.

Dr. Price is an orthopedic surgeon representing a district north of Atlanta. He has been studying how to accomplish the goal of dismantling the Affordable Care Act for more than six years, according to the New York Times. The bills he has introduced into congress since 2009 have included detailed replacement plans, and much of what he advocates has involved removing the federal government from healthcare and other employee benefits programs.

Based on these previous submissions, here's how Trump'sHHS Secretary nominee may impact healthcare and employee benefits.  

As the end of the year approaches, it a good time to talk about making a fresh start in the new year. One way to ensure your employee benefits program gets off to a good start in January is through a series of audits.

Two of the more popular benefits audits are Dependent Eligibility Audits and Claims Audits; both are typically conducted to drive longer-term health plan objectives as well as to receive immediate, short term returns or a one-time recovery of funds. 

By making use of these periodic audits, businesses can more easily control the rising costs of employee benefits, while protecting the program from purposeful fraud or accidental waste. These audits also protect your workforce from unnecessary expenses and possible denials of coverage which could prove financially disastrous.

We'll cover the "ins and outs" of claim audits in another post, but for now, here are some general guidelines to follow with Dependent Eligibility Audits.

Dependent Eligibility Audits 101

Eligibility audits identify plan participants who should be purged from the rolls because they no longer qualify for benefits. Examples include divorced spouses, adult children who age-out of eligibility, and nieces or nephews living with an employee.

According to AON, these audits typically find 5 to 7 percent of dependents do not meet eligibility criteria. Other sources peg the number at closer to 20 percent. With the average cost of covering a dependent costing an employer $3,500 a year, companies can easily lose upwards of hundreds of thousands of dollars when providing health care to ineligible dependents. Losses of this magnitude can affect a company's bottom line, and its ability to fund other important employee benefits.

In survey after survey, employee benefit costs remain the top concern for HR professionals. Providing a competitive benefits package that is within an organization's budget sometimes seems like an impossible task. Affordable Care Act (ACA) requirements have added further strain, forcing employers to get creative, most especially when it comes to funding options.

For example, a self-funded benefits strategy used to be reserved for only the largest corporations, yet the Kaiser Family Foundation has tracked dramatic growth in this funding mechanism in companies with 200 or more employees over the past 15 years (from 67% in 2000 to 83% in 2015).

What other funding options for employee benefits are working for U.S. companies? Here are two of the most common strategies being used today, along with a plan design which is exploding in popularity.

1. Fully-Insured Health Plans

These are often thought of as "traditional plans" which used to be very prevalent with employers of all shapes and sizes. They include Preferred Provider Option Plans (PPO), Point of Service Plans (POS), and Health Maintenance Organizations (HMO). Simply put, fully-insured health plans work as follows; employers pay an agreed upon annual premium to a carrier, coupled with employee premium contributions per paycheck. In return, the insurance carrier pays all covered benefits.

One of the most significant advantages to fully-insured plans, in additional to ease of administration, is risk reduction: the risk of claims out-sizing premium collection is removed entirely from the employer. No matter how many eligible claims are made, regardless of scope and size, premiums remain the same for the one-year negotiated period.

The downside to fully-insured plans is that companies may pay more in premiums than they really have to. This often occurs with employers who have young, healthy workforces, but it also happens quite often with companies who know how to effectively manage claims and those who foster positive wellness and preventative care programs.  Furthermore, fully-insured plans only reduce in-year risk. Carriers who get burned on claims will inevitably exact their proverbial pound of flesh the next year in the form of exponential increases in premium.  Lastly, access to carrier claims data is a real challenge for smaller companies on fully-insured plans. This lack of transparency impacts an employer's ability to more successfully manage workforce health and wellness.

As an employee benefits broker, we immerse ourselves in health care issues every day. After all, it’s part of our mission to ensure our clients’ employees and their dependents get access to outstanding health care resources. 

Yet our reach in this regard only extends so far. For the unemployed and under-employed, employer-sponsored health care simply isn’t an option. And for some, not even the marketplace exchanges and other government-provided relief programs make their way to the youth of this country. 

That’s why, as long time supporters of underprivileged children’s charities, it gives us great pride to lend our support to The Hope Association and their Run for Hope initiative. Their mission is to build and operate two mobile health clinics to serve underprivileged children in the Washington, DC and Los Angeles metro areas, with possible expansion to other cities thereafter. 

We announced this collaboration back in September, when Levi Rizk, a Virginia Pediatrician, set off from Santa Monica Pier to run from LA to DC in just under 100 days.  To cover that distance, he'd have to run roughly 40 miles a day. That essentially two marathons a day, back-to-back for 100 days. Tomorrow morning, Levi will run the last 3 miles of this journey, up the National Mall in Washington DC to the steps of the US Capital.

Already, the millennial generation is beginning to shape the workplace. According to the US Bureau of Labor Statistics, millennials form 25% of the today’s workforce, and by 2030, they will occupy 75%.

Millennials' attitudes towards work, their vast knowledge in technologies, and their strong career aspirations will determine the culture of the 21st century workplace. Therefore, this generation is not only different but also a very crucial engine that will steer the world economy in the coming decades.

A lot is said about these “digital natives,” but much of it is conjecture. Mostly, what is said about millennials is said through the biased lenses of Baby Boomers and Gen Xers. Employers need to shed this narrow thinking and separate the facts from myths about this demographic.

Here are the five most common employment myths about millennials you need to get right.

Myth 1: Millennials want constant acclamation.

Millennials are said to crave positive reinforcement and tend to think that everyone in the team “deserves a trophy.” However, a study by IBM showed that this is just a misconception. The study found that millennials value feedback and a fair manager who recognizes their accomplishments.

The upcoming election is just days away and includes Propositions 205 and 206 in Arizona, which places company benefits front and center in the minds of employers- accompanied by a collective sigh.

A quick review of what’s at stake in terms of considerations for Arizona employers reveals that questions are more prevalent than answers, especially regarding Proposition 205.

To place employers' questions in their strategic context, here is a framework in which to consider what to do:

• Consider the role your employees play in giving your enterprise a competitive edge. Benefits plans and policies are key employee attraction and retention tools, as savvy CEOs know.
• Consider that your benefits plans and policies can work to keep your workforce healthy and productive. It doesn’t end there: when the families of your employees are healthier, your employees remain more productive too.
• The right benefits policies strategically aligned to your workforce are likely to increase your employees’ engagement with their jobs—which leads to happier, more productive employees who are eager to pitch in outside their job descriptions.

Everyone - employers and employees alike - know all too well that the world of healthcare coverage is confusing. As they say in the movies, “It’s complicated.” Yet despite the confusion, there's simply no stopping the trend towards consumer-driven healthcare coverage.

That’s why it's time to unpack the facts about workplace health spending accounts, otherwise known as Health Reimbursement Accounts (HRAs) and Health Savings Accounts (HSAs) - with a focus on how to view their costs and benefits.

Before we dive into the benefits of each one, let’s start with clarifying what they are.

HRAs

HRAs come in many flavors, including Retiree HRAs, Stand-Alone HRAs, One-Person Stand-Alone HRAs, and Integrated HRAs, which are also known as Group HRAs, Linked HRAs, or Deductible-Only HRAs.  For purposes of this discusion, we are talking about Integrated HRAs - those linked with a High Deductible Health Plan (HDHP). 

This type of HRA is designed to help offset the cost of higher deductibles and is only offered to employees and their dependents who enroll in the group health insurance plan. Only the employer contributes to the HRA, and only the employer owns the account. An employer will typically set aside a dollar amount per employee per year that can cover some portion of group plan premiums, co-pays, and deductible expenses. This does not mean, however, that funds accumulate in a separate account; employers only pay after employees incur healthcare expenses.