Employee Benefits Blog

State lawmakers are currently reviewing a piece of legislation that could improve Arizona healthcare for a number of residents. Senate Bill 1441 seeks to solve a common Arizona healthcare problem: surprise medical bills from out-of-network physicians after receiving treatment or having surgery through in-network providers. It’s a frustrating (and confusing) situation, especially for those who have done their research beforehand to make sure all providers were covered by their insurance policy. How are people getting unexpected bills? And what will this legislation do about it?

The Arizona Healthcare Problem: Surprise Bills

In the state of Arizona, people seeing in-network doctors and utilizing in-network hospitals systems frequently receive surprise bills from out-of-network providers. It’s become a common Arizona healthcare narrative these days. If it hasn’t happened to you, you probably know someone who has encountered this issue in the past.

How does this happen? Well, it’s actually pretty complicated.

Let’s say you need surgery. You do your necessary diligence by researching the hospital, the surgeon, and the other doctors you know you’ll be in contact with. You make sure they’re all in-network so you’re minimizing the bills you receive after the fact. Everyone (including the hospital network) is covered. You should be all set, right?

Since the inauguration of a new president in January, healthcare legislation to replace the Affordable Care Act (ACA) has been a hot topic of conversation, not only among employers and healthcare providers, but many American citizens as well. Multiple rumors have been making their way down from Capitol Hill, but it appears as though we finally have some concrete ideas from House Republicans — even if they aren’t fully fleshed out in terms of finances. 

Regardless of what healthcare legislation is passed, it is largely expected that the employer mandate will be repealed, which will have some sort of effect on many American employers. Let’s take a look at the proposed healthcare legislation and other documents from the Department of Health and Human Services (HHS) to determine what employers might be able to expect from lawmakers in the coming months.

The New GOP Healthcare Bill

On Monday, March 6, 2017, House Republicans released what is being collectively referred to as the American Health Care Act (AHCA), which is intended to partially repeal, but also replace the ACA. As anyone might expect in a heated political climate, the proposed healthcare legislation has been met with mixed reviews.

The proposed bill would keep some of the popular components of the ACA, such as the provisions that prohibit insurance companies from denying coverage based on pre-existing conditions or capping the amount of benefits received in one year (or a lifetime). In addition, people would be allowed to remain on their parents’ health insurance plans up to age 26.

While pre-existing conditions would no longer be a reason insurance companies could deny coverage, they would be allowed to charge up to 30 percent more for enrollees who let their coverage lapse. Coverage lapses are common among those suffering from chronic illnesses or serious medical conditions because they are likely to miss work for an extended period of time. Since the Family Medical Leave Act (FMLA) only protects workers for 12 weeks, those receiving extensive treatments (such as chemotherapy) are some of the most commonly affected by lapses.

Creating a truly competitive and compelling employee benefits package can be a struggle — especially for smaller companies. As an employer, you are required to offer certain benefits, like social security taxes, unemployment insurance, and worker’s compensation, plus some others based upon the size of your company, not the least of which is medical insurance per the ACA's "employer mandate".

Providing employee benefits can get expensive fast, but you can only do what you can afford to do. The goal is to remain competitive in the marketplace, not to become a total outlier. And remember, cost-sharing with employees is normal these days and employees expect to pay a portion of insurance costs.

In addition, there are plenty of low cost (and even no cost) benefit options at your disposal to help sweeten the deal. But where to start? Here is a list of typical benefits packages offered by American businesses.

List of Common Employee Benefits

1. Health Insurance Benefits

This one is a no-brainer. Applicants view medical coverage as one of the most important factors in an employee benefits package and as a result, the majority of employers offer it. According to the Bureau of Labor Statistics (BLS), 70 percent of civilian companies (and 67 percent of private firms) offered medical insurance to employees in March of 2016 in their company benefits packages.

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.  

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.

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.

A recent survey found that Millennials of both genders are more likely to accept a job that offers a flexible schedule. Why is a flexible schedule so important? Entrepreneur magazine reported 74 percent of employees want it for better work-life balance. Other reasons included health and exercise, time savings, reduced commute stress, costsavings, and more time to travel or spend with family.

To date, millennials already make up one in three American workers, and are expected to become the largest living generation in the not-so-distant future. Offering benefits that attract top talent from this demographic is critical to a company's future growth and success. Can you balance a productive workforce, while giving employees the schedules they want? It's worth examining why and how some companies are making flexible schedules work in their company culture.

Why?

Many employers fear that flexible schedules give employees too many opportunities to slack off. In fact, the opposite is true. Study after study shows that flexible schedules contribute to increased productivity, a happier workforce, and better recruiting leverage. Reporting on Yahoo's decision to ban working at home, the Washington Post commented, "Such a policy could very well hurt Yahoo’s chances at recruiting the most talented young developers, engineers, and executive talent." Consider the highlights from just two studies:

• Fewer distractions equals increased productivity. Sixty-one percent of employees report being less distracted by office politics. Another 59 percent say they experience fewer distractions from their colleagues, 56 percent say they have less general distractions.
• Flexible scheduling is a huge recruitment tool. Researchers reported that 82 percent of workers say they would be more loyal to their employer simply because of flexible schedules. Thirty-nine percent would even turn down a promotion, not take a job, or quit a job because of not having flexible scheduling options.