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What Is Value-Based Insurance Design and Does It Lead To More Effective Employee Benefit Programs?

Jeff Griffin

In an effort to mitigate rising health insurance premiums and increase overall efficiency within the healthcare industry, an increasing number of insurers and employers are integrating value-based insurance design into their group health plans. 

For everyone involved -- including insurers, providers, employers and employees -- insurance plans integrating value-based design help to spotlight and migrate healthcare to services that have been proven to yield better results vs. those which are less effective.

Value-Based Insurance Design Recognizes Value

Value-based insurance design recognizes that not all healthcare services provide patients with the same level of value. Simply put, some health services are more effective than others.

These insurance plans seek to encourage employees to use services that have proven to be more effective and beneficial. Decisions on which services to encourage aren’t made on conjecture, but rather are based on research that shows which services have the best positive impact on patient health given the resources invested. In most cases, encouragement is created in the form of financial incentive (e.g. lower copays).

Some of the highest value services are outpatient treatments offered at clinics, and most value-based designs focus on promoting clinical services. There is a particular surgical example, however, that illustrates how these plan designs work.

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Topics: Cost Containment, Education, Plan Design

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Four Ways Employers Can Reduce Smoking Rates Among Their Workforce

David Rook

Smoking has been in steady decline in the United States for decades, with Gallup reporting that smoking rates among adults have dropped from 45 percent in 1953 to 16 percent in 2018.

Nevertheless, according to the CDC,  almost 38 million adults in the country still smoke cigarettes regularly (defined as “every day” or “some days”). This doesn’t even take into account anyone who enjoys pipe tobacco, cigars or other cigarette alternatives.

The malignant effects of these habits are well documented. In addition to the personal health issues individuals suffer, smoking also impacts non-smokers, both in terms of health risks and more expensive healthcare.

The following is an exploration into just how much smoking costs businesses each year and what measures employers can take to reduce smoking rates among their employees.

The Added Cost of Employing Smokers

CDC research places the increased cost of employing a smoking adult at nearly $6,000 per smoking employee, per year. Much of this figure comes from lost productivity and increased healthcare costs, but it also takes into account other less obvious expenses.

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Topics: Cost Containment, wellness, Behavioral Psychology, Smoking

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Employee Benefits in the Gig Economy

David Rook

From Uber and Lyft to TaskRabbit and Fiverr, the gig economy is now firmly established as a fixture of today’s workplace. 

Gallup surveys show that about 36 percent of U.S. workers have some sort of gig, and 29 percent rely on an "alternative work arrangement" (as it's sometimes called) as their primary source of income.

With such a strong presence in the labor market, the gig economy is altering the shape of employment. The numbers from Gallup are lower than some respected economists originally reported (and lower than some less established source’s statistics), but they still show that the gig economy is here to stay. Few aspects of employment will remain unaltered by it, and employee benefits certainly isn’t immune to its impacts.

In fact, multiple issues related to employee benefits in the gig economy have already been raised. Moving forward, both government agencies and businesses will need to rethink employee benefits programs so that they adequately compensate independent contractors, online platform workers, contract firm workers, on-call workers, temporary workers and others with alternative work arrangements.

Here’s what’s being done for both the distant and near future.

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Topics: Employee Benefits, Company Culture, Recruitment

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HSA Contribution Limits; What To Watch-out For When Families Have Multiple Accounts

Jeff Griffin

An increasing number of married employees are obtaining health insurance coverage through their own plans rather than their working spouses’.

Regardless of whether this reflects sound economic strategy (depending on employer contributions), personal preference, or is the result of spousal carve-outs instituted by employers as a cost-mitigation strategy, having two working spouses each go on their own individual high-deductible health plans (HDHP) increases the chance of overfunding health savings accounts (HSAs). This is not unlike the situation some married couples find themselves in when they accidentally overfund their Dependent Care FSA by each accidentally maxing out their contributions through their individual employers.

HSA Contribution Limits for 2019

Unlike last year when the IRS adjusted HSA contribution limits multiple times during the year, the 2019 HSA contribution limits are set and fairly straightforward. They are as follows:

  • $3,500 self-only contribution limit
  • $7,000 family contribution limit
  • $1,000 catch-up limit for people age 55 and over

These represent a $50 increase for individuals and a $100 increase for families compared to last year’s numbers. The catch-up limit has remained unchanged. (All of these figures include both employer and employee contributions.)

When just one person is contributing to an HSA, these limits are easy to apply. A bank representative can explain the account to them and help them make contributions that don't exceed the applicable limit.

In situations that involve two spouses, however, staying within the contribution limit becomes a little more involved. 

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Topics: Compliance, HSAs, HDHPs

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How Does Your Employee Benefits Package Stack-up? Our 2018 Employee Benefits Benchmarking Study Is Now Available

Jeff Griffin

It’s considered conventional wisdom that the fiercest competitors can be found in the world of professional sports. After almost 30 years working in employee benefits, I beg to differ.

Greatly exacerbated by today’s low unemployment rate, the competition for talent in the business world today is as fierce as I’ve ever seen it, most especially in the fields of construction, dining, cybersecurity, nursing, and finance, just to name a few. Bryce Harper and Tom Brady have nothing on today’s business professionals in charge of talent acquisition.

As if competing for customers wasn’t enough, companies often compete against each other for the same pool of talent, whether that be within specialized industries or simply within an overlapping geographic region.

In the quest to attract the best talent, employee benefits benchmarking is crucial. This practice allows employers to gauge their organization's position in terms of benefits versus the competition. Some companies regularly conduct benchmarking as part of a strategy of good governance, while others perform benchmarking in response to something specific, such as an acquisition, the need to fill a specific role, or the launch of a new division.

Introducing Our New Partnership & Benchmarking Study

This year the JP Griffin Group joined with United Benefits Advisors to produce the nation’s largest independent health plan benchmarking survey. In doing so, we’ve created the most comprehensive source of reliable benchmarking data for employers of all sizes.

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Topics: Employee Benefits, Benchmarking, Recruitment

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Self-Funding For Small Business; A Way to Manage Healthcare Costs and Expand Options

Jeff Griffin

The popularity of self-funded group healthcare plans continues to rise. Already immensely popular with large employers, small businesses continue to embrace self-funding as a remarkably effective way to manage costs, navigate changing regulations, and expand medical plan options.

The genesis of self-funding’s popularity amongst smaller employers can be traced back to the Affordable Care Act. When the ACA was enacted back in March of 2010, its requirements prompted many small to mid-size companies to re-examine how they were offering - and funding - employee benefits.

Self-funding used to be considered an alternative funding method that was ONLY feasible for large companies who could take on greater risks and handle cash flow fluctuations in exchange for upside savings potential. Self-funding, after all, is a mechanism by which companies are essentially insuring themselves.

With the advent of the ACA, the benefits of self-funding expanded beyond just those of potential financial upside. The benefits of the transition are now far more reaching, and now benefit employers and employees alike.

Because of this, small and mid-size employers have been taking the plunge into self-funded group medical plans in large numbers. And as the industry has continued to evolve, self-funding among small groups has become quite common.

Here’s why:

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Topics: self-funding, healthcare costs, small businesses, stop-loss insurance

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Rollovers, Grace Periods and Run-Outs: Important FSA Terms for Early in the Calendar Year

Jeff Griffin

There are three key FSA-related terms that every company which offers flexible spending accounts to their employees should review around this time of year.

While human resources professionals likely are well-aware of what FSA rollovers, grace periods and run-out periods are, employees frequently don’t know the difference between these (and sometimes don’t know they exist at all).

Rollovers: Letting Employees Use Some Previous Funds This Year

Rollovers are an optional feature that the IRS made available starting in plan year 2013 (plan year 2014 for plans with grace periods). Despite being strictly an optional feature that employers can elect or not elect to offer, rollovers have been widely adopted since they were first made available. Only 8 percent of employers who had FSA plans offered the option early on, but by 2015 it was adopted by 60 percent of employers with plans.

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Topics: FSAs

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The State of the Union Address and What It Means For Employee Benefits

Jeff Griffin

Last week, President Donald Trump delivered the 2019 State of the Union Address (SOTU). The SOTU is an annual message delivered by the president to a joint session of Congress at the beginning of each year.

At this year’s SOTU, President Trump discussed issues that have the potential to impact the employee benefits industry, as well as employers offering healthcare and benefits to their employees. The issues he discussed included pre-existing conditions, lower prescription drug prices, and nationwide paid family leave.

While the SOTU is just a speech, often times packed with lofty aspirations, it does sometimes lead to policy. Here is a recap of what was addressed:

Pre-existing Condition Protection

In a departure from 2018 Department of Justice actions, President Trump announced in the address that people who have pre-existing conditions should receive protections. If the administration holds true to this goal, they will likely find cross-aisle support, as pre-existing condition patient protection was a key campaign issue in the midterm elections.

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Topics: Paid Time Off (PTO), Legislation, Prescription Drugs, Pre-Existing Conditions

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Arizona’s New Mini-COBRA Requirements for Small Businesses (with Sample Notice & Side-by-Side Comparison Table)

Jeff Griffin

At the start of this calendar year, Arizona became the latest state to adopt a mini-COBRA law, which impacts small employers. The new law specifically applies to employer-sponsored medical plans issued or renewed on or after January 1, 2019. (Employers with plans that were issued or renewed prior to this date have a little more time to comply with the law.)

The law requires small employers – those that offer group health plans, including medical, dental and vision - to offer continuation coverage to eligible employees and qualified dependents who experience Qualifying Events that would typically result in a loss of coverage.

These events include such things as loss of employment (for reasons other than gross misconduct), divorce or separation from the covered employee, or death of the covered employee.

Employers impacted by this new legislation are those that have fewer than 20 employees for more than fifty percent of its typical business days during the prior calendar year.

Although the new mini-COBRA continuation coverage requirements are very similar to the Federal COBRA requirements that apply to larger employers, there are some key differences. We invite you to download our side-by-side comparison of COBRA and Arizona’s Mini-COBRA of how these requirements compare with one another.

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Topics: Compliance, COBRA, Arizona Regulations

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Leaves of Absence - Do Employers Need to Provide Health Insurance During These Times?

Jeff Griffin

Employees who take qualifying leaves of absence are provided multiple protections by way of the Family and Medical Leave Act (FMLA), the Uniformed Services Employment and Reemployment Act (USERRA), and many state laws.

The most well-known protection is the guarantee of the same or an equivalent job when employees return to work, but there are also other protections. For example, many of these laws stipulate employers’ obligations regarding health insurance during employees’ qualifying leaves of absence.

The following is a breakdown of FMLA, USERRA, and some general state laws with regards to employer-provided health insurance coverage.

FMLA and Health Insurance

In order to meet the requirements for an FMLA-qualifying leave of absence, employees must meet four criteria:

  • Have completed 12 months of work for the employer (not necessarily consecutively)
  • Have completed 1,250 hours of work in those 12 months
  • Work at a location where there are at least 50 employees present or within 75 miles
  • Have a qualifying event

There are many qualifying events, ranging from the birth or adoption of a child, to serious health conditions, to providing for family members who have serious health conditions. Having a family member called to active military duty also qualifies (and extends FMLA benefits from 12 to 26 weeks).

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Topics: Compliance, Qualifying Life Events, FMLA, USERRA

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