Keeping Your Wellness Program Compliant

Dr. Christine

You don’t have to be a health insurance expert to know that healthcare coverage makes up a significant portion of businesses’ operating costs. Looking ahead to next year, Willis Tower Watson predicts the average annual per-employee cost for health insurance will increase 5.3% to $12,850 (up from $12,200 in 2017). Understandably, employers are always looking for ways to get a firmer handle on rising healthcare costs and often turn to wellness programs as a possible solution.   

Three Important Federal Laws That Affect Wellness Plans

Before you launch a wellness program, it’s important to do your homework. Mistakes can be costly for both your employees and your bottom line. One area you should pay particularly close attention to is the intersection of wellness plans and federal law. There are several comprehensive federal statutes that impact workplace wellness plans, so before you put your plan in place, make sure you consult with a legal expert who can help you stay on the right side of the law.

1. The Health Insurance Portability and Accountability Act

The Health Insurance Portability and Accountability Act (HIPAA) includes nondiscrimination rules that apply to wellness plans being offered in connection with group health plans. Under HIPAA, workplace wellness programs are divided into two categories: participatory wellness programs and health-contingent wellness programs.  

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Topics: Employee Benefits, Compliance, wellness, employee wellness, wellness program

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How to Motivate Employees to Participate in HSAs

Jeff Griffin

As the cost of traditional group health insurance has gone up, high deductible health plans (HDHPs) with tax-advantaged health savings accounts (HSAs) have become increasingly popular among employers of all sizes. But offering a HDHP is only helpful if employees, assuming they’re given a choice, then choose to adopt them. And employees who are most satisfied with HDHPs are the ones who make the most of a HDHP’s best feature, the HSA.

HSAs (which are only available with a qualifying HDHP) are primarily designed to help employees offset the high out-of-pocket costs which come along with HDHPs by allowing both employers and employees to contribute dollars into a special savings account. (Employee contributions are made on a pretax basis.) Because HSA funds roll-over and can eventually be converted into retirement savings, savvy employees have quickly learned how to take advantage of these accounts and those who can afford it are maximizing this benefit to the full extent of the contribution limits, which currently stand at $3,400 for an individual and $6,750 for a family.

That said, the average HSA participant can’t afford to max out this benefit. In fact, most HSA participants barely contribute enough to the HSA to cover their anticipated out-of-pocket medical costs for the year. The average individual contribution is just $833, far less than any deductible on a HDHP, thereby causing enrollees to suffer under the weight of this type of plan design. Some of this behavior is simply due to limited incomes, but some can be attributed to other factors, such as a lack of education on how an HSA works.

To ensure that your workforce fully embraces HDHPs with HSA plans, it behooves every employer to explore ways to motivate employees to participate in their HSA. Afterall, according to the Employee Benefit Research Institute, between 20 and 22 million people in the U.S. are currently enrolled in an HDHP with an HSA.

Here are just a few ideas for improving HSA participation:

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Topics: Employee Benefits, Employee Engagement, Plan Design, Behavioral Psychology, HSAs, Consumer Driven Healthcare

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What Is Reference Based Pricing?

Shawn Fried, PMP

In the never-ending quest to decrease employee benefits spending on healthcare, some employers are turning to a somewhat revolutionary concept called reference based pricing. This switch is most common among large employers (500 employees or more) who are self-funded, and is gaining popularity rather quickly. For those who may be interested in implementing such a program, it’s important to understand how it differs from traditional healthcare plans, as well as how it will affect those enrolled in it.

What Is Reference Based Pricing?

Reference based pricing (RBP) is a system that some employers have started to use for cost containment purposes. This method is different from more traditional pricing options in that the employer caps the amount they’ll agree to cover for certain non-emergent medical procedures that can vary greatly in price yet not in outcome, such as hip or knee replacements.

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Topics: Employee Benefits, Cost Containment, Education, employers

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When Does it Make Sense to Offer Voluntary Benefits?

Jeff Griffin

Voluntary benefits have been particularly popular in the past few years as healthcare costs rise and employers continue to shift more of the cost burden onto employees. Benefits that were once completely or partially financed by the employer, such as dental and vision, are sometimes now voluntary. A growing number of employers have also replaced low deductible health plans with high deductible health plans.   

But if you’re not careful, cutting these types of benefits can present a coverage gap for your employees, many of whom are not prepared to take the hit on unexpected medical expenses. This could leave you with a financially insecure workforce — not to mention a stressed, unhealthy and ultimately unhappy one. Offering voluntary benefits can be a meaningful addition to an employee benefits package and a win for employees and businesses alike: employees feel as though they have helpful supplements to their health insurance, and employers don’t have to increase their health care budget to offer them.

Required Benefits vs. Voluntary Benefits

As we’ve discussed in the past, certain employee benefits are required by law, and employers who fail to provide them can be hit with serious — and costly — penalties. These benefits include social security and Medicare withholding, unemployment insurance and workers’ compensation benefits. Depending on where an employer is located and how many employees it has, it may also be required by law to provide disability insurance, FMLA benefits and “acceptable” health insurance per federal statute.

Voluntary benefits, on the other hand, are usually paid 100% by the policyholder, and employers are neither expected nor required to cover any portion of the premium. Furthermore, what constitutes a “voluntary benefit” is frequently up for debate — some claim it’s a benefit paid entirely by the employee, while others say it can include benefits that are partially subsidized by the employer. In reality, almost all benefits are voluntary, as employees can waive coverage as long as a benefit is not required by law.

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Topics: Employee Benefits, Employee Retention, Voluntary Benefits

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What Is the Difference Between Group Health Insurance and Individual Health Insurance?

David Rook

With healthcare costs continuing to rise, small employers that aren't obligated to offer health/medical insurance per the Affordable Care Act’s (ACA) “employer mandate” have been dropping group coverage. This is a trend that started in 2009 during the recent recession. Some larger employers have also considered doing the same (though, they must pay steep ACA penalties if they do). At first glance, it might seem like this would bolster the health and stability of the individual insurance market. Despite the numbers of insured rising, however, increased costs and fewer options have put a serious squeeze on what was once a very healthy marketplace.

Group Health Insurance and Individual Health Insurance by the Numbers

Occasionally, a news piece predicts major shifts in the health insurance landscape, including dire predictions about employers dropping group health plans due to their high costs. However, it’s important to look closely at these numbers, as well as the size of the companies cited in the statistics.

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Topics: Employee Benefits, Affordable Care Act, Education, ACA

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The Changing Definition of Work-Life Balance

David Rook

The term “work-life balance” has gotten quite a bit of buzz in recent years, thanks in part to the new priorities millennials are bringing to the workplace. This idea captures the desire to work and grow a career, but also the desire to enjoy one’s life outside of work — with the goal of creating a meaningful sense of balance between the two.

However, it’s not just millennials who crave a healthy balance between their working lives and time spent outside the office. Because the workforce is currently juggling three different generations (not counting the bookend demographic groups of Generation Z and The Silent Generation) who view the working world in different ways, it’s important to define what “work-life balance” truly means to each of them, as it may change how employers can effectively motivate employees.

For example, employers might consider adjusting incentive programs to accommodate different needs and desires among several different generations of workers.

How Baby Boomers Feel About Work-Life Balance

The baby boomer generation encompasses the group of people born after the Second World War — between the years of 1946 and 1964. Although baby boomers are frequently described as the largest generation in history, Pew Research reports that millennials have now overtaken boomers are the largest living generation. Millennials also make up the largest demographic in the workforce today.   

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Topics: Employee Benefits, millennials, Multi-Generational, Employee Retention, work life balance

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The Effect of Chronic Conditions on Employer and Employee Healthcare Costs

Dr. Christine

It seems like the only thing we can talk about these days is the rising cost of healthcare. Whether it’s in the news or in the boardroom, healthcare costs are a major topic of conversation — and with good reason. Healthcare costs have been increasing for decades with no apparent end in sight. There are many differing opinions on how exactly to decrease costs and even more debate as to the cause behind them. What is the reasoning behind the drastic increases?

While that question may have many answers, one of the most impactful is the effect of chronic conditions, which require constant care from medical professionals. Chronic conditions range in severity and attention needed to manage them, which can dramatically affect the healthcare costs associated with them.

A recent study by the RAND Corporation, a nonprofit, nonpartisan research organization committed to making “the world safer and more secure, healthier and more prosperous,” looked into chronic conditions in the United States and their effect on healthcare costs. Their findings were both surprising and disheartening — but they do help explain at least one reason why overall costs are increasing so dramatically.

What Is a Chronic Condition?

A chronic condition is an illness that lasts for a prolonged period, but most definitions do not specify an exact period of time. For the purposes of the RAND study, they defined the term as a “physical or mental health condition that lasts more than one year and causes functional restrictions or requires ongoing monitoring or treatment.”

By this definition, we could assume that the term “chronic conditions” includes ailments such as heart disease, high blood pressure, asthma, anemia, diabetes, arthritis, cancer, and mood disorders, among many others.

What Causes (and Contributes to) Chronic Conditions?

According to the CDC (Centers for Disease Control), there are four major health risk factors that “cause much of the illness, suffering, and early death related to chronic diseases and conditions.” They are:

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Topics: Employee Benefits, Cost Containment, Education

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Containing Employee Benefit Costs Through Value-Based Insurance Design (VBID)

Shawn Fried, PMP

As the cost of healthcare continues to rise with seemingly no end in sight, employers of all sizes across the entire country are looking for ways to cut costs without compromising the quality of care. Many employers have already moved toward consumer directed healthcare, but another strategy some employers are turning toward is value-based insurance design (VBID).

While value-based insurance design is far from a topic discussed at the dinner table, it isn’t a new concept. In fact, one state adopted this plan design in 2008 and some principles of VBID, such as low-cost preventative care and wellness visits, were incorporated into Section 2713 of the Affordable Care Act (ACA).

VBID takes a very different approach than HDHPs (high deductible health plans)  when it comes to trying to save employers and employees money, so if you’re thinking of making a change to your employer-sponsored health insurance, it’s important to understand exactly what you’re signing yourself (and your employees) up for.

What Is Value-Based Insurance Design?

Value-based insurance design is a cost containment strategy being adopted and tested by some employers. This plan structure is different from traditional health insurance plans in that its purpose is to decrease costs for medical services deemed as “higher value,” while increasing costs for those considered to be “low value.”

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Topics: Employee Benefits, Cost Containment, Education, Plan Design

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When Good Employee Perks Go Bad

David Rook

More and more, employers are looking for innovative ways to increase the value of their employee benefits packages without breaking the bank. Oftentimes, this comes in the form of unique employee perks which attempt to depart from the tried-and-true. 

While this quest for creativity should be commended, no matter how well intentioned, sometimes the best laid plans wind up backfiring in spectacular fashion. To keep this from happening, it’s a good idea to vet your ideas with a representative cross-section of your workforce before introducing them to the entire company. Role playing worse case scenarios as an HR team might also help mitigate any disasters. Here are five examples of good employee perks gone bad.

Penny Wars for a Good Cause

“At a previous employer, we had a ‘penny wars’ competition to raise money for a good cause. It was part of a lot of fun activities for the annual workplace giving campaign and employee engagement (which was a good idea). Employees donated coins in jars labeled with each executive’s name. The executive whose jar collected the most money would get a pie in the face. When the CEO won, the penny jars quickly disappeared as it didn’t seem like a good idea to pie the CEO in front of employees — and no one wanted to be the one to actually do it.”

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Topics: Employee Benefits, Employee Retention, employee culture

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Why Your Cost Saving Strategies On Employee Benefits Are Failing

Jeff Griffin

As the third or fourth largest line item on most business’ profit and loss statements, employee benefits have been under pressure for years. Rising costs have impacted both employers and employees, but cutting benefits or pushing more of the financial burden onto employees will only exacerbate hiring and retention struggles. And as employers have figured out by now, relying on a once a year negotiation with their medical carrier is by no means an effective or sustainable way to curb costs.

While putting all your eggs in one basket by attempting to contain employee benefits cost via an annual renewal negotiation is still more mainstream than the exception, employers would realize far more sustainable savings if they sat down with an employee benefits broker who is dedicated to year-round cost saving strategies. Additionally, renewal negotiations, which are still very much a part of cost containment, should not only be focused on price, but also on the multitude of contractual issues which, when thoroughly reviewed, can yield substantial cost savings.

The three areas we consider of greatest importance to sustainable employee benefits cost savings are 1) wellness through the identification and management of chronic conditions within an overall health plan, 2) high-dollar claims intervention, and 3) the effective purchasing of healthcare in the open market.

Wellness Through the Identification and Management of Chronic Conditions

When designed effectively, with targeted population health data to guide the way, wellness programs can be very effective in bringing down the overall cost of your employee benefits program. But wellness programs should not be solely focused on modifying behavioral health patterns such as smoking, lack of exercise, and poor eating habits. In fact, by promoting age appropriate screenings, preventative care participation, and medication adherence for chronic conditions, wellness plans can really pay off in the long run.

Chronic conditions such as hypertension, high cholesterol, diabetes, depression, back pain, and heart disease represent a significant risk for an overall health program. These conditions present challenges in direct medical expenses as well as indirect costs such as lost productivity and absenteeism. In our experience, members with chronic conditions typically make up 25 percent of the overall population, but are responsible for 75 percent of overall healthcare spending. Programs geared towards disease management, medication/standard of care adherence, and unidentified conditions present the greatest opportunity for cost containment and large claim mitigation in employee benefits programs.

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Topics: Employee Benefits, Cost Containment, Education

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