Get an Early Start on Open Enrollment

As open enrollment is right around the corner, now is the time to make a plan to maximize employee enrollment and help your staff select the health plans that best suit them.

You’ll also need to make sure that you comply with the Affordable Care Act if it applies to your organization, as well as other laws and regulations.

Here are some pointers to make open enrollment fruitful for both your staff and your organization.

Review what you did last year

Review the results of last year’s enrollment efforts to make sure the process and the perks remain relevant and useful to workers.

Were the various approaches and communication channels you used effective, and did you receive any feedback about the process, either good or bad?

Start early with notifications

You should give your employees at least a month’s notice before open enrollment, and provide them with the materials they will need to make an informed decision.

This includes the various health plans that you are offering your staff for next year.

Encourage them to read the information and come to your human resources point person with questions.

Help in sorting through plans

You should be able to help them figure out which plan features fit their needs, and how much the plans will cost them out of their paycheck. Use technology to your advantage, particularly any registration portal that your plan provider offers. Provide a single landing page for all enrollment applications.

Also, hold meetings on the plans and put notices in your staff’s paycheck envelopes.

Plan materials

Communicate to your staff any changes to a health plan’s benefits for the next plan year through an updated summary plan description or a summary of material modifications.

Confirm that their open enrollment materials contain certain required participant notices, when applicable – such as the summary of benefits and coverage.

Check grandfathered status

A grandfathered plan is one that was in existence when the ACA was enacted on March 23, 2010, and is thus exempt from some of the law’s requirements.

If you have a grandfathered plan, talk to us to confirm whether it will maintain its grandfathered status for the next plan year. If it is, you must notify your employees of the plan status. If it’s not, you need to confirm with us that your plan comports with the ACA in terms of benefits offered.

ACA affordability standard

Under the ACA’s employer shared responsibility rules, applicable large employers must offer “affordable” plans, based on a percentage of the employee’s household income. For plan years that begin on or after Jan. 1 of next year, the affordability percentage is 9.86% of household income. At least one of your plans must meet this threshold.

Get spouses involved

Benefits enrollment is a family affair, so getting spouses involved is critical. You should encourage your employees to share the health plan information with their spouses, so they can make informed decisions on their health insurance together.

Also, encourage any spouses who have questions to schedule an appointment to get questions answered.

New Rule Allows Employers to Pay Workers to Buy Their Own Health Coverage

The Trump administration has issued new rules that would allow employers to provide workers with funds in health reimbursement accounts (HRAs) that can be used to purchase health insurance on the individual market.

The rule reverses a long-standing part of the Affordable Care Act that carried hefty fines of up to $36,500 a year per employee for applicable large employers that are caught providing funds to workers so they can buy insurance.

The rule was put in place to keep employers from shunting unhealthy or older workers from their group health plans into private insurance and government-run marketplaces.

Under the rules issued by the Departments of Health and Human Services, Labor and Treasury, employers would be authorized to fund, on a pre-tax basis, health reimbursement funds that to buy ACA-compliant plans. The new rules take effect Jan. 1, 2020.

With the final rules written in a way to keep employers from trying to reduce their group benefit costs by sending sicker and older workers into the individual market, HHS noted in a press release announcing the rule that it would closely monitor employers to make sure this type of adverse selection doesn’t occur.

Typically, HRAs have only been allowed to be used to reimburse workers for out-of-pocket medical expenses. This rule allows them to also be used to pay for health insurance premiums for coverage that a worker may secure on their own.

’Integration’ conditions

The regulation permits an HRA to be “integrated” with certain qualifying individual health plan coverage. In order to be integrated with individual market coverage, the HRA must meet several conditions:

  • Any individual covered by the HRA must be enrolled in health insurance coverage purchased in the individual market, and must substantiate and verify that they have such coverage;
  • The employer may not offer the same class of individuals both an HRA and a “traditional group health plan”;
  • The employer must offer the HRA on the same terms to all employees in a “class”;
  • Employees must have the ability to opt out of receiving the HRA;
  • Employers must provide a detailed notice to employees on how the HRAs work;
  • Employers may not create a class of employees younger than age 25, whom they might want to keep in their group plan because they’re healthier.
  • For employers with one to 100 employees, a class cannot have less than 10 employees; for employers with 100 to 200 employees, the minimum class size is 10% of the workforce; and for employers with 200 or more employees, the minimum class size is 20 employees.

While the HRA money can be used mostly for buying plans that meet ACA requirements, employers under the rule can establish a special type of “excepted benefit” HRA for employees who want to buy less expensive short-term plans that do not comply with the ACA.  The contribution for such plans would be capped at $1,800 a year.

Under the ACA, employers with 50 or more full-time workers (applicable large employers) must provide their employees with health insurance that covers 10 essential minimum benefits and must be “affordable.”

Under the new rule, an applicable large employer could meet their obligation if they provide adequate HRA contributions for employees to buy individual coverage.

Congress, Administration Serious About Tackling Health Care Costs

As more people struggle with their medical bills, Congress has been introducing a raft of new legislation aimed at cutting costs and making pricing more transparent.

The multi-pronged, bipartisan effort targets the lack of transparency in pricing particularly for pharmaceuticals, as well as surprise medical bills that have left many Americans reeling, and there are also other efforts aimed at reducing the cost burden on payers: the general public and employers.

And since consumers are affected regardless of their political affiliation, congresspersons are reaching across the aisle to push through legislation to address this crushing problem.

There are several draft proposals, but word is a number of bills are expected to be introduced soon.

Surprise medical bills

One of the top priorities seems to be surprise medical bills, which are in the administration’s crosshairs. President Trump in January 2019 hosted a roundtable to air the problems people face when hit with what are often financially devastating surprise bills after they venture out of their network for medical services for both emergency and scheduled medical visits.

After the roundtable, he directed a bipartisan group of lawmakers to create legislation that would provide relief. The House Energy and Commerce Committee in May responded by introducing draft legislation that aims to ban surprise medical bills.

Also, Sen. Maggie Hassan (D-N.H.) and Sen. Bill Cassidy (R-La.) have said they hope to introduce legislation to end the practice of surprise bills. With the White House and both sides of the aisle talking the talk, observers say that there are a number of ways legislation could tackle these surprise bills. That could include:

  • Setting caps on how much hospitals and service providers can charge, or
  • Requiring hospitals and service providers to turn to the insurance company (and not the patient) when they are seeking additional reimbursement.
  • Requiring the insurer to share more of the cost burden for the out-of-network services.

At this point legislation is still being formulated, but chances are good that we could see a bipartisan push to fix this problem. The biggest issue will be how to calculate what are “reasonable” costs for out-of-network services.

Pharmaceutical costs, transparency

The Trump administration has also made it a priority to reduce the costs of medications and tackle pricing transparency in the system.

While both Republicans and Democrats have decried the skyrocketing costs of prescription medications, the inflation for which is outpacing all other forms of medical care, so far there has been only one piece of legislation introduced tackling transparency.

Unfortunately, it’s part of a larger bill that aims to preserve the Affordable Care Act and reverse some recent policy decisions by the Trump administration, so the chances of that measure going anywhere in the Senate are slim to none.

The good news is that members from both parties have been talking about cooperating on legislation, and political observers say the chances are good some type of measure will be introduced this summer.

Other costs

Sen. Ron Wyden (D-Ore.) in February introduced legislation that would require insurers to tell people what they would have to pay out of pocket for any in-network treatment or prescription drug.

On top of that, the Senate Health Committee will soon introduce a number of bills aimed at reducing frictional costs in the system.

In addition, the Senate Finance and Judiciary committees are both in the process of formulating measures aimed at reducing health care costs, as well as prescription drug prices.

New Rule Allows Employers to Pay Workers to Buy Their Own Health Coverage

The Trump administration has issued new rules that would allow employers to provide workers with funds in health reimbursement accounts (HRAs) that can be used to purchase health insurance on the individual market.

The rule reverses a long-standing part of the Affordable Care Act that carried hefty fines of up to $36,500 a year per employee for applicable large employers that are caught providing funds to workers so they can buy insurance.

The rule was put in place to keep employers from shunting unhealthy or older workers from their group health plans into private insurance and government-run marketplaces.

Under the rules issued by the Departments of Health and Human Services, Labor and Treasury, employers would be authorized to fund, on a pre-tax basis, health reimbursement funds that to buy ACA-compliant plans. The new rules take effect Jan. 1, 2020.

With the final rules written in a way to keep employers from trying to reduce their group benefit costs by sending sicker and older workers into the individual market, HHS noted in a press release announcing the rule that it would closely monitor employers to make sure this type of adverse selection doesn’t occur.

Typically, HRAs have only been allowed to be used to reimburse workers for out-of-pocket medical expenses. This rule allows them to also be used to pay for health insurance premiums for coverage that a worker may secure on their own.

’Integration’ conditions

The regulation permits an HRA to be “integrated” with certain qualifying individual health plan coverage. In order to be integrated with individual market coverage, the HRA must meet several conditions:

  • Any individual covered by the HRA must be enrolled in health insurance coverage purchased in the individual market, and must substantiate and verify that they have such coverage;
  • The employer may not offer the same class of individuals both an HRA and a “traditional group health plan”;
  • The employer must offer the HRA on the same terms to all employees in a “class”;
  • Employees must have the ability to opt out of receiving the HRA;
  • Employers must provide a detailed notice to employees on how the HRAs work;
  • Employers may not create a class of employees younger than age 25, whom they might want to keep in their group plan because they’re healthier.
  • For employers with one to 100 employees, a class cannot have less than 10 employees; for employers with 100 to 200 employees, the minimum class size is 10% of the workforce; and for employers with 200 or more employees, the minimum class size is 20 employees.

While the HRA money can be used mostly for buying plans that meet ACA requirements, employers under the rule can establish a special type of “excepted benefit” HRA for employees who want to buy less expensive short-term plans that do not comply with the ACA.  The contribution for such plans would be capped at $1,800 a year.

Under the ACA, employers with 50 or more full-time workers (applicable large employers) must provide their employees with health insurance that covers 10 essential minimum benefits and must be “affordable.”

Under the new rule, an applicable large employer could meet their obligation if they provide adequate HRA contributions for employees to buy individual coverage.

Drug Prices, Employee benefits, Pharmaceutical Inflation

Retail prescription drug spending grew 36% over the four-year period ended Dec. 31, 2016, but out-of-pocket spending for health plan enrollees remained steady, according to a recent study by the Pew Charitable Trusts.

The study, “The Prescription Drug Landscape, Explored,” found that patients are covering the lion’s share of the cost through higher premium outlays, while large pharmacy benefit managers are passing on a larger portion of the manufacturer rebates they receive to insurance plans.

The study found health plan enrollees have largely been sheltered from rapidly rising drug costs due to:

  • More of the health insurance premium being dedicated to pharmacy benefits. The percentage of health insurance premiums allocated to pharmacy benefits increased to 16.5% in 2016 from 12.8% in 2012.
  • Policies that cap out-of-pocket expenses.
  • Cost-sharing assistance from manufacturers (like Medicare Part D coverage gap discounts and copay coupons).

Overall health retail prescription drug spending grew to $341 billion in 2016 from $250.7 billion in 2012. Here’s who spent what:

Patients: $103.8 billion – This includes the percentage of the premium they pay that goes towards drug benefits, in addition to out-of-pocket spending.

Employers: $97.5 billion – The premiums that employers pay that go towards drug benefits.

Government: $139.8 billion – This is both federal and state spending on retail drug coverage through Medicare Part D, Medicaid fee-for-service, and the share of premiums for retail drug coverage in Medicaid managed care.

Employers have grown increasingly concerned by the rapidly increasing cost of medications and the effect on the premiums they and their employees pay.

The National Business Group on Health in 2018 surveyed 170 large employers and found that:

  • 14% said the pricing and rebate system needed to be more transparent,
  • 35% said rebates needed to be reduced,
  • 50% said the pharmaceutical supply chain was inefficient and too complex and needed to be overhauled and simplified.
  • 56% said rebates were not an effective tool for helping drive down costs.
  • 53% said rebates did not benefit customers at the point of sale.

Tackling drug costs

The National Business Group study also looked at what employers are doing to combat drug costs, including:

  • Adopting recently developed capability by pharmacy benefit managers to pull rebates forward at the point-of-sale to benefit consumers.
  • Implementing point-of-sale rebates to benefit the enrollees.
  • Educating employees about the value of buying generic, so they can save money for you and themselves. According to the Federal Drug Administration, generic medications save more than $150 billion annually.
  • Half-tablet programs – These programs aim to reduce the number of tablets participants consume, while still receiving the same strength of medication. For instance, individuals might need 15 milligrams of a daily medication, so they receive a prescription for 30 tablets. With the half-tablet program, individuals would receive a prescription for 15 tablets, with 30mg strength each.
    Instead of taking one daily, they would only take half of a tablet. Despite the higher-strength pills, participants in this program only pay half of their usual prescription copay because they are receiving half the number of tablets. Likewise, individuals who pay coinsurance would be paying a smaller percentage for fewer tablets.

Benefits in a Multi-generational Workplace

With multiple generations working side-by-side in this economy, the needs of your staff in terms of employee benefits will vary greatly depending on their age.

You may have baby boomers who are nearing retirement and have health issues, working with staff in their 30s who are newly married and have had their first kids. And those who are just entering the workforce have a different mindset about work and life than the generations before them.

Because of this, employers have to be crafty in how they set up their benefits packages so that they address these various needs.

But don’t fret, getting something that everyone likes into your package is not too expensive, particularly if you are offering voluntary benefits to which you may or may not contribute as an employer.

Think about the multi-generational workforce:

Baby boomers – These oldest workers are preparing to retire and they likely have long-standing relationships with their doctors.

Generation X – These workers, who are trailing the baby boomers into retirement, are often either raising families or on the verge of becoming empty-nesters. They may have more health care needs and different financial priorities than their older colleagues.

Millennials and Generation Z – These workers may not be so concerned about the strength of their health plans and may have other priorities, like paying off student loans and starting to make plans for retirement savings. 

Working out a benefits strategy

If you have a multi-generational workforce, you may want to consider sitting down and talking to us about a benefits strategy that keeps costs as low as possible while being useful to employees. This is crucial for any company that is competing for talent with other employers in a tight job market.

While we will assume that you are already providing your workers with the main employee benefit – health insurance – we will look at some voluntary benefits that you should consider for your staff:

Baby boomers – Baby boomers look heavily to retirement savings plans and incentives, health savings plans, and voluntary insurance (like long-term care and critical illness coverage) to protect them in the event of a serious illness or accident. 

You may also want to consider additional paid time off for doctor’s appointments, as many of these workers may have regular checkups for medical conditions they have (64% of baby boomers have at least one chronic condition, like heart disease or diabetes).

Generation X – This is the time of life when people often get divorced and their kids start going to college. Additionally, this generation arguably suffered more than any other during the financial crisis that hit in 2008. You can offer voluntary benefits such as legal and financial planning services to help these workers.

Millennials and Generation Z – Some employee benefits specialists suggest offering these youngest workers programs to help them save for their first home or additional time off to bond with their child after birth.

Also, financially friendly benefits options, such as voluntary insurance and wellness initiatives, are two to think about including in an overall benefits package.

Voluntary insurance, which helps cover the costs that major medical policies were never intended to cover, and wellness benefits, including company-sponsored sports teams or gym membership reimbursements, are both appealing to millennials and can often be implemented with little to no cost to you.

Employers Double Down on Employee Benefits

As the job market tightens and competition for workers becomes fiercer, a majority of employers are boosting their employee benefits offerings and are paying less attention to reducing associated costs, according to a new study.

The changes reflect the shifting priorities of the workforce and the newest generation to enter the job market. The challenge for employers is controlling benefit costs, while at the same time being able to attract and retain talent as competition for workers increases.

The “2018 Benefits Strategy & Benchmarking Survey” by Gallagher Benefits found that U.S. employers were most concerned with:

  • Attracting and retaining talent. This was the number one operational priority for 60% of employers.
  • Controlling benefit costs. This was the top priority for another 37%.

The study authors said they are noticing a “clear shift in the market” because employers are having to compete so fiercely for workers and because the workforce comprises five generations, all of which have very different priorities and needs. Besides beefing up their health insurance offerings, they are also boosting other employee benefits.

New strategies

Employers are also adopting new strategies to help their employees get the health care services they need. The survey found that:

  • 45% of employers have increased employee cost-sharing of health care benefits.
  • 55% of employers provide telemedicine services that allow employees to speak remotely with medical professionals.
  • More employers are focused on helping their employees reduce their medical expenses with wellness programs and prevention services. The most popular offerings include:
    • Flu shots
    • Tobacco cessation programs
    • Health risk assessments
    • Biometric screenings
  • Financial wellness programs are gaining popularity, with 62% of employers providing access to financial advisors.
  • 89% of employers offer employees life insurance
  • 70% of employers provide access to employee assistance programs.
  • 47% of employers offer financial-literacy education to help employees better manage their money.
  • 22% of employers offer employees three medical insurance plans to choose from (another 13% offer four or more).
  • 46% of employers offer tuition reimbursement.

Getting a Head Start on Open Enrollment

As open enrollment is right around the corner, now is the time to gear up to maximize employee enrollment, help them make the best selections for their own personal circumstances, and stay compliant with relevant laws and regulations.

It’s a lot to take in as uncertainty has been a constant during the last many years with the onset of the Affordable Care Act, and now that its future is hazy at best.

Still, since health coverage and other employee benefits are an important part of your compensation package – and your competitive edge for talent – it’s important that you get it right.

Here are some pointers to make open enrollment fruitful for your staff and your organization.

Review what you did last year

Review the results of the previous year’s open enrollment efforts to make sure the process and the perks remain relevant and useful to workers. How effective were various approaches and communication channels, and did people give any feedback about the process itself?

Start early with notifications

You should give your employees notice at least a month before open enrollment to let them know it’s coming, as well as provide them with information on the various plans you are offering. Encourage them to read the information and come to your human resources point person with questions.

Help them sort through plans

You should be able to help them figure out which plan features fit their needs, and how much the plans will cost them out of their paycheck. Use technology to your advantage, particularly any registration portal that your plan provider offers. Provide a single landing page for all enrollment applications.

That said, you should hold meetings on the plans and also put notices in your employees’ paycheck envelopes.

Plan materials

Communicate to your staff any changes to a health plan’s benefits for the 2019 plan year through an updated summary plan description or a summary of material modifications.

Confirm that their open enrollment materials contain certain required participant notices, when applicable – such as the summary of benefits and coverage.

Check grandfathered status

A grandfathered plan is one that was in existence when the ACA was enacted on March 23, 2010 and is thus exempt from some of the law’s requirements. If you make certain changes to your plan that go beyond permitted guidelines, the plan is no longer grandfathered.

If you have a grandfathered plan, talk to us to confirm whether it will maintain its grandfathered status for the 2019 plan year. If it is, you must notify your employees of the plan status. If it’s not, you need to confirm with us that your plan comports with the ACA in terms of benefits offered.

ACA affordability standard

Under the ACA’s employer shared responsibility rules, applicable large employers must offer “affordable” plans, based on a percentage of the employee’s household income. For plan years that begin on or after Jan. 1, 2019, the affordability percentage is 9.86% of household income. At least one of your plans must meet this threshold.

Out-of-pocket maximum

The ACA’s out-of-pocket maximum applies to all non-grandfathered group health plans. The limit for 2019 plans is $7,900 for self-only coverage and $15,800 for family coverage.

Make sure your plan is in line with these figures.

Other notices

Consider also including the following notices:

  • Initial COBRA notice
  • HIPAA notice. This may be included in the plan’s summary plan description
  • Notice of HIPAA special enrollment rights
  • HIPAA privacy notice
  • Summary plan description
  • Medicare Part D notices
Get spouses involved

Benefits enrollment is a family affair, so getting spouses involved is critical. You should encourage your employees to share the health plan information with their spouses so they can make informed decisions on their health insurance together.

Also, encourage any spouses who have questions to schedule an appointment to get questions answered.