Thursday, 06 September 2012 11:21

Wellness Credits, What are they - Really?

The Department of Health and Human Services (HHS) awarded $372 million to 44 various communities to help with the efforts of reducing obesity, smoking, increase physical activity and improve nutrition (HHS.gov, 3/19/10). It is uncertain if this American Recovery and Reinvestment Act of 2009 has impacted the communities; and when the government grants were researched these amounts were earmarked for senior citizens. Today another award was released for 2012.

Employer groups are hearing from various sources the importance of wellness, says Danone Simpson, founder and CEO of Montage Insurance Solutions. Carriers are offering to assist with wellness efforts and many add as much as $44 in cost per year to the premiums. For larger employers Kaiser will send a bus to park outside workplaces testing employees for high cholesterol or strokes for a fee. “High cholesterol is one of the major risk factors leading to heart disease, heart attack and stroke. 2,200 Americans die of cardiovascular disease each day” (American Heart Association, www.heart.org).

Lifestyle changes are needed and yet Americans are sitting in front of computers all day urged to be more physically active. The balance is falling on the employers’ shoulders who know if they have more than 50 employees they are now required to pay for medical insurance or be fined $2,000 per employee per year. So the Human Resources Departments are asked to create wellness programs to keep premium costs down. Pooled groups will have to have a community effort in order to accomplish this goal unless they are planning to grow into a larger employer who has control over their premium costs.

Yet, the buzz on the street is wellness. Today, August 29, 2012, the Obama administration announced, “The Public Health Training Centers (PHTC) is to improve the Nation’s public health system by strengthening the technical, scientific, managerial, and leadership competence of the current future public health workforce” (http://bhpr.hrsa.gov/grants/publichealth/phtc.html). Approximately 36 U.S. Government Universities have been given a grant worth an average of $650,106 in financial assistance to promote public health training for the third year in a row.

So what does this mean for employers? We are not sure yet. “Employer wellness incentive programs take a variety of forms, ranging from employer-provided direct incentives, such as pedometers or discounted health club memberships (participation only programs) to group health plan incentives that link healthcare discounts to meeting certain health targets, such as cholesterol or blood pressure standards (standard-based programs). The codified support for employer wellness programs in the PPACA demonstrates Congress’s intent to encourage these programs and, thus, enhance and encourage public wellness. However, whether offered as part of a health plan program subject to HIPAA or the PPACA extension, or as a separate employer program or policy not subject to HIPAA or the PPACA, wellness programs are still generally bound by federal, state and local nondiscrimination and privacy laws, such as the Americans with Disabilities Act (“ADA”); Genetic Information Nondiscrimination Act of 2008 (“GINA”); Title VII of the Civil Rights Act of 1964, as amended (“Title VII”); and the Age Discrimination in Employment Act. Employers contemplating penalty or reward wellness programs should consider that few, if any, cases have addressed the application of these nondiscrimination laws to the wellness program penalty and reward provisions” (Hall, 2012, gshllp.com).

The only reimbursements are from employers to employees who participate in the employer sponsored programs. Today the employer is allowed to reimburse the employee a portion of their premium dollars by up to 20% of the cost of employee-only coverage and in 2014 that amount goes up to 30%; however this costs the employer more, while many are struggling to pay their portion of the premiums.

So what can an employer do? Employers need to make sure their broker is providing some of these services to their employees in a compliant way on a volunteer basis. And make sure their program is compliant or it can be deemed discriminatory in a court of law, “Despite PPACA’s clear legislative support for wellness efforts, employers fashioning penalty and reward wellness programs must consider nondiscrimination and privacy implications of such provisions” (Hall, 2012, gshllp.com).

Unraveling the Patient Protection and Affordable Care Act (“PPACA”) is a full time job and the penalties and compliance landmines are plenty. Overtaxed HR departments need brokers who are working 24/7 to guard the employees and employer from tax burdens and who offer employee wellness incentives, since the government is not.

Danone Simpson is the founder and CEO at Montage Insurance Solutions. Reach her at (818) 676-0044 or danone@montageinsurance.com.

Insights Business Insurance brought to you by Montage Insurance Solutions.

Published in Los Angeles

Productivity losses related to personal and family health problems cost U.S. employers $1,685 per employee per year and $225.8 billion annually, according to the U.S. Centers for Disease Control and Prevention. So what is creating these problems with health care claims and insurance, which ultimately lead to poor health and lower productivity?

“It is the delivery system, administration and billing,” says Danone Simpson, founder and CEO at Montage Insurance Solutions. “I have no doubt about this, as our firm battles away at claims that take hours, weeks, months and sometimes years to sort through.”

Smart Business spoke with Simpson about what she sees as the problems with health care, how carriers are coping and what employers can do about it.

What is the problem with health care today?

From wait times for approvals to multiple bills being sent to carriers, carriers are denying needed PET scans, MRIs and other tests so doctors can determine care — partially because of what they deem as ‘abuse’ from doctors who overtreat or analyze treatment. Approvals can sometimes take two months when patients need major surgery to remove cancer.

The real issue with health care is not only who is paying what premiums, fines or co-payments, it’s more about the overall cost of health care and billing complications.  Doctors desperate to earn more may overbill, even though they know the contracted amount they agreed to. However, that may be a different amount with each carrier, which makes the administrator’s job a nightmare.

How will private exchanges and mandated health care impact the system?

It’s likely that health care insurance exchanges won’t necessarily lead to better health care pricing. In addition, private health insurance carriers will be forced to offer coverage on the exchanges and compete with themselves.

Surveys prove that employers are angry about being forced to pay for coverage, even if they already cover 100 percent. They expect employees to ask for more coverage of dependents, and some employers who stretch to pay a portion of dependent coverage are feeling backed into a corner. It’s not required to cover dependents, but most plans today do.

What are carriers doing to help with costs?

With expensive fines that can account for more than the actual premium amounts, carriers are helping form Accountable Care Organizations (ACOs) to hold doctors and hospitals responsible. These organizations use incentives to cause providers to work together when treating a patient across care settings such as doctors’ offices, hospitals and long-term care facilities, according to HealthCare.gov. For example, the Medicare Shared Savings Program rewards ACOs that slow health care cost increases while meeting performance standards on quality of care and putting patients first. Patient and provider participation in an ACO is purely voluntary.

What can employers do to lower health insurance costs?

Offering a wellness program is one way to truly impact the heart of the problem of the country’s health care costs. An unhealthy work force is a major issue for businesses large and small. For example, 20 million Americans — 7 percent of the population — have diabetes and 30 percent of this population remains undiagnosed, according to Katz. Moreover, a recent Newsweek article states that two-thirds of adults and one-third of children and adolescents are overweight or obese.

The law might require an employer to buy an insurance policy for employees, but it causes anger and rebellion on the part of many employers. The more proactive approach is to dive down into the parts of the reform that assist in either lowering premium costs or aiding in the retention and well being of your employees.

There are a number of tax credits available to help you with this proactive approach, if they are available to companies of your size.

  • The Patient Protection and Affordable Care Act includes a variety of provisions aimed at encouraging wellness and disease prevention. As shrm.org reports, effective Jan. 1, the ‘law will permit rewards or penalties such as premium discounts of up to 30 percent of the cost or coverage. Existing wellness regulations permit incentives of up to 20 percent of the total premium, provided that the program meets certain conditions. The law increases the amount of the potential reward/penalty to 30 percent of the premium.’ There is also the possibility of an even higher amount after national studies are performed.
  • Another option is the Small Employer Health Insurance Tax Credit. The U.S. GAO states, ‘Fewer small employers claimed the Small Employer Health Insurance tax credit in tax year 2010 than were estimated to be eligible.’  Calculators are available on the National Federation of Independent Business, www.nfib.com and many other websites.

Employers also can ask their carriers about the Medical Loss Ratio reimbursement, which was just issued for the first time.

Take care to avoid fines and earn tax credits on wellness incentives. Many employers are starting to offer a carrot approach to motivate employees, and then a stick with some sort of penalty for not participating to truly see employees take advantage of a wellness-based plan.

Danone Simpson is the founder and CEO at Montage Insurance Solutions. Reach her at (818) 676-0044 or danone@montageinsurance.com.

Insights Business Insurance brought to you by Montage Insurance Solutions

Published in Los Angeles
Tuesday, 03 July 2012 09:57

The CEO decision; Benefits or Fines

As the media is promoting employers will pay fines rather than continue to pay for employee benefits, I am trying to understand why they are trying to mess with the heads of business owners. We pose the argument, “Why would CEOs or executive directors pay taxes for a benefit they already offer their employees by free will now?”

Today, in 2012, we are not legally required to offer benefits to the employees, but do because we want to recruit and maintain the best talent we are able to. So why would that change? Why would employers now pay fines? I don’t know of one that would fall for that reasoning.

Of course the government would love to gain these tax dollars, but business owners are savvier than that. As a general rule we don’t like to pay more in taxes than we have to. We would rather invest in business operations, equipment, computers and/or our employees.

CEOs also care about their employees and gain employee loyalty through employee benefits, despite what the media says or thinks. Many employees would not take a job without them, unless it is a job of their choice and today some may feel they do not need benefits. These are the ones who will potentially feel the impact from this law unless they qualify for Medicare or other state insurance such as the California-offered Medi-cal.

Larger employers choosing not to offer benefits today may decide to pay taxes. However, just because they have not yet paid for benefits for their employees, why would they want to pay more taxes? The logic does not make sense. Take, for example, Medical CA HMO only: $320 (typical employer co-share cost more or less) x 100 employees = $32,000/month x 12 = $384,000, or an annual fine of $2,000 x 100 employees = $200,000.

Fines are potentially $120,000 less than paying for medical insurance for employees, under employee benefit group programs. However, what does one get in return for this? The answer is frustrated employees now mandated in 2014 to get their own individual insurance through an exchange, a broker or carrier. They may be likely to do this during office hours or leave for a company that offers insurance. Why?

  1. A group policy will always be richer, priced better and offer more assistance with claims through a company’s broker, and any pre-taxed dollars can be paid out through payroll.
  2. An individual plan has higher deductibles, co-pays and co-insurance and can cost a substantially higher amount for an individual than the group employee premium and will have to pay the bill every month with after tax dollars, on time or face cancelation.

In weighing the costs, most employers would prefer opting for employee retention, presenteeism, less turnover cost, and best offerings for recruiting. So the landmark Supreme Court ruling on June 28 upholding the individual mandate had wide-ranging implications. The legislation requires Americans to buy health insurance or pay a penalty, a key part of the law that had come under heavy scrutiny.

In a semi-conservative and also slightly technical statement, the court ruled that the mandate ius actually unconstitutional under the Constitution’s commerce clause, but it can stay as part of Congress’s power under a taxing clause. The court said that the government will be allowed to tax people for not having health insurance. Originally the wording “taxing” was avoided to make the bill a little more palatable to legislators to pass, potentially making it fall under the “commerce clause,” or ability for the federal government to regulate interstate purchasing.

Addressing the concern that this expands the commerce clause so far that people could, in the future, be forced to “buy broccoli,” as one argument puts it, Chief Justice John Roberts wrote, “(t)he Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness,” in the ruling.

The court’s ruling upholding the main part of Obama’s law means that people must buy health insurance or pay a tax up to several thousand dollars a year. It also means that other popular provisions of the law will stay, including the various employer mandates we discuss in our Smart Business webinar. We also had several carrier executives express their plans going forward to control cost through Accountable Care Organizations.

Now, as we continue to wait on the outcome of another decision pertaining to discrimination in employee benefit plans, employers are continuing business as usual. One employer states, “I hate the word discrimination when it comes to my decision to pay more toward my key executives or long term employees.” There is still a timeline on this matter expected from the Department of Labor forthcoming.

As time marches forward toward 2014, your benefits brokers will be more important than ever to help your team interpret your responsibilities. If it is not educated in HCR, then it may be time to find one who is.

Danone Simpson is the founder and CEO at Montage Insurance Solutions. Reach her at (818) 676-0044 ordanone@montageinsurance.com.

Insights Business Insurance is brought to you to Montage Insurance Services

Published in Los Angeles

The entire health insurance industry is holding its breath right now, waiting for the Supreme Court to hand down its decision regarding the Patient Protection and Affordable Care Act.

But regardless of what happens, insurance brokers are urging companies to take steps now to ensure that they have the best insurance plans in place.

“We’re expecting most employers to maintain what they currently have,” says Danone Simpson, founder and CEO of Montage Insurance Solutions. “However, to be prepared, employers need to make sure they are offering a variety of insurance plans that can compete with a low-cost insurance plan in a health care exchange.”

Smart Business spoke with Simpson about how changes will impact business’s health insurance and how companies can work with their insurance carriers to prepare.

What critical steps do companies need to take in regard to their health insurance plans right now?

Employers with 50 employees or more, if they provide insurance, need to work with an insurance brokerage firm to make sure it offers a variety of plans, including a low-cost plan that can compete with health insurance exchanges. It’s a good idea to have two to four plans available.

States are currently putting together health insurance exchanges where employees can look for other plan options that may be lower in cost due to reduction in benefits.  In addition, some of the the insurance carriers, are setting up exchanges. Our firm, Montage Insurance Solutions is setting up an exchange called SIMPLAN™ which will offer all the carrier's plans.  If an employee finds an insurance plan on the exchange that he or she wants to purchase, the employee can purchase it on his or her own.  So many individual plans however, may create problems because it could quickly become unmanageable for a company’s human resources department to assist employees properly.  An HR department might already oversee one group plan — one set of plans with one carrier or two — but if employees buy individual insurance on their own, they will be going to the HR department, asking questions about very complicated and different plan designs from multiple carriers within the exchanges. Even if the reform bill is struck down, these exchanges likely will still exist in some form, as the legislation leaves the design up to individual states.

In addition to placing more strain on HR, under current laws, if an employer of 50 or more employees doesn’t offer what is considered affordable health insurance — 60 percent of covered expenses for a typical population, or employees paying less than 9.5 percent of family income coverage — businesses pay a penalty of $3,000 annually for each employee, with a maximum of $2,000 times the number of full-time employees minus 30. That means that a company with 100 employees would pay no more than $140,000 per year in penalties. The penalty also increases each year with growth of insurance premiums.

However, penalties do not apply to small employers. And if an employer has 25 or fewer employees and an average wage of up to $50,000, the company may even be eligible for a health insurance tax credit.

Will employers’ insurance be affected regardless of the Supreme Court decision?

That’s the part no one knows. The entire insurance industry is in limbo waiting to find out if laws that have already been passed, such as preventive care at no cost, will stay in place. If laws already in place are struck down, each individual insurance carrier will be handling it differently.

For example, the mandate of having young people ages 26 and younger on their parents’ plans will likely be kept by many insurance carriers, as it is a healthy demographic that has been profitable. On the other hand, carriers might not want to keep covering children up to age 18 with pre-existing conditions. If it is no longer law, it might not look good for insurance carriers to make that move, but it will cut costs.

Right now, most health insurance renewals with health insurance carriers will only have single digit increases this year (2012), compared to increases of 11 to 20 percent in 2010 and 2011. One exception might be increases of as much as 40 percent if a company with 50 employees or more has a lot of claims, as carriers want to move them off of their books.

One way to ensure that nothing changes with a business’s insurance plan is through grandfather status, in which a company has kept the same plan it had since 2010. However, carriers are charging more for those with such a status, as it is more costly for them to keep two platforms of insurance plans.

How can a company keep track of its health insurance carriers’ updates and changes?

Every carrier's legal department is reading and handling reform differently. However, it is easier for employers with group plans; not much will change for them as long as they offer at least one plan that is similar to those within health care exchanges.

Make sure you are working with a broker that educates your HR department, and consider education through seminars and informing employees of your benefits through annual enrollment meetings, an annual health-fair and wellness events. Our firm also updates constantly through social media, using powerpoints and whitepapers.. This is a national issue that impacts all employers, but there are also separate state nuisances. For example in California, Gov. Jerry Brown says he plans on keeping the California health insurance exchange in place, no matter what the Federal government decides.

Danone Simpson is the founder and CEO at Montage Insurance Solutions. Reach her at (818) 676-0044 or danone@montageinsurance.com.

Please join us on June 12th from 8:00 am to 12:00 pm PDT for the seminar, “Make your benefits count: cost, delivery, self-insurance and innovations” – A presentation and panel discussion with powerhouse health carrier executives, brought to you by Montage Insurance Solutions.

Smart Business will be presenting live streaming audio for this event. If you want to listen in, please register here.

If you are in California and would like to attend the actual live event, please use this registration link.

Published in Los Angeles
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