How a more engaged approach to wellness provides multiple benefits

Employers are taking a more engaged role in helping employees lead healthier lives. Momentum is building to encourage workers to get regular health screenings and to provide support for those who wish to quit smoking, get more exercise or take action in other areas.

“It started out as strictly a financial decision,” says Paul J. Baranowski, CLU, ChFC, vice president of account management and services at Benefitdecisions, Inc.

“Taking these steps will reduce health care costs. Fortunately, it can grow into more than that. It’s not just good for the health plan budget, but it’s good for productivity, increasing employee engagement and reducing absenteeism.”

Today’s employees are faced with more work and fewer resources to do it, so the challenge for many companies is to find time for people to get these screenings done and become more involved in their health and well-being.

Smart Business spoke with Baranowski about what you can do to make being healthy a priority in your workforce.

What changed for employers with regard to health care screenings?

The data has become more empirical and employers are more accepting that there is a bottom-line benefit to encouraging wellness. Early adopters are sharing testimonials about how health care costs have trended better since they began to develop wellness programs and encourage regular screenings.

More importantly than just a hard cost focus, employers are taking a more holistic approach with the understanding that wellness affects everything. They are willing to spend money for tangible programs to drive behavior that is not just good for the organization, but also for the individual.

How do companies create the time for employees to participate?

You need to make it a higher priority. Bring the screening process to your company and explain that work is going to stop to allow time for your people to participate. If someone doesn’t participate, ask for an explanation.

In addition to the screenings, you can bring programs such as exercise or wellness educational classes to your workplace for a minimal cost. Insurance carriers have all begun to build up their wellness and preventive care departments in order to drive behavior more efficiently in this area. Some will provide a direct-dollar subsidy toward purchasing wellness services whether it’s from the carrier or through an outside vendor.

Carriers and employers are also allowing  workplace wellness screenings to be paid through as a claim, which then allows tracking so you can build a targeted campaign specifically around a condition.

What about the issue of employee privacy?

This is a bit of a pain point for employees and uncomfortable for employers. Most employees see these steps as a positive for everyone involved because the worst-case outcome is for someone to not take care of themselves and end up in a bad way because they failed to go get a simple blood test. The flip side is some folks take the position that it’s an invasion of their privacy.

This is certainly a sensitive area and the position the employer can take is to welcome an alternative method.

Let employees obtain the screening through their personal doctor. That way the employee is still receiving the benefits that they obtain from the screening results as well as potential discounts on their health plan premiums. It’s a win-win for all parties. Younger folks are more comfortable with others knowing and using personal health information for their benefit. Many times employees will begin to buy in to the process, once they receive a screening that warns them that worse health issues could be forthcoming if they don’t change their behaviors.

What is the estimated return on investment for health care screenings?

For every dollar spent, most estimates are anywhere from $3 to $7 return. Just helping one person to avoid a catastrophic event could save thousands in one person’s claim costs, let alone the productivity savings. So not only are you saving a life, but financially, you’re easily a winner.

A new wave of options gives employees choices in coverage

Although voluntary benefits are not a new concept, they have increased in popularity as the landscape of health care continues to change and evolve with the implementation of the Affordable Care Act. Traditionally, these types of benefits were offered by large employers.

Smart Business spoke with Michael Galardini, sales executive with JRG Advisors, about growth in demand for voluntary benefits.

What are voluntary benefits?

These benefits are made available to employees on a voluntary or optional basis.  Some key characteristics of voluntary benefits include 100 percent employee-paid insurance, offered through an employer with premiums paid through automatic payroll deductions. Others may include accident insurance, critical illness, auto/homeowners, cancer, disability income and pet insurance.

Because these types of benefits are cost efficient and contribute to the employee’s work-life balance, they are becoming a central component of many companies’ overall benefits strategies.

Why should employers consider adding them to the benefits portfolio?

Since many employers find it increasingly difficult to provide employees with a complete benefits package, voluntary benefits have become a solution or supplement to an employee benefits program. Employers can offer these types of coverages without any added expense to the company. Implementation requires little or no administration or support. Trends also show that voluntary benefits have strong emotional appeal to employees, and they have actually come to expect them.

What are some  of the advantages to offering voluntary benefits?

Voluntary benefits appeal to both the employer as well as the employee. From an employer standpoint, they offer a means of increased expense control. They provide the employer with a cost-effective way of supplementing benefit cuts or reductions that may be necessary due to budget constraints. By offering voluntary benefits, an employer can stand out from competitors in offerings and image, and thus may attract and retain valued employees.

From the employees’ perspective, voluntary benefits provide the opportunity to access a broader array of benefits in one place and the freedom to choose what best suits their needs. Voluntary benefits often have lower premiums than individual policies that employees would purchase on their own, and the premiums are payroll deducted, often on a pre-tax basis.

What should an employer consider when offering voluntary benefits in its portfolio?

First, employers wishing to offer voluntary benefits must show their support for the benefit program if they want them to be successful with the employees. Such support on behalf of the employer lends itself to motivating employees to see the value of voluntary benefits for themselves and their families. An employer should talk to employees to help determine what offerings would be most useful.

In addition, employers should carefully examine their current benefits package to determine which benefits are popular and those that are not. Most importantly, employers need to determine the type(s) of voluntary benefits that offer the most value for the lowest cost. This is crucial to the success of the voluntary benefits program due to employee’s perceived value.

As the program is implemented, employers should educate employees on what voluntary plans are available and the benefits of enrolling. Lastly, employers should follow up with employees on a regular basis to ensure that they are satisfied, and that there are no problems.

How is the success of a program measured?

Employers should review their voluntary benefits program every 12 to 24 months  to gauge the program’s success and effectiveness. This can be accomplished through employee surveys to measure employee awareness, understanding and satisfaction with the benefits that are being offered.

In addition, through benchmarking and reviewing participation rates among their workforce, employers can further determine if they are at industry norms with regard to enrollment, re-enrollment and persistency.

Insights Employee Benefits is brought to you by JRG Advisors

Don’t wait to plan for coming health care reform changes

Businesses have been playing the health care reform waiting game, complying when necessary but otherwise holding off on planning for future regulations with the hope that there will be another postponement. In the interim, insurance companies are allowing employers that like their current benefits program to extend it. But that will not last.

“Small-group employers with fewer than 50 employees are really going to struggle when the grandfathering period ends,” says Ross W. Farro, a principal at Benefits Resource Group.

Companies need to plan for the future, he says, especially those with rich benefits — plans with very minimal out of pocket exposure for employees. Those plans aren’t available under the Affordable Care Act (ACA) for small businesses. There is already evidence that businesses are being forced into public platinum, gold, silver and bronze plans and aren’t able to match up their benefits with those they’ve had in the past.

Smart Business spoke with Farro to find out what’s ahead in health care reform that businesses should prepare for.

What is around the corner for businesses in the context of health care reform?

For small businesses, rollout of further ACA regulations has been postponed until the 2016 plan year.

For those companies with more than 100 full-time employees, the ACA goes into effect for the 2015 plan year. That includes provisions for the affordability of coverage, minimal essential benefits, the pay or play tax, and the standard for full-time equivalent employees.

Some employers have considered dropping their health care insurance to reduce costs. They’re weighing paying the $2,000 per employee penalty for not offering coverage against what they pay for health insurance. Those companies should know that the IRS recently issued words of warning to businesses suggesting there could be stiffer penalties beyond the pay or play tax that could make dropping coverage more painful.

How are businesses adapting?

Premiums are increasing for all businesses because of the volatility in the market caused by the taxes and fees associated with the ACA. One way to mitigate the effects of this volatility is by using the private exchange model, which is created by consultants in conjunction with insurance companies to provide a host of coverage options. This, combined with a defined contribution plan, allows employers to set their cost while giving employees more choices for health care coverage, essentially allowing them to shop the market while helping employers maintain a consistent budget. A private exchange model would keep a company in compliance with ACA regulations while allowing employees to build a plan that best fits their needs.

How has the self-funding option changed in response to ACA?

Self-funding had previously been reserved for larger groups. Today, however, smaller groups can take advantage of these programs through level funding, which is a stepping stone to self-funding. Employers that take this approach won’t need to pay the market share fee, which is 2 to 3 percent of their monthly premium today and will increase to 5 percent by next year. It offers a way to get around the mandated fees from the government. Some carriers allow as few as 25-employee groups into this new self-funding model, whereas previously it required groups of 150 to 200.

Employers using level funding won’t be required to go into community rating plans or public plans; they’re able to keep their plans in place. Further, level funding offers protections to insulate employers from very large claim, which prevents them from going into the red trying to deal with it.

What can companies do to comply?

Today’s business owners need to have a benefits adviser who is very knowledgeable regarding health insurance funding options in the era of the ACA. Health care insurance and ACA compliance is going to have a huge impact on businesses’ costs and their ability to dictate their plan types. It’s constantly evolving, so if businesses aren’t working at the forefront of these issues they’re liable to miss something big. They need a consultant who leads instead of reacts to get their client the necessary information to make the best decisions.

Insights Employee Benefits is brought to you by Benefits Resource Group

Why the steps you take to provide great HR services are so important

You have decided to outsource the human resource function of your business to an outside firm that specializes in this service. Now that you’ve taken this step, it’s important that you let the experts do their job.

“You may take it personally when someone comes in and gives you an honest assessment of how your company does things,” says Stephanie Martinez, Director of HR services at Benefitdecisions, Inc. “Understand that the firm you are working with is putting that information out there so you know what your exposures are and the risk associated with not doing things a certain way. The goal is to make your organization the best it can be.”

Smart Business spoke with Martinez about the advantages of using an external firm to handle HR and how to make the transition seamless.

What are the advantages to outsourcing HR services?

One major advantage is risk management. There are many different employment laws that have come about and it can be hard to stay on top of the changes and stay in compliance. Outsourcing can help you avoid costly lawsuits by knowing the proper rules and regulations.

You have the ability to bundle various offerings at a lower cost and save on personnel when you think about the individuals you would otherwise have to hire within an HR department.

You can gain efficiency by streamlining processes and administrative functions. An outsourced HR partner can create a paperless environment that gives employees an easy-to-access portal to manage their benefits and make changes online.

Finally, there is an increased opportunity for employee development. You have someone who knows the law and has the expertise to handle different situations within an organization.

How do you begin your search for an HR firm?

Identify what services your company needs and then find a firm that can provide those services.

Create realistic goals and timelines and develop a plan that is achievable and can be accomplished within that time frame.

You also have to take into account how receptive your employees are going to be to the HR firm when you first make the move. If you have never had HR before and now you are trying to implement it, it can be a radical change for the organization.

Another important piece is ensuring the leadership team is committed to working with the firm you hire.

It’s going to take time and effort to work with the firm, to identify those goals and to provide support. You need to communicate your buy-in to the HR effort to your employee population.

Talk to employees about the decision to outsource your HR functions and be clear about the role they are going to play. Demonstrate that they have your support to do what it takes to strengthen your organization.

What if you have concerns about the cultural impact?

A good introductory way to start the process is to work with a consulting firm and do an HR audit or assessment to see where the gaps are in your company. Identify those high-priority areas that need to be fixed immediately and what can be fixed later on. That will provide an opportunity to work with both the firm and a consultant to see if there would be a good fit on a long-term basis. Some companies don’t even know what they need, so the HR consultant can help you identify those issues.

How can you help the process be more effective?

Communicate to employees that the HR consultant will be on-site at set times and dates each week and give them an internal email address so that they have a way to communicate with that individual.

Once HR is on-site, the level of employee requests usually increases because employees know there is someone available who can help. It’s great to align expectations with employees right from the start.

A good HR firm wants to help you provide a positive experience for your employees. You don’t want anyone to leave the organization not having a good experience because that reputation will follow you.

Insights Employee Benefits is brought to you by Benefitdecisions, Inc.

How the ACA guidelines affect workplace wellness programs

Workplace wellness is not a new concept. Many employers offer wellness programs to keep employees active and productive. Every bit as important, however, is the long-term goal of reducing health care costs as a result of healthier lifestyles and behaviors. But not all wellness programs are the same. The Affordable Care Act (ACA) established new guidelines to encourage and regulate workplace wellness programs.

The incentives available to employees can differ significantly depending on the type of wellness program offered.

“Rules now allow employers to increase incentives and/or rewards that are offered as part of some wellness programs as long as certain criteria are met,” says Amy Broadbent, vice president, JRG Advisors. “The ACA separates workplace wellness into two general categories — participatory wellness programs and health-contingent wellness programs.”

Smart Business spoke with Broadbent about the types of wellness programs that companies may offer at their sites.

Who can enroll in participatory wellness programs?

Participatory wellness programs are open to any employee who wants to participate. Rewards are not based on achieving specific goals or meeting specific criteria, but simply enrolling in the program.

These programs typically include smoking cessation programs, gym membership discounts or reimbursement, diagnostic testing/screenings and health education classes.

Programs can be reimbursed, subsidized or incentivized if the employer chooses to do so. There is no limit to the type of reward that is given as long as the reward is not dependent on any specific outcomes.

Which employees can enroll in health-contingent wellness programs?

Health-contingent wellness programs reward employees for achieving specific health goals. There are two types of health-contingent wellness programs, the first of which is an activity-only wellness program that requires the employee to perform or complete a health related activity in order to obtain a reward (walking, diet or exercise programs, for example).

While employees are obligated to perform an activity to gain a reward, they do not have to achieve and/or maintain a specific health outcome such as losing weight or reducing blood pressure.

The second type of health-contingent wellness program is an outcome-based wellness program. These programs require employees to achieve and maintain a certain health outcome in order to obtain a reward. Examples of outcome-based programs include meeting exercise targets, weight loss goals or not smoking.

There are maximum rewards that can be given under health-contingent wellness programs. For 2014, rewards for most programs and goals can equal up to 30 percent of the cost of the employer’s health coverage for an employee and their covered dependents.

Furthermore, if a program is specifically designed to prevent smoking, then the total incentive amount offered can equal up to 50 percent of the employee’s health coverage cost.

Are there alternative standards for employees with a medical condition?

Employers are required to offer alternative standards for employees who cannot reasonably be expected to complete health-contingent programs due to a medical condition.

For activity-only wellness programs, health plans can require employees to have a physician verify that their health status or condition make it medically inadvisable to participate in the program.

For outcome-based programs, health plans cannot ask a physician to verify that the initial standard is medically inadvisable or potentially too difficult due to a medical condition.

If you offer workplace wellness programs currently or if you are interested in doing so in the future, be sure to disclose the availability of the alternative in your employee wellness campaign materials.


Insights Employee Benefits is brought to you by JRG Advisors

Understanding health care exchanges for both employers and individuals

By now, everyone has heard about health care reform and its impact on every business and individual in some way, shape or form, says Craig Pritts, sales executive at JRG Advisors.

“You may have also heard about public or private exchanges, and it is very likely that you will be using an exchange to purchase insurance in the future,” Pritts says.

In fact, by 2017, the use of private exchanges are expected to catch up to public exchanges, with one in five Americans purchasing benefits from some type of health insurance exchange, according to projections by Accenture, a global management consulting company.

Smart Business spoke with Pritts about what exchanges are available right now to both employers and individuals.

What is the public exchange?

The public exchange is an option for individuals to purchase health insurance that started on January 1, 2014. States were given the option to create their own state-based exchange, to partner with the federal government on an exchange or to default to the federal government’s exchange.

The public exchange, also known as the Federally-Facilitated Marketplace, determines if a person is eligible for a subsidy that lowers their monthly payment; if a person is eligible for a cost sharing reduction, which can lower the deductible, copayments and/or coinsurance; and if a person is eligible for Medicaid or their dependents are eligible for the Children’s Health Insurance Program.

The subsidy is available for people earning up to 400 percent of the federal poverty level. The marketplace or public exchange was also designed to create an online shopping experience that will simplify the health insurance buying process.

Over eight million people signed up for health insurance using the public exchange, according to the Department of Health and Human Services, through April 19.

Is there a public exchange for businesses?

There is also a public exchange for small businesses known as the Small Business Health Options Program (SHOP).

This option is available for a business with up to 50 employees, but smaller businesses tend to benefit the most. A business with 25 or fewer full-time employees that contribute at least 50 percent of the premium and have an average wage of under $50,000 may qualify for a tax credit up to 50 percent of the premium or 35 percent of the premium if it is a tax-exempt employer.

There is a SHOP marketplace available in each state. Businesses may work with an agent, broker or insurance company to determine eligibility, view plans available and enroll.

How does the private exchange differ?

A private exchange is offered by a private company like an insurance company or third party and is available for a business to buy group insurance products.

Private exchanges have been in existence for a few years and are gaining popularity due to rising premiums and a need for a better way to provide group insurance.

In this model, an employer determines the amount of contribution it will make to the employees’ insurance. It also may budget for future years under this approach. The contribution amount is provided to the employees who are able to select the health insurance plan that is best for their needs.

Many of the private exchanges offer other benefits that may include everything from dental and vision to life insurance, disability insurance, health savings accounts, flexible spending accounts and pet insurance to name a few.

Employers can enjoy cost control and robust benefit packages while allowing employees to take advantage of having more control of their plan selections to fit their specific needs.

What’s the bottom line on exchanges?

Whether you are an individual or part of an employer group, you will be required to have health insurance in 2014 or face a penalty of the greater of 1 percent of your household income or $95. Odds are you may be purchasing that insurance through one of the exchanges in the future. Public exchanges provide a subsidy for individuals that qualify and a tax credit for businesses that qualify, and private exchanges provide cost control for an employer and more choice for the employees.

Insights Employee Benefits is brought to you by JRG Advisors

How your employees can become better health care consumers

Most employers announce annual enrollment for health care benefit plans, give employees two weeks to decide which plan to enroll in, and then expect them to understand how the program works for the balance of the year, says Robert J. Dorsey, Vice President of Consulting at Benefitdecisions, Inc.

Open enrollment is no longer just an annual event. Companies should work with employees or give employees the tools to help them understand health care options throughout the year which will help them become informed and better consumers — saving money for the employee and employer, Dorsey says.

“Typically most employees use the health care system and don’t understand how their benefits apply until 30 to 45 days after the service, when the explanation of benefits arrives at their home. That approach is backward considering that the majority of services are scheduled. Employees need to better understand how their benefits apply before they get the services,” Dorsey says.

Smart Business spoke with Dorsey about how nurse advisory programs work with health care plans to enable better consumer decisions and reduce costs.


How would having more information in advance help when scheduling health care services?

In the Chicago area, prices can vary significantly depending on the health care services provided. For example, a brain MRI can range from $1,500 to $8,000; that’s a pricing variance over 400 percent, which is after the in-network discount is applied. Employees and their employers will find this kind of pricing variance for many scheduled services like X-rays, CAT scans, colonoscopies and mammograms, but neither knows how to evaluate such pricing. We need to provide members with access to pertinent pricing and quality of care information before the services are rendered. We are asking employees to be better consumers yet we don’t provide the services or tools to allow them to succeed.

Benefit plans today try to steer employees to make better decisions through higher deductibles and HSA type products.

However, they become better consumers by having access to health care professionals who can assist employees in better understanding their benefits prior to receiving services, the pricing options for those services and even assist in scheduling the appointment with the provider. Strong nurse advocacy services really empower members to be better consumers.


What can be done to get employees this information?

About five years ago, there were only a few companies in the country that provided nurse advisory services. Today, there are many, not including those offered through major insurance companies. Employers can also contract with nurse advisory firms outside of their health plans. There are some very good ones that assist employers in educating employees about costs, outcomes and alternative services. Typically, the cost of these services range from $3 to $10 per employee, per month, and yield a reduction in claims of roughly 5 to 8 percent. On average, about 50 percent of an employer’s health care claim costs are for discretionary, non-life threatening scheduled services. Nurse advisers can help employees become better consumers by giving them the right information before services are scheduled.


What is the employee response to these programs?

Employers are finding that employees are looking for help with plan selection, scheduling appointments with providers, evaluating cost and quality of care information, and prospectively understanding how the benefit plans will work at the time of service. Employees are an employer’s greatest asset, so connecting them with a trusted health care adviser improves productivity, lowers claims, lowers turnover and reduces absenteeism. Employees love it. Everyone wins.

Cost shifting strategies through higher deductibles, large out of pocket maximums, payroll deductions or confusing HSA products do not flatten an employer’s health care cost, and, worst yet, have the unintended consequence of really frustrating the employee and employer. A successful strategy is one that includes a nurse advisory program and education, working with employees throughout the plan year.


Employee wellness programs offer employers more than cost savings

Employers today face the rising cost of an employee, which can be attributed to increased health insurance premiums or disability costs, or because health issues are affecting their production. Businesses looking for a solution may find one in the implementation of a company wellness program.

“The recession resulted in lots of layoffs,” says Megan Baker, wellness coordinator at Benefits Resources Group. “Though it’s ended, many businesses didn’t rehire to pre-recession staffing levels. So there is a serious need to ensure employees are performing at the top of their ability. A wellness program can have a huge impact on how someone performs in the workplace.”

Smart Business spoke with Baker about the costs and benefits of implementing an employee wellness program.

What can employers expect to gain from a wellness program?

A well-executed wellness program can help employers realize reduced disability claims and absences from work, improved morale related to a reduction in employee stress, and better recruitment and retention from a often higher-performing candidate pool that values wellness. Employers also see a shift in presenteeism, which is a measure of how well an employee works while on the job. While an employee may show up daily, come in and leave on time, they have issues, health related or otherwise, that make concentrating on their job difficult. An on-site wellness program can improve employee health, which can improve productivity.

What is a realistic timeline for a return on investment and how is it calculated?

Typically clients can expect to see a return three years after a wellness program is put in place. This ensures any claims anomalies are normalized so program effectiveness can be more accurately analyzed.

But how the return is calculated depends on the size of the client, and how they’re funded with their insurance provider. When the business is self-insured and sees its claims on a day-to-day basis, the provider is able to look at claims year-over-year to determine ROI. Calculating the ROI of smaller, fully insured clients hinges on data provided by employees though their health risk assessment. This gives the provider aggregate cohort reporting that shows per employee, per year decrease or improvement in health score.

What are the legal implications and considerations for a wellness program?

It depends on the type of wellness program an employer has in place. Activity or participation based programs allow an employer to reward employees based on employees performing or not performing an aspect of the program. An outcomes-based program requires employees to meet a measurable health goal to get a reward, whether that’s a premium incentive or a payroll credit. This program requires more attention to the laws surrounding wellness programs as employees must be offered a reasonable alternative or appeals process if they’re unable to meet the goals. And there are limits on the differential an employer can charge based on whether someone meets the goals or doesn’t.

Providers can analyze whether it’s better to use an activity or outcomes based program and ensure employers are moving forward appropriately.

Why use a provider to implement a wellness program instead of in-house resources?

A trusted provider will custom design a plan that works for the client based on client expectations and the provider’s expertise. Providers are researching and implementing new ideas, vendors and programs to better serve their clients’ needs, which require resources most HR departments do not have. Also, providers have negotiated proprietary pricing with vendors.

It’s a large part of a provider’s job to take all the work out of a wellness program. They can design communications HR can use to talk with employees about the program, and perform the analytics that measure efficacy. Partnering with a benefits consulting firm that also manages an effective wellness solution is advantageous for companies looking to create funding and measure ROI.

The effective implementation of a wellness program is a crucial component of realizing all of its benefits. Consider working with a provider that understands the keys to success to ensure ROI. ●

How to make sense of the individual mandate

Craig Pritts, sales executive, JRG Advisors, the management arm of ChamberChoice

Craig Pritts, sales executive, JRG Advisors, the management arm of ChamberChoice

Your entire employee population — even those part-time, seasonal and currently not eligible for benefits — will be increasingly impacted by health care reform. Beginning in 2014, a key provision of the Affordable Care Act (ACA) known as the “individual mandate” will require most individuals to purchase health insurance or pay a penalty. The requirement to maintain coverage applies to all ages, even children.

Smart Business spoke with Craig Pritts, sales executive at JRG Advisors, the management arm of ChamberChoice, about how the individual mandate may impact your employee population.

What are the penalties for not following the individual mandate?

The penalty for not obtaining acceptable health insurance coverage will be phased in over three years and will be the greater of either a flat dollar amount or a percentage of income. In 2014, the penalty will start at $95 per person or up to 1 percent of income. In 2015, the penalty increases to $325 per person or up to 2 percent of income. For 2016 and after, the penalty goes up to $695 per person or up to 2.5 percent of income.

For penalty calculation purposes, ‘income’ will be defined as the taxpayer’s household income minus the taxpayer’s exemption (or exemptions for a married couple) and standard deductions. The penalty will be calculated on a monthly basis and will be assessed for each month in which an individual goes without coverage. There will be no penalty for a single lapse in coverage lasting less than three months in a year.

Those covered under an employer-sponsored group health plan or a government-sponsored program such as Medicare or Medicaid can continue to be covered and will not be subject to a penalty.

Who is exempt from penalty?

Individuals may be exempt if they:

  • Cannot afford coverage. Those for whom a required contribution for coverage would cost more than 8 percent of their household income.
  • Experience a gap in coverage for less than three consecutive months.
  • Have income below the tax-filing threshold.
  • Receive a hardship exemption from the Department of Health and Human Services.
  • Are incarcerated.
  • Are members of a Native American tribe.

According to the Internal Revenue Service (IRS), if they are eligible for an exemption for a single day of a month, they will be treated as exempt for the entire month.

How will the IRS enforce the penalties?

Beginning in 2015, everyone who files a federal income tax return for the previous year will be required to report which family members are exempt from the individual mandate and whether each person not exempt had insurance coverage. A penalty will be owed for each nonexempt family member without coverage. Married couples filing a joint return will be jointly liable for the penalties that apply to either or both of them. Anyone claiming a dependent will be responsible for reporting and paying the penalty for that dependent.

The IRS will assess and collect penalties in the same manner as taxes. However, the ACA imposes certain limitations on the IRS’s ability to collect. It’s anticipated that assessable penalties will be subtracted from individual tax refunds, if applicable.

How will tax credits help people comply with the individual mandate?

The ACA created a premium tax credit to help eligible individuals and families purchase health insurance through an affordable insurance exchange, making coverage more affordable.

Taxpayers may qualify for a premium tax credit if their annual household income is between 100 and 400 percent of the federal poverty level for their family size; if they cannot be claimed as a dependent by another taxpayer; or if they are not eligible for minimum essential coverage, which is coverage under an employer-sponsored group health plan or Medicare or Medicaid plans.

The health insurance arena is changing, and individuals have a responsibility to comply with new legislation or pay a penalty. Understanding the legislation is challenging, to say the least. It’s good to work with an advisor who has the resources to help employees sort through the confusion, understand options and responsibilities, and find the best solution to fit their needs.

Craig Pritts is a sales executive at JRG Advisors, the management arm of ChamberChoice. Reach him at (412) 456-7253 or [email protected]

Learn more about the individual mandate and other ACA provisions, visit and click on ‘Health Care Reform.

Insights Employee Benefits is brought to you by ChamberChoice

How companies are developing strategies to meet the PPACA mandate

Daniel Meracle, Employee Benefits Consultant and Wellness Adviser, Benefitdecisions, Inc.

Daniel Meracle, Partner, Benefitdecisions, Inc.

Businesses with many variable-hour and part-time employees are developing new strategies to address the employer mandate in the Patient Protection and Affordable Care Act (PPACA).

Although implementation of the mandate has been delayed until 2015, companies continue to work on ways to avoid penalties when enforcement kicks in, says Daniel Meracle, a partner at Benefitdecisions, Inc.

“We’re seeing four variable-hour strategies that employers are using,” Meracle says. “Some may be against the spirit of what Congress intended when they passed PPACA, but they are within the guidelines of the law.”

Smart Business spoke with Meracle about these latest strategies for meeting PPACA requirements for variable-hour employees.

What are businesses with variable-hour employees doing to meet the PPACA mandates?

First, employers need to measure whether employees worked 30 hours a week or more, and would be considered full time for the purposes of mandatory health care benefits. The PPACA gives the ability to look back 12 months to determine if an employee has worked an average of 30 hours a week. If he or she did, the employer would be required to provide health insurance that has a minimum value and is affordable.

In the hospitality industry — restaurants and hotels — businesses historically have turnover rates of 90 percent or more within 12 months. Most employees will leave during the 12-month look back period, so employers will not have to offer health care insurance to them.

Basically, it’s a matter of tracking the hours, and several technology programs are available to manage that task. Certainly payroll companies can provide that service, as well.
Three other strategies being utilized are:

  • Reducing hours below 30.
  • Slash and share.
  • Providing minimum essential coverage plans.

What is slash and share?

Businesses are sharing employees. A restaurant owner cuts an employee’s hours below 30 and then might share that employee with another franchise owner, who also might employ that person for less than 30 hours.

They have to be two different franchise owners; it can’t be two restaurants owned by the same person or company. It could be that one is Hardee’s and one is Jack in the Box, and the person works for 20 hours a week at each.

How does the minimum essential coverage strategy work?

Insurance companies have realized that under the strict guidelines of the PPACA minimum essential coverage is nothing more than preventive care. So businesses are offering what are nicknamed ‘skinny’ plans to employees. Making these plans available allows the business to avoid the $2,000 penalty per employee for not providing coverage.

Skinny plans cost about $40 to $50 a month, and all of that cost could be paid by the employee. If an employee declines the coverage, he or she would be subject to the $95 penalty under the individual mandate. But a young, healthy person would rather pay $95 than buy health insurance because there are no restrictions regarding pre-existing conditions. When you can join the exchange at any time, why not wait until you are sick to get coverage?

Most of these minimum essential coverage plans also are self-funded, which gets around a lot of PPACA regulations.

However, there are two caveats to taking this approach — these plans are probably not within the spirit of the law, so this option could go away with the issuance of a release from the Internal Revenue Service or Department of Health and Human Services. Also, employees can still go to the health care exchanges and get a subsidy because the plan does not provide minimum value.

If an employee gets a subsidy, the employer would pay a $3,000 penalty for that person. Still, it allows you to avoid paying $2,000 on all employees.
Of course, implementation of all of these strategies might be delayed because the employer mandate has been pushed back until 2015. But these are ways businesses are dealing with their variable-hour employees right now.

Daniel Meracle is a Partner at Benefitdecisions, Inc. Reach him at (312) 376-0433 or [email protected]

Website: To learn more about health care reform and other employee benefits issues, visit our resource center at

Insights Employee Benefits is brought to you by Benefitdecisions, Inc.