Browse, point, click: Embrace today’s benefits technology

We buy everything from clothing to groceries with a simple click. People — both young and old — prefer online shopping, as opposed to fighting crowds and searching store aisles. This self-service shopping mentality is also becoming the preferred method when it comes to buying employee benefits.

“Now, more than ever, employers are looking to manage costs while reducing administrative burden. And, employees want the convenience of shopping for benefits online utilizing smartphones and tablets,” says Ron Smuch, insurance and benefits analyst at JRG Advisors.

Smart Business spoke with Smuch about embracing employee benefits technology.

How have employee benefits changed?

As the health care landscape has changed, so too has benefits technology. Although HR systems have existed since the 1980s, they weren’t developed to be very robust or flexible because they did not have to be. Now, employee benefits administration has become quite complicated and, according to many HR managers, a nightmare. The demand for technology has created a boom in software development and platforms that support enrollment, status changes, compliance, COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985) and record keeping.

This technology growth is the product of several key factors, such as the inception of the Affordable Care Act and its compliance requirements, particularly how and to whom benefits are offered as well as how enrollments and waivers are tracked and reported. Another key factor is the popularity of high-deductible health plans. Employee cost sharing causes employers to embrace the concept of defined contribution aimed at empowering employees to make coverage choices for their specific needs, utilize those coverages wisely and ultimately take an active role in managing their health.

Employees are no longer simply enrolling in a set benefits plan that may not suit their personal circumstances.

Why do some employers hesitate to get this technology?

Many employers still shy away from benefits administration technology under the false assumption that their employee population prefers paper enrollment. A 2016 LIMRA Study: Benefit Communication and Enrollment revealed that 38 percent of employers believe employees want to use a computer to enroll in employee benefits and 27 percent believe that employees still want to enroll with paper forms. Conversely, 68 percent of employees said they prefer online enrollment and only 16 percent preferred paper forms. Surveyed employees who preferred online enrollment felt that companies still using paper enrollment were stuck in the past, out of touch with today’s technology or thought that it would simply be better done electronically.

The study also found that 10 percent of employers automatically re-enroll employees annually in some type of benefit, but less than 10 percent of employees prefer this process.

With more millennials entering the workforce, LIMRA believes the disconnect between employers’ paper-centric enrollment mentality and the modern technological approach of their employees will only grow.

How can employers find the right solutions?

While there are many benefits technology solutions on the market today, it is imperative you find the right technology to fit the needs of your company, your benefits program and your employee population. You should work with a knowledgeable employee benefits professional who has experience with benefits technology software to help you align your company goals with the correct technology solution.

Consider questions like: What are your ultimate employee benefit objectives? How could technology support your objectives? Does your employee benefits program present any major challenges? How might technology help alleviate those challenges?

Implementing the right benefits technology solution can not only ease the administration burden on your company and HR staff, but also improve your employees’ awareness and understanding of their benefits. The end result is a more engaged employee, which has been proven to increase productivity and performance.

Insights Employee Benefits is brought to you by JRG Advisors

What solves the no-one-size-fits-all problem of employee benefits? Choice.

Voluntary benefits help employers meet the diverse needs of today’s workers, while requiring only low-impact administration. At the same time, voluntary benefits allow employees easy access to needed personal and family protection without having to shop around in a market that otherwise might overwhelm them.

Smart Business spoke with Douglas Fleisner, sales executive at JRG Advisors, about the advantages of adding voluntary benefits to your benefit plan.

What do companies need to know about voluntary benefits?

Voluntary benefits are easy to buy, featuring guarantee issue and ultra-simple forms. They are easy to keep, as payroll deduction means no bill to forget and no checks to write.

Employee diversity is real, based on factors like culture, generation, family status, behavioral preferences and economic category. Voluntary programs allow the employer to offer a broad palette of benefits without adding an additional cost to the company.
Lots of small and midsize companies are saving money by increasing deductibles on their health care plans and offering voluntary benefits to bridge the gap.

Difficult economic times mean tough either/or choices for small and midsize business owners. For many, adding voluntary benefits to compensate for cutbacks elsewhere in a benefits package or to enrich an existing core benefits plan — particularly one with a high deductible — makes more sense than making cuts in critical areas of a business, laying off key employees or losing them to a competitor with a richer benefits package.

How do these benefits work?

With a voluntary benefits portfolio, employees are encouraged to focus on whether they need a given product, and how much to purchase. Instead of the employer paying for accident, critical illness, disability, life, vision and/or dental insurance as core employee benefits, business owners have begun to see the wisdom of providing those kinds of benefits on a voluntary basis, a la carte-style, where employees can pick and choose among them and pay for the ones they want and can afford.

Not only does offering voluntary benefits cost small employers virtually nothing and help level the benefits playing field with larger companies, it also affords employees access to various types of insurance coverage, typically with looser underwriting requirements and at group rates that are lower than if they went out and got coverage on their own.

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 benefits 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

So, in the end, what’s special about voluntary benefits is their responsiveness to the needs of customers. Employers can easily offer benefits that will be meaningful to a broad spectrum of employees while keeping costs down, and employees can easily make informed selections of benefits that meet their needs.

Insights Employee Benefits is brought to you by JRG Advisors

Self-funding is a viable strategy for more and more employers

Almost every employer that offers a group health benefit program is searching for methods to lower the company’s spending. To cut health insurance spending, employers can modify plan designs, change insurance companies and shift more costs to employees. These methods, however, often only provide a temporary Band-Aid solution, rather than a long-term strategy to effectively and efficiently manage an employee benefits program.

“Because of the effects of the Affordable Care Act and ever-escalating costs, employers need to focus on where their medical dollars are being spent, to accurately assess what plan changes need to be made in order to be more efficient and stabilize costs,” says Domenic Pascucci, a consultant at JRG Advisors. “Self-insurance — normally considered a funding method only available to large employers — is now a viable option for employers as small as 25 employees or less.”

Smart Business spoke with Pascucci about self-funded health plans and how they might fit in with your employee benefits.

What’s important to understand about self-funding?

As the term implies, in a self-insured or self-funded health plan, the employer takes on direct financial responsibility for employees’ health care costs. Rather than being in a larger risk pool, the self-funding employer takes on the risk for its own employee group.

Some customization can be applied to the structure of these contracts. For example, all of a health plan may be self-funded, or a contract might be purchased to cover certain types of claims. Most self-funded employers buy stop-loss insurance to cover catastrophic claims, capping their financial risk exposure.

Self-insured health plans are exempt from most state insurance laws and mandates, and not having to pay regular premiums to an insurance company can result in substantial savings. An employer also only pays for the claims that actually occur, not the claims an insurance company projects may occur.

Despite these advantages, many employers, especially smaller ones, tend to avoid self-funding — perceiving it as too risky. A recent Kaiser Foundation survey found 82 percent of employers with 200 or more workers are self-insured. Conversely, only 13 percent of employees in firms with three to 199 employees are in a self-insured plan.

How does a business owner know if self-insurance is right for his or her company?

Self-insurance is not the right approach for every employer. Some companies will benefit from such an arrangement; others will not.

Self-funding can provide more control. Coverage can be customized since you aren’t purchasing a pre-packaged product. Self-insured plans are subject to ERISA, but aren’t bound by state insurance laws and state coverage requirements. You can truly meet employee health care needs with a plan that makes sense.

As a self-insured company, you pay health claims as they occur, rather than paying a monthly premium regardless of actual claims activity. This can be attractive, especially during periods where health claims are low. On the other hand, you have to handle large claims as they come in. Remember, however, that stop-loss insurance limits this exposure and there are other methods to minimize payment swings, such as level funding.

When you pay a premium to an insurance company, you pay for more than just claims. It takes into account the insurer’s overhead costs, including advertising, technology, legal, allowance against their own financial risk and a profit margin. Self-insured employers don’t pay these hidden costs, but they incur other expenses like third-party administration of claims and the premium for stop-loss insurance.

Workforce demographics also can make a self-insured solution either more or less attractive. Young and healthy employees don’t necessarily guarantee a less expensive self-insured solution; nor will older and unhealthy employees always break the bank. Remember, self-funding means your company bears the risk associated with your employees, along with the protection of a stop-loss carrier.

It’s worth closely analyzing this risk with a professional who can give you well-thought-out estimates of your company’s potential liability. Only then will you be able to intelligently decide whether self-insurance is for you.

Insights Employee Benefits is brought to you by JRG Advisors

How alternate funding and tools can help control small group health plans

Today’s health care environment is riddled with complex plan designs and rigorous government regulations, leaving many employers to feel as though their hands are tied when it comes to finding unique, innovative and cost-saving solutions.

But a new concept is emerging that will enable small employers to identify current and future risk, influence behavior and control costs.

Smart Business spoke with Aaron Ochs, a consultant at JRG Advisors, about strategic analysis and risk management in the small group health insurance market.

How is the small group health insurance market changing?

Typically, small employers have been unable to maximize the value of their medical benefits due to lack of claims utilization and analysis from their insurance company. In the typical buying arrangement, the small group market is a fully insured contract that does not offer the employer much control over the health plan. Self-funding works differently.

In addition to providing protection against excessive costs in years with high claims and the opportunity to keep the profits from favorable years, the availability of data, including claims utilization, is a significant advantage for the employer. Knowing the health and risk factors of the employee population helps the employer determine the appropriate benefits strategy.

Self-funding is not a new concept; but it is new to the smaller employer — with many insurance companies offering level-funding premium options (a form of self-funding) to groups with as few as 10 insured employees.

With level funding, the employer puts aside enough money to cover anticipated claim expenses and the monthly premium remains level for the entire plan year. If claims are less than the funded amount at the end of the year, a rebate or credit is issued. If claims exceed the funded amount, the employer is protected by stop loss.

How can employers use data as a tool to help?

The ability to anticipate or predict claims costs hasn’t been available in the small group market due to the absence of claims data from the insurance companies — until now.

This is where newly developed risk management and predictive modeling tools come into play, making it possible to take a much ‘deeper dive’ into the composition and risk of the smaller employer, proactively identifying members with markers for chronic illness to predict health risks and determine if self-funding is a viable solution.

The deeper dive begins with employee data that is captured through a custom access portal, scrubbed and reviewed. The portal is an insurance company-accepted, Affordable Care Act and HIPAA compliant online benefits application tool designed to reduce the amount of time, cost and paperwork for employers. Employees are asked to complete an online enrollment interview. The employer receives a confidential de-identified aggregate report with an overall analysis.

This expert analysis guides the business owner through the benefit decision process with the power of knowledge. Gaining insight into the composition and health status of the group means plan design decisions can be strategic rather than an annual game of ‘pinning the tail on the donkey’ to find a tolerable solution.

What kind of results can employers expect?

Often, the same portal technology can reduce or eliminate many administrative burdens by providing the added support of employee enrollment, communication and plan election/waivers. The solution is a faster and more efficient approach to benefits. This means employers can essentially build their own health plan, which can lead to generous cost savings, greater transparency and understanding, and better overall cost control.

Over half of an average employer’s health care budget is spent on members with preventable conditions. It’s time for small employers to take control of their health care plans. Talk to your advisor to learn how these funding arrangements and risk analysis tools can help with your strategic benefits planning needs.

Insights Employee Benefits is brought to you by JRG Advisors

What does a new president mean for employee benefits?

With the inauguration of President-Elect Donald Trump imminent, it is still not certain what his administration will ultimately mean for health care.

“Many promises regarding health care reform were made on the road to the White House, and now the question is: How or will those promises be delivered upon?” says Frances Horn, employee benefits compliance officer at JRG Advisors. “More importantly, many employers want to know how Trump’s presidency will affect them. But until a detailed proposal is released, speculation remains and the only certainty is that change is coming to health care.”

Smart Business spoke with Horn about the state of employee benefits under a new administration.

What can employers expect to see?

Trump campaigned on revamping the health care system as a top priority for his administration. With the Republicans retaining control of the House and Senate, the stage appears set for significant changes, possibly even a ‘repeal and replace’ of health care reform. At the same time, there have been comments on the possibility of retaining some elements of the Affordable Care Act (ACA).

In order to repeal the ACA, Senate rules require 60 votes, which the Republicans do not maintain. However, a Republican Congress and president can utilize the budget reconciliation process to repeal significant portions of the law. Budget reconciliation may only include provisions that affect the revenues or expenditures of the federal government. Thus, the individual mandate, premium tax credit, Medicaid expansion and other imposed taxes of the ACA could be addressed. However, popular insurance reforms such as the ban on pre-existing condition exclusions, coverage for dependent children to age 26, prohibition on annual and lifetime limits for essential health benefits and community rating are unlikely to be affected by the budget reconciliation process.

Besides legislation, what other avenues could reverse the ACA or other policies?

It is common that when the White House changes party, the incoming administration seeks to impose a moratorium on regulations that haven’t yet gone into effect. As the president-elect appoints new leaders in the Department of Labor, Treasury Department, and Department of Health and Human Services, he may consider exercising his authority to change regulations or withdraw previous guidance. Since legislation can be time consuming and regulations often require a notice and comment process, regulatory authorities may take a position of non-enforcement against current ACA provisions.

Trump could issue Executive Orders early in his presidential agenda and will likely rescind many of President Barack Obama’s Executive Orders. This may include any that have a connection to benefits, such as the overtime rule or paid time off for federal contractors. This could then lead to new agency regulatory rule-making to revise or completely repeal the rules.

Numerous issues in the benefits arena — the fiduciary rule affecting retirement plans, which does not go into effect until April 2017, many ACA rules (though most are now final) and paid sick leave rule for federal contractors — could be affected. Due to timing, though, many plan sponsors have already made plan design and operational changes and it may be more trouble than it is worth to reverse those decisions.

What areas addressed in Trump’s campaign bear watching?

Key areas to watch, include promises to:

  • Allow individuals to fully deduct their health insurance premiums.
  • Permit insurance to be sold across state lines.
  • Expand Medicaid grants to the states enabling them to cover more of the local population.
  • Direct the Food and Drug Administration to immediately enact safety standards to enable prescription drug importation.
  • Propose significantly higher contribution limits and federal ‘seed’ contributions via tax credits for Health Savings Accounts.

Until a specific proposal is released, employers may want to stay the course. Any new developments during this transition of executive power will be monitored and reported upon.

Insights Employee Benefits is brought to you by JRG Advisors

The four Cs of employee benefits every business should follow

It should be no secret: The employee benefits broker of the past will not provide the necessary strategic approach required to achieve the goals of a successful and comprehensive employee benefits program.

The traditional broker-employer approach of gathering census information, marketing to insurance companies and implementing changes close to open enrollment deadlines is a Band-Aid solution for one year at best. In today’s world an employer needs to evaluate the level and expertise of service when it comes to risk management, creative solutions, consulting and compliance.

Smart Business spoke with Michael Galardini, director of sales at JRG Advisors, about the most progressive ways to develop and manage your employee benefits.

How should business owners be adapting with employee benefit management?

Old habits can be hard to break. In the wake of the Affordable Care Act (ACA) and costly health insurance premiums, a company’s strategy and approach needs to adapt to the changing health care landscape.

A company should focus on the four Cs of employee benefits — cost, creative solutions, consulting and compliance. The concept of this four Cs approach is maximized by using a three-year strategy in developing a benefits program.

The traditional broker will not achieve significant cost reductions by simply raising their plan deductible, co-pays, shifting contributions to the employees or leap frogging from insurance company year after year to save a few percentage points on renewal increases.

What exactly is involved with implementing each of the Cs?

  • Cost: Utilizing risk analysis software tools, a company can now identify medical conditions that are present within their employee population. This risk analysis can also be done by properly dissecting claims, if the employer is large enough to receive appropriate data from the insurance company. Armed with an accurate risk assessment, the broker can work with the employer in a variety of ways to correct or improve the identified medical conditions and implement a customized risk management solution tailored to the group’s specific needs.
  • Creative Solution: Various strategies can then be implemented in order to shift the curve to lower costs and favorably impact premiums. These strategies can include gap insurance, self-funded/level-funded premium options, defined contribution-private exchange or voluntary insurance products to help offset employees’ out-of-pocket costs.
  • Consulting: Through ongoing consultative analysis an experienced, knowledgeable broker should work closely with the company’s HR team or benefits administrator to closely monitor the changes and results throughout the benefit year. Proper monitoring of the benefits strategy and a proactive approach to any needed changes are imperative to ensure the program is on pace to meet the goals of the company. The broker should also conduct periodic strategy meetings to provide both the employer and employees on-going education, as well as updates on industry or insurance company changes.
  • Compliance: Employers need to consider legal issues relating to employee benefits and the increased taxes, reporting and penalties imposed by the ACA. Choosing a broker that can provide specialized knowledge, experience and guidance with ACA and the Employee Retirement Income Security Act of 1974, or ERISA, is critical to ensure that any audit fees and penalties are avoided.

By following this approach to employee benefits, employers are able to identify the risk in their employee population, implement a risk strategy through creative solutions and monitor results through consultative analysis to ensure they are achieving their coverage and budget requirements.

Insights Employee Benefits is brought to you by JRG Advisors

Time to review Health Reimbursement Arrangements for 2017

Late last year, the IRS provided guidance on compliance under the Affordable Care Act (ACA) for group health plans, particularly Health Reimbursement Arrangements (HRAs).

In preparing for 2017, employers that offer HRAs should review plan documents and plan operation to ensure compliance with some of the new requirements.

Smart Business spoke with Frances Horn, employee benefits compliance officer at JRG Advisors, about what employers need to know about HRAs for the coming year.

How do HRAs generally work?

In 2013, the IRS advised that in order for an HRA to meet the ACA market reforms, it must be integrated with group health plan coverage. Generally, market reform requires that a health plan provide preventive services at no cost and no lifetime/ annual limits on essential health benefits. An HRA is integrated with group health plan coverage, if it meets the following requirements:

  • The employer offers group health plan coverage, other than the HRA, that is ACA compliant.
  • Employees receiving HRA benefits are enrolled in group health plan coverage.
  • HRA eligibility is limited to employees enrolled in group health plan coverage.
  • Employees have the opportunity to opt out of the HRA annually and upon termination of employment, or upon termination unused balances are forfeited.
  • Reimbursements are limited to copayments, coinsurance, deductibles and medical care expenses that aren’t essential health benefits, or the other non-HRA coverage provides minimum value.

Due to these integration requirements, an HRA that covers more than one current employee is unable to reimburse the cost of premiums for individual health coverage.

What’s critical to know about reimbursement of spouse or dependent expenses?

The usual practice of employers offering an HRA as a benefit to employees was to permit the qualified medical expenses of spouses and dependents to be reimbursed, regardless if they were covered under the employer’s plan or not.

With the integration requirement, this capability no longer exists. The integration rule states that an HRA may not be used to reimburse expenses for a covered employee’s spouse or dependent, unless that spouse or dependent is also covered under the employer’s integrated group health plan.

The 2015 IRS notice clarified this, and this rule is applicable to those plan years beginning on or after Jan. 1, 2017.

What about retiree HRAs and individual health expenses?

Information provided in the 2013 IRS notice for a HRA plan that has less than two current employees was confirmed in the 2015 notice. An HRA covering only retirees or an HRA covering only one employee isn’t subject to the ACA market reforms.

Therefore, it is permissible for a retiree HRA to reimburse the expense of individual market coverage. This type of HRA is deemed an eligible employer-sponsored plan and would cause individuals to be ineligible for a premium tax credit on the exchange.

To apply this provision, the HRA must only cover retirees. Thus, an HRA plan covering both retirees and current active employees cannot reimburse individual health care covered purchased by retirees.

This rule was applicable for any plan years beginning on or after Dec. 15, 2015.

In summary, providing employee benefits through a HRA has been popular for many years. The ACA market reforms, however, changed the practice such that HRAs for current active employees cannot reimburse the expense of individual coverage. Improper payment of individual coverage can result in a penalty of $100 per day per affected individual.

As 2016 winds down, employers should review their HRA practices to ensure compliance in 2017.

Insights Employee Benefits is brought to you by JRG Advisors

The new technology that enhances employee benefits

As we near the presidential election most of us are wondering about the impact to our health insurance plans and costs. The Affordable Care Act (ACA) has had significant impact on companies of all sizes. But there has also been some good born out of the law, and most of it is centered on development of technologies to support new plan designs and pricing, data accessibility and transparency.

Smart Business spoke with Aaron Ochs, consultant at JRG Advisors, about technology that is enhancing how employee benefits can be managed today.

How is technology improving health plan designs and pricing?

A new approach is to consider self-funded and level funded quotes from multiple carriers. Self-funding is typically viewed as out of reach for small and midsized employers, but that can be overcome with health risk data and stop loss insurance.

A risk analysis can gather employee information. It generates an assessment and utilization summary that most employers with fewer than 100 employees never see. Armed with meaningful data, an employer can confidently consider alternative premium funding. And, employers can educate employees about health, wellness and cost-effective purchasing choices. The data also can be used to create the plan that achieves a company’s goals — reducing claims costs, improving employee health and/or incentives to make cost-effective health purchases —  putting the employer in a position to obtain better premium rates.

Another new health plan delivery model is the private exchange platform, which fits with a defined premium contribution and provides choice and online shopping.

New technology helps employees find affordable options by comparing independent pricing information among providers and hospitals, showing the cost of care before you receive it, for both in- and out-of-network coverage.

Family health insurance premiums rose 397 percent since 1995, while household salary rose only 15 percent. So, transparency is critical. The only way to offer affordable health insurance coverage is to ensure employees have access to affordable care. Higher medical costs don’t result in better medical care — only higher medical bills.

What are examples of how the new technologies are working?

Example 1 — A company with 40 full-time equivalents (FTEs) and 30 employees that are fully insured receives double digit increases year-after-year. About 60 days before renewal, the company provides its employees with an online link to complete a family profile and answer 15 health questions. The data is compiled to a group-based risk assessment, and if feasible, used to shop for self-funded options. Now, when the company receives its renewal, it already has a self-funded quote option, or knows that fully insured is the best fit. Either way the enrollment is complete, as the information provided by employees is fed electronically into any health insurance company quoting and enrollment system.

Example 2 — A company with 30 FTE and 19 employees that are fully insured receives a single-digit increase. The group completes the online risk analysis and learns it’s overpaying premium. The employer then provides a member dashboard that gives employees real claims data on outpatient services, making them better shoppers. This saves the company even more money, as its self-funded quote assumed the worst and was still a more cost-effective option. The business gained composite rates, based on tier, not age, bands, eliminated ACA fees and taxes and saved thousands.

Example 3 — The company’s risk analysis determines its health history isn’t good. It needs to remain fully insured, but the premium is unaffordable. The company determines a dollar amount it can support, and the employees shop from a menu of plans, which are delivered on a private exchange. The employer can provide many benefits, but still control costs and reduce administration. During the benefit year, the company uses the data to implement a wellness program. Within two years, the group has control of its health care costs, has more educated employees and is a fit for self-funded plans on the private exchange.

The changed landscape of health insurance requires a new approach to benefits, in order to control costs, provide options and create a quality benefit experience for everyone.

Insights Employee Benefits is brought to you by JRG Advisors

What you need to know about proposed updates to Form 5500

The Employee Retirement Income Security Act (ERISA) imposes an annual reporting obligation on welfare and retirement benefit plans. In general this reporting requirement is met by annually filing a Form 5500.

This is the primary source of information about the operation, funding and assets of employee benefit plans. Thus, the annual report contains certain financial and other information about a plan, such as name and addresses of plan fiduciaries, number of covered employees, plan name, number and year, says Frances Horn, employee benefits compliance officer at JRG Advisors.

The Form 5500 is also the primary source of information for both the federal government and the private sector for assessing employee benefit, tax, and economic trends and policies.

Smart Business spoke with Horn about how Form 5500s work and the proposed revisions that were recently announced.

What are employers’ responsibilities with Form 5500?

Generally, the annual report must be filed with the Department of Labor (DOL) and be readily available for inspection by participants and beneficiaries.

Before panic sets in, be advised that currently there is an exemption from the welfare benefit plan Form 5500 requirement for small unfunded, insured or combination unfunded/insured plans. To qualify for the exemption, a plan must cover ‘fewer than 100 participants at the beginning of the plan year.’ Please, keep in mind this exemption is NOT applicable to retirement plans.

Depending on the type and size of the plan, the plan administrator may have to attach a report of an independent auditor, or other required schedules and attachments.

There are a lot of nuances that determine whether a Form 5500 is required to be filed by an employer. Any uncertainty about a Form 5500 obligation should be discussed with a benefit advisor.

What’s important to know about updates to these forms?

On July 21, 2016, the DOL and IRS published a notice to revise the Form 5500 Annual Report. The revisions are intended to meet several goals, including:

  • Modernizing the financial statements and investment information filed about employee benefit plans.
  • Updating the reporting requirements for service provider fee and expense information.
  • Requiring Form 5500 reporting by all group plans covered by Title I of ERISA.

One of the biggest changes is the addition of a new Schedule J-Group Health Plan Information. This schedule would gather a broad range of information, such as:

  • Number of persons offered and receiving COBRA coverage.
  • Information on whether the plan offers coverage for employees, retirees and dependents.
  • The type of benefits the plan offers.
  • Plan funding.
  • Grandfather status of the plan.
  • Whether the plan is a high deductible health plan, a health flexible spending account or a health reimbursement arrangement.
  • Information on receipt of rebates, refunds or reimbursements from a service provider.
  • Stop loss information including premium, individual and aggregate claim limits.
  • Information on compliance with the Summary Plan Description, Summary of Material Modifications and Summary of Benefits and Coverage.
  • Information on compliance with applicable federal laws and DOL regulations, such as, among others, HIPAA and the Affordable Care Act.

The key concern of the smaller employer is that these proposed revisions would eliminate the current small insured and self-insured welfare benefit plan exemption. Thus, every private employer offering its employees a welfare benefit plan would be subject to the Form 5500 reporting. It should also be noted that small employers would only be required to answer limited questions on the new Schedule J.

These proposed rules, if adopted, would become applicable for plan years beginning on or after Jan. 1, 2019. In the meantime, employers should follow any updates on these proposed revisions, since generally every private employer offering a welfare benefit plan could be affected.

Insights Employee Benefits is brought to you by JRG Advisors

How alternate funding and tools can help control small group health plans

Today’s health care environment is riddled with complex plan designs and rigorous government regulations, leaving many employers to feel as though their hands are tied when it comes to unique, innovative and cost-saving solutions.

But a new concept is emerging that will enable small employees to identify current and future risk, influence behavior and control cost.

Smart Business spoke with Amy Broadbent, VP of Client Services at JRG Advisors, about strategic analysis and risk management in the small group health insurance market.

How is the small group health insurance market changing?

Typically, small employers have been unable to maximize the value of their medical benefits due to lack of claims utilization and analysis from the insurance company. The typical buying arrangement in the small group market is a fully insured contract that does not offer the employer much control over the health plan. Self-funding works differently.

In addition to providing protection against excessive costs in years with high claims and the opportunity to keep the profits from favorable years, the availability of data, including claims utilization, is a significant advantage for the employer. Knowing the health and risk factors of the employee population helps the employer determine the appropriate benefits strategy.

Self-funding is not a new concept; but it is new to the smaller employer — with many insurance companies offering level-funding premium options (a form of self-funding) to groups with as few as 10 insured employees.

With level funding, the employer puts aside enough money to cover anticipated claim expenses and the monthly premium remains level for the entire plan year. If claims are less than the funded amount at the end of the year, a rebate or credit is issued. If claims exceed the funded amount, the employer is protected by stop loss.

How can employers use data as a tool to help?

The ability to anticipate or predict claims costs haven’t been available in the small group market due to the absence of claims data from the insurance companies — until now.

This is where newly developed risk management and predictive modeling tools come into play, making it possible to take a much ‘deeper dive’ into the composition and risk of the smaller employer, proactively identifying members with markers for chronic illness to predict health risks and determine if self-funding is a viable solution.

The deeper dive begins with employee data that is captured through a custom access portal, scrubbed and reviewed. The portal is an insurance company-accepted, Affordable Care Act and HIPAA compliant online benefits application tool designed to reduce the amount of time, cost and paperwork for employers. Employees are asked to complete an online enrollment interview. The employer receives a confidential de-identified aggregate report with an overall analysis.

This expert analysis guides the business owner through the benefit decision process with the power of knowledge. Gaining insight into the composition and health status of the group means plan design decisions can be strategic rather than an annual game of ‘pinning the tail on the donkey’ to find a tolerable solution.

What kind of results can employers expect?

Often, the same portal technology can reduce or eliminate many administrative burdens by providing the added support of employee enrollment, communication and plan election/waivers. The solution is a faster and more efficient approach to benefits. This means the employer can essentially build their own health plan, which can lead to generous cost savings, greater transparency and understanding and better overall cost control.

Over half of the average employer’s health care budget is spent on members with preventable conditions. It’s time for small employers to take control of their health care plans. Talk to your advisor to learn how these funding arrangements and risk analysis tools can help with your strategic benefits planning needs.

Insights Employee Benefits is brought to you by JRG Advisors