Individual open enrollment period here again for next three months

The next open enrollment period in which individuals can buy health insurance policies on and off the health insurance marketplace runs from Nov. 15, 2014 to Feb. 15, 2015.

“If you do not purchase a plan within this period, you may be barred from obtaining health insurance coverage until 2016’s open enrollment, unless you have a ‘qualifying life event’ throughout the year,” says Douglas Fleisner, sales executive, JRG Advisors.

Some examples of a qualifying event are birth, marriage, divorce, losing current coverage, certain changes in your income and moving to a new state or area where different medical plans are available.

Smart Business spoke with Fleisner about what individuals need to know about the open enrollment process.

What primary concerns should people be aware of regarding open enrollment?

Those who experience a qualifying event will have 60 days to apply for coverage. If they fail to do so, they will have to wait until the next open enrollment period to enroll in a plan.

If they go without qualified minimum essential medical coverage for all or part of 2015, they may be subject to an individual mandate penalty. This penalty increases in 2015 to $325 per adult or 2 percent of the modified adjusted gross household income, whichever is greater.

Qualifying medical coverage can include coverage provided by an employer, health insurance purchased in the health insurance marketplace, most government-sponsored coverages and coverage that is purchased directly from an insurance company.

However, qualifying coverage does not include coverage that may provide limited benefits, such as coverage only for vision care or dental care, workers’ compensation or coverage that only pertains to a specific disease or condition.

Can people shop somewhere other than www.healthcare.gov?

There are many options for individuals looking for coverage both on and off the health insurance marketplace.

The first step people should take when shopping for individual coverage would be to see if they and/or family members qualify for a premium tax credit through www.healthcare.gov. They may qualify if their adjusted gross household income falls between 100 to 400 percent of the federal poverty level (FPL).

If their income is below 250 percent of the FPL, they may even qualify for cost sharing reductions, which provide them with a richer benefit health plan than if they purchased one outside the marketplace. Advance payments of the tax credit can be used right away to lower monthly premium costs.

If the amount of advance credit payments received for the year is less than the tax credit that is due, they will get the difference as a refundable credit when they file their federal income tax return. If advance payments for the year are more than the amount of the credit, they must repay the excess advance payments with their tax return.

In order to qualify for a subsidy or cost sharing reductions, a person must be a citizen or non-citizen lawfully present in the U.S., reside in the state covered by the exchange and not be claimed as a tax dependent by another taxpayer. An individual cannot be eligible for health insurance through an employer group program that is deemed affordable and provides minimal value under the Affordable Care Act (ACA), and cannot be eligible for any government-sponsored program such as CHIP, Medicaid or Medicare.

How else can a person be prepared?

It is important to look at all options available, make sure the window to enroll in a plan isn’t missed and avoid the individual mandate penalty. It is important that individuals have a clear understanding of the requirements mandated by the ACA. It may also be helpful to consult with an insurance specialist who is certified to help individuals both on and off the government marketplace.

A certified insurance professional can ensure that an individual is selecting an insurance plan that best meets their financial, medical and network needs.

Insights Employee Benefits is brought to you by JRG Advisors

How to help your aging employees navigate through the various options

In the past decade, 52 percent of Americans were working past the Medicare-eligibility age of 65, according to the U.S. Bureau of Labor Statistics.

“At many companies, retiring used to mean transitioning from your employer’s health plan to a retiree health plan,” says Crystal Manning, Medicare specialist at JRG Advisors. “Now, more individuals are faced with trying to navigate through dozens of different Medicare plan options.”

Since fewer employers offer retiree coverage, it’s important that people study options early enough to make good choices based on their needs.

Smart Business spoke with Manning on how to optimize the choices for Medicare-eligible employees.

What can a company do to improve an employee’s Medicare experience?

More companies are taking steps to coordinate their health care coverage options for employees eligible for Medicare.  Research shows that for each employee that moves off the employer’s group medical plan, the employer may save  $6,000 to more than $12,000 on premiums for the employee alone. The savings for larger employers can far exceed these numbers. For small employers, the 2014 rate increase for the 65-plus age group will drive up an employer’s costs even higher.

When coordinating coverage under the group plan with Medicare, employer size is a factor. If an organization has more than 20 employees, the group health plan is the primary payer. If there are fewer than 20 employees in the organization, Medicare is the primary payer, and the employer’s plan is the secondary payer. In this occasion, it’s normally essential that employees turning 65 enroll in Medicare Parts A and B.

What about for smaller businesses?

The law does not require small employers to offer employees or a covered spouse the same coverage as other employees. Therefore, smaller businesses can require an employee to enroll in Medicare. Some smaller employers may offer coverage that is supplemental to Medicare, such as paying the Medicare deductibles and cost-sharing.

It is essential that employees enroll in Medicare Parts A and B. If they don’t enroll, there may be penalties associated to late enrollment. Employees might be able to move to their spouse’s health care plan if it would provide them with equal or better coverage than Medicare.

Employers may create, adopt or maintain a wide range of retiree health plan designs, as well as reduce or terminate benefits for Medicare-eligible retirees without running the risk of the federal Age Discrimination in Employment Act.

What about employee savings accounts?

Generally, all employees will benefit from enrolling in Part A when they reach 65. They may choose to contact Social Security at that time, or wait until they are ready to enroll in Part B. However, people with a health savings account (HSA) may want to delay enrollment in Part A. If an employee has a health reimbursement account (HRA) and becomes eligible for Medicare, he or she may chose to enroll in Medicare or delay enrollment. If an employee does enroll, the employee may draw from the HRA to pay Medicare premiums, deductibles and cost-sharing.

What are the risks of late enrollment?

The rules for enrolling in Medicare are strict. The initial election period for employees turning 65 without penalties is three months before their birthday, the month of their birthday or three months after. For each 12-month period of enrollment delay when eligible, the employee will pay a penalty of 10 percent of the Part B premium — forever.

Once an employee leaves a job, he or she must enroll in Part B within eight months, even if the employee stays on the group plan. If the employee chooses COBRA, Medicare is primary. Also, if an employee chooses traditional Medicare and his or her income is above a certain threshold, the employee will pay more for Parts B and D.
It is not surprising many people find this process confusing. An employee often will find that the benefits relative to group coverage are much lower and changing to Medicare may be far less a risk than initially thought. A good adviser will assist the company in choosing from Medicare Advantage, prescription drug and Medigap options.

Insights Employee Benefits is brought to you by JRG Advisors

Self-funded insurance: As the benefits become evident, more companies choose local control

Today’s business climate calls for unique and cutting-edge employee benefits solutions. Pre-packaged medical plans do not always offer the greatest value. Employers of all sizes are looking to customize their plans around the requirements of their business, which has led to an increased interest in self-funding.

The nonpartisan organization Employee Benefit Research Institute reported that about 59 percent of private sector workers with health insurance coverage were in self-insured plans in 2011, a significant increase from the 1998 incidence of 41 percent.

“Unlike a traditional fully insured medical plan under which the insurance company assumes the financial and legal risk of loss in exchange for a fixed premium paid by the employer, a self-funded or self-insured plan enables the employer to eliminate obligations to an insurance company by assigning the financial risk for providing health care benefits directly to its employees,” says Amy Broadbent, vice president, JRG Advisors.

Smart Business spoke with Broadbent about self-funded insurance plans and stop-loss insurance.

How can a company benefit by offering a self-funded insurance plan?

The advantages of self-funding include reduced overhead costs, reduced state premium taxes, exemption from state mandated benefits, flexibility in plan design and customizable stop-loss insurance to reduce the risk associated with high claims.

In addition, self-funded insurance provides the opportunity for improved cash flow as a result of a company not having to pre-pay for coverage (instead, claims are paid as they are incurred) and possible additional cash flow if reserves are held in an interest-bearing account.

Most self-funded insurers offer stop-loss insurance to reduce the risk associated with large individual claims or high claims from the entire plan. The employer self-insures up to the stop loss attachment point, which is the dollar amount above which the stop-loss carrier will reimburse claims.

What types of stop-loss insurance are there?

Stop-loss insurance comes in two forms. ‘Individual/Specific’ stop loss protects the employer against large individual health care claims and limits the amount the employer must pay for each individual. For example, an employer with a specific stop-loss attachment point of $25,000 would be responsible for the first $25,000 in claims for each individual plan participant each year. Any claims for a specific individual in excess of $25,000 would be paid by the stop-loss insurer.

‘Aggregate’ stop-loss insurance protects the employer against high total claims for the entire health care plan. For instance, aggregate stop loss with an attachment of $500,000 would begin paying for claims after the plan’s overall claims exceeded $500,000. Any amounts paid by a specific stop-loss policy for the same plan would not count toward the aggregate attachment point.

Self-funded insurance serves as an important financial backstop for the employer if, for instance, an employee will need major medical attention, such as being diagnosed with cancer, needing an organ transplant or has a premature baby requiring intensive care.

What are some examples how fully funded plans differ from self-funded plans?

Let’s say ABC Co. is fully insured and pays an annual premium of $1.5 million for its health insurance plan. Claims experience shows that ABC only had $1 million in claims and administrative expenses. The fully-insured carrier realizes $500,000 in profits.

On the other hand, let’s say ABC’s group health insurance is self-funded. ABC’s potential worst-case scenario for the year is $1.6 million. ABC pays $20,000 a month as a fixed premium and has a reserve of $1.36 million for potential claims that is the company’s to use as it sees fit until claims are filed. At the end of the year, the company’s claims are $1 million. It retains the $360,000 it reserved in the event of a worst-case scenario. ABC realizes a savings by going self-funded versus fully-insured.

Employers should consult with their benefits advisor to learn more and determine if self-insuring is the right option for them.

Insights Employee Benefits is brought to you by JRG Advisors

What you need to know to comply with new HR rules tied to health care

The penalty for non-compliance with HR regulations implemented as part of the Affordable Care Act (ACA) should not be taken lightly.

“Just on a COBRA (Consolidated Omnibus Budget Reconciliation Act) notice, if you don’t have the correct documents in line and you are not notifying employees accurately within the guidelines of the federal government, you can be looking at fines upward of $100 a day, per employee, per violation, that you are in non-compliance,” says Amy Weir, account manager at Benefitdecisions, Inc.

It is estimated by the IRS that 90 percent of employers are out of compliance.

“It’s a worthy investment to make sure whoever is handling HR is as up to speed as can possibly be on these regulations.”

Unfortunately, many employer groups are struggling to stay ahead of the changes.

“There is definitely education that needs to take place on the employer side,” Weir says. “HR departments are feeling it more and more and a lot of them are behind the curve on what it is they need to be doing and how to proactively manage that.”

Smart Business spoke with Weir about what companies can do to remain in compliance with the latest changes to health care.

What’s one example of the challenges faced by HR departments?

I’ll use the example of installing a HIPAA (Health Insurance Portability and Accountability Act) manual. The law was revised last year and you have to have this manual and certain privacy protocols in place.

Every employer should have an ERISA (Employee Retirement Income Security Act) attorney in place who specializes in certain aspects of health insurance law.

This attorney should be partnering with your insurance broker to gather the resources needed to put these manuals in place. You certainly don’t want to put anything in place as far as formal policy until you have an attorney review it.

Any information you get from a consultant, be it insurance or HR, it’s not going to be legal advice. Those are going to be suggestions. Every employer has different privacy practices and it’s going to be customized for each one.

That’s why it’s strongly recommended that you have outside counsel review anything, like a HIPAA manual, before it becomes formal policy in your organization.

What about the fear of even more changes down the road?

There is no shelf life for any of this. With the ACA, it’s pretty much an evolving and ever-morphing piece of legislation.

So you need to have a good trusting relationship with your broker and that broker should be advising you whenever there are changes coming up to make sure you are in compliance. This is what’s coming, this is the deadline and this is what needs to be done.

A lot of brokers are hiring people with HR backgrounds for this specific reason, so that person can be used as a resource to help them through these changes.

If you do not have a broker, you can subscribe to different HR resources such as the Society for Human Resource Management.

How concerned are employees about changes in HR and health care policy?

It’s more of an administrative challenge that HR departments are facing, regardless of the size of the employer.

Employees do expect HR departments to have information on things like health insurance exchanges and when they open or other policy changes.

That’s where you’re going to hear from your employees when you’re communicating the latest news on regulations that could affect both them and their health care status.

What can you as the leader do to help with this process?

Continuing education is always important and that’s certainly the case with the ACA and health care reform. Provide your team with additional training resources.

Send your HR people to seminars or classes that are offered by HR outsourcing firms. It’s a worthy investment to make sure your HR people are being properly supported and advised in this area.

It’s a huge advantage for any company to have people on staff, or have people at the broker or consulting firm that they work with, who can answer these questions and attend these meetings to keep everyone up to date with what is happening. ●

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

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