Seven reasons why online benefits administration makes a lot of cents

Not long ago, the main reason employers weren’t converting to online-based benefits enrollment was the cost. Now, because of more competition among vendors and other factors, the opposite is true.

“Nearly three-quarters of U.S. companies have moved their benefits administration online because of the cost savings. But to get there, it’s important to look for a vendor with high-touch service to help show you the way,” says Ryan Smith, a sales executive with eBenefits Solutions, a part of UPMC Health Plan.

Still not convinced this high-tech benefits admin approach is the way to go?

Smart Business spoke with Smith about seven great reasons to switch over now — and every single one leads to cost savings.

Reason No. 1: Online self-service benefits administration costs less.

According to a recent CFO.com survey, the average cost for an HR staff to manually enroll an employee in benefits is around $110. The average cost for an employee to self-enroll online is just under $22.

Reason No. 2: Online self-service takes less time for HR staff.

An industry survey found that when employees do their own benefits administration online, it results in a 15 percent time savings by HR staff.

Reason No. 3: Online benefits administration can cut in half the time needed for open enrollment.

Among other things, a self-service site frees up HR staff to focus on more strategic tasks and initiatives, such as wellness or employee engagement programs. These help to create a healthier workforce and reduce overall health care costs.

Reason No. 4: Online benefits administration saves on paper, printing and postage.

Printing and mailing benefits packets can be costly and time consuming. When you convert to online, costs for these ‘three Ps’ can be eliminated altogether.

Reason No. 5: Online benefits administration cuts down on premium payment mistakes.

One recent study found that manual benefits administration could significantly increase the likelihood of monthly premium billing errors — leading to higher employer admin costs.

Reason No. 6: Online benefits administration can lower the number of ineligible employees who are enrolled in coverage.

A recent study conducted by a large benefits consulting firm shows that the cost of ineligible employees and dependents (age 26 and older) who receive benefits is between 2 to 8 percent of the total medical premium cost. When electronic data feeds and system eligibility rules are used, this unnecessary cost is virtually eliminated.

Reason No. 7: Online benefits administration is just plain easier.

Online enrollment means employees can sign up 24/7 from home or office, and can check their selections and benefits any time. It’s also much easier for employees to compare plan options and benefit details when everything is online. Clearly employers benefit from this ease of access as well.

If an employer does decide to switch, what’s important to look for when picking a vendor?

To ensure your online benefits administration runs smoothly, it’s more important than ever to look for a vendor with deep HR experience and a high level of technical expertise. This vendor must be able to offer high-touch customer service to your HR staff as well as individual employees.

And by the way, employees will applaud the switch to online the loudest. It turns their benefits selection process into an easy, retail-like experience akin to an Amazon.com visit. Many online benefits admin platforms even include decision-support tools that help employees determine in real time which products and services are the best fit.

Insights Health Care is brought to you by UPMC Health Plan

How to help your employees better manage their care and costs

As the cost of health care continues to rise, studies have shown that almost half of those costs are unnecessary or avoidable. To reduce those expenses, many organizations want to help their employees make better health care choices on their own.

“When employees understand their health insurance, they can make good decisions that benefit themselves and their employer,” says Veronica Hawkins, Medical Mutual vice president of Statewide Accounts. “That’s why it’s important for organizations to make sure their employees have all the information they need.”

Smart Business spoke with Hawkins about what organizations can do to help their employees take a more active role in their health care decisions.

What resources are most important to help employees understand what’s covered?

Probably the most important resource is their benefits book or certificate of coverage. This is the document that explains what services are covered — and not covered — under the plan. Organizations should make sure their employees receive a copy, or have access to it online. This can help them understand the terms of their plan so there are no surprises when they need a service or supply.

How much does the network of providers factor into costs?

It can be significant. The doctors and hospitals employees choose to utilize factors into how much they pay for services. By choosing doctors and facilities in the insurance carrier’s network, employees may only have to pay their copay and any deductible or coinsurance that applies. Employees receiving services outside the network often have to pay any balance beyond what the insurance carrier has agreed to pay.

Before choosing a doctor for any type of treatment, or a facility for any test or procedure, it’s important to check the network. Even if a doctor or facility was listed in the network previously, that status can change. Employees should make sure their doctor is in network by calling their carrier’s customer hotline or going online and searching the provider directory.

What are some other easy ways to save money?

Many people aren’t aware that doctors and health care facilities charge different amounts for the same services. Often, patients can be charged more for seeing a doctor at a facility he or she doesn’t own, like a hospital-owned clinic. It may cost less to see that same doctor and have the same treatment at a different facility. This can also apply to lab costs, as price differences can be significant. To maximize benefits and minimize out-of-pocket costs, it’s important to shop around within the plan’s network.

Some insurance carriers offer online tools for comparing costs. Price estimates are often available for everything from office visits to X-rays to surgical procedures, and may factor in facility fees and other associated costs. These estimates should be pretty close to what the member will have to pay.

What is the best way to keep employees informed?

Good communication is critical. Organizations can partner with their insurance carriers to create a customized approach for building awareness of all these tools. This could include interactive presentations that use visuals and easy-to-understand language. Short segments with a question and answer period may be a good option to help avoid confusion. After any presentations, refresh the topic by emailing employees with benefit reminders and updates.

The key is to give employees the resources they need. They should know how to reach their insurance carrier, where to look for in-network providers and how to use their benefits book and explanation of benefits.

Insights Health Care is brought to you by Medical Mutual

How to use customer service to reduce your costs

Most people call customer service when they have a problem or a complaint. But proactively using customer service to get information or ask questions could help employers, and their employees, save on their health care costs.

“While some large group employers may have a customer service line dedicated to their account, small and midsize employers also can benefit from educating their employees about the customer service department,” says Karen Gotsch, manager of Customer Care at HealthLink, Inc.

Smart Business spoke with Gotsch about best practices for customer service in your health plan.

In an ideal world, how should customer service function for a health plan?

Ideally, customer service should function as a go-to resource for employees looking to get the most from their benefit coverage. Customer service can find providers that meet employees’ needs and participate in their health plan, ensuring they receive the highest level of benefits on medical services.

Customer service can also help employees determine what services are covered and whether or not they need pre-certification. Otherwise, employees could end up paying more out-of-pocket if they receive care that isn’t covered.

What’s the reality for many companies?

Many employees are still not well educated about their health plan and the best practices for maximizing their benefits. Employees often assume they’ll receive their full level of benefits, no matter which doctor or facility they choose, which isn’t necessarily true. They don’t always understand or take into consideration that there may be exclusions or limits associated with their health plan.

How should employers educate their employees about customer service?

Employers have a unique opportunity to educate their employees about their health plan benefits. Employers should focus on having the information readily available so it is easy to access when a question arises. Open enrollment is prime time to talk about benefits as most employees are engaged in the decision-making process at that time. It’s also important to use easy-to-understand layman terms and avoid terms that are highly technical when possible.

Employees need to be aware that customer service is available as a resource to help with any questions or concerns.

Do smaller companies concerned about resources and time need to take a different approach?

Employees should be educated about their health plan benefits no matter the size of the company or employee group — and it doesn’t have to take a lot of time and resources. Employers should utilize communication avenues they already have in place, such as their website, employee newsletters and other internal communications. Smaller companies that don’t have a corporate intranet or newsletter could try making benefit education a part of their next scheduled team meeting, or simply send an email out to their employees.

What are the benefits of being proactive?

Using customer service as a proactive resource can positively affect employees in a number of ways. Taking the time to find a provider that is a good fit and that participates in their health plan can lower out-of-pocket costs. They can also utilize customer service to determine what their out-of-pockets costs will be, whether or not certain procedures are covered and if there are pre-certification requirements.

This sort of education can ensure employees don’t receive a surprise bill, and it gives them the knowledge they need to review their Explanation of Benefits (EOB) for accuracy to avoid overpayment.

What else is important to know?

Employers should educate their employees about any self-service options, such as online bill pay or how to search for a doctor. These tools can save employees time and help them get the most from their health plan in a way that is easy and convenient.

Employees should always review their EOBs for accuracy before paying a bill. It is important for employees to understand that they may have different plans for different benefits so they know whom to call with questions. Keeping all of this important information together and easily accessible when calling customer service is also a great way to save time.

Insights Health Care is brought to you by HealthLink

Choosing the right health coaching program for your employees

It’s a fact that 75 percent of employer health care costs are the result of chronic diseases that have unhealthy behaviors as their root cause, according to the Centers for Disease Control and Prevention.

“The key to bringing down those health care costs? Change the behaviors that lead to the chronic diseases,” says Amanda Budzowski, MS, MPH, CHES, senior manager of Clinical Training & Development at UPMC WorkPartners and UPMC Health Plan.

“The question is, how? How to get employees to lose weight, eat better, get more active or stop smoking?” she says. “How to help them better manage their diabetes, high blood pressure or heart disease?

And the answer is: With help from a health coach.

“It turns out that many health insurance companies are now offering health coaching free to their members. That’s great news for employers,” Budzowski says.

Smart Business spoke with Budzowski about how to set up a coaching program to help change the employee behaviors that lead to chronic diseases.

What’s important to include in a successful health coaching program?

With health coaching, employees and family members can work one-on-one, usually by phone or email, with a trained expert in behavior change. Research confirms that health coaching works.

When assessing a health plan’s health coaching services, look for:

  • Lifestyle expertise: The health coaching team should be able to help your employees with lifestyle challenges, such as losing weight, eating healthier, quitting smoking, increasing activity and lowering stress.
  • Health condition expertise: Health coaches should also have expertise in managing conditions such as diabetes, asthma, low back pain, depression and heart disease.
  • Comprehensive staffing: To ensure your employees are in good hands, the health coaching team should have licensed nurses, counselors, social workers, registered dietitians and exercise physiologists — preferably with medical director oversight.
  • Accessibility: Some health insurance companies can actually supply health coaches to your job site. Short of that, look for health coaches to be available full-time on weekdays via phone, email or live chat, with accessibility for teletype devices for the deaf, hard of hearing or speech-impaired.

What else should employers keep in mind?

Effective health coaching doesn’t happen by accident. It should follow a process much like this:

1) Health coach meets with client to define their personal wellness vision.

2) Health coach and client explore strengths and past successes as well as anticipated challenges and barriers.

3) Health coach and client determine health goals.

4) Health coach and client co-create solutions and a customized plan to get there.

5) Health coach checks in frequently to help client stay motivated and accountable.

6) Health coach celebrates with client when goal is accomplished.

Health coaching is a highly effective tool for changing the behaviors that lead to the chronic diseases that significantly increase employer health care costs. That’s why it’s so important to choose the right health coaching program for your employees.

Are there any secrets to getting employees to use a health coach?

There is a new strategy out there that is having a big impact on health coach usage, and that’s when a person’s doctor recommends health coaching. It’s one thing if a person self-directs to a health coach or if a health insurance company recommends the health coach, but it’s a different deal altogether if the recommendation comes from the doctor.

People believe their doctors and doctors get to know their patients over time. So there’s a relationship of trust that forms. Therefore, when a doctor says to a patient that it would helpful if he or she got some guidance and motivation from a health coach, that recommendation goes a long way. The patient is more likely to take action and sign on.

Insights Health Care is brought to you by UPMC Health Plan

How to complete your employee health coverage forms for the IRS

Last year, many organizations had to figure out the new rules for submitting information about their employee health coverage to the IRS. It’s that time of year again, and while the overall process is very similar some aspects have been adjusted since last year.

“Just like last year, different employers will have different requirements they have to meet,” says Amber Hulme, Medical Mutual regional vice president for Central Ohio. “To avoid fines for the business, or even tax penalties for employees, employers need to know which requirements apply to them this time around.”

Smart Business spoke with Hulme about what employers should do to understand the annual IRS reporting requirements and what they can expect for 2017.

What is the purpose of this reporting?

The reporting really consists of two parts. One helps the IRS prove that everyone in the U.S. has health insurance — or that they qualify for an exemption. The other is intended to make sure certain employers can offer ‘minimum essential coverage’ for their employees. To do all of that, the IRS needs to collect the appropriate information.

How do employers know which requirements apply to them?

First, look at funding type. If you’re fully insured, your insurance company will handle 6055 reporting for you.
Then look at how many full-time employees you have (including equivalents). That’s your ‘FTEs.’ If that number is 50 or more, you will need to report for 6056.

Self-funded employers usually have more work to do. They have to report for 6055, which includes collecting any missing Social Security numbers from employees and dependents. And they also have to report for 6056 if they have 50 or more FTEs.

How do insurance carriers handle 6055 reporting?

Insurance carriers are required by law to send 1095-B forms to all fully insured members. Those forms serve as their proof of coverage for the previous tax year. Then, if any of those members don’t have Social Security numbers on file for either themselves or a dependent, carriers are also required by law to contact members directly to collect that information. So employees might get requests to supply that type of information.

Has the process changed at all since last year?

The overall process is essentially the same, but the IRS has revised instructions on its website, IRS.gov. This year the deadline extensions are going to be different than they were in 2015. Generally speaking, any forms for employees need to be delivered to them by March 2, while forms submitted to the IRS are due by Feb. 28 if they are filed by mail, and March 31 if they are filed electronically.

Are the penalties the same for not complying?

Employers are subject to fines of $260 per instance, which is up slightly from last year. It’s also a flat rate now — instead of a range based on the intent behind a mistake or omission.

And like last year, employees could see money come out of their next tax return if the IRS doesn’t have all the Social Security numbers it needs from them. So even if your organization isn’t required to file, it’s smart to help your insurance carrier collect what it needs.

Any other reminders as organizations prepare?

Just make sure you know which forms you have to submit and what information is required. If anything is missing, it’s better to know sooner than later. And, as with any forms submitted to the IRS, it’s always a good idea to consult with a tax adviser or legal counsel.
In addition, keep in mind that these requirements are tied to a provision of the Affordable Care Act (ACA). So any changes to the ACA under the Trump Administration could affect what organizations will have to do.

Insights Health Care is brought to you by Medical Mutual

How health care fraud has changed in the electronic age

In the electronic age, fraud is a major concern. As consumers become more engaged in making informed health care decisions, health care fraud has evolved. Your employees’ understanding and concerns about fraud needs to evolve as well.

“Nearly every aspect of life can be conducted online and is susceptible to hacking and theft. The health care industry is shifting toward more web-based services, such as telehealth. More online services provide more opportunities for criminals,” says Howard Levinson, DC, CFE, AHFI, clinical fraud director, Special Investigations Unit, at Anthem, Inc.

Smart Business spoke with Levinson about how employers can impact the risk of fraud.

What fraud are you seeing in health care?

The majority of health care providers submit their claims for payment electronically. More than 1 billion claims are submitted annually to Medicare. Private payers process hundreds of thousands of claims on a daily basis. For the most part, that volume is handled by sophisticated computer software, and in many cases a human eye never sees it.

Fraudsters can generate claims for fictitious patients just by entering data into billing software. They can submit claims for services that were never rendered. Unscrupulous providers, who know a service wouldn’t be covered, may purposefully enter incorrect data. For example, a large sports medicine practice was aware a certain joint injection wasn’t covered by a health plan. In order to have the treatment paid by the plan, however, the provider submitted an alternate code for a service that was covered. The plan’s investigators discovered the scheme during an audit. The overpayment for the miscoded service was nearly $1 million.

In addition, the Affordable Care Act (ACA) mandated electronic medical records (EMR) as the standard. EMRs have proven effective and efficient in documenting patient care but have also created opportunities for fraud. An unscrupulous provider can cut and paste patient visit information that isn’t timely or accurate, or create an entirely fictitious EMR to submit as a claim for payment.

Investigators are challenged by the time it takes to identify fraudulent records. They must review individual records to compare visit information and look for potential duplicates or cloned information. If suspicious information is detected, the investigator then must interview patients, physicians and their staff.

Also, the audit function of most EMR systems keeps track of all patient visit entries, entry changes and every time someone accesses that EMR. While this function helps identify potentially cloned or copied patient visits, lab findings or symptom descriptions, some programs don’t have an audit function or the provider can turn it off.

How can employers help minimize the risks?

Employers should educate their employees about health care fraud, waste and abuse. Federal and state agencies offer educational materials and services, so tap into these and make them readily available to employees.

Employers should ensure their network and systems are secure and adhere to the latest security guidelines. Require company-wide education on computer and mobile security standards and advocate for the use of strong, regularly updated passwords.

Also, educate employees on potential scams such as phishing emails, online pop-up ads or links that seem legitimate but have attachments that shouldn’t be opened.

What are other best practices?

Employees should take the same safety measures they would with their financial information. Also, they should be suspicious of anyone offering anything in exchange for personal and health care information, such as free medical equipment, whether via an unsolicited phone call or what appears to be a legitimate television ad.

They should review all medical bills, Medicare summary notices and explanation of benefits to make sure the medical services listed were received and are being accurately billed. If unusual or questionable charges appear, they should contact their health care provider or health benefits plan.

Criminals are targeting health care and their methods are getting more sophisticated and complex. Make sure you educate your employees on the potential tactics used by criminals and the high cost of fraud, waste and abuse in the health care industry.

Insights Health Care is brought to you by HealthLink, Inc. HealthLink is a fully owned subsidiary of Anthem, Inc., one of the nation’s leading health benefits companies.

How organizations can benefit from healthier employees

The overall success of your organization depends on the people you employ. Without them performing their jobs at a high level each day, productivity — and your bottom line — would most certainly suffer. That’s why it’s so important to keep your employees happy and healthy. A workplace wellness program is an excellent way to help accomplish both of those goals.

“A wellness program can be an effective way to engage employees and promote healthier lifestyles,” says Veronica Hawkins, Medical Mutual vice president of Statewide Accounts. “Plus, it can be tailored to incorporate an array of health-related activities based on an organization’s needs and budget.”

Smart Business spoke with Hawkins about workplace wellness programs and the many benefits organizations can enjoy if they choose to make the investment.

What do workplace wellness programs involve?

Programs can vary in size and scale and offer things like health education, disease management programs, health screenings, fitness classes, fitness center memberships and more.

Offering a health assessment is a good place to start. A health assessment is a survey that asks questions about employees’ health and fitness. Questions about smoking, frequency of doctor’s appointments, exercise habits and health conditions can give your organization an idea of what to include in your program. For example, if there is a high percentage of diabetes among your employees, you may want to offer a diabetes management program.

Additionally, a health assessment can provide you with some insight into what your employees would like in a program. There may be a high interest in fitness classes or fitness center memberships. Or employees might like the convenience of on-site health screenings.

Your organization can also offer incentives to increase participation. By setting goals for your employees and offering rewards for achievement, you can get employees engaged and excited about being involved and getting healthier.

Can these programs help lower health care costs?

Studies show a significant percentage of health care costs could be linked to employees’ poor lifestyle choices. Tobacco use, unhealthy diets and a lack of exercise can increase the risk of chronic disease and lead to a variety of costly health problems. Organizations that invest in a wellness program could see a reduction in medical claims, disability costs, workers’ compensation claims and absenteeism due to illness.

Helping employees learn about their health can help them and your organization save money. The more they understand their risk factors, the more likely they may be to make positive changes to help improve their overall health.

How do employees benefit?

Recruiting and retaining talented people isn’t easy. Many organizations are now looking for unique perks to set them apart from the competition. A wellness program is one way to demonstrate a real commitment to the health and well being of employees. That can result in increased job satisfaction among staff members and stronger retention rates.

A wellness program can also help build camaraderie among co-workers. Employees can participate in a variety of non-work-related activities or simply go to the gym together. Competition and encouragement can go a long way toward helping people change their lifestyles and make better decisions.

What’s the bottom line?

More and more organizations are becoming believers of wellness because they see a difference.

Wellness programs can help employees feel better. When they feel better, it helps improves their morale, their mental outlook and their productivity. It also helps them live healthier lives, which in turn reduces absenteeism and medical claims.

Sure, there is a cost involved in setting up a wellness program, but it’s really an investment in your employees and in the future of your organization.

Insights Health Care is brought to you by Medical Mutual

Telehealth: What’s in it for employers and employees

Various forms of telehealth — whereby patients access medical care remotely using telecommunications technology — have been around for years. But these days its popularity is accelerating exponentially, and employers need to take note.

Smart Business spoke with Kim Jacobs, vice president of Consumer Innovation at UPMC Health Plan, about the state of telehealth, and what it means for employers and employees.

Why is telehealth’s popularity accelerating exponentially?

A big reason for its increasing prevalence is that technology now makes it easier than ever for patients to access care using their smartphones anytime, from anyplace.

Another key driver: The health care industry is now figuring out how to fairly and consistently reimburse providers for the service. Therefore, providers are now incentivized to offer it.

On the payer side, health plans are increasingly supportive of the practice because they see it as value-based care that improves the patient experience, improves health outcomes and is far less costly than ER and urgent care visits, for example.

Why should employers want to see telehealth included in their health benefits package?

As for employers, the reasons to include telehealth in their health insurance benefits package are numerous and significant. They include:

  • Improved care. It’s simply another option for employees, especially those who live in rural areas where nearby health care options are less prevalent.
  • Lower cost. Surveys show that the average cost of an emergency room visit is $700, with urgent care visits averaging $150. The average cost of a telehealth visit is $40.
  • More convenience. Increasingly, telehealth access is 24/7. All you need is a smartphone, tablet or computer, and you can access care instantly.
  • Better health. Because it’s quick, convenient and relatively low cost, employees are more likely to seek medical care when they need it, instead of putting it off until things become more serious — and expensive.
  • Higher productivity. A visit to the doctor or urgent care center can take half a day or more, which results in significant time away from work — at the expense of productivity. A telehealth visit takes mere minutes.
  • Better employee retention. With telehealth becoming more and more popular, employees are seeing it as a necessary part of their benefits package. If employers don’t cover it, employees will notice.

What is the very latest with telehealth, and what should employers keep an eye on?

The technology is going to keep getting better. The interface between patient and provider used to be primarily by email, text or phone. Many telehealth operations are now switching over to real-time, face-to-face video chat.

This opens up some amazing possibilities. Now, a doctor can literally do a skin rash assessment, for example, while you point your smartphone camera to your arm. Or the doctor can have you say ‘ah’ and look down your throat by way of your laptop camera.

Also, in some cases, a telehealth-based provider can now send an instant email to your primary care physician (PCP) about your visit, so your PCP stays in the loop. In other cases, the provider can send a prescription to your local pharmacy for pickup right after your visit.

We will see more and more of these advances, and they all have the potential to positively impact employee health and productivity.

Given all this, it’s no surprise that the percentage of U.S. large employers that offered a telehealth benefit to their employees rose from 48 percent in 2015 to more than 70 percent in 2016, according to the Wall Street Journal. That percentage is sure to go higher in 2017 and beyond.

Insights Health Care is brought to you by UPMC Health Plan

Myths about self-funded health plans

Historically, self-funded health plans have been most effective for very large corporations. But with the rising cost of health care over the past 10 years, at a rate of nearly 10 percent, other alternative-funded solutions have become a viable option for many employers, even those with smaller employee populations.

Today, it is estimated that 61 percent* of companies within the U.S. self-fund at least a portion of their health plan, and since the passage of the Affordable Care Act (ACA) in 2010, there are even more benefits for employers who are willing to explore alternative-funded solutions to provide quality health benefits to their employees.

Smart Business spoke with Susan French, director of marketing at HealthLink Inc., about what employers really need to know about self-funded health plans.

What does the self-funding environment look like today, compared to five or 10 years ago? What do you expect for the future?

The ACA actually brought an increased interest in alternative-funded options for small group employers because many were unsure about offering an ACA-regulated plan. Also, alternative-funded options aren’t subject to certain taxes and mandates and are typically less expensive than fully insured plans.

As employers become increasingly more informed and involved in the health care benefits they purchase and offer to their employees, they are demanding more for their money. As insurance premium rates continue to rise, employers will also continue to seek new and innovative solutions to meet their needs. Alternative-funded options offer a variety of arrangements and the high-level of flexibility that employers are searching for.

Why would an employer consider moving to an alternative-funded option?

One of the key advantages to alternative-funded arrangements is increased cash flow. With an alternative-funded plan, an employer pays claims as they are incurred, rather than paying fixed monthly premiums to cover services that may or may not have been rendered. For many employers, this can positively impact their cash flow.

Another advantage that attracts employers is the flexibility to customize the benefit offering to fit their employee population. In an alternative-funded arrangement employers can work with the consultant and third-party administrator of their choice to build the plan they want.

There are also a variety of other cost-containment and reduction opportunities that can be particularly effective in an alternative-funded arrangement.

What are the most common misconceptions that you spend your time debunking?

Many employers are open to exploring new options and breaking away from the way health plans have ‘always been.’ Therefore, it’s far more productive to concentrate on educating employers that there may be a better way to control their spending.

Typically, misconceptions are easily disproved by focusing on the advantages of alternative-funded arrangements, such as the ability to use data to analyze fixed and variable costs to affect outcomes, as well as the opportunities for provider collaboration and enhanced cost containment.

How do the most effective companies handle the risks of a self-funded health plan?

Employers deal with risk all the time — this is nothing new. Alternative-funded arrangements often include an additional layer of stop loss insurance that outlines risk, protects against high-dollar claims and limits the amount of claim expenses an employer is liable for. As with many aspects of business, employers who are comfortable and strategic with handling risk are often the most successful with alternative-funded plans.

What else do you wish employers understood about self-funding?

There are many different types of alternative-funded arrangements, so employers shouldn’t focus solely on traditional self-funded solutions only. There are arrangements that act more like fully insured plans but can still offer employers the flexibility and security of a financial backstop they are looking for.

In today’s health care market, the savviest employers should be open to exploring all their options before deciding what is best for their company.

* 2014 Kaiser Family Foundation Employer Health Benefits Survey

 

Insights Health Care is brought to you by HealthLink Inc.

How stop-loss insurance can reduce the risk involved in self-funding

As more businesses look at self-funding as a way to control their health care costs, it’s not uncommon for stop-loss insurance to be part of the discussion. In fact, according to a recent study from QBE Solutions, 60 percent of self-funded employers now have stop-loss insurance.

While some businesses choose to forgo stop-loss to avoid the extra monthly premium costs that come with it, many others have determined it’s a necessary measure to protect their business from unexpectedly high claims.

“Organizations assume more risk when they self-fund, but most want safeguards in place to protect their business,” says Amber Hulme, Medical Mutual regional vice president for Central Ohio. “While insurance carriers have set products to offer, there is also typically a fair amount of customization involved in terms of the contract. It’s important to get all the pieces right.”

Smart Business spoke with Hulme about how stop-loss insurance works, why it could be a valuable tool for organizations that fund their own health benefits and what types of contract decisions could make a big difference in the long term.

What is stop-loss insurance?

Stop-loss insurance limits risk for a self-funded employer when one employee has a catastrophic claim, as well as when claims for the entire organization are higher than a set amount. It insures the employer, not employees or other health plan participants.

Stop loss policies are initially written as indemnity policies. In others words, the employer pays the claim and the carrier then reimburses them.

How does it work?

Well, there are two types of stop-loss insurance — specific and aggregate. Specific stop-loss limits the amount an organization would have to pay for an individual claim from a specific employee. Usually an organization pays a monthly premium based on how many covered employees it has.

Aggregate stop-loss limits the total amount the organization will have to pay in claims, for all of its employees for the full length of the contract.

Most choose to have both types of stop-loss insurance to cover both scenarios.

Why is stop-loss getting more attention lately?

One reason is because self-funding is getting more attention, especially for small businesses that have 50 or fewer employees. In 2018, those businesses may lose the transitional or ‘grandmothered’ status that has kept them exempt from many aspects of the Affordable Care Act.

Stop-loss insurance is one of the most crucial elements of a self-funded health plan, because it’s the best way to help the plan limit its risk. So, as more organizations take on the financial risk of self-funding their employees’ health care coverage, stop-loss will continue to be a critical component.

What factors should organizations consider?

There are several contract provisions that organizations need to understand and take into account.

One of the most important aspects involves a practice called lasering. When insurance companies give a quote or a rate renewal, they might place a higher deductible on certain individuals or even exclude them from coverage. That’s called lasering. Organizations need to understand their insurer’s policies on lasering, and how it might affect their coverage when it’s time to renew their contract.

Is there anything else to consider?

One of the biggest factors in stop-loss, and self-funding as a whole, is to know your population. Most insurance companies need to know about any employees with a history of high claims or any known health risks before they will even give a quote. It’s a good idea for organizations to be prepared with that information ahead of time.

There are various types of stop-loss coverage available, so start by talking to your insurance carrier or other stop-loss carriers to find out which options make the most sense.

Insights Health Care is brought to you by Medical Mutual