The Jan. 1, 2014, implementation date of many insurance provisions and mandates under the Affordable Care Act (ACA) is rapidly approaching, leaving employers to wonder just how the ACA is going to impact them and their benefit offering.
“As employers explore their health insurance options for 2014 and receive renewal rates from their carriers, some may see an increase that is higher than what they may have expected,” says Marty Hauser, CEO of SummaCare, Inc. “This increase can be attributed to several factors mandated by the ACA. Employers should familiarize themselves with these changes so they understand the reason for premium costs and can decide what is best for their employees and business.”
Smart Business spoke to Hauser about the changes in rating and underwriting under the ACA that will impact premium costs next year.
What do insurers use to determine rates for employers and how will that change?
Currently, rating is based on a number of factors including age, gender, health status and geographic location. Preexisting medical conditions and prescription use are also used to determine rates.
In 2014, rating is limited to age, smoking status and geographic location. Guaranteed issue also goes into effect, meaning that insurers cannot deny coverage because of a preexisting condition or rate-up for high-risk groups. Simply put, insurers can rate a group based on fewer factors than in previous years.
What else is changing in rating that will impact premiums?
Age bands, which are ranges of ages that determine premium amounts, are used to determine a group’s rates, and today these are set at a 5-to-1 gender-based ratio.
Beginning in 2014, age bands can have a maximum ratio of 3-to-1, and these age bands are separated into three groupings: one single age band for children ages 0 through 20, one year age bands for adults ages 21 through 63, and one single age band for adults ages 64 and older.
It’s important for employers to understand that under the ACA these ratios are uniformly mandated and regulated across the country for each carrier in order to level the playing field when it comes to group insurance premiums.
In addition to the change in rating factors and age bands, the ACA requires certain fees and taxes from health insurance companies based on the insurer’s membership.
The first fee, called the patient centered outcomes research trust fund fee, went into effect last year at a cost of $1 per family member and increased to $2 per family member this year. The fee is collected to help fund the Patient-Centered Outcomes Research Institute, which will assist patients, clinicians, purchasers and policy-makers in making informed health decisions through research.
The second fee, called the transitional reinsurance program fee, is effective from 2014 through 2017 at a cost of $5.25 per family member per month or $63 per family member annually. This fee will be assessed against both insured and self-funded group health plans in order to stabilize premiums in the individual market for the first three years the marketplaces are in effect. These fees will be used to make payments to carriers that cover high-risk individuals in the individual market.
The third fee, called the marketplace user fee, goes into effect next year at a cost of 3.5 percent of policy costs. The marketplace user fee is meant to cover administrative costs of policies on the health insurance marketplace.
Finally, the annual health insurer industry fee begins next year at a cost of 2 to 2.5 percent, increasing to 3 to 4 percent in 2015. This fee is an excise tax to fund some of the provisions of the ACA.
In addition to the new fees, health plans are still subject to the 1.4 percent state premium tax.
How can employers offset some of the expense of their health insurance next year?
While there isn’t much employers can do about the new rating factors or fees imposed by the ACA, they can help offset their premium costs by working with their insurer or independent insurance agent to make sure they are offering the right coverage for their employees and budget. ●
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2013 Healthcare Reform Seminar
In mid-July, Smart Business held the 2013 Healthcare Reform Seminar, presented by SummaCare, and sponsored by Rea & Associates, Sequent, Roetzel & Andress, The Greater Akron Chamber, and hosted by Firestone Country Club. More than 200 people heard insight, advice and strategy from a panel of experts on what employers need to know about healthcare reform.
Contact these insightful panelists to learn more:
The Affordable Care Act (ACA) contains a total of 91 provisions, bringing change to the insurance market and impacting the type of coverage employers offer their employees.
“Many of the upcoming ACA provisions depend on the size of your employee population,” says Marty Hauser, CEO of SummaCare, Inc. “Employers need to understand these provisions, as they will likely determine what kind of coverage you offer your employees.”
Smart Business spoke to Hauser about how some key provisions impact employers.
What are some provisions impacting all employer groups?
Although some provisions of the ACA are based on the number of employees an employer has, others apply to all employer groups, regardless of size. These provisions include, but are not limited to, guaranteed issue and renewal of health insurance plans, no pre-existing condition exclusion, employer notification of the health insurance marketplaces and an increase to the maximum allowable reward for health-contingent wellness programs.
Beginning Oct. 1, 2013, employers will be required to notify employees of the availability of the health insurance marketplace, formerly known as exchanges. The marketplace is an online portal that will allow consumers and employers to find and compare different health insurance options. Employers must provide employees, regardless of plan enrollment status or part-time or full-time employment status, a written notice informing them of their coverage options. The Department of Labor (DOL) has created three different model notices for employers to communicate this information to employees, and these are available on the DOL’s website.
Another provision impacting all employer groups is the increase to the maximum allowable reward for health-contingent wellness programs from 20 to 30 percent of the cost of coverage. The program must meet five regulatory requirements to qualify as a health-contingent wellness program.
What are some provisions impacting small group employers?
Beginning in 2014, the marketplace will operate a Small Business Health Options Program, or SHOP, that offers choices when it comes to purchasing health insurance for small group employers — with up to 50 employees in 2014 and increasing to 100 employees in 2016 — and their employees.
Through the SHOP, employers will eventually be able to offer employees a variety of Qualified Health Plans (QHPs) from different carriers, and employees can choose the plan that fits their needs and their budget. In 2014, however, small group employers will be limited to offering only one QHP to their employees, as the provision allowing choices between multiple carriers has been delayed until 2015.
In addition to the availability of the SHOP, small group employers with fewer than 25 full-time employees, or a combination of full-time and part-time employees, may be eligible for a health insurance tax credit in 2014 if they offer insurance through the SHOP and meet other criteria, such as the average wages of employees must be less than $50,000, and the employer must pay at least half of the insurance premium.
What are some provisions impacting large group employers?
Effective Jan. 1, 2014, employers that employ an average of at least 51 full-time employees are required to offer employees and their dependents an employer-sponsored plan or the employer pays a penalty, often referred to as ‘pay or play.’
This provision has specific criteria meant to not only define and determine the number of employees in the group, but also to confirm the employer is providing affordable, minimum essential coverage. Part-time employees count toward the calculation of full-time equivalent employees, and there is no penalty if affordable coverage is offered.
If an employer doesn’t provide adequate health insurance to its employees, the employer will be required to pay a penalty if its employees receive premium tax credits to buy their own insurance. The penalties will be $2,000 per full-time employee beyond the employer’s first 30 workers. Penalties paid by the employer will be used to offset the cost of the tax credits.
Marty Hauser is CEO at SummaCare, Inc. Reach him at email@example.com.
Insights Health Care is brought to you by SummaCare, Inc.
As we approach next year’s continued implementation of the Patient Protection and Affordable Care Act (PPACA), which affects how and what type of health insurance employers will offer, many employers are beginning to explore the best plan for them.
One popular topic of discussion is wellness programs. The PPACA provision on wellness programs that rewards positive health outcomes is being expanded. Next year, employers will be able to provide even more incentives for employees participating in wellness programs, with the reward percentage changing from 20 to 30 percent of the cost of coverage.
“It’s not surprising that a significant change under the PPACA is one that encourages employers to promote and reward employees for healthy behaviors,” says Marty Hauser, CEO of SummaCare, Inc. “Employer-sponsored wellness programs are popular, and incentivizing employees to make better overall lifestyle and wellness choices can help to lower long-term health care costs. It is reasonable at a time when we are trying to make health care available to more consumers and also drive down overall health care costs.”
Smart Business spoke to Hauser about the new wellness aspect of the PPACA and what employers should consider to help encourage and promote a healthier workforce next year.
What types of wellness programs are eligible for the 30 percent reward?
Wellness programs are currently and will continue to be divided into two categories — participatory wellness programs and health-contingent wellness programs. Participatory wellness programs are not eligible for the 30 percent reward, while qualified health-contingent wellness programs are.
In general, participatory wellness programs account for the majority of wellness programs offered by employers. They are made available to most employees and do not offer a reward or request that the individual satisfy a health standard to receive a reward. Examples include a full- or partial-reimbursement to employees for fitness center membership and/or a program that rewards employees for attending free health education seminars or lectures.
Health-contingent wellness programs require the participant meet certain health measures to receive a reward. These rewards can include incentives such as a discount or rebate on monthly health insurance premiums; partial- to full-waiver of cost-sharing benefits, such as deductibles or copays; and/or other monetary or non-monetary incentives. An example could include a program where participants’ biometrics are measured regularly and rewards are based on meeting a health measure. Participants who don’t meet the health measure must take additional steps to get the reward.
What are the requirements of a health-contingent wellness program?
A qualifying health-contingent wellness program must meet five regulatory requirements. These requirements include:
• Frequency of opportunity to qualify. The program is offered to all similarly situated employees.
• Size of reward. This could be as high as 30 percent of the cost of health coverage and up to as much as 50 percent for programs meant to prevent/reduce tobacco use.
• Uniform availability and reasonable alternative standards. The program is designed to be available for everyone, with a reasonable alternative for those whose medical conditions don’t allow them to participate to the full health standard.
• Reasonable design. The program is designed with an overall goal to promote health and prevent disease.
• Notice of other means of qualifying for the reward. Those who qualify for a different means of obtaining a reward have the opportunity to do so.
These requirements are meant to protect the consumer and safeguard against unfair practices.
What should interested employers do?
Discuss your options with your health insurer, benefits consultant or broker to determine what type of program makes the most sense for your employee population, time, wellness staff and budget.
Marty Hauser is CEO at SummaCare, Inc. Reach him at firstname.lastname@example.org
Insights Health Care is brought to you by SummaCare, Inc.
The new year means we are closer to the 2014 changes under the Patient Protection and Affordable Care Act (PPACA), the health care reform bill.
While we’re approaching the implementation of major changes to the way care is delivered in this country, some provisions are pending guidance and structure, so many employers are in a holding pattern until things are clearer.
“The best thing an employer can do is become familiar with upcoming changes and talk to their insurer and financial planners now,” says Marty Hauser, CEO of SummaCare, Inc. “Though they might not have all the answers to your questions, it’s a good time to begin the conversation.”
Smart Business spoke to Hauser about what provisions have gone into effect and what we can look forward to this year and into 2014.
What provisions exist now?
In 2010, early provisions included coverage of children with pre-existing conditions; coverage of dependents up to age 26 and 28 under federal and Ohio law, respectively; elimination of lifetime limits of coverage; regulation of annual limits of coverage; prohibiting rescinding of coverage; and 100 percent coverage of certain preventive services.
In 2011, more provisions were implemented, including extending 100 percent coverage of certain preventive services to Medicare members; medical loss ratio requirements; and changes to Federal Savings Accounts (FSAs).
Last year, women’s preventive health services were added to services covered at 100 percent, when received in-network, and insurers were required to distribute Summary of Benefits and Coverage (SBC) documents to potential enrollees upon application and renewal. Employers were also required to include aggregate costs of employer-sponsored health coverage for the 2012 tax year on W-2 documents provided to employees earlier this year.
This year, employers will be required to notify employees of the availability of state exchanges, now referred to as ‘marketplaces.’ There is also a $2,500 cap on FSA contributions.
What provisions are next?
In 2014, one provision impacting consumers will be guaranteed issue of health insurance policies. Guaranteed issue will provide access to affordable coverage to hundreds of thousands of individuals who may have previously been denied coverage because of pre-existing conditions.
Another provision impacting consumers is the implementation of state, federal and partnership marketplaces. A marketplace, in essence, is a state-based transparent and competitive insurance shopping and buying website administered by a governmental agency or nonprofit organization, where individuals and small businesses with up to 99 employees can buy health insurance plans. On Jan. 1, 2014, marketplaces will open to individuals and small employers, and some consumers will qualify for a subsidy from the federal government, helping to offset the cost of coverage purchased through the marketplace.
Additionally, on June 28, 2012, the U.S. Supreme Court ruled the individual mandate constitutional. It’s considered a tax that will be reported and paid when filing income taxes. The individual mandate takes effect Jan. 1, 2014, meaning all persons will be required to have health insurance or pay a tax penalty.
At the same time, the employer mandate also goes into effect, meaning employers who employed an average of at least 50 full-time employees, with full-time equaling an average of 30 hours per week, are required to offer employees and their dependents an employer-sponsored plan or the employer pays a penalty. Penalties don’t apply to employers with fewer than 50 full-time equivalent employees and there is no penalty if affordable coverage is offered. Employers with 25 or fewer employees may be eligible for a health insurance tax credit if they offer insurance, but the credit is only available on the marketplace in 2014.
Lastly, in 2014 employers will be allowed to offer wellness incentives of up to 30 percent of the cost of coverage.
What can be done to prepare for 2014?
Talk to your health insurer and financial adviser to find the best health insurance option for your employees next year.
Marty Hauser is the CEO of SummaCare, Inc. Reach him at email@example.com.
Website: To learn more about health care reform, visit www.summacare.com/healthcarereform.
Insights Health Care is brought to you by SummaCare, Inc.
When considering whether to begin a company-wide wellness program, many CEOs and benefit administrators can be overwhelmed and confused with the options available to them. You may wonder what kind of program is right for your company, how much it will cost, how you are going to engage your employees and whether there will be a measurable return on investment (ROI). Often, by working closely with your insurance carrier, you can build a strong wellness program from the ground up.
“Implementing and maintaining a successful corporate wellness program doesn’t have to be difficult,” says Marty Hauser, CEO of SummaCare. “With a little guidance from your insurer, you can successfully begin and manage an effective program that will assist in keeping you and your employees healthy and happy.”
By working closely with your insurer, you can learn tips for overcoming hurdles before beginning your program, ways to engage employees to participate, ideas for implementing effective incentives and even how to determine success metrics — regardless of the size of your program.
Smart Business spoke with Hauser about successful wellness programs that began small and produced big results.
How can a company take the concept of wellness and turn it into an actual program that works for it?
Having an idea of what you want your wellness program to accomplish is one of the most important factors in turning the idea or concept of wellness into reality.
For an example of how this can happen, take Company A, a manufacturer of frozen bakery products. Company A has 113 employees and tried for several years to implement a wellness program before finally finding one that made sense for its culture and staff. After years of informal, sporadic wellness initiatives, Company A decided to create an organized, sustainable wellness movement for employees as a resource for improving their health conditions.
Supported by the co-owner’s belief that he owed his staff information, instruction, incentives and encouragement to help improve the quality of their lives, Company A designed a diverse, low-key and nonjudgmental program to help employees improve their diet, exercise regularly and make more positive lifestyle choices. Company A designed a program that includes a variety of programs and activities for employees to choose from, allowing each employee to participate in those most appealing to him or her, without a requirement for participation or consequence for not participating.
Though initially faced with skepticism from employees and difficulty identifying ways to interest a broad number of people at the same time, once the employees at Company A realized the company was serious and simply trying to guide and support those wishing to improve their health, participation quickly followed. Through the years, Company A has consistently offered new and different activities, formed a wellness committee that has kept in constant contact with staff and asked for suggestions from their employees to keep them engaged. To further encourage participation, Company A came up with an exciting incentive model: assigning each activity in the wellness program a certain number of credits. Once the employee accumulates the required number of annual credits he or she receives a $200 cash bonus.
Today, Company A has what they consider to be a successful program, with happy employees who have maintained healthier lives since the program’s implementation.
Is it possible for a company to quickly implement a successful wellness program?
While gauging the success of a wellness program takes time, it is possible to introduce the idea of wellness at your company and have it catch on quickly, thus turning it into a successful program in as little as a few years.
For example, look at Company B, a local manufacturing company with 180 employees. For six months, Company B considered implementing a wellness program before taking action. Employee absenteeism and unfavorable health, as well as rising insurance premiums, motivated Company B to design a program to not only improve the overall health of its employees, but to encourage early detection and treatment of health conditions.
The program launched as a voluntary participation program, but eventually became an incentive activity/points based program in which wellness activities were offered throughout the year. Employees receive points for every activity in which they participate. Employees then receive a discount, penalty or neither on their biweekly medical payroll deduction based on the points they accumulate during the previous year’s wellness program activities.
In addition to the points program, Company B holds drawings throughout the year in which employees who participate in wellness activities receive prizes. Also, they hold a monthly fruit or vegetable spotlight — and all employees receive that month’s featured item. Employees are provided with access to a nurse who can answer questions, listen to employees, create activities and assist with annual health risk surveys.
Today, Company B maintains and manages a successful wellness program with high employee engagement, thus giving its employees the opportunity to take control of their own health and earn rewards for doing so.
What can an employer do if interested in launching a wellness program?
If you are interested in introducing wellness in your workplace, talk to your insurer to see what kind of program might be right for your employee population. Make sure to communicate what you may have already tried, what has worked and what hasn’t worked, and what your short- and long-term expectations are for the program. Your insurer should be able to help you design a wellness program that is right for you and your employees.
Marty Hauser is the CEO of SummaCare. Reach him at firstname.lastname@example.org.
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Current statistics show an average of three in five employers offer wellness programs, so it’s no surprise employers are seeking help from their benefits administrators and insurers to get employees interested and engaged.
“Getting employee participation and buy-in can be a struggle for some employers introducing a wellness program in their workplace,” says Marty Hauser, CEO of SummaCare, Inc. “Fortunately, there are a few easy things you can do to increase your chances of having a successful program.”
Smart Business spoke to Hauser about things employers should consider to get employee buy-in and participation when implementing a new wellness program.
What is the most important factor when implementing a wellness program?
Before you commit to and implement a wellness program, make sure you have dedicated resources within your company who can give your wellness program the attention it needs and deserves. Coordinating a successful wellness program requires at least three to four hours of attention each week, and it means more than simply hanging or displaying posters and sharing health tips. Having an internal employee committed to sharing information about the wellness program, answering questions that may come up from other employees and acting as the ‘go-to’ person to assist with any necessary preparations for wellness-related events will increase your chances of having a successful program.
A successful and well-managed wellness program involves on-site activities, including events such as flu shot clinics, worksite wellness seminars, fairs and information sessions, and even group exercise classes.
It is also important to make sure you have more than just senior level buy-in; a wellness program requires time and attention from others in your company who can help make it happen.
How can I get employees in my company involved and committed to a wellness program?
Two questions we often receive from employers that have implemented wellness programs in their workplaces are, ‘Why are our programs not working?’ and, ‘Why are our employees not engaged?’ Simply put, wellness requires attention and nurturing, and a successful wellness program needs ‘cheerleaders’ to support it.
One way to get your employees involved and committed to a wellness program is to create a wellness committee comprising representatives from several areas or departments in your workplace. Forming a wellness committee that includes employees acting as representatives will allow for more feedback about the wellness program you are offering, while serving as a listening platform for challenges and questions among other employees in different areas of the company. These employees and committee members are great sounding boards for what is working and what isn’t, and they can help lead and coordinate the programs and services.
The other benefit of having employees on your wellness committee is that they, too, can and will encourage wellness and participation from their co-workers and friends. Co-workers are likely to support others who are leading wellness efforts, and these relationships can turn into future opportunities for wellness initiatives and activities, such as healthy brown bag lunch days, walking and weight-loss clubs and more.
What kind of wellness program is most popular and attractive to employees?
Wellness programs that offer incentives for participation are successful at getting employees involved. The fact is, people like — and sometimes expect — to be rewarded for good behavior. Offering perks for involvement can help give your wellness program longevity.
When incentives for participation are offered, employees are more likely to be motivated to participate, and this is especially true when the incentives for participation involve money. With this in mind, many employers are moving to an outcome-based rewards program that essentially gives employees the opportunity to earn money back on premiums they pay if certain pre-established wellness goals are met. Outcome-based rewards are popular incentives to influence the behavior of your employees and have a better chance at encouraging behavior and lifestyle changes because of the opportunity to ‘pay less’ for premiums. Because these rewards are often tied to employees’ paychecks and premiums paid for benefits, they are more likely to be motivated to participate when they see the effects of their participation — or lack thereof — on their regular pay stubs.
If you are interested in offering a wellness program that offers incentives and/or an outcome-based rewards program, it’s a good idea to start small and slowly cultivate your program based on employee feedback. In the first year or two, you can offer employees small incentives for participation in activities such as screenings and/or completion of a Health Risk Appraisal, and in the next couple years build up to an outcome-based rewards program with varying levels of rewards depending on goals met.
It’s also important to note that under the Patient Protection and Affordable Care Act, beginning Jan. 1, 2014, employers will be permitted to offer employees rewards of up to 30 percent, potentially increasing to 50 percent, of the cost of coverage for participating in a wellness program and meeting certain health-related standards. This would give employees an even better incentive for living a healthy lifestyle, which, in turn, could give you greater employee engagement.
Regardless of what kind of wellness program you decide to implement, it is important to check with your legal department and labor laws before committing to any program.
The key to any successful program is the support it receives, as well as communicating the program to employees. Discuss your company’s culture and wellness goals with your benefits administrator or insurer so they can help you select a wellness program that is right for you.
Marty Hauser is the CEO of SummaCare, Inc. Reach him at email@example.com.
Insights Health Care is brought to you by Summa Care, Inc.
On June 28, 2012, the Supreme Court announced its decision to uphold the majority of President Barack Obama’s 2010 healthcare law. Known as the 2010 Patient Protection and Affordable Care Act (PPACA), the law includes hundreds of provisions.
The Supreme Court upheld the mandate that all nonexempt individuals maintain a minimum level of health insurance coverage or pay a tax penalty. It also upheld new reporting requirements and mandates for employers that offer coverage to their employees, as well as coverage and benefit requirements for health insurers.
While the Supreme Court’s decision confirmed that Americans will see significant changes to the health care industry in the coming years, it also left many individuals wondering about the personal impact this decision will have on them, their families and their businesses.
“While the Supreme Court’s ruling does not affect current coverage for most health insurance policy holders, it is understandable that many are wondering how the ruling affects them personally in the future,” says Marty Hauser, president of SummaCare, Inc. “And although we don’t have all the answers, we do know some things to help employers and individuals work their way through the mandates and provisions of PPACA that may affect them.”
Smart Business spoke with Hauser about what the Supreme Court’s decision will mean to individuals and employers in the coming years, as well as what employers should be doing now to prepare for the upcoming mandates.
What does the Supreme Court’s ruling mean for the average American?
The ruling of the Supreme Court and the provisions under PPACA affect everyone, from the individual with pre-existing conditions to someone who can’t afford health insurance, to the employer that provides coverage to employees and the health insurance company that administers the plan and benefits. Overall, the goal of PPACA is to make health care coverage available to more individuals than ever before.
The ruling not only affects the availability and affordability of health care, but it offers peace of mind for individuals by requiring insurers to provide 100 percent coverage of some benefits, including preventive care and wellness visits, immunizations and some types of counseling and testing.
What are the next mandates and/or provisions that will affect employers and individuals?
Effective Aug. 1, health insurers are required to cover women’s preventive services at 100 percent. This includes well-woman visits; gestational diabetes screening for women 24 to 28 weeks pregnant and those at high risk of developing gestational diabetes; human papillomavirus DNA testing every three years; sexually transmitted infection counseling and HIV screening and counseling; contraception and contraceptive counseling; breastfeeding support, supplies and counseling; and domestic violence screening.
In addition to newly covered preventive services for women, another provision of PPACA that will affect employers and individuals is the Summary of Benefits and Coverage provision. The SBC provision applies to both fully-insured and self-funded group health plans and is meant to help employers and individuals compare benefits between different insurers and/or plans.
The SBC document is designed to describe health plan benefits, including what the plan will cover, limitations and coverage examples. The SBC document must be provided to participants of a health plan enrolling or re-enrolling on or after Sept. 23, 2012. Check with your insurer to determine their process for providing the SBC.
What mandates go into effect in 2013 that will impact employers and/or plan sponsors?
Upcoming mandates slated to go into effect in 2013 for employers and/or plan sponsors include Form W-2 reporting for the 2012 tax year; a $2,500 limit on employee contributions to health Flexible Spending Accounts for plan years beginning in 2013; a requirement for employers to notify employees of the availability of health insurance exchanges; a 0.9 percent tax on earned income of high-income individuals under the Federal Income Contributions Act; and a 3.8 percent Unearned Income Medicare Contribution tax for high income individuals/families.
What mandates go into effect in 2014 that will impact employers and/or plan sponsors?
Mandates effective in 2014 include the ‘pay-or-play’ mandate; employer certification to Health and Human Services regarding whether the group health plan offered to employees provides minimum essential coverage; an increase in permitted wellness incentives from 20 percent to 30 percent; automatic enrollment of new employees in a group health plan for large employers with 200 or more employees; a 90-day waiting period limit for coverage; coverage of certain approved clinical trials for non-grandfathered plans; guaranteed availability and renewability of insured group health plans; prohibition on pre-existing condition exclusions; and complete prohibition on annual dollar limits, which will primarily impact those in the individual market.
What should employers/plans sponsors be doing now to prepare for upcoming mandates?
The most important thing employers or plans sponsors should do now is to start talking to their insurer about insurance options available to them and consider their long-term goals and strategies. It’s also important to figure out when the mandate and provisions will affect the coverage and benefits offered to employees, as some mandates and provisions go into effect upon renewal and are not automatically required, and not every provision applies to each plan type.
Because parts of the mandates and rules aren’t fully written, guidance is still needed. Employers and plan sponsors should pay attention to information regarding upcoming items as information is released.
Marty Hauser is the president of SummaCare, Inc. Reach him at firstname.lastname@example.org.
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The Patient Protection and Affordable Care Act (PPACA) was signed into law on March 23, 2010, and since then, the health care delivery system has experienced rapid change. Health care reform will be the biggest change to the U.S. health care system since Medicare was established in 1965. According to KPMG and Milliman reports prepared for the Ohio Department of Insurance, nearly 1 million more Ohioans will shift to Medicaid in 2014 at a cost of $250 million to taxpayers. It is estimated that this will increase to $600 million in 2019, while another 524,000 individuals could shift into the proposed government subsidized exchange. It’s also estimated that 660,000 fewer Ohioans will get their health insurance coverage from their employers. Not only does health care reform impact the way health care services are covered and administered, it also changes the delivery of health care and the ways consumers will obtain insurance. In addition, employer groups that offer benefits to their employees will experience change due to health care reform laws. Therefore, many employers have questions regarding how they can continue to offer comprehensive benefits to their employees while maintaining the costs of such benefits. “The small- to medium-sized employer will definitely be affected by the new legislation,” says Marty Hauser, president of SummaCare, Inc. “Many employers plan to continue offering benefits to their employees, but the way these benefits will be offered and the contributions made by the employer will likely change.” Smart Business spoke with Hauser about changes and mandates under the health care reform law, as well as post-reform strategies employers may use when offering benefits. What changes under PPACA have already gone into effect? In 2010, changes include coverage of children with pre-existing conditions; coverage of dependents up to age 26 under federal law and up to age 28 under Ohio law; elimination of lifetime limits of coverage; regulation of annual dollar limits of coverage; and a prohibition against rescission of coverage. In addition, certain preventive services became covered at 100 percent for most policies. What changes under PPACA are up next? While many of the changes under the PPACA law will go into effect in 2014, others will take effect in the coming months, and insurance companies are busy making appropriate preparations now. In August 2012, new women’s health preventive services, including contraception, will be covered at 100 percent if received in-network. These services fall into the categories of evidence-based screenings and counseling, routine immunizations and other preventive services for women. For policies issued or renewed after Sept. 23, 2012, insurance issuers will be required to distribute Summary Benefits of Coverage (SBC) documents to potential enrollees upon application and upon renewal. These documents will allow consumers to easily compare plans from different insurance companies. Under the law, two new resources scheduled to be available for consumers to purchase policies. Consumer Orientated and Operated Plans (CO-OPs) go into effect in 2014 and will offer consumers more choice when it comes to purchasing an insurance policy. CO-OPs are nonprofit groups designed to offer individuals and small businesses more affordable options, and their customers will direct them. Low-interest federal loans will be available to eligible private, nonprofit groups to help set up and maintain the CO-OPs, which can be operated locally, statewide or across several states. The second new resource for consumers in 2014 will be exchanges. Exchanges are state-based transparent, competitive insurance marketplaces, administered by a governmental agency or nonprofit organization, where individuals and small businesses with up to 100 employees can buy affordable and qualified health benefit plans. Standard benefit tiers will be offered on each exchange, and states will have broad latitude in design of the exchanges. All plans offered on the exchanges will be guaranteed issue with no medical underwriting, and some consumers may be eligible for subsidies based on their income. What strategies might employers use so they can continue to offer health insurance to their employees in the post-reform market? Strategies include providing employees with a stipend to pay for health insurance in the individual market or providing a defined contribution and moving to the purchase of policies on the exchanges. Another strategy is offering a policy that promotes a culture of wellness that features a smaller network, larger employee contribution or incentives for meeting wellness and/or preventive care goals. Employers may also continue offering benefits in the same manner as they have in the past. What changes are insurance carriers making? While the focus of most carriers has always been to provide cost-effective care in the most appropriate setting, insurance carriers now are participating with providers in creating Accountable Care Organizations (ACO) and Patient Centered Medical Homes (PCMH) that aim to further provide savings and promote coordinated, appropriate care. More information and education about these activities will be forthcoming in the near future. Where can employers get more information? Begin with your current insurance carrier or broker. Share questions or concerns. You can work together to determine the best option for your business. Also, www.healthcare.gov provides information that outlines the basics of the reform law and its provisions. Regardless of the final outcome of PPACA, health care delivery will be changing. With the spotlight on quality, effective outcomes and transparency, the move toward improving the delivery system is certainly well under way. MARTY HAUSER is the president of SummaCare, Inc. Reach him at email@example.com. Insights Health Care is brought to you by SummaCare, Inc.
As healthcare costs continue to rise, many employers are open and anxious to hear ways they might be able to save money while still providing comprehensive medical coverage to their employees. And luckily, many insurance companies have things in place that can do just that.
“While there is no silver bullet in negating health insurance annual increases, there are ways to minimize increases,” says Kevin Cavalier, vice president of sales at SummaCare, Inc. “Plan design is critical in lowering plan premiums, but employee engagement in understanding care options and being a better consumer of healthcare services is imperative. Employee engagement and education should also incorporate wellness initiatives to maximize plan effectiveness.”
There are ways to save money on your health insurance premiums, and your health insurer is on your side. It continually looks for ways to extend cost savings to you, and these savings often come by way of partnership discounts, higher-deductible plan designs, generic drug prescription riders, value-added services and wellness programs.
Smart Business spoke with Cavalier about ways your insurer can help you save on health insurance-related costs.
How can partnerships between your health insurer and a local chamber or consortium save you money on your health insurance premiums?
Choosing an insurer that offers health insurance premium discounts through a chamber or consortium is a great way to save money on the monthly costs associated with offering health insurance to your employees. Chamber members are offered extended discounts on things such as health insurance, office supplies, shipping and transporting, and energy costs because of existing relationships and agreements a chamber has with other companies.
By joining your local chamber, you can save thousands on services and costs you would otherwise have to pay for at full price.
Can staying with a carrier that offers predictable rate increases save you money?
If you have consistently offered health insurance benefits to your employees year after year, you are probably familiar with the annual rate increases that can accompany those benefits. And while some of these increases are unavoidable as medical costs continue to rise, there are ways to help you better anticipate higher costs. Staying with a carrier that offers predictable rate increases can help you better budget for your anticipated benefits spend while resting assured you are receiving the most value for your dollar.
If you’re thinking about switching carriers due to an extremely low rate, know that, more often than not, these low rates are unsustainable and you may experience an unexpectedly high increase in year two. Making minor benefit changes can often negate some of the difference in costs between two insurers and saves the time, effort and hassle of changing insurance carriers.
How can offering an HRA/HSA plan save both you and your employees money?
Offering a Health Reimbursement Arrangement (HRA) or Health Savings Account (HSA) in conjunction with a high-deductible plan is a great way to lower your premium costs while still offering your employees comprehensive benefits. An HRA essentially gives your employees the opportunity to use tax-free money (provided by you) to pay for qualified medical expenses. An HSA is a tax-free savings account that belongs to your employees, and they can use it to pay for their insurance deductible and out-of-pocket medical expenses. Both of these arrangements allow you to save money by offering a higher-deductible, lower-premium plan, and they will educate your employees on the costs associated with the services they receive.
Will offering a generic-based prescription plan also save on costs?
One of the best ways to save costs is to offer a generic-based prescription plan. A generic-based prescription drug plan promotes the use of less expensive, generic drugs by filling prescriptions with the generic alternative when available. With this type of prescription plan, a pharmacy will only fill a prescription with the brand name drug if there is not a generic alternative available and/or if the prescribing physician indicates that it must be dispensed as prescribed with the brand name drug.
In addition to the cost savings of prescriptions filled with generic drugs instead of brand name drugs, many Pharmacy Management programs promote the use of generic drugs by offering a 90-day supply at retail pharmacies or mail-order options for a very low copay. These conveniences and low-cost options have proven effective in steering people toward generics. In addition, it encourages people to have their prescriptions filled at network pharmacies using plan coverage, which, in turn, reduces costs.
Can a wellness program save you money?
Yes, implementing a simple wellness program is oftentimes the first step in helping to lower costs, though the financial benefit may not be immediate. Offering things such as smoking cessation, weight management counseling, preventive care incentive programs and onsite health and fitness classes can reap long-term benefits in relation to the health of your employees and the cost of providing health insurance to them. Talk to your insurer to find out what components of a wellness program would benefit your employers and company.
Regardless of what type of benefit plan you choose to offer your employees, it is critical to continually evaluate what plans and services are offered by your insurer to ensure you have chosen the best plan option while containing costs.
Kevin Cavalier is vice president of sales at SummaCare, Inc. Reach him at (330) 996-8650 or firstname.lastname@example.org.
Insights Health Care is brought to you by SummaCare, Inc.