6 Tips for Benefits Open Enrollment in 2014

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With the changing health insurance and benefits landscape, there is a great deal of confusion occurring in the workforce, and the upcoming open enrollment season will be different than others in the past. Employers will be faced with the need to communicate and educate employees on health care reform and the benefits options available to them. In addition, organizations may be forced to identify alternative health care options or modify existing ones to cope with rising costs.

Here are six (6) tips for benefits open enrollment in 2014.

1. Review and modify your coverage.

Carefully review your health insurance policy changes each year and compare your current benefits package to your new one. Be sure to review all costs for health care services, spousal and dependent coverage options, as well as your premium costs. Consult health insurance related benchmark information from surveys as well as your broker on different options and modify accordingly. Perhaps even gather feedback from your employees on what they like and dislike about different health care/benefits options you are considering.
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6 Affordable Care Act (ACA) Reforms Taking Effect in 2014

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Although the employer mandate required under the Affordable Care Act (ACA) doesn't take effect until 2015, several reforms become effective in 2014. Here are the key reforms that you need to know.

1. Minimum Essential Coverage

Beginning in 2014, the ACA requires that health insurance issuers and sponsors of self-insured plans provide "minimum essential coverage" and report health coverage information to the IRS. This information will likely be used to verify data related to the ACA's individual and employer mandate.
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Health Care Reform's Employer Mandate: 3 Things You Need to Know

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Recently, the IRS has proposed regulations which further clarify employer shared responsibility, specifically the requirement of employers with at least 50 full-time and/or full-time equivalent employees to offer affordable healthcare coverage with a minimum level of coverage or pay a penalty.

1. Employers must determine if they need to offer a minimum level of healthcare coverage.

According to the regulations, each year, employers will need to determine if they must offer healthcare coverage with a minimum level of coverage or pay a penalty by averaging the number of employees they employ across months in the year, which accounts for fluctuations in the workforce. If the average is 50 or more full-time equivalent or full-time employees, the employer must offer healthcare coverage or pay a penalty.

There is a $2,000 penalty for each full-time employee not covered by the plan beyond the first 30 full-time employees. There are additional large penalties for coverage that is not deemed to be "affordable."

2. Employers must use a specific calculation method to determine how many full-time/full-time equivalent employees it has.

The proposed regulations also offer a calculation method for determining how many full-time and full-time equivalent employees an organization has.

  1. Employers need to calculate the total number of hours of service per month for all employees who were not employed an average of 30 hours of service per week for that month.
  2. Employers should divide the total hours of service by 120 to yield the number of full-time equivalent employees employed in a given month.
  3. Employers should add the number of full-time employees (those working 30 hours or more each week) to the number of full-time equivalent employees.

*If employees in excess of 50 FTEs were seasonal workers for a period of no more than 120 days, an employer is not subject to the shared responsibility requirement.

3. A calculator will be provided for employers to use to determine if they meet affordable healthcare coverage requirements.

In addition, the regulations state that the IRS and Department of Health and Human Services will provide a calculator for employers to use to determine if they meet the “affordable healthcare coverage” requirements.

Health coverage is considered affordable if the plan has a single employee premium no more than 9.5% of the employee's household income. Additionally, a healthcare plan must meet the requirement of minimum essential coverage when the policy pays out at least 60% of the actuarial value of the covered benefits (Source: Buckingham, Doolittle & Burroughs, LLP).

Please note that by providing you with research information that may be contained in this article, ERC is not providing a qualified legal opinion. As such, research information that ERC provides to its members should not be relied upon or considered a substitute for legal advice. The information that we provide is for general employer use and not necessarily for individual application.

 

6 Important Healthcare Reform Changes You Need to Know

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Several important healthcare reform provisions will begin to take effect during 2013. Below is a short summary of the major healthcare provisions that will start to affect your business in early 2013 as well as resources you can access for more information.

1. Reporting Requirements for Form W-2

Beginning January 1, 2013, employers are required to report the value of certain health benefits on employees' W-2s unless they are filing fewer than 250 forms. The IRS provided guidance (links below) on these reporting requirements, which include medical plan coverage, Medicare supplemental coverage, onsite medical coverage, and employer-sponsored flex credits contributed to a flexible spending account (FSA).
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The Top 3 Benefits Trends You Need to Know

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Three types of benefits have seen the most significant changes in trends this year, based on our research nationally, locally, and among employers of choice. Find out what they are and how these trends impact your organization as it plans and budgets for 2013.

Health Insurance & Wellness

Survey data released by Towers Watson and Aon Hewitt show that the widespread majority of employers plan to offer health care benefits to their employees in the future. Most employers, according to their surveys, do not foresee eliminating health plans, even in light of health care reform.
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National, Local Health Insurance Premiums Increase

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In a report published jointly by The Kaiser Family Foundation and The Health Research & Educational Trust earlier this month organizations were asked about a number of practices and metrics related to employer provided health benefits. Participants indicated that their health insurance premiums for 2012 increased by approximately 4% nationally over 2011. More specifically, single coverage cost 3% more than in 2011 and family coverage cost 4% more. The report, 2102 Annual Employer Health Benefits Survey, notes that differences based on company size and geography have the most significant variation in the health insurance premiums reported.

A more local analysis of the current state of employer provided health benefits lends additional support to this claim with Northeast Ohio organizations facing much higher than 4% increases. Of the 100 organizations participating in the ERC/Smart Business Workplace Practices Survey, the average size was only 143 employees. With an average increase of just over 10% among a sample of 100 Northeast Ohio organizations, the size of the organizations surveyed may be contributing to these higher premiums.
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Health Care Trends for 2012

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Open-enrollment and budgeting season are upon many organizations and the trends are similar to previous years: rising costs, shifts in plan design, increased emphasis on wellness and health management, and greater employee accountability – but with a few positive surprises. Here are some major health care trends that will affect your organization heading into 2012.

Health care costs are still rising, but are slowing.

Several studies conducted by Mercer, Towers Watson, and Segal, have found that health care costs will continue to rise in 2012 by approximately 5.4-7.6%, but there is solid evidence that costs are slowing from the past few years. 

Cost-shifting to employees is slowing from past years.

As a result of lower increases in health care costs, experts believe that cost shifting to employees will slow as well in 2012. This trend coupled with slower health care cost increases is likely attributable to more cost sharing practices that have occurred over the past few years and wellness initiatives that many employers are using to manage health care expenses.

Healthcare utilization seems to be trending downhill.

Other positive news is that healthcare utilization is trending downhill. Employees are using fewer medical services, mainly due to wellness and health management programs and choices to postpone medical visits and procedures due to higher health insurance costs (co-pays, deductibles, etc.) and lower disposable income.

High deductible and health savings plan options continue to increase in popularity.

Employers are placing more accountability on individuals in terms of spending their health care dollars and managing their health by integrating a Health Savings Account (HSA) option in their benefits packages. Similarly, high deductible plans are quickly becoming a chosen plan design for many employers.

Greater individual accountability for health continues to increase.

In addition to modifying plan design, employers continue to offer tools to help employees take responsibility for their health including health risk assessments and screening. Many have also turned to incentives to promote the healthy behaviors they are seeking.

Employers are re-evaluating their benefits strategies.

Organizations continue to be concerned about the sustainability of health insurance costs on their businesses and are re-evaluating their benefits strategies for the short and long term, focusing on benefits that are most valuable to their employees including health care, retirement, and lifestyle benefits.

More employers are exploring narrower options and access.

More small and midsize employers are considering swapping lower premiums for narrower access to providers and changing their approach to providing benefits for dependents. Out-of-network options are also coming at a higher price. These three areas appear to be the most common tradeoffs employers are making in order to keep premium costs manageable.

Health management will remain a critical priority for employers.

Organizations aren’t planning to decrease their wellness efforts anytime soon. In fact, in the next year or two and beyond, employers can expect that health management and wellness programs will increase and continue to be a priority as they attempt to control health care costs. Employers will be focusing on greater prevention of health conditions by exploring ways to integrate wellness initiatives into their benefits strategy.

As your organization plans its health care strategies for 2012 and negotiates its renewal rates, keep these trends in mind to ensure that your organization manages its health insurance costs effectively in the short and long term.

Sources: Mercer, PricewaterhouseCoopers, Segal, Towers Watson, WorldatWork

 

Additional Resources

Making Corporate Wellness Work

Corporate wellness programs are usually introduced with the best of intentions: to improve employee health and productivity, foster teamwork, and save on health insurance costs. Often loosely pulled together through a number of vendors and initiatives, they can be difficult to manage and track, and therefore lack staying power. While the necessity for corporate wellness is undeniable, building a sustainable program remains a difficult task in many organizations. Join ERC as we discuss: 

  • Trends in corporate wellness and its connection to productivity
  • Best practices: what to Include, how to budget and track
  • How to solicit participation
  • Connecting your program with your benefit plan design
  • Cost saving tips

NorthCoast 99 Winners Cover a Higher Percent of Health Insurance Premiums

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The 2011 NorthCoast 99 Winners Report and 2011-2012 ERC Policies & Benefits Survey show that NorthCoast 99 winners pay, on average, a higher percentage of their employees’ health insurance premium than other Northeast Ohio employers. In 2010, NorthCoast 99 winners covered 80% of the health insurance premium for their employees, while Northeast Ohio employers covered 76% of their employees’ health insurance premium.

NorthCoast 99 winners across manufacturing, non-profit, and professional services industries paid 79%-80% of their employees’ health insurance premium on average – consistently higher than their other Northeast Ohio counterparts.

“Similar to providing compensation above market averages, NorthCoast 99 winners also provide above average health insurance coverage as a way to attract and retain top performers despite the trend to shift more premium costs to employees. Benefits consistently rank high in importance to top performers, and these employers of choice have responded with more competitive benefits coverage and practices than other employers in the region,” says Marty Mordarski, Director of Research and Membership.

For more information or to purchase the 2011 NorthCoast 99 Winners Report, please click here. Or, to purchase the 2011-2012 ERC Policies & Benefits Survey, please click here.

12 Implications of Health Care Reform

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As insurance carriers increase premiums in response to health reform and employers start dealing with the law’s new requirements, there is a heightened focus on providing better education and communication to employees, on negotiating and investigating alternative options, making smarter benefits decisions, and enhancing wellness programs. Here are 12 ways in which health care reform is already impacting how we do business.

1. Increased cost-sharing

Cost-sharing between employers and their employees for health insurance continues to increase. This is one of the easiest ways to manage health insurance costs, but naturally has effects on employee engagement and morale that employers need to consider. The average cost-sharing arrangement has steadily increased over the past few years.

2. Education about health benefits

Education about how employees can be better health care consumers is becoming more imperative. Often employees do not understand how usage affects costs and need to be educated buyers when using their health insurance plans. Ideas for education efforts other employers have initiated include:

  • Explain the costs associated with health care decisions (i.e. going to the emergency room vs. their primary care physician).
  • Show employees the drivers of health care costs at the organization.
  • Communicate what employees can and need to do in order to maintain or reduce their current costs. Specific actions steps are recommended.
  • Expand education to spouses who are also users of the plan.
  • Provide employees with key questions to ask their doctor.
  • Make health insurance an on-going conversation and communication effort with quarterly meetings to discuss trends, employee forums to discuss suggestions, and other media to disseminate wellness and health insurance information.

3. Use of benefit statements

Benefit or total rewards statements are a widespread and important communication tool that show employees how much the organization is investing in their benefits, and particularly their health insurance. Showing employees actual dollar amounts and levels of coverage your organization has been shown to enhance satisfaction and improve understanding.

4. Review of plan design

Reviews of plan design are increasingly occurring. Plan design should be reviewed carefully and different scenarios should be run and analyzed. Raising deductibles or co-pays to offset other costs or providing a health savings account (HSA) or health reimbursement account (HRA) are options to consider. But it’s also important to pay attention to the level of benefits that other employers are providing. Conducting an annual benefits analysis can help determine where employer benefits could be modified without compromising competitiveness.

5. Negotiation of options

Taking responsibility for your health care costs and seeking additional bids from other carriers is a necessity. Inquire about other options from your broker that reduce costs and provide greater wellness resources to help employees better manage their health. Your broker may not freely offer this information, so take initiative and ask.

6. Implementation of restrictions or penalties

Increasingly, organizations are implementing more restrictions in their health insurance plans such as spousal carve-out provisions and higher premiums for smokers. Shifting additional costs or penalties to unhealthy workers, although not widespread, is becoming more popular and may help reduce or manage health care costs.

7. Offering of incentives

Incentive use for wellness program participation is expanding. A chief reason that wellness programs may not reduce your organization’s health care costs is lack of participation. Studies continue to show, however, that employees are more likely to participate in programs when meaningful incentives are offered, such as discounts on health insurance premiums.

8. Health risk assessments

Usage of these assessments is becoming very common as they can be valuable data-gathering tools for both organizations and employees. Employees can attain greater insight into health risk areas and organizations can receive an aggregate report of areas where employees need wellness assistance. Wellness programs can then be targeted to those needs. 

9. Free prevention services

Services like flu shots, health screenings, cholesterol and blood pressure checks, vaccinations, and other yearly screenings are increasingly offered in the workplace.  By providing free wellness services on-site, you can decrease usage thereby managing costs better. Also, educate employees to take advantage of the new provision of health care reform which provides free annual preventative services.

10. Wellness initiatives tied to health insurance costs

Wellness initiatives are obviously one of the best ways to reduce health care costs and the majority of employers either have one in place or are planning on initiating one. When planning wellness initiatives, be sure to not only emphasize how your organization is supporting employees’ well-being, but also how these programs are intended to assist employees in better managing and maintaining their health care costs. Employees need to see the connection.

11. Promotion of healthy habits

Recently, we’ve found that more organizations are promoting healthy habits to deal with increasing health care costs through internal nutritional standards, on-site fitness activities, and educational efforts like seminars, paper materials, and online information. Create the “norm” of healthy behavior in your workplace to manage health care costs.

12. Make it a team effort

Involving employees in solving health insurance problems can be effective. Encourage them to get involved in suggesting or implementing wellness activities and to provide their feedback on health insurance options. Collaborating and creating a conversation with your staff can help generate greater buy-in about health care decisions and limit negative perceptions of change.

Navigating health care reform and its effects won’t be easy, but we’re seeing many employers taking a proactive approach and implementing a variety of initiatives to cope, educate, and manage the law’s changes and effects on their businesses. 

Additional Resources

ERC Policies & Benefits Survey
Access our just-published Policies & Benefits Survey for the most detailed, comprehensive, and current information about health insurance plans. For more information, including pricing and other topics covered in this survey, please click here.

ERC Health
Visit www.erchealth.com to learn about our health insurance offerings for small and mid-sized businesses.

Benefit Plan Design
Learn about benefit plan design and other HR topics by attending HR University Series, beginning March 31st. Click here to register for this series.

HR Help Desk
For more information and guidance pertaining to any of the content in this article, please contact hrhelp@yourerc.com.

Employees Sharing More of Health Insurance Costs

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According to ERC’s recently published 2011/2012 Policies & Benefits Survey, the average health insurance deductible paid by employees (as reported by Northeast Ohio employers) has increased significantly from 2009. Employees' co-pay amounts and contributions to health insurance premiums also showed slight increases from two years ago.

The results of the survey, which provide detailed information on a variety of health plans and health insurance practices, appear to suggest that organizations are continuing to increase cost-sharing with employees to cope with rises in costs.

Specifically, the survey provides detailed information about eligibility for coverage, medical plan options, and detailed practices for HMO, PPO/POS, Indemnity, and High Deductible Plans including percent of medical premium paid; average amounts of co-pays, lifetime maximums, and annual deductibles; and in-network and out-of-network amounts. It also covers information about Health Savings Accounts in terms of average annual contributions, services covered, and out-of-pocket expense limitations, as well as Health Reimbursement Accounts, Prescription Drug Plans, and much more.

For more information about the 2011-2012 ERC Policies & Benefits Survey, including other topics covered in the survey and pricing and ordering information, please click here.