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