Tag Archives: Small Biz Tips

Alternate Options to Offering Paid Healthcare Benefits

The cost for companies to provide healthcare benefits is at an all-time high, according to a new Towers Watson report. In 2014, healthcare costs reached an average of $9,560 per employee, and that’s just the employer’s share.

The Affordable Healthcare Act mandates that companies with 50 or more full-time employees provide health coverage. However, small businesses and startups don’t have to take the same route.

Though this new law might make healthcare more expensive to employers, Healthcare.gov does provide many affordable options for individual and family plans. For example, if an employer does not offer coverage, the individual may be eligible for a tax credit.

Since the Affordable Healthcare Act is giving consumers more control over their own healthcare, offering healthcare as a benefit might not be as attractive as it once was. In place of providing healthcare as a benefit, consider providing these benefits instead:

1. Pay enough to help cover costs of personal plans

Though healthcare costs are rising for employers, it doesn’t necessarily mean employees will have the same experience with a personal or family plan.

2. Opportunities to work remotely

We’re entering an age where the workforce is starting to get picky. Why? It’s increasingly being flooded by millennials who grew up alongside the Internet, mobile technology and access to any information on demand from virtually anywhere.

3. More flex/vacation time

Instead of offering healthcare to supplement the medical expenses that may be incurred due to workplace stress, treat the source.

4. Creative perks to inspire innovation

By 2025, 75 percent of the workforce will be made up of millennials. Companies are going to have to make a few adjustments to ensure employee retention.

To read more, click here.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary

Employers Capping Health Care Procedures

In an effort to slow health care spending, more employers are looking at capping what they pay for certain procedures — like joint replacements — and requiring insured workers who choose hospitals or medical facilities that exceed the cap to pay the difference themselves.

But a study out Thursday finds employers might be disappointed with the overall savings. While the idea, known as “reference pricing,” does highlight the huge variation in what hospitals and other medical providers charge for the same services, the report says, it does little to lower overall health care spending.

“It’s zeroing in on a piece of the health spending puzzle that is critical, the unreasonably high negotiated prices paid by health plans … but it’s not going to get you there if you need to save a lot of money,” said co-author Chapin White. The study was done by the National Institute for Health Care Reform, a nonprofit, nonpartisan research group sponsored by auto makers and the United Auto Workers union.

The use of price limits has also drawn concern from consumer groups that it might lead to confusion — and end up sticking patients with large, unexpected bills if the programs are not clearly explained.

The Obama administration, in a document about health law implementation in May, essentially gave its blessing to large or self-insured employers to use reference pricing in their health plans.

While only about 10 percent of employers currently have such programs, about 68 percent plan to do so soon, according to a recent survey by Aon Hewitt, a management consulting firm.

To read more, click here.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary

Bill Passed for Employee Transit Tax Benefit

The New York City Council passed a bill Tuesday afternoon to require businesses with 20 or more full-time employees to provide access to a transit tax benefit. The heretofore optional program enables employees to pay for monthly train and bus fares with pretax earnings, potentially saving them hundreds of dollars on annual payroll and income taxes.
Companies, which can also save on payroll taxes but must bear the cost of administering the program, will face fines starting in 2016 unless they can prove hardship.

The transit benefits, typically provided via TransitChek in New York City, are currently used by roughly 1 million New Yorkers. According to its proponents, the new legislation, which now awaits Mayor Bill de Blasio’s signature, will provide 450,000 more New Yorkers with access, saving them an average of $443 a year and injecting $50 million into the city economy.

“A monthly MetroCard now costs $112—that’s $1,344 a year,” said Councilman Dan Gardonick, the bill’s author, at a midday rally preceding the council vote. “For many New Yorkers, that is an unavoidable cost.”

While the savings on pretax income are real for employees, the argument that small businesses will save money as well is less certain. A report by transportation group Riders Alliance estimated that the legislation would save businesses $103 a year in taxes for every employee at the median wage level. But that doesn’t take into account that administration of the program must be provided by the businesses, many of which may have to outsource the work.

The legislation creates additional costs in the form of fines for those that fail to abide by the bill. The legislation does allow the city’s Department of Consumer Affairs to exempt businesses that demonstrate that compliance will be a financial hardship.

For critics of the bill, the idea of fining companies for failure to provide a costly program that was created by Congress as an option for businesses is yet another example of de Blasio-era legislation that burdens businesses.

To read more, click here.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary

Incentives Moderately Effective on Medical Spending

Health plans that cover two-thirds of commercially insured Americans used incentives this year to motivate hospitals and doctors to improve quality and manage costs, according to a survey. Those contracts were responsible for 40% of insurers’ medical spending.

The survey is the second by Catalyst for Payment Reform, a health policy not-for-profit founded and funded by employers, and the results offer a snapshot of how some of the nation’s largest insurers use the promise of financial gain or loss to influence the way providers deliver care and run their businesses.

Four of the five largest U.S. insurers were among 39 health plans that responded to the survey, and together they cover 101 million lives, Catalyst said. About 15% of the enrollees had providers with incentive-based contracts, the survey found.

Employers welcome the greater use of incentives, Catalyst said, and the survey suggests they are proliferating quickly. The 40% of health spending tied to incentives this year is a dramatic increase from 10.9% in 2013 (although the comparison is imperfect because different plans responded to the survey each year).

But with use of new incentives comes questions about which incentives are most effective, something that employers confront as insurers market health plans that employ incentives differently. “We are in an amazing era of experimentation,” said Suzanne Delbanco, executive director of Catalyst for Payment Reform. “We have a lot to learn about what the right balance of incentives are.”

The organization is launching an effort to develop a standard method for employers to evaluate which health payment reforms are most effective, said Andrea Caballero, a program director for Catalyst. “They’re being bombarded,” as health plans market new payment models.

To read more, click here.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary

High Number of Young Adults Signing Up For Health Insurance

The Affordable Care Act’s supporters and detractors have consistently agreed on one thing: the success or failure of the law hinges on the whether young adults, who tend to be healthier and less expensive to insure, enroll. New data released last week shows that more young people are getting health coverage, and in stunning numbers.

New U.S. Census data released last week shows that the number, and rate of young adults, who lack health insurance has fallen significantly since the Affordable Care Act became law in March 2010. An estimated 3.9 million more 18 to 34 year-olds were insured in 2013 than in 2009.

During that same time period, the rate of uninsured young adults has fallen, too, from 28.1 percent in 2009 to 25.2 percent in 2013. In just one year, — between 2012 and 2013 — the number of uninsured 18 to 34 year-olds dropped by over 367,000 people.

The new estimates don’t even include over a million young adults who signed up for health plans on their state’s Health Insurance Marketplace during Open Enrollment. That’s because the Census finished collecting this set of data at the end of 2013.

Open Enrollment started on October 1, 2013, but the vast majority of young adults — 1.7 million of the 2.2 million — signed up on state health exchanges after January 1, 2014. That’s 78 percent of enrollments that we won’t be able to account for until 2014 data gets released next fall.

While we will have to wait for further data to show the Marketplace system’s impact on youth insurance rates, the ACA implemented scores of systemic reforms to our health system that could account for more young adults getting covered. Systemic reforms that were in full effect, include: the provision allowing young adults to stay on a parent’s health plan until the age of 26, small business tax credits that provide health insurance to small business workers, new coverage options for people with pre-existing conditions, and the elimination of lifetime limits on coverage.

To read more, click here.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary

The Skinny on Narrow Health Care Networks

Lots of people shopping in the new health care marketplaces this year picked health plans that limited their choice of doctors and hospitals. The plans were popular because they tended to cost less than more conventional plans that covered nearly every health care provider in a region.

The proliferation of these more limited plans, called narrow networks, has worried consumer advocates and insurance regulators. The concern is that people will struggle to find the care they need if their choices are limited.

Maybe we don’t have to worry so much. A new study suggests that, done right, a narrow network can succeed in saving money and helping certain patients get appropriate health care. The study, published as a working paper with the National Bureau of Economic Research, looked at a program that used financial incentives to steer workers into narrow plans. Those that chose the plans saved their employer money, saw their primary care doctors more and used the emergency room less. That doesn’t mean that narrow networks are the right choice for every health care consumer, but it all sounds like good news for the type of patient who wants such a plan. Done right, a smaller choice of doctors may have some advantages.

What’s encouraging about the program, studied by the economists Jonathan Gruber of M.I.T. and Robin McKnight of Wellesley College, is that its conditions look similar to what we’re seeing in the marketplaces. Massachusetts offered its workers a discount — three months premium-free — if they chose a narrow network plan over a standard offering. Only about 10 percent of the workers took the state up on the offer. Over the course of a year, that group’s health care cost its employer 36 percent less than it cost to cover their colleagues in the traditional plans. Over all, that translated to a 4.2 percent decrease in spending for the whole program.

To read more, click here.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary

Employers Adjusting Employee Benefits

Large businesses expect to pay between 4 and 5 percent more for health-care benefits for their employees in 2015 after making adjustments to their plans, according to employer surveys conducted this summer.

Few employers plan to stop providing benefits with the advent of federal health insurance mandates, as some once feared, but a third say they are considering cutting or reducing subsidies for employee family members, and the data suggest that employees are paying more each year in out-of-pocket health care expenses.

The figures come from separate electronic surveys given to thousands of mid- to large-size firms across the country by Towers Watson, the National Business Group on Health and PriceWaterhouseCoopers, consulting groups that engage with businesses on health insurance issues.

Bracing themselves for an excise tax on high-cost plans coming in 2018 under the Affordable Care Act, 81 percent of employers surveyed by Towers Watson said they plan to moderately or significantly alter health-care benefits to reduce their costs.

The excise tax will be levied on companies offering annual benefits that exceed $10,200 for individuals or $27,500 for families. For any costs above those amounts, businesses would be taxed 40 percent on the difference. Nearly three quarters of the businesses interviewed by Towers Watson said they are concerned they will be subject to the excise tax.

To lower their tax bill, many companies are looking to cut their premiums by raising deductibles. Many also are making greater use of health-care savings accounts.

“My takeaway from the employer surveys is that this trend is accelerating,” said Paul Fronstin of the nonprofit Employee Benefits Research Institute.

The National Business Group on Health finds 81 percent of employers offering insurance plans that include higher deductibles and an annual health savings account. The savings account allows employees to deposit money tax-free, and employers often deposit a set amount of money into these accounts at the beginning of the year.

To read more, click here.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary


HSAs Popular Among Employers

Health savings accounts are gaining in popularity with small to mid-size employers at the same time the appeal of health reimbursement accounts is waning.

A recent United Benefit Advisors survey finds HSAs are outpacing HRAs in both adoption and participation rates. The number of employers offering HSAs increased from 14.7% to 15.1% in 2013, and employee participation in these plans rose from 7.1% to 8.8% in the same period. By contrast, the percentage of U.S. employers offering plans with HRAs in 2013 was only 8.6% and employee participation in these plans dropped from 8.8% in 2012 to 8.6% in 2013.

Now that metal tier plans under the Affordable Care Act are allowed higher deductibles, employers are increasingly looking at HSA-qualified plans for their upcoming plan year, UBA says. Benefit advisers are already fielding questions from employers about what HSA funding levels will keep their plan competitive, whether to consider a consumer-driven health plan wrapped with a partially or fully funded HSA account, and whether an employer should consider partially self-funding a plan to lower premiums and deductibles, UBA says.

The ACA originally capped deductibles at $2,000 for individuals and $4,000 for families, forcing employers to buy plans with lower deductibles, explains Elizabeth Kay, compliance and retention analyst for the San Mateo-based benefit adviser group AEIS, a UBA partner firm.

“As a result, we saw premiums go up dramatically in 2014 — for some as much as 250% to 400%,” she says.

In 2014, as part of the Protecting Access to Medicare Act, ACA legislation was amended to allow metal tier plans [e.g., platinum, gold, silver, etc.] to have higher deductibles.

“I think carriers will be more creative with their plan designs next year, and we may see a comeback of higher deductible and HSA qualified plans,” Kay adds.

HSAs have “proven themselves to be better at driving consumer behavior and cost containment while maintaining compliance with the maximum allowable out-of-pocket costs under the ACA of $6,350 for individual and $12,700 for family coverage,” UBA says in its report.

The survey finds that on average, funding levels for plans with HSAs have remained constant for individuals at approximately $574 for both 2012 and 2013, while average funding for families increased from $928 in 2012 to $958 in 2013

By contrast, funding levels of plans with HRAs increased significantly for individuals from $1,605 in 2012 to $1,766 in 2013, and for families from $3,075 in 2012 to $3,506 in 2013.

To read more, click here.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary

Human Resource Professionals State Health Benefits Key to Attracting Workers

Employers have offered employees a greater variety of health and wellness benefits in the past five years, including coverage for mental health care and contraception, according to a report by the Society for Human Resource Management.

The 2014 SHRM Employee Benefits report showed that 87% of employers offer mental health coverage in 2014, down from 89% in 2013, but up from 82% in 2010. About 84% of employers reported covering prescription contraceptives for their employees in 2014, up from 82% in 2013 and 68% in 2010.

Under the health care reform law, most group health insurance plans are required to provide contraceptives without charge to the employee. Excepted are nonprofit religious organizations and, due to last week’s Supreme Court ruling, closely held for-profit companies with religious objections.

Mental health benefits also are governed by federal law. Under the 2008 Mental Health Parity and Addiction Equity Act, companies with more than 50 employees that offer mental health benefits must ensure that copayments, deductibles and limits on treatment are no more restrictive than medical or surgical benefits.

Alexandria, Virginia-based SHRM interviewed more than 500 human resource professionals for its annual survey, which was released in late June during the organization’s Annual Conference & Exposition in Orlando, Florida. Twenty-eight percent said benefits offered by their companies increased in the past 12 months, while 63% said their benefit levels remained the same.

“Offering health benefits is critical to employee recruitment and retention,” Bruce Elliott, SHRM’s manager of compensation and benefits, said in a statement. “However, the rising cost of health benefits, especially health insurance, has made it challenging for some employers to continue offering it. Because of that, employers are evaluating all their benefits and making adjustments.”

During the conference, Michael Cohen, a partner at Duane Morris L.L.P. in Philadelphia, said firms should create equal employment and anti-discrimination policies that include protections for employees based on sexual orientation and gender identity to help prevent discrimination complaints.

Employers also should address inappropriate behavior by employees that can be perceived as discriminatory against lesbian, gay, bisexual and transgender people, and can offer benefits to same-sex spouses, civil union partners and domestic partners of employees after checking with their insurer, he said.

To read more, click here.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary

Are You Fearful of Your Employer Dropping Health Coverage Due to Obamacare?

Obamacare requires most employers to offer coverage next year, but fears persist that many will dump workers onto the insurance exchanges instead. Fear not, for now.

Q: I’ve heard that some firms may drop their health plans and have workers purchase a plan on the government exchanges. Will that happen to me?

A: Nine months after the launch of the controversial health insurance exchanges, confusion hasn’t died down over what exactly health reform means for the average American. A new poll found that 65% of workers are very or somewhat worried that their firms will drop health coverage and have employees go it alone on the new federal and state insurance exchanges.

Such a move would hurt, at least in workers’ minds, according to the survey of 1,240 likely voters by Morning Consult, a digital media company. Half said that if their employer exited the benefits business, they would be negatively affected; only 16% expected to benefit from such a switch.

Even though Obamacare requires firms with 50 or more workers to offer insurance or owe a fine starting in 2015, the concern is that some will opt to pay the fine, since individual coverage can cost two to three times as much—and substantially more for a family plan. What’s more, employers with fewer than 50 workers that already offer health benefits—even though they are not required to—may decide to get out of the business now that all workers have the alternative of buying coverage on an exchange.

Are workers right to worry about getting dumped? As long as you work for a large firm, you shouldn’t lose sleep over the issue, at least not yet, says Beth Umland, director of research for health and benefits at consultant Mercer. Earlier this year—well after the exchanges went live—an overwhelming 94% of big firms reported that they will keep offering health coverage for the next five years, Umland says. That percentage has remained consistent since Mercer first asked the question in 2008.

To read more, click here.

Jeffrey R. Ungvary President

Jeffrey R. Ungvary