Human Resources

7 Advantages of Partially Self-Funded Health Plans

Obamacare allows no rate consideration for health conditions on fully-insured small group plans. Rates are the same whether a group is very healthy or very sick. Healthier groups must subsidize the cost for sicker groups. Since groups are not underwritten, the business owner usually has no way of knowing if the cost includes a subsidy for sicker groups.

Self-insured small group health plans are allowed to underwrite and set rates for each group based on the health of the group. By going through this underwriting process, a small business owner can see the price based on the health of the employees. Once the rates for a self-insured plan are determined, the business owner can make a decision of what is best.

Very few plans a totally self-funded, so when EBA refers to the self-funded it important to realize these plans are partially self-funded.

  1. Lower Costs – Savings may result from underwriting, fewer mandates, greater flexibility in plan design, tax savings, and a refund of claims funds. The savings can be significant.
  2. Tax Savings – Self-funded plans save on state insurance taxes and ACA taxes. State insurance tax is paid only on the stop loss insurance portion of the cost. This is typically less than one half the total plan cost and results in a typical savings of one half or more of the state premium tax.
  3. Money Back from Claims Fund – In years that claims are less than funded for, the money left over in the claims fund belongs to the employer.
  4. Monthly Claims Report – The employer receives monthly claims reports showing where dollars are being spent. This information can be used by the employer and advisor to design a plan that works best for the specific business.
  5. Not Subject to State Mandates – Carriers selling fully insured plans must spend large amounts of resources just to comply with the different state mandates. With a self-funded plan, the employer selects benefits that work best for the employees.
  6. Underwriting Based for Type of Business, Age, Sex, Health and Lifestyle – With a fully-funded plan, the healthier and younger groups must subsidize the cost for older and less health groups. The underwriting process used for self-funded plans allows you to be charged the correct amount for your group, rather than being included in a community rated traditional plan. This can result in significant savings.
  7. More Latitude in Plan Design – With self-funded plan an employer is allowed to select the benefit that works best for that specific business. Deductibles, co-insurance, co-pays, prescription benefits and other options allow for a custom design.

Healthcare Bluebook brings Price Transparency

Healthcare Bluebook provides transparency to consumers to compare healthcare costs and quality. Employers can provide a valuable tool to employees that will enable them to shop for the most affordable high quality care.

How does Healthcare Bluebook work?

  • Employees search for services using common language
  • Employees learn the price range they can expect to pay how much they can save by making cost effective choices
  • Prices are based on your local area network rates
  • Employees can compare specific providers on both cost and quality

Why do employers need a transparency solution?

  • In-network prices for healthcare services vary by 300% to 500%
  • Employees don’t know that prices vary within their network or how to find lower cost quality providers
  • Employers and employees can cut healthcare costs if they have the right information, tools and incentives

Healthcare Bluebook can be paired with both self-funded and fully insured plans. Although it supports traditional plan designs, EBA believes it is a super-value-added support for consumer driven high deductible plans. Healthcare Bluebook says employers have been decreasing total medical spend by 4% to 12%.

Humpty Dumpty Had a Great Fall

Employee Benefit Advisors blogged Oct 9, 2013 about court cases that have been falling under the radar. EBA said “These cases could dismantle health care reform as we know it.”    Yesterday the decision came down the “Court bars PPACA aid for federal exchange shoppers.” The decision has already been appealed, however, the way PPACA is written makes it very clear that the subsidy is available only to people who bought plans on state-run exchanges. Only 14 states have opted to set up their own marketplaces.

A conflicting ruling was also issued on an almost identical case by the 4th Circuit Court of Appeals in VA. To complicate things further, there are two other cases still pending before other circuit courts. These conflicting rulings mean that the issue will almost certainly be appealed to the U.S. Supreme Court later this year. If and when heard by the Supreme Court, expect a final decision regarding the availability of subsidies in federally facilitated marketplaces no sooner than June 2015.

HiRes

 

Humpty Dumpty sat on a wall,
Humpty Dumpty had a great fall;
All the King’s horses, and all the King’s men
Cannot put Humpty Dumpty together again.

…so apropos

 

Four Numbers that may cause you to say Four Letter Words

The U.S. Treasury Department and Internal Revenue Service has issued the final regulations on the employer mandate under the Affordable Care Act. The new 6055 & 6056 regulations are 227 pages long and Employee Benefit Advisors believes will prove to be the most cumbersome and costly part of Obamacare. We say costly because we believe this will prove to be far more complicated, and thus burdensome than employers realize. Employers with part-time, seasonal and variable hour employees (as an example a bus driver who also works maintenance; so he would have hours under two different pay codes or a temporary that works temp to perm etc.) will particularly have difficulties and will need a managed solution.

Software is available to help manage your employees and meet the new Healthcare Reform guidelines. This system is fully automated to your specifications and will complete all the necessary reporting documents. Contact Employee Benefit Advisors for a demo.
_______________

The laws reporting requirements fall under sections 6055 and 6056 of the internal revenue code. Under section 6056, large employers subject to the employer mandate must file a return with the IRS and provide a statement to each full-time employee with information regarding their offer of employer-sponsored healthcare coverage. Under section 6055, employers who offer self-funded plans and insurers generally must file a return with the IRS and provide a statement to each individual who is covered by plans that constitute minimum essential coverage.
Here are the nuts and bolts of the full regulation:

  1. Employers that have between 50 and 99 full-time equivalents will have until 2016 to provide health insurance, not 2015. So if you have 100 or more full-time equivalents in 2014, Jan. 1, 2015 is still your target. But if you have 99 or fewer, you get a one-year extension.
  2. Transitional relief is now available for non-calendar plans. There was some confusion over whether the 2014 transition relief would apply for 2015 and now it appears that it does. Employers with non-calendar year plans are subject to the mandate based on the start of their 2015 plan year rather than on Jan. 1, 2015.
  3. Large employers (those with more than 99 full-time employees) have to comply in 2015, but for the first year, they will only have to offer coverage to 70% or more of their full-time employees. The 95% requirement will not go into effect until 2016.
  4. For large employers that contribute to a multi-employer plan, an employer will not be subject to shared responsibility penalties with respect to employees for whom the employer is required by the collective bargaining agreement or appropriate related participation agreement to make contributions to the multi-employer plan.
  5. Some categories of employees are better defined:
  • For volunteers for a government or tax-exempt entity (like emergency response personnel), hours they volunteer will not count in consideration of their full-time employment status.
  • For teachers and other educational employees, they will not be treated as part-time for the year simply because their school is closed or operating on a limited schedule during the summer. Also, for adjunct faculty, employers of adjunct faculty may credit them with 2 ¼ hours of service per week for each hour of teaching or classroom time.
  • For those in traditionally seasonal positions where annual employment is customarily six months or less, they will not be considered full-time employees.
  • For students in work-study programs, these hours will not be counted in determining whether they are full-time employees.

Charity & Community

Over $8,000 was raised for CARRFOUR by Mike Schunk / Employee Benefit Advisors working with the Miami Finance Forum. The event itself raised $1,360 and then for every dollar donated, Carrfour was able to leverage $5.00 in government funding. This means a gift of $1,360 will yield $6,800 in government funding for an impact value of $8,160; which will provide supportive housing for one family for approximately 13 months.

Carrfour’s mission is to confront homelessness by developing affordable housing and providing supportive services as a pathway to self-sufficiency. – See more at: http://carrfour.org

Employee Benefit Advisors donates a portion of our revenue on a monthly basis to local charities.

mike

 

Pictured left to right;
Mike Schunk, CEBS – President of Employee Benefit Advisors
Anthea Pennant – Director, Fund Development for Carrfour
Carlos J. Deupi – MFF Chairman, General Counsel the Brilla Group

How to choose a PEO – Part 2 (Health Insurance)

Get a clear understanding of the health insurance. How is it rated? Ask about tier placement and get a guarantee you can only be moved down a few tiers in any one year. Ask for claims/utilization records supporting the decision. Key points for Health Insurance Renewals

  • What rate increases have your clients experienced in the past 3 years?
  • When? Annually? Quarterly?
  • How far in advance are clients notified of the renewal?

HR & Benefit Compliance is more and more important with required SBC distribution, increase in ACA & DOL audits resulting from Obamacare. I have asked several PEOs to show the support provided for these audits. Repeatedly I’m told “Our Benefits Department has advised that this information is provided to the employee in the package that is mailed to them from the carrier after enrollment and advises they may visit the carrier website or contact the carrier’s customer support to obtain a copy of the SPD.”

SPDs and Wrap documents are not provided by the carrier, SBCs ares. However, SBC distribution is the obligation of the PEO. – Whoever answered the question either did not understand or does not know what an SBC or SPD is. It is the responsibility of the group to provide the SPD and Wrap. I this case, if a PEO is undertaking the compliance for their clients, it would be the PEO’s responsibility.

We recommend working with a PEO broker like Employee Benefit Advisors. The experience brought to the table can save headaches that you otherwise might not have seen.

How to choose a PEO – Part 1 (Transparency)

Many variables exist when choosing a PEO. – The first step is deciding IF a PEO is the right decision. It’s never always yes or no. You may have the goal of being in a PEO for the short term or long term. If short term you may be trying to correct WC, health insurance or administrative problems. If long term, be sure to choose a strategic partner. Regardless, always consider the opt-out clause; i.e. lengthy contract obligation, one year, 30 day opt-out, terminate anytime or only at renewal…

Questions for a PEO and the right fit for each PEO will be different depending on the potential client. Is price the primary concern? What’s their culture? Do they value customer service? Do they provide training; HR, WC, etc…? Performance reviews? Are they strategic? Tactical?

Employee Benefit Advisors places transparency right at the top of the list. – Ask to see a sample bill and ask to see all rates you are being charged, not a bundled rate. What are they trying to hide that they cannot tell you? Many PEOs hide their cost within the margins of the billing points and charge an artificially low administration rate. What are the transparent points in evaluating a PEO?

  • WC
  • Payroll Tax; FICA, Medicare, FUTA, SUTA
  • FSAs
  • Tax cutoff points – Does PEO continue to charge?
  • Does the PEO make the ER/EE whole if contracted mid-year?
  • Is the PEO passing on Work Opportunity Tax Credits (WOTC) you may be eligible for?
  • Is the PEO SSAE 16 Type 2 certified? (formerly known as SAS70. This is an independent audit vendors should obtain to verify their systems, processes and data security.)
  • Restaurants: Is the PEO passing on FICA Tax Tip Credits you may be eligible for?

PEOs receiving federal and state tax credits should be offering this tax savings opportunity to their clients.

You want your PEO to be financially stable. The best PEOs are accredited by the Employer Services Assurance Corporation and have a current Statement on Standards for Attestation Engagements No. 16 audit (formerly known as SAS 70). Do your homework, make sure your PEO has a strong presence in your industry. Talk to references.

Memorial Day – Short History Lesson

Memorial Day was formerly known as Decoration Day and originated after the American Civil War to commemorate the Union and Confederate soldiers who died in the war. By the 20th century, Memorial Day had been extended to honor all Americans who have died while in the military service.

(Memorial Day is not to be confused with Veterans Day; Memorial Day is a day of remembering the men and women who died while serving, while Veterans Day celebrates the service of all U.S. military veterans.)

Rx Impact – Bid Rx – Prescriptions for Less (Part 2 of 2)

BidRx (www.bidrx.com) is a website built by pharmacists that links consumers with pharmacies and pharmaceutical companies, so consumers can make better decisions when purchasing prescription drugs. BidRx provides the information needed to identify the best value drug; then pharmacies compete for filling prescriptions. Consumers can

  • See cost of prescriptions (original plus alternatives) and services.
  • See list of participating pharmacies in your geographic area.
  • Get bids from pharmacies that want to earn your business.

Employers can use the site to help communicate the true cost of prescriptions. Employees see the prescriptions’ maximum price before bids (a discounted price), alternative prescriptions with discounted prices, and competitive bids (even lower discounted prices). Employees can use the site to lower drug costs. 

Important – Medications ordered through BidRx.com may be out-of-network and thus not apply towards the deductible. Therefore, BidRx may be used best for drugs with bid prices less than your copay.  So if you find a deal, check your network price and copay, too.  If the savings is worth it, buy it.

When registering, you will need a referral code, feel free to use our code. EBA’s Referral Code is 35FFN.

Examples

  • Simvastatin (generic for Zocor and alternative for Lipitor and Crestor) for lowering cholesterol usually has a generic co-pay of $10 or $15 for a 30 day’s supply.  EBA was able to get a bid price of $3.40 for a 90 day’s supply.  That’s an annual savings of $75.
  • Amlodipine (generic for Norvasc) for lowering blood pressure usually has a generic co-pay of $10 or $15 for a 30 day’s supply.  EBA was able to get a bid price of $3.68 for a 90 day’s supply.  That’s an annual savings of $75.
  • Nexium (the purple pill) retails at $762 for a 40 mg 90 day supply. BidRx price was $660. Similar drugs (generics) cost just over $20.

Rx Impact – Specialty Drugs (Part 1 of 2)

Specialty Drugs – generally referring to drugs costing over $600 per month – are estimated to account for 30% of total drug costs and expected to reach 50% by 2018. These drugs are expensive to develop and pose challenges manufacturing. However they target life altering illnesses making them an absolute must if needed. These patients have chronic illnesses and are expected to be on medication for years.

The average cost of a specialty drug is $10,000 per month for a patient. (That’s not a typo – stat is provided by a principle of the Institute for Integrated Healthcare). Thus cost management is crucial to trying to hold down pharmacy costs. Strategies include requiring prior authorizations to assure the expensive drugs are the best fit and tiered out-of-pocket cost are two of the most common.

www.shrm.org/0314-specialty-drugs

 



A special thanks to SHRM – Content and video from the Article The Looming Rx Threat by Tamara Lytle.

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