Friday, October 31, 2014

Climate of health reform impacts employee benefits structure, not just medical plan designs

Health care reform has impacted not only employers’ medical plan designs, but also other aspects of their employee benefits programs, according to the 2014 Guardian Workplace Benefits Study. The study found that employers are rethinking their benefits model and are contemplating further efforts to control costs through plan design changes, outsourcing, and cutting administrative costs.

“As Americans get ready to sign up for their workplace benefit coverage this open enrollment season, it’s important to recognize how benefits contribute to the overall financial well-being of most workers. At the same time, the benefits landscape is changing with employers shifting more costs to employees, so employees must fully understand their choices and needs—especially when voluntary or less traditional benefits are offered, such as critical illness or accident insurance,” said Phyllis Falotico, head of group marketing at Guardian.
Benefits strategy. Eighty-five percent of respondents to the study say making plan design changes to control costs is a critical part of their benefits strategy. In addition, about half are looking to employees to bear a greater portion of their benefits costs. Forty-one percent of employers say that adding employee-paid, voluntary benefits is an important part of their overall strategy while thirty-one percent plan to replace employer-paid benefits with voluntary products. The study notes that those who feel they are more prepared for the Patient Protection and Affordable Care Act (ACA) changes also are more confident about increasing participation in their voluntary plans.
Outsourcing. Outsourcing is another way employers are looking to mitigate risk and costs in the aftermath of health care reform implementation, according to the study. Six in 10 companies say an external company is primarily responsible for the administration of their medical and voluntary benefits. Over half report that an outside vendor is responsible for non-medical insurance not offered on a purely voluntary basis.

Wednesday, October 29, 2014

Chief HR officers give negative reviews to ACA’s impact on employee health care

The Patient Protection and Affordable Care Act (ACA) has increased health care costs, which are being largely borne by individuals with existing employer-provided health insurance, according to a survey conducted by the University of South Carolina’s Darla Moore School of Business. Fifty-two percent of the Chief Human Resource Officers (CHROs) responding to the survey reported that, as a direct result of the ACA, they have raised employee contributions toward health insurance. Eleven percent have cut back coverage eligibility, but few have moved employees to either private exchanges (1 percent) or public exchanges (.5 percent).
Even more CHROs have moved employees to consumer directed health plans (CDHPs), whereby employees receive set amounts of money for regular health care. Although the trend toward offering CDHPs was growing prior to the implementation of the ACA, with 10 percent of firms previously surveyed offering them in 2007, for example, and 13 percent offering them in 2008, it appears that the ACA has accelerated that trend. Seventy-three percent of respondents now indicate that their companies either are offering or are planning to offer CDHPs.
CHROs responding to the survey stated that a 7.73 percent increase in health care costs was directly attributable to the ACA. A substantial number of CHROs also reported that the ACA had created increases in labor costs (37 percent), as well as decreases in their employees’ quality of health care (33.8 percent), in transparency of health delivery (20 percent), in the quality of health delivery (31.6 percent), in the efficiency of health care (37 percent), and in innovation for both health care and health systems (32 percent and 30 percent, respectively). It was not clear from the published survey results exactly what these decreases entailed.
Part-time employees. Employers also are apparently taking a more rigorous stance with regard to how many hours a part-time employee can work, in anticipation of upcoming employer mandate penalties. The ACA describes employees working at least 30 hours per week as full time, and many employers are concerned that enough part-time workers would end up working more than that. One employer was quoted as saying of his part-time workers who were limited to the ACA’s definition of part-time hours, “we frequently had people that worked 32-34 hours, and if enough of them did so, it would put us a risk for fines. Therefore we now limit workers to 27 hours to ensure that we minimize the number that might exceed 30 hours.”
Many employers (29.7 percent) also have taken or plan to take some action to encourage part-time employment or limit the use of full-time employees. In support of this number, the article references the June 2014 jobs report, which showed an increase in part-time employment of 840,000.

Monday, October 27, 2014

Americans concerned about Exchange’s out-of-pocket costs, survey finds

Across income levels, the amount Americans say they can afford to spend out-of-pocket on health care costs annually is far below the deductibles, copayments, and other costs for most health plans offered on the Exchanges, according to recent research from HealthMarkets, Inc. For example, the survey found that individuals in households earning the current U.S. median income of approximately $52,000 believe they can afford to spend up to an average of $976 on out-of-pocket health care costs annually, while a household of four in that same income bracket could face costs of up to $10,400 under a Silver plan on the Exchange.
In addition, HealthMarkets found that a 59 percent of survey respondents do not believe the Patient Protection and Affordable Care Act (ACA) has had an impact on their lives. Of those who do believe the ACA has impacted them, 78 percent view the effect as negative: 48 percent claim that their taxes are higher and 55 percent claim their health insurance is more expensive under the law. Only 20 percent believe they now have better health care coverage.
“The ACA has changed the health insurance landscape tremendously and nearly everyone agrees that having more people insured is positive. However, current educational efforts have not produced the level of understanding required to ensure Americans are making informed decisions to protect both their physical and financial health,” said Kenneth Fasola, president and CEO of HealthMarkets, Inc. “Just because someone is covered by a qualified health plan with monthly premiums they can afford, does not mean that they have selected a plan they can afford to use or that they are adequately protected from financial hardship in the event of a serious medical problem. With legislation this significant and complex, it is critical that the right resources are in place to create informed consumers.”

Friday, October 24, 2014

AonHewitt: 25% of employers have yet to evaluate impact of ACA "Cadillac" plan tax

A quarter of employers said that they still have not determined the impact of the Patient Protection and Affordable Care Act’s (ACA) excise tax on high cost or "Cadillac" health plans, according to recent research from AonHewitt. In addition, more than one-third of employers reported that their executive leadership and finance teams have limited or no knowledge of the implications of the tax for their organizations.

Excise tax. In 2018, the ACA will impose a 40 percent excise tax on employer-sponsored health coverage that exceeds a threshold amount. Plans with this level of coverage have been dubbed “Cadillac” health plans. The tax will be imposed with respect to coverage for a tax period if: (1) an employee is covered under an applicable employer-sponsored plan; and (2) there is any “excess benefit” with respect to the coverage. An excess benefit is defined as the sum of the monthly excess amounts during a tax period. A monthly excess amount is the excess of: (a) the aggregate cost of the applicable employer-sponsored coverage of the employee for the month, over (b) an amount equal to 1/12 of the annual limitation for the calendar year in which the month occurs.

Majority taking steps to minimize exposure. Aon Hewitt did find that while a quarter of organizations have not assessed the impact of the excise tax on their health plans, the majority of companies are taking steps to minimize their exposure to the tax. The survey noted that 40 percent of employers expect the excise tax to affect at least one of their current health plans in 2018 and 14 percent expect it to immediately impact the majority of their current health benefit plans.

Of those employers that have determined the excise tax’s impact, 62 percent said they are making significant changes to their health plans for 2015, including reducing the richness of their plan designs; increasing the use of wellness incentives; evaluating private exchange options for retirees (both pre- and post-age 65); and reducing spousal subsidies through mandates or surcharges.

“While the excise tax provision of the ACA doesn’t go into effect until 2018, it is accelerating the pace of change for U.S. employers,” noted Jim Winkler, chief innovation officer for Aon Hewitt's Health business. “Over the next few years, employers expect to use both traditional and innovative tactics to make substantive changes to their health plans to minimize their exposure to the tax and put them on a path to lower rates of health care cost increases.”

Wednesday, October 22, 2014

ACA compliance: ADP describes challenges for mid-size businesses

Mid-sized businesses, those with 50-999 employees, are experiencing a gap in confidence when it comes to the U.S. economy, with the cost of health coverage, the large number of government regulations, and the complexities of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) ranking among their top three concerns. These results stem from a new study released by ADP. More specifically, 69% of midsized business owners and executives are concerned with health coverage costs, along with costs of other benefits, 54% are concerned with the ACA specifically, and 51% are concerned with the level and volume of government regulations.

ADA says these  mid-sized business owners contribute more than one third of all U.S. jobs and represent nearly one-third of private sector U.S. gross domestic product.

No clarity on ACA. Unfortunately, it appears from the study that many mid-sized businesses are out of touch with not only management of ACA issues, but economic consequences of non-compliance with various laws and regulations. Even though the constitutionality of the ACA has been upheld by the U.S. Supreme Court and many of its provisions have been implemented, more than half of midsized businesses in the ADP study said they still have no plans in place to manage it.

In addition, more than one-third of businesses in the study reported that they had been fined or penalized for the failure to comply with laws regarding workforce management, but 58% of those did not know how much the fines cost. Also, 47% did not know how many times they had been fined. Neither result bodes well for businesses that may be facing the imposition of the ACA’s employer mandate penalty.

ADP adds that, while concern about the ACA has dropped slightly since 2013 among mid-sized businesses, less than a quarter of them say they are confident that they have the necessary tools and information for making decisions about the best health and benefits strategies for their companies. Furthermore, more than three quarters of mid-sized business owners reported lacking confidence that their organizations understand all of the ACA’s new regulations.

Strategies among mid-sized businesses for managing ACA compliance include outsourcing benefits administration (7%), putting together a plan to control or lower the cost of employees’ health insurance (56%), reducing the number of plans offered to employees (33%), and offering wellness programs (46%).