Healthcare Disinformation and Benefits Communication

shutterstock_174966584 - CopyMedia portrayals of the “current” state of the US healthcare system rely on outdated information, sensationalism, fear-tactics, vagueness, and circumstantial evidence. The information dispensed in this manner can even have a substantive impact on policy initiatives in congress, further exacerbating the misunderstood nature of challenges in our healthcare and benefits climate. Fortunately, current and significantly more reliable data is available.

The healthcare market has cycled in and out of growth phases over the last 25 years – an indication of a market that neither bleeds (as did the airline industry in that period) nor exhaustively extorts (as in the case of pharmaceutical companies). At present the industry is expanding and maturing to meet new, unique market demands.

In these first several years of PPACA implementation, both profits and risks for insurance companies have increased. The paradigm is similar for employers – offering more attractive or flexible benefits make for a more compelling environment in which to recruit talent. But at what cost? The key for consumers, employers, and news personnel is to be mindful of the shifting nature of our healthcare system, and to seek out the most current and balanced information available.

Employers should work in tandem with their insurance advisers to better understand the big picture of healthcare reform and the how it relates to their business. After this critical step, employers must then find effective ways to communicate the costs and benefits available to their employees – and help them make informed decisions. Businesses can no longer wait and see what happens, reacting to healthcare changes instead of anticipating them. Proactive and educated decision-making must be promoted at all levels to develop and sustain workplaces and societies that live well.

Recent Study by Wells Fargo Insurance Indicates Anticipation of Increased Benefits Costs

shutterstock_229854826 - CopyA recent study by Wells Fargo Insurance indicates that employers expect their healthcare costs to rise again in 2016. Nearly 60% of employers surveyed expected their medical plan costs to exceed ACA excise tax thresholds (recently delayed until 2020). Additionally, seventy percent of employers expect their budgets for benefit plans to increase, as workplace health and productivity remain key issues and indicators of competitive efficacy. The survey assessed more than 650 middle-market companies and large corporations to better understand how organizations are responding to healthcare reform requirements.

Over half of employers surveyed said that they’ll continue to modify their plans in the next 18 months by adding a high deductible plan option, increasing the employee contribution percentage, or increasing co-insurance features. Employers will further refine plans to address not only the physical well-being of their employees, but also chronic condition management and mental, financial, and social well-being. Employers indicated that a multi-pronged approach was both desirable and necessary, encompassing:

  • Voluntary benefit solutions – As more employers offer high deductible health plans, the C‑suite is also aware of the financial exposure that employees face with these types of plans. As a result, they are looking to mitigate those costs by offering voluntary benefits solutions (e.g. critical illness and accident insurance).
  • Wellness offerings – Employers of all sizes are seeking ways to encourage a healthier and more productive workforce. Fifty one percent of companies expect to increase wellness offerings, and 37 percent will add wellness incentives or penalties to their programs in 2016.
  • Focused on return on investment (ROI) – 91 percent of C-suite respondents said improving the health of employees is important as it correlates with lower medical costs, reduced absenteeism, and increased productivity.

The study also found that executives are making changes to their plans because of an increased focused on attracting and retaining talent, with 62 percent saying it is a top concern, up from 45 percent last year. To learn more, contact us.

Cadillac Tax Still 45 Months Out, but Impact Already Here

shutterstock_174966584 - CopyAs the Cadillac tax draws closer to assessment, many businesses are growing more cautious regarding employee HSA contributions. Since 2014, HSA enrollment has increased 10.7%, according to new survey data from United Benefit Advisors. This large-scale survey of employer-sponsored health plans found that overall enrollment in HSAs is increasing, while employer contributions are not.

The Cadillac tax comes into effect January 1, 2020, but is already demonstrating significant influence on employee benefits planning – particularly with regard to HSA. Looking at HSA performance by industry, the UBA survey finds:

  • Government employers offer the most generous contributions at an average $834 for singles and $1,636 for families.
  • Families and individuals in the hospitality and foodservice industries received less than $200 in employer contributions.
  • While most industries have seen steady growth in HSA enrollment, the utilities sector not only has the lowest enrollment at 3.2%, but is also the only industry to see a decline in enrollment from three years ago.

To learn more about benefits compliance and solutions, contact us.

Message from the Founder: Medigap for Everyone

shutterstock_251707783 smEmployee benefits have changed dramatically in the last 30 years. But at the end of the day, most employers are still looking for the most cost-effective health plan to offer their employees, and most employees are looking to maximize their total compensation without sacrificing too much personal time. Every product and strategy that speaks to issues outside of this unifying principle is likely to be little more than promotional material by outside vendors to HR directors.

It may sound harsh, but the explosive growth in voluntary benefits over the last few decades has largely missed the mark for most employees. If an employee can have a health plan with no deductible or coinsurance, then the sale of critical illness, cancer or accidental injury is probably not that important. Instead, selling short-term and long-term disability plans on a group basis is more cost-effective and consumes less HR and employee time to implement.

As such, I believe that employers should investigate the strategy that millions of seniors leverage every year to fill the holes in Medicare parts A and B – Medigap insurance. They “pick and purchase” the amount of deductible and coinsurance coverage they feel appropriate. When they go to see a medical provider, they simply show their Medicare card and their Medigap card. Everything is done behind the scenes and some of the plans are even designed so that virtually all costs except prescription co-pays are covered by the combination of Medicare parts A and B and Medigap.

So if 94% of surveyed American seniors love their health plan combination program, why are we not offering similar plans to our employees?

Obamacare “bronze” plans are very similar to Medicare parts A and B, leaving employees with sizable deductible and coinsurance costs but providing catastrophic coverage. Group gap insurance plans can be designed to cover a little or a lot of deductible and coinsurance costs, making the plan very similar to the strategy that work so well for seniors.

The challenge lies in voluntary worksite insurance carriers wielding significant influence with agents, HR personnel, and employees. Their persistent support of the benefits of buying cancer insurance, critical illness insurance, and accidental injury insurance drives commissions for agents and bolsters profits for agencies. But the plans are rarely used in comparison to group medical gap plans, and do little to provide tangible benefits to most employees.

Until there’s complete transparency on the part of the medical industry, facilitating fair prices for medical products and services, our best bet to protect employees in a cost-effective and customizable manner is through gap insurance.