Fully-Insured vs. Self-Funded Health Plans (Infographic)

Has your company examined the differences between fully-insured versus self-funded health plans? Check out this infographic to see why more employers are choosing self-funded plans.

fully-insured versus self-funded health plans

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IRS Announces 2017 FSA Limits

By Michael Berwanger, JD, Director, Quality Management & Compliance

The Internal Revenue Service recently announced the tax year 2017 annual inflation adjustments for more than 50 tax provisions.

Notably, for the first time in two years and consistent with industry expectations, the IRS has increased the dollar limitation under § 125(i) on voluntary employee salary reductions for contributions to health Flexible Spending Accounts (FSA) from $2,550 to $2,600.

The Revenue Procedure 2016-55 provides details about these annual adjustments. The tax year 2017 adjustments generally are used on tax returns filed in 2018.

2017 FSA

 

 

 

For guidance on FSAs, please review the IRS Frequently Asked Questions page.

 

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5 More Tips for a Smooth Open Enrollment

open enrollmentDoes open enrollment for your Human Resources department seem like “Nightmare on Employment Street?” Our first post listed five practical tips to streamline the open enrollment period for annual benefits. Check out these five additional best practices to chase the confusion away:

 1. Make sure you provide all of the data requested by your claims administrator.

Inaccurate or incomplete data can result in time-consuming, frustrating mistakes. Remember to enter information exactly as provided in previous enrollments. Unique and accurate identifying information must be entered for each dependent.

 2. Collect waiver forms from your employees.

For ACA reporting and Department of Labor requirements, you as the employer need to keep proof of waived coverage on file. Here is a Compliance Assistance Guide from the U. S. Department of Labor that offers more information. MedCost provides our clients with a generic form as part of our benefits’ services, if clients do not have one.

3. If you submit updated enrollment data on paper forms or by spreadsheet, information on new hires, changes, and terminations is all that is needed.

It may seem counterintuitive, but full enrollment data is not required and can actually slow down the input process for your claims administrator.

Note: This does not apply to clients that electronically submit enrollment data via 834 transaction. 

4. When open enrollment is over, it’s over—no extensions.

health insurance noticesStick with the open enrollment deadline you set. Announce the deadline and remind employees of it several times during the open enrollment period. It is then the employees’ responsibility to complete the required enrollment process by the deadline. Remember, open enrollment is a finite time period, not an ongoing process.

5. Once you’ve collected enrollment data, submit it all at one time.

Submitting information piecemeal or in multiple spreadsheets that have to be merged or compared to previous submissions only increases the chance for errors. Avoid confusion with one complete submission of enrollment data.

Don’t let your open enrollment become a nightmare. Competent claims administrators can help advise you of all compliance requirements and deadlines. And turn your nightmares into sweet dreams.MedCost

Got Employees? 5 Tips for a Smooth Open Enrollment

open enrollmentIt’s that time of the year that presents headaches for HR professionals and admin staff—open enrollment. But your company’s benefits administration doesn’t have to resemble a Halloween Fright Night. Here are five best practices to streamline your employees’ enrollment period and leave you with a basket of sweet candy:

1. Create a realistic schedule for open enrollment by beginning with the end in mind.

Your open enrollment period should end no later than 30 days prior to the end of your plan year or renewal date. Once you determine the ending date of open enrollment, back up from there to schedule open enrollment meetings, print forms or materials, distribute or mail open enrollment packets, etc.

2. Collect all required information for each plan participant (employee or dependent).

This may include information for each plan participant such as:

  •  Last Name, First Name and Middle Initial (exactly as provided in previous enrollments)
  •  Social Security Number (unique and accurate identifying information for each dependent)
  •  Address
  •  Date of Birth (unique and accurate identifying information for each dependent)
  •  Gender
  •  Hire Date (if an employee)
  •  Coverage Effective Date
  •  Product Coverage (Medical, Dental, Flex)
  •  Date of Termination, if applicable, and Reason for Term
       (especially needed for COBRA)
  •  E-mail address (useful to promote programs and services available through benefits plan)

3. Remind employees that “good data in equals good data out.”

open enrollmentStress the importance of completing all fields on any enrollment or waiver forms. It’s in every plan participant’s best interest to review and verify new and existing data during open enrollment since it directly affects coverage for the upcoming plan year. Decisions regarding participants’ eligibility and coverage under the health plan—as well as that of their dependents—are made based on the information provided during open enrollment.

4. Educate employees about the “not-so-flexible” guidelines of flexible spending accounts (FSAs), if available through your plan.

In addition to the advantages of flexible spending accounts, make sure your employees also know about the guidelines for FSAs. The most important thing for employees to remember is that FSAs are “use it or lose it” accounts. Contributions made to an FSA during a calendar year can be used only for eligible expenses incurred during the same year—unless your plan provides for either a grace period or a carryover. If your plan doesn’t provide for a carryover, employees need to be aware that any money remaining in an FSA account after the claim filing period at the end of the year (and after the grace period, if applicable) is forfeited in accordance with IRS regulations.

5. If your employees have flex debit cards, remind them to save all receipts for purchases made with the card.

open enrollmentSince a flex debit card deducts payment for an eligible health care expense directly from an FSA account, employees may think that saving health care receipts is unnecessary. Some claims for reimbursement, however, may require substantiation. Encourage employees to save all receipts for flex debit card purchases in case they receive a substantiation request or their tax return is audited by the IRS. Employees should hold on to their cards even if the allocated FSA total amount has already been used.

Our next blog will contain five more tips to plan and prepare for open enrollment like a pro. Subscribe to our blog to receive it automatically!*

 

*To sign up for the blog, go to the left margin under “STAY UP TO DATE.” The only requirement is your email address. 

 

It’s Time to Plan ACA Reinsurance Payments

By Michael Berwanger, JD, Director, Quality Management & Compliance

 

shutterstock_68891791It is time for employer-sponsored health plans to begin thinking about the process for calculation and submission of enrollment data and payment of fees under the Transitional Reinsurance Program.

As background, this program was established to fund a reinsurance pool to help stabilize premiums in the insurance markets created under the Affordable Care Act (ACA).

The program is being funded by three annual assessments on employer-sponsored health plans. The assessments are for average covered lives in 2014, 2015 and 2016 calendar years.

This year, enrollment data must be submitted by November 15, 2016, and payment must be submitted no later than January 17, 2017.

The 2016 Reinsurance Contribution Rate is $27.00 per covered life.

Online Submission Process

The Centers for Medicare and Medicaid Services (CMS) has implemented a streamlined process for reinsurancethe collection of reinsurance contributions. A contributing entity, or a Third Party Administrator (TPA) on its behalf, can complete all required steps for the reinsurance contributions process online (using the government portal, pay.gov), including registration, submission of annual enrollment count, and remittance of contributions.

A form is available for the contributing entity (or its TPA) to provide basic company and contact information and the annual enrollment count for the applicable year. The form will automatically calculate the contribution amounts, and entities will be required to submit payment information and schedule a payment date for remittance of the contributions.

CMS will not send an invoice to contributing entities. All required action will be completed online at pay.gov.

Options for Payment

There are two options for how a contributing entity can make a payment: (1) a one-time lump sum payment, or (2) a full contribution in two payments. (See chart below.)

Contribution Payment Options for the 2016 Benefit Year

Reinsurance

Source: Centers for Medicare and Medicaid Services

CMS will permit contributing entities to submit each year’s contribution in two separate payments – one larger payment of $21.60 per covered life at the start of the year, and a smaller payment of $5.40 per covered life at the end of the year.

However, when submitting enrollment data, dates must immediately be scheduled for payment of the fees, whether there will be one payment prior to January 17, 2017, or two payments with the later in November 2017.

If You Are Self-funded for a Portion of the Reporting Period

health insurance noticesFor a plan that has moved from a fully insured plan to a self-funded plan during the first nine months of the 2016 calendar year, both plans will be responsible for paying a portion of the fee, using one of the permitted calculation methods.

Since fully-insured plans are not permitted to use the Snapshot Factor Method of calculation, either the Actual Count Method or the Snapshot Method of calculation must be used.

Helpful Resources

This site provides technical assistance and training related to the Marketplace and Premium Stabilization program (which includes the Transitional Reinsurance Program). Webinars are offered that provide entities with information on program and operational guidance, along with live demos of the enrollment count and contributions submission process.

This is the site where the contributing entity, or TPA, will create a profile, and submit the enrollment data and contributions for the Transitional Reinsurance Program.

This website is hosted by the Centers for Medicare and Medicaid to provide information about the Transitional Reinsurance Program.

For more information, consult your broker, legal advisor or cms.gov. MedCost

This blog post should not be considered as legal advice.

 

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Is Your Health Plan Affected by the Cadillac Tax?

One-Fourth of Employers Now Offering CDHPs to Avoid Tax

Employers continue to take action to avoid the looming excise or “Cadillac” tax on more expensive health insurance for their employees. This Affordable Care Act tax of 40% annually is currently set to take effect in 2020, but it is already having a major impact.

A 2015 Mercer study found that total health benefits cost averaged $11,635 per employee.[i] Cadillac taxThis average amount exceeds the Cadillac tax’s threshold of $10,200 for individuals, and would trigger the 40% tax on benefits above the threshold. And small employers are seeing higher increases in medical, dental and other health benefits than large employers.

Employers Turn to
Consumer Plans                                             

For the first time, 25% of covered employees are now enrolled in Consumer-Driven Health Plans (CDHP). Large employers of 20,000 or more employees have added CDHPs the fastest (73%). A projected 34% of employers with 50+ employees will be subject to the excise tax in 2020 if they make no changes to their current health plans.

 Cadillac tax

 

High-Deductible Health Plans (HDHP) are a type of Consumer-Driven Health Plans. Employers are saving an average of 18% with an HSA-eligible HDHP instead of a traditional Preferred Provider Organization (PPO) plan.[ii]

One key reason that employees are researching medical costs in advance for services such as maternity care, joint replacements and Emergency Room visits. A 2015 Consumer Health Insights’ survey showed that 22% always talked to others about costs or searched websites for information.[iii]

Employees who have a telemedicine option in their health plans can choose a more appropriate level of Cadillac taxcare for certain respiratory infections, fevers and nausea (see “Treatment Alternatives to the Emergency Room”). Choosing the right level of care reduces time away from work, boosting productivity. And employees save unnecessary dollars from their own pockets.

Some employers offer pricing transparency tools such as HealtheReports™ which compares costs for a complete procedure. Employees can review local facilities that offer mammograms, colonoscopies, X-rays and other services. HealtheReports also lists comments from members about their recommendations for health care organizations.

A New Era in Health Care

CDHP plans require a shift in thinking about medical spending. In traditional plans, employees are used to handing over their insurance card and paying a small copay.

PiggyBankIt can come as a jolt to employees to realize that CDHP coverage begins with paying expenses up to a higher deductible before insurance kicks in. For this reason, employers must proactively educate employees when introducing CDHP options.

Our next blog will detail key steps for employers to take in providing tools for smart decision-making. Employers who can manage staff expectations with a balanced understanding of the changing health care industry will build a productive partnership with your team.MedCost

 

[i] “With the Excise Tax in Their Sights, Employers Hold Health Benefits Cost Growth to 3.8% in 2015,” Mercer Global, November 19, 2015, http://www.mercer.com/newsroom/national-survey-of-employer-sponsored-health-plans-2015.html (accessed August 8, 2016)

[ii] Ibid.

[iii] “Debunking Common Myths about Healthcare Consumerism,” McKinsey & Company, December 2015, http://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/debunking-common-myths-about-healthcare-consumerism (accessed August 11, 2016)

Health Costs Up 6% for Big Employers in 2017

Big employers expect health costs to continue rising by about 6 percent in 2017, a moderate increase compared with historical trends that nevertheless far outpaces growth in the economy, two new surveys show.

These cost increases, while stable, are both unsustainable and unacceptable,” said Brian Marcotte, CEO of the National Business Group on Health (NBGH), a coalition of very large employers that got responses from 133 companies.

Employers are changing tactics to address the trend, slowing the shift to worker cost sharing and instead offering video or telephone links to doctors, scrutinizing specialty-drug costs and steering patients to hospitals with records of lower costs and better results.

Most large-company employees should expect a 5 percent increase in their premiums next year and, in contrast to previous years, “minimal changes” to plan designs, NBGH said.

(Kaiser Health NewsJay Hancock, August 9, 2016)
Kaiser Health News

More Employers Are Choosing This Health Plan

Cost & Government Regulations Are Major Factors

If you’re like most employers, covering the costs of your employees’ health care is a major concern. Expenses for employee hospitalizations, chronic diseases and drug costs are threatening to swallow up annual profits for businesses.

Employer-sponsored health premiums rose 203% between 1999 and 2015.[i] This is why more employers are choosing high-deductible health plans (HDHP), as the graph below shows. Is it possible to manage health care costs and still do business?

HDHP

 

What Is an HDHP?

A high-deductible or consumer-driven health plan has lower premiums and higher deductibles than traditional insurance plans.[ii] Instead of copays, a covered employee would pay health costs until the deductible is met.

Many companies offer a Health Savings Account (HSA) or a Health Reimbursement Account (HRA) that offers significant tax advantages for both employers and employees. The HDHP combined with HSA or HRA contributions can shelter income from taxes while helping to keep premiums low.

HDHP

Benefits

How can your Human Resource department explain this shift in benefits, when only 12% of adults have a basic understanding of health terms?[iii] Here are some real benefits to tell employees when migrating to an HDHP:

  1. “Your income tax will be lower.” Employees contributing to an HSA will shelter that income from federal taxes. This can add up to 39.6% in savings, depending on the tax bracket. Can anyone say “free money”? Especially when companies add their contributions to an HSA if an employee participates in the program.

2. “You will have more control over how you spend your health dollars.” One reason HDHPs are also called “consumer-driven” is because employees have choices about where they shop services. If the same treatment for a respiratory infection can be obtained by a telemedicine call instead of the family doctor, out-of-pocket savings can really add up. And many employers offer price comparisons for services that allow smarter choices before getting treatment.

3.  “You will have an automatic nest egg for health expenses.” It’s not easy to save, but payroll deductions can ease planning for costs. And the beauty of HSAs is that employees take this account with them, even if they change jobs. HRAs reimburse qualified medical expenses up to a fixed amount each year — another tax-free savings funded by employers, which can be rolled over to be used in subsequent years.

Summary

Employer health benefits, health care, employee claimsIn this tumultuous era of health care, employees are gaining an increasing amount of financial responsibility. This gives smart employers the opportunity to treat your staff as partners in decision-making.

Educating your employees is a key foundation to bridging the transition to HDHPs as a benefits option. The next blogs will provide important steps to make that transition successfully, and how to manage expectations during the change.

 

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[i]  “Recent Trends in Employer-Sponsored Health Insurance Premiums,” Kaiser Family Foundation, January 5, 2016, http://kff.org/infographic/visualizing-health-policy-recent-trends-in-employer-sponsored-health-insurance-premiums/ (accessed June 16, 2016).

[ii] High Deductible Health Plan (HDHP), HeathCare.gov Glossary, https://www.healthcare.gov/glossary/high-deductible-health-plan/ (accessed June 29, 2016)

[iii] Quick Guide to Health Literacy Fact Sheet, http://health.gov/communication/literacy/quickguide/factsbasic.htm (accessed June 29, 2016)

 

The Employer Benefit First Offered by NASA

The first place this employer benefit was offered wasn’t even on planet Earth.telemedicine employers

The idea to assess human health from afar started with NASA in the early 1960’s. Both American and Russian doctors were concerned that astronauts might lose circulation and other functions in space. The first telemedicine was practiced on animals attached to medical monitors while orbiting Earth.

TV viewers became familiar with live updates on astronauts’ heart rates, breathing and temperature during space flights. And the technology has translated right into employer benefit plans for medical care for onsite and offsite workers.

Over 15 million Americans obtained medical care remotely in 2015,[i] and the American Telemedicine Association anticipates 30% growth in 2016. Employers have picked up on the cost savings and convenience—nearly 75% of large employers plan to offer telemedicine as a health plan benefit in states that regulate this method, up from 48% in 2015.[ii]

telemedicine employers

Why Telemedicine?

Employers are searching for ways to contain the spiraling costs of health care. The ability for employees to make a call or have a video conference with a board-certified doctor within minutes brings both convenience and less time away from work. A recent analysis by Willis Towers Watch estimated that as much as $6 billion per year could be saved by U. S. companies using telemedicine.[iii]

Where the Savings Come From

Employers are seeing the need to educate employees about the best medical options for every health need. Some fevers, headaches, sore throats and other minor symptoms are appropriate for a telemed call (see “Treatment Alternatives to the Emergency Room”). Average cost: $45.

Compare the cost of a telemed call with an average primary care doctor visit: $145. Or the average cost of an ER visit: $1,316. [iv] Your employees with commutes to work may have to travel longer distances for in-person visits—time also lost in productivity. And many employees allow conditions to worsen before seeking treatment, resulting in even higher expense and time away from work.

“Over 400 million visits a year are appropriate
for telehealth.”

 – Jason Gorevic, Teladoc CEO, NJTV News

Managing Costs in a Complex Environment

As responsibility for paying health bills shifts to the employee, 24/7 services such as Teladoc becometelemedicine employers an increasingly attractive option for appropriate levels of medical care. A board-certified doctor is always available with a cell phone callback, even if an employee is on vacation or lives in a rural area where medical access is more limited.

MedCost clients who use Teladoc have already saved hundreds of thousands of dollars in 2016, avoiding more expensive treatment centers and lost hours at work.

Looming in employers’ minds is the Affordable Care Act’s Cadillac tax, now postponed until 2020. This 40% excise tax would trigger when an employer offers health benefits above $10,200 for an individual and $27,500 for a family.

Employers have already begun to raise employee deductibles and out-of-pocket costs, not included in the value of a health policy.

Summary

Some large employers such as JetBlue Airways are installing telemed kiosks at their workplaces, harnessing technology innovations for immediate care.[v] The Department of Veteran Affairs provided telemedicine employerstelemed services to more than 675,000 veterans in fiscal 2015. Employees who are used to searching for restaurants and shopping deals on cell phones will increasingly call a doctor to get routine medical care.

And it won’t even require a trip to outer space to get it.

 

[i] Melinda Beck, “How Telemedicine Is Transforming Health Care, Wall Street Journal, June 27, 2016, http://www.wsj.com/articles/how-telemedicine-is-transforming-health-care-1466993402 (accessed July 14, 2016)

[ii] National Business Group on Health, “Health Care Benefits Cost Increases to Hold Steady in 2016,” August 12, 2015, https://www.businessgrouphealth.org/pressroom/pressRelease.cfm?ID=263 (accessed July 18, 2016)

[iii] Willis Towers Watson, “Current Telemedicine Technology Could Mean Big Savings,” August 11, 2014, https://www.towerswatson.com/en-US/Press/2014/08/current-telemedicine-technology-could-mean-big-savings (accessed July 15, 2016)

[iv] Sabrina Rodak, “Study: 71% of ED Visits Unnecessary, Avoidable,” Becker’s Hospital Review, April 25, 2013, http://www.beckershospitalreview.com/capacity-management/study-71-of-ed-visits-unnecessary-avoidable.html (accessed February 23, 2016)

[v] Phil Galewitz, “Kaiser: Your Doctor Will See You Now,” June 20, 2016, http://www.usatoday.com/story/news/2016/06/18/kaiser-how-far-telemedicine-has-come/86084092/ (accessed July 18, 2016)

How to Turn Health Care Data into Dollars

Is your company one of the growing numbers of US employers using health care data to manage expenses?

Just as employers keep a close watch on profit and loss columns, the same analysis is now available for companies’ health care costs. Big data is increasingly driving improved, better coordinated care to improve employee health while managing spiraling expenses.

We know this is a complicated topic (just like health care). That’s why we’re offering a free white paper examining the role of big data in health care and how employers can achieve true quality, cost-effective outcomes.

Between 1999 and 2015, employer-sponsored health premiums rose 203%.[i] Managing employee health costs is becoming more and more difficult every year.

Big data compiles massive amounts of data from multiple sources, yielding key metrics and predictive analytics for health care providers. Providers can then leverage this into interventions that provide high quality, cost-effective care. And employers who receive regular reports on trends can work with a benefits administrator to better manage those costs while supporting employee health outcomes.

Jane’s Story

diabetic, advanced analytics, big dataHere’s an example of how MedCost applies this analysis. Jane,* a 42-year old female member with moderately-controlled diabetes, has health benefits through her job. Jane’s biannual visit to her Primary Care Physician (PCP) documents her routine lab work, prescriptions and referrals for preventive screenings.

Between PCP visits, this diabetic member gets the flu, causing severe increases in blood glucose levels. When Jane goes to the Emergency Room, the ER doctor increases her medication dosage. After she goes home, Jane’s personal blood glucose meter shows an alarming drop in her blood sugar levels. Jane calls her PCP, who adjusts her dosage to prevent more complications. Jane’s next checkup is planned in six months.

Was all the data communicated from the hospital’s electronic records, the lab vendor’s system, payer claims and her home monitoring glucose meter? Will the PCP be able to verify that Jane actually obtained her preventive mammogram or flu vaccine prescribed before the ER visit?

At MedCost, Jane’s case would be carefully monitored by her nurse health coach. If there is an issue, her nurse health coach would follow up.

white paper

Chronic illnesses like Jane’s need expert support to prevent worse outcomes and resulting higher costs. And advanced analytics can now identify patients and populations at risk for developing certain conditions prior to the actual onset of illness.

 The white paper, Transforming Data into Dollars, offers an understanding of factors influencing the need for advanced analytics solutions, including an example using the MedCost Care Management programs.

Here are other insights from the white paper:

BENEFITS OF ADVANCED ANALYTICS  
   
1.     Accurate Reporting Normalized measures based on industry-accepted tools of evaluation yield best results for your employees.
2.     Maximized Outcomes Your company will rate higher on the Analytics Sophistication Scale and outperform industry peers.
3.     Healthier Employees Potential risk for developing conditions can be identified and prevented.
4.     Lower Costs Wise management of expenses creates a sustainable long-term cost trend.

  We’ve identified high-risk employees, improved health results and minimized costly hospital visits using precise data analysis in a sample case study that illustrates these key benefits. Download our white paper to learn how.

white paper

*Actual patient data not used.

[i] “Recent Trends in Employer-Sponsored Health Insurance Premiums,” Kaiser Family Foundation, January 5, 2016, http://kff.org/infographic/visualizing-health-policy-recent-trends-in-employer-sponsored-health-insurance-premiums/ (accessed June 16, 2016).

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