Transcript Welcome Taking a Strategic Approach to Health Insurance Plans in Light of Healthcare Reform… …What You Need to Know and Do Now 3 Things You Need.

Welcome
Taking a Strategic Approach
to Health Insurance Plans
in Light of Healthcare Reform…
…What You Need to Know and Do Now
3 Things
You Need to Remember
about this Presentation
1.
You CAN Fix and Control Your Benefit Plan Costs.
2.
You CAN offer your employees customized
choices.
3.
There IS a permanent & portable solution.
If nothing changes, then nothing changes.
Where are You Now?
If nothing changes – then nothing changes.
Health care laws are mandating certain new
requirements
Regardless of what happens with the law businesses with employees from 25 to 75 and up
are at financial risk
You must select the “right” plan to avoid balance sheet
liabilities created by having to cover employees health
costs.
You must know how to properly implement benefits for
their employees to avoid government fines
The McKinsey Report
What Will Health Care Reform look like for
employers – are you ready?
Overall, 30% of employers
will definitely or probably
stop offering ESI in the
years after 2014.
Among employers with a
high awareness to reform,
this proportion, increases
to more than 50 percent.
The McKinsey Report
Employers have long offered Group Insurance
as a key benefit to attract and retain
employees
Contrary to what many
employers assume, more
than 85 percent of
employees would remain
at their jobs even if their
employer stopped offering
ESI, although about 60
percent would expect
increased compensation.
The NFIB Report
What Will Health Care Reform look like for
employers - will you be ready?
42% of small employers
offer group health insurance
today.
57% of those small
employers are likely to drop
health coverage by 2014.
The NFIB Report
Do small employers want to stop helping their
employees? Of course not…
100% of the small employers
that are likely to drop health
coverage, also said they would
continue to provide coverage to
employees if a "tax-excluded
contribution" solution existed
today.
There must be a “real”
answer…with “real” help, right???
Timeline: Key Provisions
2012
A new federal tax on fully insured and selffunded group plans, equal to $2 per enrollee,
takes effect
The DOL will begin annual studies on selfinsured plans using data from Form 5500
All employers must include the aggregate cost
of employer-sponsored health benefits on W2s
Timeline: Key Provisions
2012
If employee receives health insurance under
multiple plans, employer must disclose the
aggregate value of all health coverage
Excludes contributions to HSAs, Archer MSAs
and salary reduction contributions to FSAs and
applies to benefits provided during taxable
years after December 31, 2010
Timeline: Key Provisions
2012
All employers as well as group and individual health
insurers will have to provide a summary of benefits
and a coverage explanation that meets specified
criteria to all enrollees in addition to SPDs
when they apply for coverage,
when they enroll or reenroll in coverage,
when the policy is delivered,
and identify any material modification is made to the
terms of their coverage.
$1000 per enrollee fine for willful failure to provide
the summary
Special Note about
Key Provisions
Calculating Full-Time Employees
These financial penalties apply to employers with more than
35 full-time or full-time-equivalent employees who do not
offer coverage to full time employees.
Your actual status could change in any given month in
response to a surge in part-time hours or as your business
grows.
The employer mandate penalties begin in 2014. But you need
to understand and plan for it NOW.
Feeling a Bit
Overwhelmed?
You
are
Not
Alone
What Are MOST Companies
Doing?
We are seeing companies choosing one of
three options in an effort to move away from
traditional group coverage plans:
Offer Group Health Savings Account
benefit plan (Group HSA’s)
Offer Group Health Reimbursement
Arrangements (Group HRA’s)
Offer Individual Defined Contribution
Plans (HRA’s)
Things Have Changed
Educate Employers; there are new
opportunities for Employers.
THEN
NOW
Defined Benefit
Defined Contribution
Pension Plan
401(K)
Employer Sponsored
Insurance
Individual
Personal, Portable
Insurance
Option 1:
Group Health
Savings Accounts
Group HSA’s
Group HSA
Employers of any size who want to
Save money with lower premiums
Reduce long-term costs by maximizing
employee engagement in health care
decisions
Provide tax-advantaged savings for
employees to help offset the burden of
increased cost-sharing
Develop a long-term strategy for affordable
retiree coverage
Group HSA
Market Trends in Group HSA’s
Premiums are lowest for high-deductible plans.
Employers can expect premium savings of up to
30% when compared to PPO plan.
More than 70% of large employers contribute to
their employees’ HSA fund with $500 – $1,000
being the most popular levels.
For smaller employers, the market is quickly
moving toward higher deductibles, like a $2,700
single deductible and 100% coinsurance
Group HSA
What it means to your employees
Everyone is placed on the same plan – anything
group is a “one size fits all”
Employees pay a greater portion of the total
cost of their health care, but this cost-sharing
can be offset by tax savings.
Employees save tax-free, earn interest
tax-free
Employees who leave face Cobra and the fact
they must reach a higher deductible on their
own, without employer subsidies.
Option 2:
Group Health
Reimbursement
Arrangements
Group HRA’s
Group HRA’s
Employers who implement Group HRA’s can:
Reduce premiums by introducing a highdeductible PPO health plan
Introduce consumer-driven health but still
choose to subsidize deductibles to lessen
cost to employees
Gain a high level of control over budget and
fund management options
Group HRA’s
Employers have more flexibility:
HRAs may be offered in conjunction with other
employer-provided health benefits.
Group HRA’s remain with the employer and do
not follow an employee to new employment.
Group HRA’s
How it Works
HRA pairs a PPO health plan with an
employer-funded HRA for out-of-pocket
expenses.
Employers determine how much
employees share in the cost of their care
Employers determine how much they will
contribute to the HRA.
Group HRA
Market Trends* in Group HRA’s
Around 10% of employers select 80%
coinsurance after the deductible
Around 90% of employers select 100%
coinsurance after the deductible.
More than 95% of employers contribute $500 to
the fund per employee.
Most employers completely customize the plan,
with 50% allowing a full rollover option of the
fund.
*Figures from BCBS North Carolina
Group HRA’s
Sounds pretty good – but it is still a Group
Group HRA’s subject to annual rate increases
– employer must choose to eat the increase,
reduce benefits or pass along increase to
employee
20% of employees will hit the deductible.
Count on it.
For a company that funds a Group HRA for
20 employees to the tune of $7500 each,
that’s $150K you know you have to set aside
for their health care expenses.
Option3:
Employer Defined
Contribution Plans
Using Individual HRA’s as an EDC:
A Common Sense Solution for
Responsible Employers
Individual Defined Contribution Plans
Gets employers
“out of the Insurance Business”
Fixed Cost … employer
controls & plans how much to
spend versus being dictated to
by insurance carrier every year
NO MORE COBRA …
no liability or administrative
burdens/costs
WORKS for everyone…
regardless of company size, or
each employees health needs
How an
EDC as an
Individual
HRA works
in 50 words
or less
Implementation
And then there are
The Legal Requirements
Employers also must be careful
not to violate the:
Employee Retirement Income
Security Act (ERISA) and the
Health Insurance Portability and Accountability Act
Legal Requirements
If using 3rd Party Implementation
To stay compliant with the health benefit provisions
in ERISA, employers who help offset the cost of an
individual plan are responsible for overseeing the
plan if they direct employees to enroll in it. The
benefit would be subject to a long list of regulations.
In private exchanges, when a worker is choosing
from any plan in the individual market, the employer
should be "shielded" from knowing which plan the
employee selects - or whether he or she has filed
claims
Legal Requirements
If using 3rd Party Exchanges
A Private Exchange option is likely to be attractive to
employers in a few categories:
Small businesses that do not offer health benefits.
Any business struggling with annual increases in
premiums.
Large companies who want to stop spending so much
on health benefits but don't want to lose workers or
risk employees being sick and uninsured.
So…
Group Plans vs.
Individual Plans?
A critical decision which
must be made…
Group Plans vs. Individual Plans
It really boils down to this
With individual path you don’t force your employees
into a box by the group choice - even in Group HRA
and HSA there are still limitations that may bring
premiums up
With Individual plans, there are no struggles to find
the right benefit plan design to fit all employees …
they choose the plan that works the best for them –
in a group plan of any kind – it is one size fits all.
Easy to implement HRAs and HSA’s for the individual
employee – lowers cost for company and workload
for HR
So…
Group Plans vs.
Individual Plans?
Let’s look at the potential savings.
Standard HRA savings model
Group of 50
We want to take
the burden off
the employer.
We believe educating
owners and employees
is key.
When you empower
your employees to
make their
own choice,
everyone wins.
Total Savings: $112,482.52
Defined
Contribution
Analysis
Standard HRA savings model
Self-Funded Group of 225
We want to take
the burden off
the employer.
We believe educating
owners and employees
is key.
When you empower
your employees to
make their
own choice,
everyone wins.
Total Savings: $978,581.00
Defined
Contribution
Analysis
Other Options
Group Plan Design
Partial HRA Implementation
New Employee HRA
Former Employee & Retiree HRA
Wellness HRA
Supplemental HRA
Healthcare Reform Compliance
3 Things
You Need to Remember
about this Presentation
1.
You CAN Fix and Control Your Benefit Plan Costs.
2.
You CAN offer your employees customized
choices.
3.
There IS a permanent & portable solution.
If nothing changes, then nothing changes.
Questions ?
Rob Ferguson
President
Health Benefits US, Inc.
(919) 794-8437
[email protected]
w w w. h b u s i n c . c o m