Posts Tagged ‘benefits’

How Communication And Education Can Reduce Drug Costs

Thursday, November 21st, 2013

The post below is a guest blog from Steve Byrd who serves as Principal, Health & Welfare Consultant  for CAI’s employee benefits partner Hill, Chesson & Woody.

hcw pillWith the cost of healthcare increasing steadily, everyone is constantly looking for ways to reduce claims and slow the trajectory. Since the passage of the Patient Protection and Affordable Care Act (ACA), discussion over how much healthcare utilization actually costs has become a central focus for both providers and consumers. One often overlooked method of lowering costs is better prescription drug management.

One of the most trusted relationships that can exist is one between a patient and a physician. When a drug is prescribed, there is rarely any second-guessing or further questioning from the patient. While it goes without saying that the doctor has the patient’s best interests in mind, it may be that there are other, more cost effective solutions that should also be considered.

The first and most obvious cost saving measure is to ask for generic prescriptions. Generic drugs can cost fractions of what name-brand drugs cost and are identical in their chemical makeup. Name brand drugs are more expensive because the pharmaceutical company has to pay for research and development, marketing, and then try to make a profit. However, once the patent on that drug expires, companies can come in and produce them for much cheaper without having to conduct the research or safety studies. This results in much lower costs to the healthcare system.

If there is not an available generic, ask for a free sample. Pharmaceutical companies are constantly supplying physicians with samples of their drugs in hope that they will prescribe them. If you are treating a short-term problem, a free sample may keep you from filling your prescription at all.

In some instances generics are not available. In these cases, ask for less costly therapeutic equivalents. This may be a different chemical or drug, but the treatment result is the same.  Instead of one more expensive prescription, you may get another, cheaper, prescription that has the same effect on your condition.

It is also important to shop pharmacies and utilize savings found at retail stores. Even though a patient may pay a small copay for whatever prescription they are having filled, the actual cost of the drug can vary from pharmacy to pharmacy, and even from location to location of chain pharmacies. Most people tend to fill all of their prescriptions at one pharmacy without ever following up on the cost. This may result in paying higher prices for the same drug. It is also important to shop at retail stores, especially for generics. Stores such as Costco, Wal-Mart, and many chain supermarkets will often fill generic prescriptions for less than the copay. This results in double savings: the customer doesn’t spend as much out of pocket and there is no pharmacy claim against the health plan.

Healthcare insurance costs are going to continue to rise. In order to minimize the impact that these rising costs have, it is becoming more critical for the consumer to use the system effectively and efficiently. It is essential to communicate with your employees the importance of good prescription drug utilization. To help keep costs under control, inform employees of potential cost saving measures, supply them with good consumer guides such as Healthier at Home, and keep them aware of how good utilization affects insurance rates.

There are a variety of ways to communicate with employees. Many companies are turning to social networks such as Facebook and Twitter to get the message out. Other methods such as lunch and learns, email communications, and face to face meetings are also effective in educating your workforce. No one solution is going to be a silver bullet, and maybe your employees need to be communicated to in a variety of ways.

Hill, Chesson and Woody works as a partner with our clients to develop communication strategies that ensure their employees understand their benefits and cost-effective utilization.

All About Grandfathered Health Plans

Tuesday, September 24th, 2013

The post below is a guest blog from W. Hunter Walton, JD who serves as Principal, Health & Welfare Consultant  for CAI’s employee benefits partner Hill, Chesson & Woody.

GrandfatherGrandfathered status is a designation with great significance because grandfathered plans are exempt from certain requirements of the Patient Protection and Affordable Care Act (PPACA). Though most employers understand the term, questions remain about the exceptions to grandfathered status when it comes to healthcare reform.

What Qualifies As Grandfathered Status?

A grandfathered health plan is one in which the plan has not made significant changes to the benefits provided since March 23, 2010 (the PPACA enactment date). This includes the cost-sharing provisions, even if the plan design has not changed. Any plan that has more than a 5 percent cost adjustment for the employee loses grandfathered status.

A plan will lose grandfathered status if any of the following occurs:

  • Elimination of a benefit that treats a particular condition.
  • An increase in a percentage cost-sharing requirement (i.e., coinsurance), regardless of the amount.
  • An increase in a deductible or out-of-pocket maximum by more than 15 percent (plus medical inflation).
  • An increase in co-payment that exceeds the greater of $5 (adjusted for medical inflation) or medical inflation plus 15 percentage points.
  • A decrease in the employer contribution rate toward the cost of any tier of coverage by more than 5 percentage points.

How Does A Grandfathered Health Plan Differ?

Grandfathered plans are exempt from certain market reform requirements, including: preventive care mandates; internal and external review; nondiscrimination based on income; choice of provider; emergency care at in-network rates; clinical trial coverage; cost-sharing and deductible maximums; guaranteed issue and renewal; and rating restrictions.

Grandfathered health plans are not exempt from requirements related to annual and lifetime limits, they are not required to offer dependent coverage to age 26, they are not limited in their rescission of coverage or pre-existing condition exclusions, they are not subject to new waiting period limits, employer mandates and many new tax provisions.

Grandfathered Status Annual Notification

Employers have an annual requirement to notify participants regarding their grandfathered status. The notice must include a statement that the plan is believed to have grandfathered status and contact information for an employee who has questions or complaints. A notice must be provided in any plan materials describing benefits for participants or beneficiaries. Generally, this includes a Summary Plan Description (SPD), a Summary of Material Modification (SMM) or benefit enrollment materials.

If a plan is grandfathered, any changes to plan design should be compared to what the plan’s terms were as of March 23, 2010. A plan will not lose its grandfathered status if insurance carriers or third-party administrators are changed, which was a later amendment to the grandfathered rules issued for insured policies that changed carriers on or after Nov. 15, 2010. It is becoming increasingly difficult to maintain grandfathered status. Most plan sponsors who have a grandfathered plan are aware of that fact and are familiar with the requirements to maintain that status. However, it is possible that a plan that was previously believed to be grandfathered could lose that status due to a seemingly minor change in plan design.

Hill, Chesson & Woody can help your business understand some of the more complex details of the Patient Protection and Affordable Care Act. For more detail, visit the healthcare reform section of our website..

Hemera Technologies / PhotoObjects.net/ Thinkstock

Know What Regulations To Consider For Your Corporate Wellness Plan

Thursday, August 22nd, 2013

The post below is a guest blog from Twyla Hutchins, RN, BSN, COHN-S who serves as Health Management Officer for CAI’s employee benefits partner, HCW Employee Benefit Services.

Twyla-HutchinsAs more companies add wellness programs to keep healthcare claim costs down, they should consider what compliance regulations need to be followed for successful program implementation. Otherwise, workplace wellness plan savings can vanish due to penalties resulting from a failure to follow the rules.

There are a few key rules to remember when setting up and monitoring a corporate wellness program that can reduce the likelihood of violations allegations for employers. Here is an overview of what to factor into an employee wellness program.

Americans with Disabilities Act (ADA)

The ADA prohibits employment discrimination against disabled individuals and limits the circumstances in which an employer may require physical examinations or answers to medical inquiries. For wellness plans to comply with ADA guidelines, voluntary medical exams and inquiries are permitted if:

  • Participation in the program is voluntary;
  • Information obtained is according to the confidentiality requirements of the ADA; and
  • Information obtained is not used to discriminate against an employee.

The gray area here is determining exactly how “voluntary” is defined, as the Equal Employment Opportunity Commission (EEOC), which oversees ADA complaints, has not issued formal guidance. However, if the wellness program requires an employee to complete a health risks assessment to become eligible for the group, the health plan would violate the ADA. Additionally, a wellness program that complies with HIPAA’s wellness regulation may not meet the requirement of the ADA.

COBRA

COBRA allows employees who lose their health benefits to choose to continue benefits provided by their group health plan for limited periods of time under certain circumstances. For wellness programs that provide physical examinations, cholesterol screenings, flu shots and similar benefits that qualify as medical care, these offerings can trigger the program to be a group health plan and thus incur COBRA responsibilities for participants.

Internal Revenue Code (IRC) Taxation

If you are offering incentives to reward employees who reach or surpass certain wellness plan goals, some may be considered taxable income, such as cash or gift cards. Other incentives may avoid taxation, including lower employee premium contributions, smaller deductibles for employees, and employer contributions to company savings and retirement accounts.

Incentives such as cash and prizes are considered taxable unless they qualify as “de minimis” in value by the Internal Revenue Service. As with the EEOC and the “voluntary” designation, what qualifies legally as “de minimis” is unclear, with amounts ranging from $10-$50 in gifts being offered by businesses with wellness programs that they believe fit this definition.

State Laws

North Carolina is one of 31 states with a lawful products protection law prohibiting discrimination against employees who use products such as tobacco outside the workplace. Employers can prohibit smoking on company property, however, as well as refuse to provide smoking breaks or other accommodations to smoking employees.

If an employer uses a wellness program that is part of an employee welfare benefit plan subject to the Employee Retirement Income Security Act (ERISA), then North Carolina’s lawful products law may be preempted. Employers that are considering charging tobacco users a higher premium for health insurance should be aware of these issues.

HIPAA

Rules for the Health Insurance Portability and Accountability Act of 1996 (HIPAA) require that, a group health plan may not discriminate against any individual or dependent because of a “health factor.” Health factors include health status, medical condition (including both mental and physical illness), claims experience, receipt of healthcare, medical history, genetic information, evidence of insurability, and disability. A group health plan may vary benefits, however, including premiums based on whether an individual has met the standards of the wellness program, if the wellness program itself meets certain requirements.

This is a tricky distinction to make, and the rules of what qualify continue to change. HCW is developing tools and a webinar to explain further the impact of HIPAA and its new rules that go into effect on Jan. 1, 2014. These items will be available in the near future.

Be cognizant of all these regulations and how they can affect your employee wellness program. If you need more immediate information on any of these considerations, contact HCW at (919) 403-1986 or visit us online.

4 Questions to Answer Before Tackling the Affordable Care Act

Thursday, August 8th, 2013

In today’s video blog, CAI’s CEO, Bruce Clarke, offers employers advice for the Affordable Care Act (ACA). He suggests that your next few group health benefit renewals should be less about rates and more about fundamental decisions and choices.

Bruce says renewal meetings should be more like strategy meetings. Some tips for conducting productive meetings include asking these four questions:

  • Has the ACA dramatically affected your company or workforce?
  • Are your satisfied with your current plan design as it is?
  • Does the act open new options to you that would improve your plan?
  • Are you getting a specialist’s advice on all of your options?

CAI is here to help you navigate through the changes and opportunities that health care reform will bring. Please call a member of the Advice and Counsel Team at 919-878-9222 or 336-668-7746 with any questions.

Considering Voluntary Benefit Offerings As Part Of An Employee Benefits Package

Tuesday, June 18th, 2013

The post below is a guest blog from Jay Lowe, who serves as Principal, Health & Welfare Consultant for CAI’s employee benefits partner, HCW Employee Benefit Services.

Blog 015 PictureAs the cost of providing benefits to employees continues to rise, an often underappreciated benefit employers can offer at little expense is voluntary benefits. These include such products as life insurance, dental insurance, critical illness insurance, vision benefit, disability income replacement coverage, and home owners/rental and auto insurance.

 

Voluntary benefits allow an employer to maintain a robust offering of services that enhances the overall package, while letting workers handle the total cost of benefits through their payroll deductions.

 

With voluntary benefits, employers can set themselves apart from competitors that offer only the traditional lines of medical coverage. Since many workers have indicated through several surveys (including some cited below) that they want a suite of benefits, voluntary benefits should be a popular item to implement. This can ease employees’ worries relating to future costs that may be incurred in these areas and shows them the value of their employment, thus serving as a strong retention tool.

 

The annual “Study of Employee Benefits Trends” white paper released by MetLife this year suggests that many employers nonetheless are failing to recognize the appeal of voluntary benefits and take advantage of them. With the exception of 20 percent who offered life insurance, at most only 10 percent of businesses with up to 499 employees surveyed offered any other voluntary benefits. At the same time, at least 26 percent of Baby Boomers and 38 percent of younger workers (Gen X and Y) said they were interested in each of those products even though they had to pay 100 percent of the cost.

 

The white paper reported that 38 percent of workers surveyed cited a choice of voluntary benefits as a factor that drives loyalty to their company. More than 50 percent of both younger workers and Baby Boomers said they would rather pay for benefits than lose them. The white paper noted that “Voluntary benefits … can serve to fill gaps and supplement employer-paid programs to provide a more holistic benefits offering.”

 

Another recent survey by Guardian Research discovered that participation rates in voluntary benefits have been climbing and will continue to increase, especially for non-dental and non-vision offerings. The study said that addressing the lack of perceived need for voluntary benefits has been and will continue to be the biggest opportunity moving forward for employers in this area.

 

These findings suggest adding voluntary benefits can be part of an effective employee recruitment strategy for employers, but several considerations need to occur for successful implementation. One is the wide variety of products available. Beside the voluntary benefits listed in the white paper, employers can provide additional lines such as supplemental life and dependent life, critical illness coverage, cancer coverage and hospitalization. Should any or all of these benefits be included in your package?

 

healthcare_industry_issuesAnother concern is making sure employees understand what the benefits involve. Employees frequently overlook voluntary benefit offerings during orientation and open enrollment because they are focusing on other tasks they consider more important, such as adjustments to their existing plans. If employees concentrate on other items than voluntary benefits when they are presented, chances are strong they will avoid taking full advantage of the products and programs. The time and money spent on presenting such benefits to employees will have been a waste for the employer.

 

When selected and presented properly, voluntary benefits are a great way for employers to enhance their traditional lines of coverage at little or no cost to the company’s bottom line. There are convenient, web-based enrollment tools which provide a simple, quicker enrollment and reduce costs and free up time to focus on running the business in the process. The process serves as an effective recruitment and retention tool in attracting and maintaining top talent in the organization.

 

From an employee perspective, the ease of purchasing these types of products via payroll deduction can be a great benefit. The simplicity of accessing this protection at the workplace avoids wasted time by the employee looking for this coverage during their free time.

 

Employers should be cautious and limit the lines of coverage when initially launching these benefits.  Gauge employees’ interest in the proposed products before deciding what coverage to offer. Employees who believe programs are of limited value in what they can buy likely will not participate in them. Identify employee needs and interests, and match product options to them to produce better results. Involvement in voluntary benefits is particularly crucial for smaller employers, as minimum participation percentages or signup of enrollees may be required in order for the plan to take effect.

 

It’s important to consider your communication methods around these benefits as well. For effective communication of voluntary benefits, provide information beyond orientation and open enrollment sessions. Send out emails, put up flyers, devote special meetings to provide an overview and answer questions. Talk about the voluntary benefits year round. Help employees fully understand and appreciate what voluntary benefits do for them and how they are relevant.

 

One final key consideration is making sure that any voluntary benefit offering supports and integrates with the core health and welfare strategy. This is another area where HCW consultants assist in ensuring alignment with your organization’s entire benefit strategy.

Employees May Need a 7th Inning Stretch

Thursday, September 27th, 2012

The post below is a guest blog from Elizabeth Johnson who serves as Health Management Coordinator for CAI’s employee benefits partner, HCW Employee Benefit Services.

Stretching is a vital and important part of beginning any fitness routine, but did you know that it is absolutely essential to a productive and healthy work environment as well? It increases flexibility, improves mental alertness, and reduces anxiety, stress and fatigue, making your employees healthier and more productive all around.

Employees who work behind a desk all day are susceptible to developing musculoskeletal disorders that commonly arise from having poor or inappropriate seating, spending too much time in one position and engaging in repetitive actions, such as typing. Encouraging employees to take short breaks every hour or two to stand up, walk around and stretch will improve their focus and long-term well-being.

Regular stretching can:

  • Reduce muscle tension
  • Improve circulation
  • Improve mental alertness
  • Decrease risk of injury
  • Tune the mind into the body

Many stretches can easily be accomplished at the desk, but some should not be attempted without warming up. A brief walk around the office stretches and warms the legs and body at the same time, which helps to ease into a few stretching routines for key parts of the body.

Working a desk job and sitting in front of the computer can cause damage to the neck, wrist and back. These areas of the body need special attention. Below are some stretches that will help prevent injury and soreness.

 Neck: Stretching the neck is very important for employees who spend hours working in front of computers. Stretching the neck is simple and can be accomplished anywhere. Looking straight forward, employees should slowly tilt their ear toward their shoulder, paying close attention not to raise the shoulder, but to focus on the stretch in the side of the neck. Hold the position for 15-20 seconds, then slowly tilt the head to the other side. It is also beneficial to look left and right, practice chin tucks (tucking the chin to the chest) and look up towards the ceiling. This stretch should be done two or three times throughout the workday.

 Wrists: Desk employees who type frequently are highly at risk of carpal tunnel syndrome, and while experts still argue if it is caused by repetitive strain, employees should exercise caution and stretch their wrists. Extend one hand out in front as if making the hand motion for “stop” and use the other hand to gently pull the fingers back towards the body. Then, letting the fingers of the same hand point toward the ground, use the other hand to pull back towards the body once again. Repeat with the opposite hand. Additionally, moving the hands slowly in a circular motion, in alternating directions, is a great stretch for the wrists. As much as employees type throughout the day, they should stretch their wrists about once every hour.

 Back: The most common and consistent complaint for office workers is back pain. The best remedy for it is to consistently practice good posture. To combat the common habit of slouching in front of a computer screen, interlock the fingers and stretch the arms upward. Slowly lean the body to one side and then the other, like a slow pendulum. To invigorate the lower back after long periods of sitting, stand and place the palms of the hands on the lower back with fingers pointing downward. Then, push forward with the palms and lean back gently until a stretch is felt. Employees should perform this stretch about four to five times a day.

Does your company have a system in place to suggest stretching to its employees? If not, get a couple of co-workers together to stretch at the same time to keep up with a healthy work environment. Or even suggest having a professional come in for an hour to set best practices for stretching at the workplace. Whatever you do, fit in some kind of stretch regime to keep your mind, body in balance for a productive workplace. Our Health Management team at HCW has several tools to help our clients develop and implement wellness strategies such as this to create a healthier workforce. Contact us to help you through that 7th inning stretch!

Photo credit: iStock

Attract Candidates and Retain Employees with Your Total Rewards Program

Thursday, July 26th, 2012

A total rewards program refers to all the tools your company uses to attract, engage and retain employees, as well as recruit and secure talented job candidates. When selecting their future employer or deciding whether to stay or leave a company, workers evaluate the total rewards their company offers them. WorldatWork suggests that there are five elements that make up a total rewards program: compensation, benefits, work-life initiatives, performance and recognition initiatives, and development and career opportunities. A solid total rewards strategy combines the five elements to create a workplace environment that maximizes employee engagement.

Creating an appealing program will increase morale and job satisfaction, as well as improve overall staff performance. Here are some items to keep in mind when planning your total rewards program:

Your Employees Are Unique

Carefully analyze the different staff members who make up your organization. No two employees believe in the same values or partake in the same activities. Be sure your total rewards program takes employee differences into consideration. Create a culture that allows several types of people and personalities to grow and enjoy success.

Educate Your Workforce

As an employer, you are responsible for communicating to your staff the rewards that your company provides. If your employees receive higher than average compensation or your wellness program saves staffers money, make sure they know. It is up to your company to communicate the attractive aspects of your organization. Frequently remind employees of the benefits that you offer so they’ll have a reason to stay loyal and perform better.

Emphasize Your Appreciation

Employees are more likely to stay with organizations that show them that their time and efforts have not gone unnoticed. Use your total rewards program to highlight how important your staff members are to your company. Include meaningful ways to recognize and reward employees who turn in stellar work. Make sure professional development opportunities and other tasks to help your staff reach success comprise part of your total rewards strategy. Show them you care so they won’t want to leave.

CAI’s 2012 Compensation and Benefits Conference will feature additional tactics to craft an enticing total rewards program for your workforce. The conference will also cover several topics that are imperative for attracting, retaining and engaging your employees, including flexible scheduling and helping different generations plan for retirement. In addition to the knowledge you’ll gain by attending, you’ll have the opportunity to network with more than 150 HR professionals. Register for the conference today: www.capital.org/compconf.

Photo Source: robertstinnett

How Healthcare Costs Are Being Impacted Regardless of the Pending Reform Decision

Tuesday, May 22nd, 2012

The post below is a guest blog from Jon Dingledine who serves as VP of Consulting for CAI’s employee benefits partner, HCW Employee Benefit Services.

As we await the June Supreme Court decision on the Patient Protection and Affordable Care Act (PPACA), have healthcare costs already been impacted?  Regardless of the verdict, medical providers, insurance companies and employers are taking steps to respond to the trend of increasing costs.

Employers

A recent Mercer survey found that 57% of companies anticipate asking employees to pay a greater share of the cost of coverage. More than half of those companies will increase the cost of dependent care at a greater rate than the increase for the cost of employee-only coverage. Raising employee costs in this way merely shifts the increases to employees and does nothing to lower the true cost of coverage.

For employers to impact the cost of their health plan, an increased emphasis on wellness and disease management programs will help make positive gains in the overall health of their employees and their dependents.  Also, a greater focus on communication and the introduction of cost transparency tools will help employees make better decisions on where to access care and reduce medical costs.

Providers

In many areas of the country, the consolidation of physician practices is helping to increase provider efficiencies and their quality of care.  Similarly, Accountable Care Organizations (ACOs) are gaining popularity because they work together to coordinate patient care and reduce medical errors that result in more healthcare expenses. Nearly 20 percent of original Medicare patients discharged from the hospital are readmitted within 30 days — something that could have been avoided if their care outside of the hospital had been aggressive and better coordinated.

ACOs are being financially rewarded by the government’s Medicare Shared Savings Program if they lower the growth of healthcare costs while still meeting performance standards on quality of care and putting patients first. As such, ACOs are now exploring how these same practices can be used for all of their patients.

Insurance Companies

Insurance Companies are not sitting still while the jury is out. Healthcare reform requires that an average of 85 cents of every healthcare dollar received be spent directly on claims costs. The remaining 15 cents per dollar can be used to cover their administrative expenses, and carriers are scrutinizing how they spend that money.

To help impact the bigger portion of healthcare costs — the 85 cents spent directly on claims — insurers are taking an active role in aligning their interests with those in the provider community and employer groups. By focusing on transparency and quality pricing tools, including the facilitation of working relationships with ACOs and Patient-Centered Medical Homes, lower costs can be achieved for the benefit of all involved.

On June 14, HCW Employee Benefit Services is hosting a Healthcare Costs StormTracker panel discussion featuring the leaders of North Carolina’s five major insurance companies (Blue Cross Blue Shield, UnitedHealthcare, Cigna, Aetna and Wellpath). Panelists will answer questions regarding the pressures that insurers are facing in the wake of current rising healthcare costs, what their organizations are doing to make the future better for employers that are offering health plans to their employees and what strategies companies can use to prepare for the future of rising healthcare costs . Register to attend at: http://bit.ly/HCWStormTracker.

Pay or Play Mandate 2014 – Do You Have Your Head in the Sand?

Tuesday, April 24th, 2012

The post below is a guest blog from Dax Hill who serves as the Principal, Health & Welfare Consultant for CAI’s employee benefits partner, HCW Employee Benefit Services.

There is a book titled “Hope Is Not a Strategy.”  I believe this statement to be particularly true regarding the Healthcare Reform “Pay or Play” mandate.   This regulation will require great attention as employers determine their future path in offering employee benefits.

As you are probably aware, the following penalties will apply to employers with 50 or more full-time equivalent employees, effective 2014:

1)      If you provide no group medical insurance: you will pay a $2,000 per employee per year penalty.  The first 30 employees are exempt from the penalty.

2)      If you provide unaffordable insurance coverage:  applies to employees making between 100% and 400% of the Federal Poverty Level (400% of the FPL equates to a single employee making ~$44,000) AND EITHER your group medical insurance plan provides less than 60% value OR payroll deductions for employee-only coverage are more than 9.5% of the employee’s W-2 income.  If one of these employees receives a subsidy through the state exchange, the penalty will be subject to the lesser of:  1) a $3,000 penalty per employee receiving a subsidy through the insurance exchange OR  2) $2,000 for all employees (the first 30 employees are exempt from the penalty).

Have you asked yourself the following questions?

  • How will the government penalties impact us if we don’t offer group medical insurance?
  • What will be the financial impact if some employees opt out of our group medical insurance plan and purchase individual coverage through the state insurance exchange?
  • Should we drop our employer-sponsored coverage all together and direct our employees to the exchange?  If we go this route, how are we going to differentiate ourselves as an employer?
  • Or, are we better off continuing to offer our group medical insurance plan?

So, which approach are you taking?

  1. “Let’s wait and see…hopefully this will all go away” approach while waiting for the Supreme Court’s decision before analyzing what type of impact the Play or Pay mandate will have on your company.
  2. “This doesn’t apply to my organization” so I have no reason to consider options related to this mandate.
  3. “Let’s plan now in order to determine which options would provide us with the best possible outcome,” I want to make sure I have a great plan to make this a competitive advantage as possible for my organization.

While 2014 seems so far away, it is not.  Many employers are currently planning for the future and determining which option provides the most favorable outcome based on today’s regulations.  HCW is helping employers quantify those scenarios.  These are just a couple of different scenarios employers are considering:

1)      Stay the course on our current medical insurance plan.

2)      Drop coverage and pay the penalty for all employees. This could be most disruptive and provide no perceived value to the employees.  Additionally, higher compensated employees might not be eligible for any subsidy, which would be a negative impact.

3)      Offer a high/low option for all employees and base the premium contribution on the base plan.

4)      Adjust the “employee-only” premiums in order to meet the 9.5% threshold and prevent any penalties.

5)      Redistribute the premiums from Family to Employee-only coverage to meet the 9.5% threshold.

6)      Have employees work less than 30 hours in order to avoid penalties.

7)      Add all employees to the plan and adjust other forms of compensation to balance the budget.

So, will you Pay or Play? There are many more solutions to consider.  The key is to QUANTIFY possible solutions that align with your culture and the direction of your organization.  This will enable you to make educated decisions around this important benefits strategy.  It’s time to think strategically and not rely on hope.   What steps have you taken to map out a plan?

Misclassifying Employees Can Have Unintended Consequences

Tuesday, February 14th, 2012

The post below is a guest blog from Joy Binkley who serves as the Principal, Health & Welfare Consultant for CAI’s employee benefits partner, Hill, Chesson & Woody.

The Internal Revenue Service (IRS) has announced a new, voluntary correction program that allows employers to reclassify employees who are currently misclassified as 1099 “independent contractors” when they should actually be reported as “W-2 paid” employees. Known as the Voluntary Classification Settlement Program (VCSP), employers who are not currently being examined by the IRS are allowed to eliminate years of past employment tax liabilities for “pennies on the dollar,” an amount equaling just greater than one percent of the wages paid to the reclassified workers for the past year.

For health and welfare benefits, employers will want to consider the compliance and contractual impacts to their plan. From a compliance perspective, it all starts with control groups and eligible employees. This impacts traditional regulatory issues such as COBRA, HIPAA, ERISA, FMLA and discrimination testing. When you add in the additional impact of healthcare reform, employers will need to consider the implications on provisions that apply to varying sizes of groups, such as “Pay or Play,” tax credits and medical loss ratios.

Of course, there is also the issue of repercussions that might be felt from employees that were previously misclassified and, as a result, were denied benefits.

From a contractual perspective, employers should be aware of the requirements the insurers or reinsurers impose. This might mean a re-rating of coverage if there are material adjustments to the covered population. With clearer definitions of employees and control groups, employers may want to tighten up their eligibility monitoring to prohibit unreported carve outs. As can be seen, all of this impacts more than just tax withholdings.

To read the expanded article, feel free to view our Eyes on Benefits monthly newsletter.