Posts belonging to Category health insurance

Generally speaking, we all know how so-called coercive wellness programs work. The essential idea is to reward employees—or impose consequences on them, depending on how you look at it—for adopting certain healthier behaviors.

A common example is what’s sometimes known as the “smoker’s surcharge.” Companies hit tobacco-using employees with a higher insurance premium, ostensibly encouraging them to stop smoking, be healthier and more productive, and cut down on healthcare costs.

Such programs may be well-intentioned, but aren’t always embraced by the workforce.

Comcast Corp., however, seems to have found a way to get its nearly 120,000 employees on board with its efforts to stub out cigarettes.

At GlobalFit’s 7^th Annual Innovations in Wellness Summit, held yesterday in Philadelphia—just blocks from the cable giant’s headquarters—Lauren Gemberling, wellness coordinator with Comcast, shared some details on how they’re doing it.

In July of this year, the company begins charging a $25 per-paycheck premium to employees who smoke. This past November, Comcast employees were asked to indicate whether they used tobacco, and if so, whether they planned to enroll in the company’s smoking cessation program by July.

Planning to enroll and actually doing it are two different things, of course. But to date, 8,430 Comcast employees have done just that, and the overall results have been extremely positive, says Gemberling.

She showed the audience some examples of Comcast employees saying so themselves, through video testimonials the company has collected since November.

For example, one employee recalled his reservations upon learning of the company’s implementation of the premium, questioning his employer’s role in his personal health decisions.

In the four months since, however, he says he’s joined the program, quit smoking, gotten a gym membership, lost weight and bought a new car—which may have been made easier with the $600 he estimates he’s saved per month since giving up cigarettes.

Such examples aside, any organization introducing such a program is bound to see resistance from some workers who feel their employers are crossing a boundary, not to mention unfairly taking money out of their pockets.

Gemberling, however, says they’ve gotten largely “great feedback” from the workforce at Comcast. A key, she told the audience, is not to spring such changes on the workforce. Give employees plenty of time to process the premium change and consider their options, she said, and assure them the program’s overarching goal is to offer an incentive—and assistance—that helps them kick a dangerous and difficult-to-break habit.

“This is the first time I’ve rolled out a program where employees have said, ‘Thank you. I’ve been trying to change this behavior on my own for years, without success. I’m thankful for the help.’”

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The U.S. Supreme Court decision Tuesday in the case of US Airways v. McCutchen appears to be a big one for those handling or administering benefit claims and reimbursements under the Employee Retirement Income Security Act. So say legal experts already weighing in.

Hogan Lovells, the law firm representing US Airways, said in a statement released Wednesday that the decision “provides clear guidance to employer sponsors that reimbursement provisions will be enforced by the courts as written. In essence, the Court ruled that an employee (James McCutchen) who receives medical payments for an injury pursuant to an employer-sponsored health-benefits plan may not avoid the reimbursement requirements of that plan by arguing (as McCutchen’s lawyers had) that such reimbursement is “inequitable.”

Neal Katyal, co-director of Hogan Lovell’s appellate practice and former acting solicitor general of the United States who argued the case, calls the decision “a victory not only for US Airways, but for all ERISA employee-benefits plans, because it prevents individual judges from rewriting plan terms according to their own notions of equity,” which he argued the Third Circuit Court of Appeals had done.

According to this analysis by Michelle Anderson of Fisher & Phillips summing up the decision and its impact, ”the supremacy of a written ERISA-governed plan still reigns as [the Court] reversed the ruling of an appellate court which had held that a court in equity can ignore unambiguous subrogation reimbursement language, and simply rewrite the terms of an ERISA-governed plan in line with its own ideas of what was ‘fair and equitable.’ ”

Here’s what she says the ruling means for employers:

Although this is a win for those self-funded plans governed by ERISA, plan fiduciaries and administrators are wise to review with their counsel the subrogation, reimbursement and attorney fee and costs provisions in the written documents to ensure conformity to the law in this area.

Undoubtedly, those who litigate in the personal-injury arena will continue to develop new theories to test the sufficiency of ERISA, since taking the claim of injured persons who have had their expenses paid by a medical plan will be less attractive if the ability to collect fees and recover damages for their client will be secondary to the rights of the plan.

Her analysis offers a complete synopsis of the case, which many of you probably already know. This piece by Allison Bell on the LifeHealthPro site also sums up the facts of the case, saying the decision basically now establishes that “a federal court can use equitable law principles when a group health plan contract governed by [ERISA] is silent about a legal issue.”

And finally this, from Mayer Brown, stresses the need by employers – in light of this case – to review their ERISA-plan paperwork very carefully:

The Court’s decision in McCutchen establishes that contractual provisions requiring reimbursement of benefits paid according to an ERISA plan will be enforced according to their unambiguous terms. The ruling will thus be of interest to all businesses that offer such plans to their employees or administer them on behalf of other entities. At the same time, the Court’s decision highlights the need to draft reimbursement provisions in ERISA plan documents that are as clear and comprehensive as possible. Doing so will minimize (although likely not eliminate) the potential for courts to apply equitable rules as “gap fillers” when the plan language is silent or ambiguous.

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Just got word from a source close to this subject that the Massachusetts Board of the Connector (the state agency that administers the state healthcare-law requirements) just approved a measure on Thursday that could mean big penalties for Massachusetts employees in 2014, when healthcare reform mandates kick in, and could affect employers there as well.

Rich Stover, a principal at New York-based Buck Consultants, who testified before the Connector Board back in January about this, tells me the board’s approval of amendments to the state’s idividual-mandate requirements will result in Massachusetts employees being subject to significant penalties even if they have comprehensive health coverage that satisfies the ACA requirements.

Employers there, he says, will have to revise their plan designs or complete an uncertain certification process with the state in order to ensure their employees aren’t hit with such penalities.

Since it’s involved and a bit confusing, here’s his rundown of the whole affair:

In 2006, Massachusetts enacted a health reform law that requires Massachusetts residents age 18 and older to have health coverage that meets certain minimum creditable coverage (MCC) requirements or be subject to tax penalties. This reform law was the model for the federal Patient Protection and Affordable Care Act. Although the MCC requirements only apply to residents and do not apply directly to employers, if an employer plan does not satisfy the MCC requirements, employees and family members enrolled in that employer plan may be subject to these Massachusetts’ tax penalties.  The maximum annual individual penalty for 2012 is $1,260.

With the ACA employer and employee mandates and penalties going into effect in 2014, Massachusetts had to decide whether to continue the individual mandate and MCC requirements [then].  On March 14, the Board of the Connector … met and decided to continue, and strengthen, the individual mandate in 2014. The 2014 requirements could subject Massachusetts residents participating in large employer plans to significant penalties if their employer coverage does not satisfy the new MCC requirements, even though the employer plan fully complies with the federal ACA requirements.

In 2014, Massachusetts will require that medical coverage provide 100 percent coverage for preventive-care service and limit out-of-pocket amounts paid by enrollees to certain maximum amounts.  ACA requires that non-grandfathered plans meet these requirements, but not grandfathered plans or certain retiree plans. In addition, ACA has a special transition rule in 2014 for prescription-drug benefits that Massachusetts is not providing.  So employees in grandfathered plans under ACA may be subject to Massachusetts penalties, even though the plan is fully in compliance with the ACA. Employers can help employees avoid these penalties by filing their plans with the Connector and seeking approval for the plan.

Here, by the way is a helpful link from Stover recapping the board’s Thursday meeting and actions, as well as previous ones.

In essence, Stover says, “employers who had assumed that the Massachusetts requirements would no longer apply with federal reform being effective in 2014 will be very disappointed to learn that the compliance efforts, administration and penalties will continue under state law.”

So what does all this mean for human resource professionals in Massachusetts and possibly beyond?

“As they plan for 2014,” says Stover, “human resource officers will need to make sure they address both the federal and state requirements, which [obviously and apparently] will put an additional burden on Massachusetts employers.”

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Came across this helpful post on the headcount-accounting rules for providing healthcare coverage under the Patient Protection and Affordable Care Act.

The post, courtesy of the Society for Human Resource Management (subscription required), makes note – with links provided – of two recent releases you should know about. One is a Jan. 2 publication in the Federal Register by the Internal Revenue Service of its proposed “Shared Responsibility for Employers Regarding Health Coverage,” with guidance on complying with the requirement that large employers provide affordable healthcare coverage under the act. The other is the IRS’s online post of questions and answers regarding those “shared responsibility” provisions.

What’s essential to note here, according to the release, is the healthcare mandate’s application “to employers with 50 or more full-time employees or a combination of full-time and part-time employees that is equivalent to at least 50 full-time employees.” Granted, this sounds like it affects smaller employers more than large ones, but it needs to be worked into all headcount calculations, and large employers choosing to opt out of healthcare-plan provisions need to know what they’re getting into.

To quote the release:

… large employers that do not offer coverage to their full-time employees face a penalty of $2,000 times the total number of full-time employees if at least one employee receives a tax credit to purchase coverage through a state-based health insurance exchange established under the PPACA.

If large employers do offer coverage to their full-time employees and their dependents but the coverage is “unaffordable” to certain employees or does not provide minimum value, the employers face a penalty of $3,000 times the number of full-time employees receiving tax credits for exchange coverage (not to exceed $2,000 times the total number of full-time employees).

Here’s the general mandate behind those calucations, according to the release:

Employers with 50 or more full-time employees (including full-time equivalents) must offer all employees working an average of 30 hours per week or more in a month healthcare coverage with “minimum value,” beginning in 2014, or pay penalties.

In other words, although large employers are not required to provide healthcare coverage to part-time employees working less than 30 hours per week, these part-time employees are included in calculating the threshold number of 50 workers (including full-time equivalents) that would require employers to offer affordable coverage to all full-time employees.

It gets even more involved:

As explained in the new Q&As, because under the PPACA a full-time employee is an individual employed on average at least 30 hours per week, half-time would be 15 hours per week, and 100 half-time employees would equal 50 full-time employees. In another example given in the Q&As, 40 full-time employees employed 30 or more hours per week on average plus 20 half-time employees employed 15 hours per week on average are equivalent to 50 full-time employees.

In addition to spelling out more details on how FTEs are to be calculated under the new law, the release includes specifics on other types of employees, such as seasonal workers and transition relief.

Obviously, as with all aspects of the ACA, you should be conferring with your legal and benefits consultants first and foremost.

Given the intricacies of these FTE calculations, it might behoove you to confer with some mathmeticians and accountants as well.

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No harm in reminding one and all that you have until March 1 — according to the recently enacted Affordable Care Act — to notify your employees about state-specific healthcare exchanges to be set up before 2014.

This alert from the Society for Human Resource Mangement lays out what you need to be doing next, according to the new law, after you’ve satisfied your January 2013 healthcare-benefit cost-reporting requirement for 2012 W-2s, that is. (Appropriate informational links are included in the SHRM piece; note, though, that the SHRM site is a subscription-based one.)

In the piece, Jennifer Benz, CEO of Benz Communications, lists three specific communication requirements employers must satisfy by March 1:

• State exchange basics. This is a description of the state exchange, the services provided by the exchange and how to contact the exchange (website and customer service number). One wrinkle: not all states have decided how they’re going to comply (the National Conference of State Legislatures provides an up-to-date chart of state implementation efforts). Employers in multi-plan states will have an even more challenging time.

• Individual plan value. This explains whether employees will receive at least 60 percent coverage of essential health benefits through employer-provided coverage, and whether employees may be eligible for a premium tax credit if they purchase a plan on the state exchange.

• Tax implications. Because health-insurance premiums under employer-sponsored coverage may be paid with pre-tax dollars, buying coverage through a state exchange may change an employee’s tax obligations. Employees using an exchange to purchase coverage may lose their employer’s tax-free contribution (if any) to their health coverage, also.

Although many benefits and HR experts are predicting the March deadline will be extended, considering the U.S. Department of Labor has yet to release proposed regulations or samples of a model notice, Benz suggests integrating the three-part notice into your overall health-benefits-communication strategy regardless.

“No matter what deadline the DOL ultimately sets,” says Benz, “employers need to be prepared to include [these three points] in their communication plans for 2013.”

“Communicate your 2014 position before the legalese does,” she adds. “Be sure to use language that fits the notice into your big-picture approach to healthcare-reform compliance. For many employers, this strategy is going to include high-deductible health plans and incentive-heavy wellness programs, two benefit strategies that require robust, thoughtful communications in their own right.”

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On this, the last Saturday in 2012, I went hunting and pecking for a few things I might share about the HR profession — looking back on the year that will soon be history as well as anticipating the one to come.

With healthcare and the impending Affordable Care Act enactments that much closer, this list from Mercer of the top five priorities for employer-sponsored health plans in 2013 seemed a helpful one. I was especially drawn to its specific suggestions for customizing plan designs and contributions in today’s high-health-cost environment, and for making health exchanges work best for you.

One blog post from an Edwardsville, Ill.-based employment, payroll and workforce-services company, Extra Help Inc., lays out its leading seven concerns HR professionals should be attending to right now. Though some of the list is aimed at Missouri and Illinois businesses, and promotes its services, it’s still a nice, succinct rundown of things you should have on your front burner — such as whether you’re fully versed in healthcare-reform requirements, whether you’re up on all you’re supposed to have posted around your environs and whether you really have the best plan in place when employees start leaving as the economy continues to improve.

Looking across the pond, I found this post from CIP HR, based in Buckinghamshire, England, that — interestingly — echoes many of the same cost-centered concerns HR professionals in the United States face in 2013: making sure the right talent gets into the right post to begin with, making sure younger workers get the kind of development opportunities that will encourage them to stay since they can’t climb the corporate ladder the way their parents did, and making sure social-media policies are crafted correctly, to keep you out of court.

Couldn’t find quite as much out there on top HR issues of 2012, but probably wouldn’t/couldn’t have found anything better than our own Winners and Losers list for 2012 from HRE Editor David Shadovitz. And, in keeping with other lists’ overriding focus on healthcare and healthcare reform, no surprise that his No. 1 winner is Obamacare.

Also, for the record, here again is Web Editor Michael J. O’Brien’s blog post on what you blog readers read the most this past year on The Leader Board. May be a reflection of what caught your eye more than what has been or will be keeping you up at night, but a reflection nonetheless.

And, as I intimated up top, there’s probably no better time to reflect than when one year bites the dust and another one is born.

Happy New Year everyone.

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Red flags are starting to wave over a temporary reinsurance program the U.S. Department of Health and Human Services has proposed as part of the Affordable Care Act.

The HHS intends for the program — which would take effect in 2014 — to stabilize premiums, not allow coverage denials because of pre-existing conditions, and limit premium variations based on age, gender and smoking status.

What’s raising concerns — “ire” might be a better descriptor — is a clause within the proposed plan that imposes an annual $63 per-health-plan-recipient fee on group-health-plan providers, i.e., employers.

Just Saturday, in this story from the Columbus Dispatch, U.S. Rep. Pat Tiberi, who represents Ohio’s 12th congressional district, blasted the proposed rule. He’s worried the plan that would be imposed on employers who pay for insurance might spur them to stop providing it to their employees, pushing them into insurance exchanges instead.

“This was buried in the healthcare-reform legislation,” he told the Dispatch, ”and no one ever talked about it.”

Indeed, as Chantel Sheaks, a principal in the Washington-based government-affairs practice for Buck Consultants, puts it: “I call this the sleeper issue of 2012 … and people are waking up to a nightmare.”

She goes on to say that the statute is unclear and confusing in the way it refers to those responsible for feeding this reinsurance fund as “issuers” and “third-party administrators on behalf of group health plans.” In the preamble of a revision to the statute, issued earlier this month, “group-health plans” are cited as the responsible parties.

According to Sheaks, this could be a devastating blow to the business community.

“Let’s assume you’re a small employer, you have 500 employees, so you have about 1,000 covered individuals on the plan,” she says. “So, looking at [$63 per covered head, that fee] is going to be $63,000. That’s someone’s salary; maybe two.”

The money slated to feed into the fund is hefty, according to this alert from Lockton Health Reform Advisory Practice: $12 billion in 2014, $8 billion in 2015 and $5 billion in 2016.

For the record, the fee is intended to be a temporary, three-year assessment that will decrease each year, with most of the money going into an HHS fund aimed at helping providers with costs incurred by medical and chronic conditions of those covered through the employer, as well as the cost of covering uninsured people with health problems.

As HHS spokesperson Erin Shields Britt told the Dispatch, “Congress included this program to reduce premiums for people who buy insurance. This three-year program will help ensure people who have insurance no longer have to shouler the cost of caring for the uninsured, which has raised healthcare costs for decades.”

For your reference, here is the HHS’ site for overall information regarding healthcare reform, as it applies to individuals, providers and businesses. Here too, for further reference, is the Assocated Press story about the proposal that ran on the Fox News site.

Other helpful links include this complete information sheet from Buck Consultants on the transitional reinsurance program and the higher costs for group health plans, the final reinsurance regulations issued by the HHS in March and the more recent proposed changes to those final regs, issued earlier this month, in which the reference to group-health-plan responsibility can be found in the preamble.

So, what should employers be doing with all this, you ask? Sheaks says “take action.”

Too many employers and their HR leaders have been resting way too comfortably in the mistaken knowledge that this particular piece of healthcare-reform legislation couldn’t possibly impact them this much, she says. “They thought they might be charged something, but I don’t think any of them were thinking $63 per [covered] head per year — employees and their families,” she says.

With some time left to change the tide, she adds, “now is the time to really sit down and talk about such a massive fee on employers.”

“If [HR and benefits professionals] haven’t communicated this to their CEOs or CFOs,” she says, “they should do so immediately [and decide] what they’re going to do: Avoid the cost [and] pay the penalty? Pass it along? All of it or some of it?

“When I talked to some of my cohorts on the employer side, they said, ‘This is a lot of money, but the issuers will probably pay for most of this and the HHS will contribute some.’ ”

Evidently, it appears they may have been wrong.

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Yet more statistics in the ever-conflicting arena of ever-increasing healthcare costs.

The latest, from the 2012 Towers Watson Health Care Changes Ahead Survey, show employers’ annual per-employee healthcare costs increasing 5.3 percent in 2013, to $11,507 – and this amid uncertainty over the November election and what that will do to healthcare reform and the development of insurance exchanges.

Despite the increase, and primarily because of the U.S. Supreme Court’s recent decision upholding the constitutionality of the Patient Protection and Affordable Care Act, 88 percent of the 440 midsize to large employers responding to the survey have affirmed their commitment to offer healthcare benefits to their employees going forward (although that does leave 12 percent not committing).

Though the rate of cost increases has slowed (the expected rate for this year stands at 5.9 percent), a majority of respondents (58 percent) say they’re expecting they will trigger the healthcare-reform excise tax in 2018 if they don’t make some significant cost-cutting moves now; indeed, 83 percent say they’re planning to take steps to control costs to avoid that tax.

As Randall Abbott, senior healthcare-consulting leader at Towers Watson, puts it:

“Affordable healthcare remains a top priority for employers and a key component in employee value propositions. However, due to the increasing costs of medical benefits and the additional burden of       compliance, business leaders need to keep the pressure on to control costs, increase workforce accountability and engage workers to lead a healthier lifestyle.”

Just how high and how fast costs are rising still depends on regional breakdowns and whose numbers you’re looking at. In this July 17 HREOnline.com news analysis, researchers from PricewaterhouseCoopers US predict healthcare spending in the United States will grow at a “historically low” rate of 7.5 percent in 2013.

The same report cites another Towers Watson report, the 2012 Towers Watson Global Medical Trends Survey, showing the global cost of employee medical benefits expected to increase by a much heftier 9.6 percent this year, though down from 9.8 percent in 2011 and 10.2 percent in 2009.

However and wherever you look at it, one constant I see is the numbers are higher than they should be and the cost-cutting parade needs to keep marching on.

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The clock is already ticking, folks, as 2014 approaches, the deadline for implementing major healthcare-reform provisions, such as the introduction of state-operated insurance exchanges and the requirement to offer essential health benefits as defined by the Patient Protection and Affordable Care Act.

In the meantime, many employees covered through their employers are already receiving letters informing them of the ACA’s requirement that part of the premiums paid by their employers to their insurance providers be rebated if the providers have not spent at least 85 percent of those premiums — as one letter puts it — “on healthcare services, such as doctors and hospital bills, and activities to improve healthcare quality, such as efforts to improve patient safety.”

This so-called “Medical Loss Ratio” requires that no more than 15 percent of premiums “ be spent on administrative costs such as salaries, sales and advertising,” according to one letter.

Health-insurance experts and providers tell me employers have some choices to make in how the rebates (which were due in their hands by Aug. 1, 2012) will, in turn, be provided to or shared with employees or if they have to be provided to or shared with employees.

What this one (hopefully not-too-confusing) aspect of the ACA points to, say employment attorneys and benefits experts, are the vagaries, choices and — in many cases – confusing segments of the legislation that employers need to address now, quickly, to ensure they won’t be caught with their proverbial pants down.

Just how confused are employers about what they need to do to get their houses in order for the ACA? According to this white paper, compellingly titled Employers most impacted by Healthcare Reform taking a ‘wait-and-see approach’ — many seem to be in denial – prepared by Guardian Research and sent to me by the Choate, Hall & Stewart employment law firm (here is Choate’s alert on the topic as well) – employers are pretty confused, indeed, especially smaller and mid-sized ones. As the paper states:

Companies with less knowledge of [ACA] are more likely to feel that they have time to make decisions and feel that they will not have to take action on their group insurance benefits until 2014 draws near. And as of right now, most are under the impression that maintaining the status quo will still be a viable option after the bulk of [ACA] provisions go into effect in 2014.”

The paper goes on to spell out just how much all employers are dead wrong about that.

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The latest survey from the National Business Group on Health shows that, although healthcare-benefits costs are expected to rise another 7 percent in 2013, that’s still no higher that the increase projected for this year and smaller than employers experienced in the previous three years.

Perhaps part of employers’ abilities to hold the line on cost increases rests on the fact that, according to the NBGH, they “are eyeing a variety of cost-control measures, including asking workers to pay a greater portion of premiums [at the same time that they're] boosting financial rewards to engage workers in healthy lifestyles.”

Additionally, 40 percent of the 82 largest U.S.-based corporations surveyed by the Washington-based organization plan to increase in-network deductibles while roughly one-third plan to increase out-of-network deductibles (33 percent) and out-of-pocket maximums (32 percent).

Nevertheless, despite all these numbers and what they tell us about what’s going up and what’s being maintained a little better, costs increases are still cost increases, says Helen Darling, NBGH president and CEO. As she puts it:

Rising healthcare costs continue to plague employers at an alarming rate. Although cost increases have stabilized somewhat, they are still on a higher base from last year and are simply not sustainable, especially when our nation’s economy and workers’ wages are virtually flat and everybody is struggling.”

In this news analysis by Michael J. O’Brien that ran on HREOnline^™ in mid-July, Darling went even further in making these cost reports a clarion call for HR leaders to ignore the headlines and do everything in their power to not just reign costs in, but perhaps even turn them around. As she said then:

HR leaders need to keep the pressure on to control healthcare-cost increases, increase consumerism and individual accountability, use all of the tools and resources available to empower consumers to be wiser purchasers and support them to choose healthier lifestyles, which will – in turn – reduce the need for healthcare.

“They should also back physicians who are working to reduce overuse and harm [including death] of medical procedures and tests that add no clinical value to patients, but cost billions of dollars.”

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