Employers More Confused about Coverage than Ever

One of the biggest challenges for employers who offer their workers health insurance benefits is that the majority of U.S. workers are really in the dark about how insurance works, according to a new survey.

Despite employers’ best efforts to provide as much education as possible to their workers before and during open enrollment, it seems the finer points are not sinking in, according to United Healthcare’s “Consumer Sentiment Survey.”

Here are the main findings:

  • A mere 7% of those surveyed had a full understanding of all four basic insurance concepts: plan premium, deductible, coinsurance and out-of-pocket maximum.
  • More than 60% of respondents could define plan premium and deductible.
  • 36% could define out-of-pocket maximum.
  • 32% could define coinsurance.


These deficiencies result in more people spending more on coverage than they may actually need to.

Another study, carried out earlier this year by the Kaiser Family Health Foundation, concluded that not having the correct information can lead to dissatisfaction when employees discover they’ve signed up for a plan that doesn’t meet their needs.

The Kaiser survey revealed that employees are most confused when it comes to understanding these factors:

  • How to calculate out-of-pocket costs once health insurance claims are processed.
  • The concept of providers who are in network vs. out of network at an in-network hospital.
  • Understanding deductibles and out-of-pocket annual limits for their plans.
  • What a health insurance formulary is (concerning prescription coverage amounts).


What you can do

So, as open enrollment nears, you may want to consider focusing on the foregoing areas to better educate your workers. Also, it’s recommended that you approach the education process with a multi-pronged approach employing technology, meetings and the offers of one-on-one time to cater to people’s different learning styles.

It’s important for your employee morale and their pocketbooks that they understand what their choices are and what they’re buying. The more light you can shine on the process and the more stress you can reduce, the better off your employees will be.

This is especially true in light of one other finding in the United Healthcare study: One-fourth of respondents said they would rather file their annual income taxes than select a health plan.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.


Companies Struggle with Benefits Compliance

More and more employers are being overwhelmed by all of the compliance requirements associated with managing employee benefits.

The Guardian Life Insurance Company of America’s “Benefits Balancing Act” study found that 60% of employers are feeling overwhelmed with the increased complexity of managing their benefits programs. One of the main reasons for the additional burden is the Affordable Care Act, with its myriad of compliance and reporting requirements.

The employer mandate and the documentation and new filing requirements with the IRS are high on the list of compliance issues, as are evolving Family Medical Leave Act (FMLA) and ERISA requirements.

Interestingly, larger firms with 100 or more employees are having the hardest time, with 70% saying they are especially challenged by installing new coverages, changing carriers and employee communications and enrollment.

The shackles of compliance are so great that it’s the number one benefits-related concern for nearly 30 % of employers, the study found. In fact, 70% said that their firms are not equipped to keep up with the steady changes in federal and state laws governing employee benefits.

The top areas of compliance concern are:

  • The ACA excise tax (“Cadillac tax”)
  • Changes to paid parental leave laws
  • ACA employer mandate
  • ERISA requirements
  • State and local FMLA requirements

In terms of administration the top concerns are:

  • Employee communications and education
  • Adding new benefits or changing plans and insurers
  • Establishing electronic data interchanges
  • Account management and service delivery
  • Claims and employee customer service
  • Enrolling employees

What companies are doing
As the regulatory landscape has shifted so dramatically over the last seven years, many employers have opted for outsourcing their benefits compliance.

This may be an especially smart move for smaller employers, which often do not have in-house benefits administration resources.

Among employers outsourcing at least some benefits activities, the study found that:

  • 50% use the services of a broker
  • 25% use an insurance company
  • 25% use a third-party vendor (enrollment firm, HR services firm or a private exchange)

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

Employers Expect 6% Hike in Health Costs for 2019

The IRS has released the inflation-adjusted amounts for 2019 used to determine whether employer-sponsored coverage is “affordable” for purposes of the Affordable Care Act’s employer shared responsibility provisions.

For plan years beginning in 2019, the affordability percentage has increased to 9.86% (from 9.56% in 2018) of an employee’s household income or wages stated on their W-2 form. The higher rate is indicative of the anticipated small group plan inflation that continues hitting premiums.

If you are an applicable large employer under the ACA (with 50 or more full-time staff), you should examine the affordability percentages for your lower-waged employees so you don’t run afoul of the law. Fortunately, as the percentage has increased, you’ll have more flexibility when setting your employees’ contribution rates.

A recent study by PricewaterhouseCooper’s Health Research Institute found that employers and insurers are expecting a 6% increase in health care costs in 2019. While that rate is just slightly above the average 5.6% increases since the ACA took effect, many employers have increasingly been passing the inflationary costs on to their covered employees.

The report by PwC noted three trends that are having the largest effect on health care costs.


Abundance of treatment options – With covered individuals demanding more convenience in their treatment options, employers and health plans have responded by giving them more ways to obtain care, like retail clinics, urgent care clinics and electronic physician consultations. While the long-term goal is to reduce health care spending on services, currently the increased offerings have resulted in higher utilization.


Mergers by providers – Hospitals and other health care providers have been consolidating for the better part of a decade, and that trend is expected to continue in light of several recently announced mega-deals. Prices tend to rise when two health systems merge and the consolidated entity gains market share and negotiating power.


Physician consolidation and employment – Hospitals, health systems and medical groups are hiring more and more doctors out of private practice. And when that happens, costs tend to go up since these organizations tend to charge higher prices than independent practitioners.

In 2016, 42% of physicians were employed by hospitals, compared to just 25% in 2012, according to the PwC report. Hospitals and medical groups tend to charge between 14% and 30% more than physicians in private practice.


Restraining factors

At the same time, there are some factors that are dampening overall cost increases:

  • Expectations that next year’s flu will be milder than this year’s main virus.
  • More employers are offering care advocates who help covered individuals navigate the insurance system to find the best quality care at the best price. According to the survey, 72% of employers offered health-advocacy services to their employees in 2018.
  • More employers are using “high-performance networks,” also known as “narrow networks.” In essence, a plan will use a narrow network of doctors who care for the bulk of covered individuals. Not contracting with as many doctors means lower overall outlays for medical services.
    While the doctors in these networks are not always the least expensive providers, they typically are ones who have proven over time to yield the best results.


The takeaway

We are here to help you get the most value for your and your employees’ health care spend. Talk to us about any of the tools mentioned above to see if we have a program that might work for your organization.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

Wellness Plans Can’t Offer Discounts for Medical Questionnaires, Exams Starting in 2019

Regulations governing how wellness plans offer discounts on health premiums are set to sunset in January 2019, and with no prospects of replacement regulations in sight at the Equal Employment Opportunity Commission, this means that the shackles will be lifted on the plans.

The rules which allow an employer to grant up to a 30% discount on health insurance premiums to employees that fill out health questionnaires or take various health evaluation tests, were found to be “arbitrary” by an appellate court judge about a year ago. But, to avoid disruption in the marketplace and for employers who had already set their wellness plans in motion, the judge ordered the regulations to sunset on Jan. 1, 2019.

The judge agreed to delay the sunsetting to that date to allow the EEOC to write up new proposed regulations for wellness plans.

In making his order, he instructed the agency to write new regulations by August 2018. However, in March, the EEOC announced that it had no immediate plans to issue new wellness regulations regarding the definition of “voluntary.”


Why are the regulations sunsetting?

In July 2016, the EEOC issued rules under the Americans with Disabilities Act (ADA) and the Genetic Information Non-discrimination Act (GINA) stating that, in connection with such plans, employers could implement penalties or incentives of up to 30% of the cost of self-only coverage to encourage employees to disclose ADA-protected information, without causing the disclosure to be involuntary.

The disclosures in question would be part of wellness program questionnaires and exams designed to help employees improve their health and fitness.

The American Association of Retired Persons filed suit challenging the regulations and a federal district court in Washington, D.C. nullified the EEOC’s rules for how employer wellness programs could be offered in compliance with the ADA and GINA.

Beginning Jan. 1, 2019, companies may no longer assess penalties (some of which triple what an employee pays for health insurance) to workers who decline to participate in wellness questionnaires and exams.

With no guidance forthcoming from the EEOC, affected employers will need to make a decision. Should they continue with current programs, considering the risk of EEOC enforcement or private legal action, or should they come up with a plan B?

While it may be tempting to expect the EEOC to come up with regulations that are similar to the current ones but in compliance with the court’s decision, that could come back and haunt you.

Pundits suggest creating a path for employees this year that allows them to achieve their full points total without medical exams or inquiries. You can put together a plan that focuses on other wellness issues that they can instead participate in.

Some alternatives to medical questions and exams that employers may want to consider are:

  • Healthy lifestyle training.
  • Distributing Fitbits or similar fitness trackers.
  • Allowing employees to participate in online health education games.

What’s next?

Considering the Trump administration’s history on regulatory matters, it’s likely things will revert to the old guidance for wellness plans: that employers could neither require participation nor penalize employees who do not participate.

But for now, employers need to tread carefully and should consider changing their wellness plan rules if they include incentives for medical questionnaires and exams.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

What Employers Need to do to Prepare for Open Enrollment

The Patient Protection and Affordable Care Act’s implications may have a big effect on the upcoming enrollment periods in the future. Experts predicted the first enrollment period to be the most difficult one in history. They are urging companies to approach the enrollment period prepared and to start planning now if they have not already done so. To help them formulate a plan, experts have provided an open enrollment checklist.

Consumer-driven health plans should be offered. These plans only continue growing in popularity. Nearly 40 percent of large companies offered these plans in 2013, and experts said within two years of that time they thought about 65 percent of employers would offer them.

Communicate plan options often to people who are newly eligible. Researchers found that more than 30 percent of companies still needed to take steps to comply with coverage extension requirements for workers putting in more than 30 hours per week. They encourage employers to begin communicating immediately with workers who are newly eligible for benefits. This includes new hires and workers who have moved from limited part-time hours to enough hours per week that they are eligible for company benefits. Employers should communicate with those who are eligible and tell them why they are eligible, what this means and how eligibility is calculated. After doing this, employees should be allowed to consider their options before making a decision. Employees who are not yet eligible for benefits should also have access to benefit information regarding what they can expect if and when they do become eligible. This information should be placed in a visible and common area of the workplace.

Put a strong emphasis on voluntary benefits. These benefits are very valuable to employees, and they should always be considered a part of any carefully planned benefits program. They are also good for settling the misconceptions employees may have about other types of plans. If employees are not eligible for employer-sponsored medical plans, voluntary benefits can still assist such workers.

Put an emphasis on mobile technology to promote accountability. Cost outlays and health benefit decisions should be the responsibilities of participants. Smart phone apps and special features that hold contacts and benefit information are very useful for advice and point of service needs.

Open enrollment should be used as a wellness campaign reinforcement opportunity. If there are any possible compliance penalties to be introduced, this is especially important. Some examples include higher premiums for people who do not use health screenings.

There are other steps employers can take to make enrollment periods easier and communicate the importance of coverage to eligible workers. Employees who are not eligible for employer-sponsored benefits should be provided with information about alternate coverage. To learn more or for answers to questions about existing plans, contact ACBI.

Health Insurance Online Enrollment Helps Businesses, Plan Sponsors

Life for plan sponsors is a lot easier than it used to be – thanks to online health insurance enrollment for employees. With open enrollment periods coming up for most employers, now’s the time to reach out to your employees and encourage them to make use of your health insurance company’s online portal for plan information and enrollment purposes.

How does this benefit Plan Sponsors?

  • It gets your HR staff or management out of the business of handling and forwarding paperwork, saving you time and money and lowering your business risk from human error.
  • It boosts employee loyalty. According to the 12th Annual Employee Benefit Trends Survey from MetLife, 8 employees in 10 reported they value noncash benefits, such as medical benefits – when they are customizable to fit their needs.
  • Employees get the benefit of authoritative information about their plans, straight from the source. Your staff doesn’t have to become plan experts.
  • You and your staff spend less time fielding basic questions from employees.
  • New information from online enrollment or online changes is automatically synched up with your account. You get a full report. In most cases, data flows right through to all carriers and to your payroll systems.


How does it benefit employees?

  • Enrollment is easy and can be done at home or at work, 24/7.
  • Changes to coverage are easy to make at any time.
  • Technology allows for instant premium quotes and easy side-by-side comparison of health plan alternatives – you your employees can make better decisions for their families.
  • More confidentiality – employees can share private information directly with the carrier and not involve HR or supervisors.
  • Eligibility documents for dependents can be easily uploaded from home.

Both employees and employers benefit from the more efficient online delivery and administration of health care plans. Plan information and data can be accessed at any time, 24/7, and appropriate changes easily made, both during and after open enrollment periods. Employers can easily obtain up-to-the minute information on their health care plans with a few clicks.

The efficiency also reduces costs for all concerned.

What Employers Can Do

Employers can maximize the benefit of online enrollment for themselves and for their employees by being proactive about communicating the plan benefits to employees, and notifying employees about how they can access your plan’s online portal for themselves.

Once they have done so, they can come back to work better informed, and ask more detailed questions.

You can also arrange to have your agent or benefits advisor come to your workplace and do an in-service presentation on available health care plans, supplementary and voluntary coverage, and any other relevant issues, ahead of or at the beginning of open enrollment period.

Such a presentation can also help you boost participation and enhance employee loyalty. Most employees place a good deal of value on quality health care plans – once they fully understand the benefits.

To arrange a meeting and informational briefing for your employees, contact ACBI.

Importance of Key Employee Insurance

Key employees are those whose skills and knowledge are significant contributions to overall business income. If a key employee dies or is unable to work anymore, the impact is significant enough that the business will suffer. The financial consequences are undesirable and detrimental. Research shows that many businesses depend on at least one or two key employees for their overall success. However, less than 25 percent of employers have life insurance for their key persons.

Disability income and life insurance for key persons who die or become disabled can provide compensation for a business. The monetary benefits are enough to cushion the adverse financial impact of losing the key person. There is no specific dollar amount that employers should purchase for this type of coverage. However, each employer should consider how much their key persons contribute to the company in order to decide how much coverage to buy. To ensure the proper amount is purchased, it’s best to contact an agent to discuss insurance options. Some insurance companies provide special formulas for calculating this amount. However, it’s important to keep in mind that a calculator is standardized, so it may be better to purchase more than the amount derived from the formula. Only an employer can determine an individual employee’s worth to their company.

In many cases, reviewing the employee’s list of responsibilities can help in the evaluation process. It’s important to consider the cost of replacing a key person. Hiring new employees can be expensive. In addition to this, agency fees, salary and possible moving expenses should be considered for the replacement. While the insured organization pays the premium, is the beneficiary and owns the policy, it’s possible to set up an insurance plan that allows sharing of these responsibilities between the key employee and employer. However, the employee must agree to the company’s purchase of this type of insurance.

Most businesses choose term insurance if their main purpose is getting compensation for losses resulting from the death or disability of a key employee. In some cases, policies that accumulate cash value are appropriate. It’s best to discuss these options with an individual agent. Key person life insurance is more popular than key person disability coverage. However, it’s important to consider the possibility of an employee becoming partially or fully disabled and the effects the disability would have on the financial future of the business. If the key person is a sole proprietor or partner, it may be best to consider a business overhead expense policy for disability coverage. To determine which options are best for an individual company, contact ACBI


Are Your Group Health and Wellness Benefits Plans Keeping Up With the Jones’s?

Most business owners and HR executives know that compensation isn’t just about cash. Study after study has shown that employees also value a strong group benefits package as well. This could include everything from employee health, vision and dental to long term care insurance group plans to employee wellness programs. Employers have dozens of options, and generally have a great deal of flexibility in choosing with their insurance companies and other vendors what benefits to offer.

The latest survey from the Society of Human Resource Management took a look at many common employee perks and benefits, and what percentage of established employers offered each one.

Here are some of the highlights from the SHRM study.

PPO plans dominated the group health insurance market, with 86 percent of employers offering the option. About 33 percent offered HMO plans. Only 7 percent of employers still offer indemnity or fee-for-service plans, according to the survey.  This indicates that employers have been trading flexibility in choosing providers in exchange for lower premiums.

89 percent of employers provide mental health coverage – often required by state mandates. 83 percent reported offering accidental death and dismemberment insurance, and 80 percent offer chiropractic coverage.

About 31 percent offer some kind of long-term care insurance, and 29 percent offer critical illness insurance.

Out of those responding to the survey, 13 percent of employers pay the full cost of health benefits for full-time employees, and 5 percent pay the full cost of benefits for part-timers and employee spouses.

35 percent of employers now offer benefits for same-sex domestic partners, but only 26 percent offer benefits for opposite sex domestic partners. 3 percent of employers pay benefits for foster children.

42 percent of employers offer HSAs, or health savings accounts, which allow employees to save money pre-tax for qualified health expenses, and to pay for these expenses tax-free. They can only be used in conjunction with a qualifying high-deductible health plan. 36 percent of employers reported making HSA contributions on behalf of employees.

77 percent of organizations provide long term disability insurance, and 68 percent provide short-term disability insurance. This coverage ensures that a worker can still keep a roof over his or her head and provide for families if illness or injury should prevent them from working.

77 percent of employers offer an employee assistance program – a benefit that allows workers to confidentially access counseling and assistance services for a variety of issues.

Wellness Benefits

About 77 percent of employers provide wellness or preventive health resources and information in some form, and 64 percent have a formal wellness program in place. 48 percent offer first aid training, 61 percent offer on-site flu vaccination, and 44 percent offer a smoking cessation program. 37 percent of employers offer a weight loss program benefit of some kind, and 36 percent offer fitness center membership or reimbursement.

One interesting development: 21 percent of organizations now offer a discount on health care premiums for getting an annual health risk assessment, and 43 percent of organizations report providing a reward or bonus for completing certain health and wellness programs. That’s nearly double the 23 percent of employers offering that particular carrot in 2009.

One brand new benefit that SHRM just began to track this year is a standing desk. 13 percent of employers offer employees a standing desk at work. 

If you have any questions about your benefits plan, call ACBI at 203-259-7580. 

10 Tips for Saving Money on Prescription Medications

Prescription drug commercials do a good job of making everything about the products seem good. However, the prices actually wind up being much higher than many seniors can afford. There are several ways to save money on prescriptions.

1. Coupons Pharmacies and discount stores take the time to send out quite a few coupons, so it is a good idea to make use of them. Searching online is even easier, and there are many apps such as GoodRX that help seniors find the best drug prices and pharmacies near them. Price comparison apps also exist. While shopping at the pharmacy, ask about a discount card. Most large pharmacies offer these to help customers save even more.

2. Generics Nearly 80 percent of prescriptions today are written for generics. These are bio-equivalent drugs for the name-brand ones. However, they cost between 80 and 85 percent less than their name-brand counterparts. Experts estimated that buying generic drugs saved Americans a total of about $3 billion every week in 2010. Also, the 17-year patents that exist on many big-name drugs will end during the next several years. When this happens, it will be easier to find generics for several drugs that did not have these options in the past.

3. Tests Another good way to ensure a drug is more useful than harmful without investing a lot is to ask the prescribing physician for a free sample. They often have trial packages with enough to last for 10 or 14 days, so this helps patients decide if a med is right for them. If it works well, use that time to also search for long-term discounts. There are often free trial offers from drug manufacturers in magazines or online.

4. Government Programs There are drug assistance programs provided in many states to help seniors pay for the gap between what is covered and what they must come up with out of pocket. There are programs for Medicare Part D in addition to resources for finding treatments. The Medicare site offers more information about these.

5. Pill Splitting Buying pills that can be cut in half will help save money, so ask a physician if a particular prescription is appropriate for this. If the pill is coated or is a time-release capsule, avoid doing this. This can be difficult with small pills, but pharmacies sell pill cutters that are tapered to cut many different sizes of pills.

6. OTC Drugs Doctors may recommend over-the-counter drugs in some situations. For example, a doctor may decide that an over-the-counter allergy substance will work instead of a prescription one for a senior. Be sure to ask about this any time a physician prescribes something new.

7. Patient Assistance Programs Nonprofit organizations and pharmaceutical companies sometimes provide discounts or grants to people who need financial help. Needymeds.org is one option, and discuss other options with an agent.

8. Order By Mail Costs can be reduced by ordering long-term supplies by mail. Avoid shady companies on the Internet that cannot be verified, but use the resources provided by the National Association of Boards of Pharmacy. Sites listed with this organization have been inspected and verified for quality practices and upholding the highest standards. When shopping online, watch for the VIPPS seal.

9. Shop Local Ask local friends, relatives or health care providers where to find the best prices. Many pharmacies are willing to offer seniors lower prices in exchange for a loyalty commitment. Keep in mind that they desire repeat customers and a long-term business relationship.

10. Wholesale Clubs Costco and other wholesale clubs offer discounted prices for members’ prescriptions. In some cases, wholesale clubs may not require membership to purchase drugs there. This is often a good way to save a great deal of money.

Saving money on prescriptions takes some research and invested time, but it is well worth every minute. To learn more about options, call ACBI at 203-259-7580 or visit our website. 

Why Insurance Premiums are Increasing

Insurance premiums are a function of these factors: The perception of future risks, recent catastrophic claims and the return available on investment. Huge fires and other disasters factor in, such as the Colorado Springs blazes earlier this year and other natural disasters have also forced large payouts. Even the devastating Japanese earthquake and tsunami from 2010 affects insurance premiums in the United States, since insurance companies routinely purchase re-insurance coverage from very large companies. And these reinsurance companies, such as General Re, have been increasing their rates. In addition, jury awards and settlement costs in a variety of commercial fields have put pressure on insurance company reserve funds.

Yes, insurance companies are just like you: They assess the risks they can cover, and then buy insurance themselves to protect themselves against very large but unlikely events that would overwhelm their reserves.

We saw a similar tightening of the property and casualty insurance world across the board, in 2001, following the 9/11 attacks on the World Trade Center. The direct costs themselves were significant, but reinsurance companies also increased their rates then, in order to cover their own risks and ensure clients were protected in case of acts of war, nuclear strikes, chemical strikes, etc.

Fortunately, their worst fears weren’t realized, but prudent insurers are in business to cover the worst case scenario, and so they had to plan and set premiums accordingly.

Fast forward to today, though, and we have a different phenomenon at work. Reinsurers had just started to climb out of the substantial capital shocks of 2008 and 2009 when they got hit with the Japan tsunami, which put pressure on capital pools. But as they work to replenish their reserves, all insurers, all over the world, have been forced to reckon with a new reality: Low interest rates.

Insurance companies make money in two ways: Bringing in premiums, and investing the “float.” Normally, insurers break even or even run a slight loss on premiums. This keeps premiums affordable, but is only possible because they can invest their accumulated reserves at a profit.

Ten years ago, an insurance company could get 5 or 6 percent on a portfolio of Treasuries. Now that same insurer struggles to get 2 or 3 percent on a AA-rated bond portfolio, and U.S. Treasuries – the traditional mainstay of conservatively-run insurance companies, may well be generating a negative real return after inflation.

Something has to give.

That’s what we’re seeing now: Actuaries have no choice but to increase premiums to cover anticipated payouts in light of the new lower interest rate environment. To do otherwise risks insolvency, which does no service to the insured at all, and even defeats the purpose of insurance.

The tightening of the reinsurance market, combined with adjustments to account for the lower returns on assets, is now making its presence felt on Main Street: Aggregate commercial insurance ratios increased for the fifth consecutive quarter, and by 5 percent in the first quarter of 2012 alone. That’s the biggest increase we’ve seen since 2004 (remember those summer hurricanes in Florida that year?)

The two lines responsible for the largest increases, according to a Towers Watson survey, were the two segments most vulnerable to jury award and medical cost increases (workers compensation), and increased reinsurance costs from megadisasters and lower interest rates (commercial property insurance), respectively.

Insurance markets tend to cycle along with other industries. As reinsurance pools of capital get replenished, or as interest rates rise, allowing carriers to generate more revenue from the “float” rather than rely so much on point-blank premium collection, rate increases tend to moderate, and new carriers spring up to compete for business.

So if you are seeing rates increase, it’s more a matter of prudence in the face of risk and low returns on capital, which affect all carriers everywhere. As a result rates increase to make sure there are enough in reserves to cover future claims . No one is exempt, and it’s a bigger issue than any single insurance agency, carrier, or insurance line.  If you would like to review your coverage to be sure you have the proper protection at the most cost-effective level, please call ACBI at 203-259-7580 or visit our website