Health Reform Advisory Practice
The Patient Protection and Affordable Care Act (PPACA) of 2010 affects employers of all sizes in many varied and often confusing ways. HBA has provided insight into this law to many "C"level groups, Financial Planners and HR Professional groups and we continue to provide updates on the How and Why of this new health care reform legislation.
Are you ready for “Pay or Play” as part of the Affordable Care Act?
Many employers have heard so many contradicting, confusing (and sometimes highly biased) opinions on how the Affordable Care Act will affect their company that they are taking the position …. “Damn the Torpedos, Full Speed Ahead!” (Admiral David Farragut (1801 – 1870).
At Health Benefits Advisors, we proudly serve as the unbiased health care industry consultants that our clients expect. Our job is to keep our clients up to date on all aspects of the law, communicate what parts of the law are in place now and what new parts are already identified to roll out in the future. Employers are very concerned about the ACA “Pay or Play” provision that kicks in January 1st, 2015 and affects employers that have 51 or more full time equivalent (FTE) employees. These employers are required to provide coverage for employees or pay a tax penalty of $2000 or more per employee (subject to some adjustments on the final employee count used in the calculation of the tax). And in California, there is talk in the legislature of lowering the employee threshold for Pay or Play to 25 or more employees. And just providing coverage is not enough, the plans must meet two additional tests that have been mandated by the law. There is a test on affordability to each employee and the plans must meet an essential benefits test.
Employers need to understand how the “full time equivalent” is calculated to determine if they are subject to these penalties. And as if that is not enough, there are at least a dozen other areas of the new law that affect employers now and with new changes proposed as the law becomes fully effective.
At Health Benefits Advisors, we have been tracking this law from before it was created and with each additional guideline as they have been implemented. Give us a call so we can conduct an analysis of your current status regarding this law and we will work with you to develop a plan for implementing the upcoming changes.
Our CEO Chuck Kiskaden has significant experience with similar programs and will answer any and all questions you may have on the new law. We will make sure that our clients are informed immediately of how they need to prepare for the evolving roll out of this legislation. For a quick half hour update on the law and how it affects you and your employees, contact us.
Health Benefits Advisors helps a Multi-state Client Implement a Corporate Wellness Culture
- Build and nurture a corporate wellness culture that engages and rewards employees that actively take steps to make lifestyle changes toward leading health lifestyles
- Create an environment where employees are as productive as possible at work and home.
- The health care premiums for 95% of employers (those with less than 500 employees) are calculated by the insurance carriers on an “actuarially pooled” basis. As a result, an employer’s individual effort will have a negligible effect on their rates.
- Educating and engaging employees and their families involves a sophisticated process incorporating a complete “top down” senior management commitment.
- Corporate wide incentive/reward programs must be implemented to engage a critical mass of employees into Health Assessment activities.
- Due to HIPPA data confidentiality of the health assessment information, employers will only have access to summary level data when conducting R.O.I analysis.
- Many employees’ life style decisions have led to employees with major disease management issues as well as basically being obese or addicted to alcohol or tobacco.
- Create and empower a committee of employees (management and operations) to spearhead the design and implementation of the programs
- Provide periodic communications to employees and their families regarding available programs
- Develop incentive plans to encourage and reward active and appropriate employee/dependents participation
- Penalize lack of participation in the programs (when absolutely necessary) for the sake of the employee and the company
- The Campaign is rolled out throughout the companies many locations
My client is very happy with:
- Overall acceptance of the Wellness Culture by employees and meeting a goal of 25% initial engagement of employees through the use of health assessment tools.
- The design of data mining reports that have tracked and reported positive changes in overall employee changes in life style toward better health outcomes.
So what are some of the Pros and Cons to self-insurance (wholly self-insured or partially self-insured with Stop Loss protection)?
- You have the very real possibility of reducing overall costs
- Would it make sense to only pay for the actual expenses that are incurred, however, without the security blanket of an insurance company?
- Your company has the chance to enjoy extremely attractive cash flow savings in the years that claim costs are down.
- You will have flexibility in plan structure
- You have more freedom in product design than just offering “off the shelf Products” from insurance carriers. You can build the plan that meets your company’s (and employee’s) needs.
- You are not subject to offering all of the state’s mandated benefits; many of which are only there due to the lobbying efforts of minority interest providers. You can decide which services best meet the needs of your employee work force. Self Insured employers can review utilization to determine if they should limit or exclude any particular services that are being miss-used and abused.
- There is the very real potential for improved cash flow
- Under a self-insured plan you will pay only for the covered health care services after they are pre-approved, received, processed, finally approved and paid for by your administrator.
- In the first 60 to 90 days, there will be minimal claims actually paid due to a lag in time between when services are rendered, billed to your TPA and final approval of payment by the Plan is rendered.
- You are no longer subject to funding the major health care costs of other employers. You can rely on your own data since internal claims trends are used for cost projections
- You are not funding the profits or replacing the losses of a managed care plan
- Your cost projections are based on your own experience
- You will not need to pay state insurance premium taxes - In the State of California the tax is in excess of 3% and all fully insured plans premiums include this tax
- You control the rate impact of “Margin and Trends”
- The Insurance Company’s “Fully Insured” rates include margin and trend.
- Under a self-insured plan you track the claims history year after year. With the assistance of your Insurance Broker, you are able to manage margins and identify trends using the utilization habits and patterns of your employees
- You will not be held hostage to the market rating effect from the fully insured market place
- Insurance Carriers have been able to take the lid off of their rates because of the major increases by some of the rate leaders – Kaiser Permanente and CalPers.
- Employers that are fully insured receive major increases even if their risk (when compared to others) does not justify the total increase.
- You have control over Pharmacy management – You can negotiate specifically for the needs of your employment base. You are not held captive by the deals negotiated by the carrier with their PBM for price and formulary.
- The risks! Your self-insured plan could cost more than a fully insured plan if it is not structured properly and also not well managed by your Broker and Third Party Administrator.
- If you currently offer HMO coverage, it may be difficult to initially predict utilization trends due to so many employees currently being in a managed care plan. These plans do not readily provide the data needed to actuarially project your first year’s claims cost.
- You will need to reserve for the possible year when you have a sicker employee population than normal. In all cases, you will have to pay the bills as approved by the TPA (except for those covered under your stop loss coverage’s).
- You need to carefully select a TPA that will do more than just pay claims. You will need one with a proven track record at aggressive Utilization Management, Care Management and Disease Management.
- PROACTIVE PLAN MANAGEMENT IS CRITICAL !!!!! A strong Insurance Broker partner is necessary; they must make sure the third party administration is managing YOUR checkbook as if it were their own!
- In Conclusion, the rapidly increasing cost of Managed Care premiums has again made Self Insurance into a very viable model for employers. While the transition will not be simple, the potential savings could be quite significant. Employers need to make sure they are working with and Insurance Broker that is keeping them informed of current and future options for managing health care costs.
- The future of health care cost management will significantly include employee consumerism in health care decisions and demand strong integration of all of the primary players in the health care model. Stone Tapert Insurance and Financial Services Agency plans to be a significant catalyst in the appropriate management of the employer’s health care budgets.