Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
“Value Based Benefit Strategies” Getting the most bang for the Employer’s buck! Agenda • • • • • • • • • • Employer trends Self funding – dodging some ACA mandates Section 125 Transparency “Narrow Networks” Telemedicine Tax subsidies for small groups Defined Benefits vs. Defined Contribution The Winners: employers, employees & brokers Section 105 HRAs and Integrated HRAs On your mark…get set…go! The ACA requires new thinking! B2B Shifting to B2C • What are you doing to differentiate your business model in the “sea of sameness”? – To help consumers understand new health plans – To guide consumers through new options – To build brand loyalty for your agency – To communicate your message Employer Trends • Shift more cost to employees? Higher health insurance premiums More out of pocket expenses • Drop the plan & take the penalty? • More Self funding • Wellness programs Employer Trends • Offer more voluntary benefits like: – Critical illness – Dental – STD / LTD – Life insurance – LTCI • Move away from “Defined Benefits” to “Defined Contribution”? Self Funding “What you’ve got is basically a loophole for the small employer to get out of the ACA requirements” Robert Laszewski, VA-based consultant & former ins. executive Self Funding • Allows a plan to get out of several ACA mandates. For example: – No 3:1 age slope – Allows for flexible deductibles and coinsurance – May be underwritten – Not community rated – Eliminate some state mandates – Save on health insurance premium tax Advantages to Self Funding • Employers’ desire to: – Maintain a level of flexibility in plan design – Gain more control in the financing of their employees’ health benefits – Potentially save money over a fully insured plan Section 125 • Premium Only Plan - POP • Flexible Spending Account - FSA – For unreimbursed Section 213d expenses up to $2,500 as of 1-1-13 • down from $5,000 due to the ACA – For dependent care • Children • Aging adults Consumer Behavior Must Change • We are a nation of “co-pay junkies” • We need to start shopping for health care like we do anything else • But…what does health care cost? • How & where do people research & shop for health care costs? Prices? • Closely guarded by hospitals • Recent government study of 3,300 hospitals show a wild disparity in billing rates • Example, hip replacement: – In Houston, $126,157 – In Appleton, WI, $26,787 – Medicare only pays $14,000 Transparency must evolve Hospital>Surgical>Heart Various Heart Surgery Results Clicked “Heart Valve Surgery” Health Care Providers What is in the ACA for them? How do the providers win? • Collaboration of services and information – Share medical records – Gain efficiency – Save money • Reduce hospital readmissions • Join an Accountable Care Organization? • Join a “narrow network” • For exchange programs, Aetna will use provider networks that are only 1/4 to 1/2 the size of its normal health plan networks – Mark Bertolini, President of Aetna Inc. (NYSE:AET), said in the first quarter 2013 earnings call ACOs Telemedicine • Up to 70% of medical issues could be solved over the phone (Wellness Council of America 2008) • 24/7 – call anytime and get a U.S. doc & get a prescription written if needed Reducing Cost via Telemedicine • Could reduce the claim cost to the carrier – Emergency room - $750 – Urgent care $150 – Doctor office visit $100 – Telemedicine: new benefit, no charge to carrier Physical by Smart-phone? • To measure blood pressure: – an arm cuff can plug into a smart-phone for a quick reading. • To measure a heartbeat: – user would place his or her fingers over the camera and the squiggly lines of an EKG appear on the phone's screen. • Other devices would enable a smart-phone user to look inside a person's eardrum, eyes, listen to a heartbeat, chart lung function or get a sonogram. Small Business Tax Credit • 2014 - up to 50% for groups up to 25 lives – Up to 35% for non-profits • To qualify: 1. Must have an average salary of <$50,000 2. Employer must pay at least 50% of the premium 3. Employees must work at least 30 hours per week Section 105 MERP • There are many different types of arrangements that fall within the umbrella of Section 105 Medical Reimbursement Plans • Some common terms you might hear are: – – – – – – Health Reimbursement Arrangement Health Reimbursement Account Healthcare Reimbursement Plan Medical Expense Reimbursement Plan Medical Reimbursement Plan Section 105 Plan MERP Tax Benefits • Section 105(e) states that amounts received under an accident or health plan for employees are treated as amounts received through accident or health insurance for purposes of § 105 • Section 1.105-5(a) of the Income Tax Regulations provides that an accident or health plan is an arrangement for the payment of amounts to employees in the event of personal injuries or sickness • Reimbursements by an employer of amounts paid by an employee for medicines and drugs purchased by the employee without a physician's prescription are excludable from gross income under § 105(b) https://www.irs.gov/pub/irs-drop/rr-03-102.pdf https://www.law.cornell.edu/uscode/text/26/105 Defined Benefits vs. Defined Contributions Fact #1: Employers want more value from their employee benefit dollars Fact #2: Employees want benefit options to fit their personal needs Defined Benefits – today’s world • 18 life group • Dual option plan – $545 monthly employee premium 1. PPO $2,500, 70/50, $4k/$8k coinsurance, office copay and drug copay…or 2. HDHP $5,000/100%, plus a $1,650 annual contribution to an HSA from the employer • Paid employee premium = $117,720 per year Could this be the future? • Drop the group health plan • Penalized $2,000 per ee? – Not in a group of <50 FTEs • We still finance the benefits, but: – We control our budget and – Each employee may customize benefits to fit their personal needs “Defined Contribution” • Employer sets up: – HRP (Sect 105 Health Reimbursement Plan) – Section 125 Plan • Employee submits defined expenses for reimbursement via the HRP, such as: – Health insurance premiums – Out of pocket Section 213(d) expenses – Optional Lasix or “Lap Band” procedures, etc. Remember this… • January 1, 2014 –All QHPs are guaranteed issue • May not discriminate based on health status Example of how this could work • Employer budgets $500 PEPM • Employee purchases a QHP – With at least 60% actuarial equivalency – Including all of the EHBs • Employee submits the premium expense for reimbursement via the HRP • Employee purchases additional supplemental benefits via the Sect 125 $500 Employer Contribution • Example: – Employee purchases a Bronze plan • $300 per month of unreimbursed premium • 2016 $6,850 max out of pocket • Employee has $200 left over $200 left to customize their plan • • • • • • • Supplemental health plans Long Term Care Insurance Dental and/or Vision Life insurance Accident policy LTD or STD …whatever fits their needs What are the most common ways to hit your max out of pocket? • Accidents – Slips, falls & fractures • Cancer • Heart Disease – Heart attack – COPD • Stroke or TIA “It can’t happen to me…right?” • Cancer – 1 in 2 men will be diagnosed at some point – 1 in 3 women • Heart attack – 1,300,000 each year in the USA • Accidental injury – 38,000,000 receive medical attn each year Cancer Stats • There were 1.4 million cancer cases in the U.S. – Men: 745,180, Women: 692,000 • Estimated cancer deaths – Men: 294,120, Women: 271,530 • Most common cancers - men: – Prostate (25%), lung & bronchus (15%), colon (10%), urinary (7%) • Most common cancers - women: – Breast (26%), lung & bronchus (14%), colon (10%), uterine (6%) Heart Attack Stats • An estimated 80 million American adults (one in three) have one or more types of cardiovascular disease. • 785,000 Americans will have a new coronary attack (this year) and 470,000 will have a recurrent attack. • Every 34 seconds, an American will suffer a heart attack. Estimated direct cost of CGD is $165.4 billion. • The average age of a person having a first heart attack is 64.5 for men and 70.3 for women. • Annual number of diagnosed heart attacks: Ages 35-44 Men: 30,000 Women: 10,000 Ages 45 - 64: Men: 265,000 Women: 95,000 Ages 65-74 Men: 180,000 Women: 95,000 • From 1995-2005 the death rate from Coronary Heart Disease declined 34.3 percent. What could a 40 yr old get for $100 per mo of supplemental coverage in today’s market? $30,000 lump sum for each: when diagnosed with cancer – plus upgraded radiation and chemo 17 different critical illnesses Plus, organ transplant, coma, paralysis, and/or blindness Heart attack or stroke Plus - recurrence benefits for the above benefits! Accident – covers 14 different types of accidents Hospital indemnity Who wins in this new strategy? 1. The Employer 2. The Employee 3. The Broker The Employer Wins! Premiums Health Insurance Critical Illness Long Term Care Insurance 2015 $117,720 Not offered Not offered 2016 Defined Contribution $64,800 $300 x 12 months x 18 employees = $64,800 Dental Not offered Accident Not offered $43,200 tax deductible voluntary employee benefits ($200 x 12 months x 18 employees = $43,200) $117,720 – ($64,800 + $43,200) = $9,720 annual savings! More Employer Savings • FICA tax savings of 7.65% on all qualified premium placed through the Section 125 • Example: – The Employer has $43,200 in payroll deduction via the Section 125 – $43,200 x 7.65% = $3,305 in FICA savings to the Employer The Employee Wins! Health Insurance 2015 2016 $2,500 ded, 70/30 with a $4,000 in network coinsurance ($8,000 OON) Max OOP of $6,850 for an individual CI, Cancer, Heart & Stroke, Accident Long Term Care Insurance Dental Accident Plan None None None None $30,000 for multiple catastrophic risks $200,000 of indemnity, 5% compound inflation Preventive, Basic and Major coverage, $1,000 CYM Up to 14 covered accidents The Broker Wins! Supplemental health product illustrated is “Active Care” from Washington National Commission 2015 2016 Health Insurance 4% of annual group health premium = $4,787 6% of annual IMM premium = $3,732 Critical Illness, Cancer, Heart & Stroke, Accident $0 50% of $21,600 = $10,800 Long Term Care Insurance $0 50% of $10,800 = $5,400 Dental $0 20% of $10,800= $2,160 Total Commission $4,787 $22,092 ~461% commission increase! ($4,787 x 461% = $22,068) Health Reimbursement Arrangements • • • • • • • 100% Employer financed accounts Not required to be pre-funded Tax advantages for Employer Employees may not contribute to HRAs IRS approved Section 105 plan HRAs are not health insurance Usually coupled with an HDHP HRAs • May reimburse medical expenses, like: – Co-pays, deductibles, and coinsurance – Dental and vision care – Prescriptions • May reimburse individual/family health premiums • May offer HRA benefits to 1099 contractors – Must report all HRA reimbursement as income Integrated HRAs • HRA vs. Integrated HRA - differences – Must be linked to a health plan • Available only to those who take health plan coverage – May not be integrated with an IMM – May not reimburse individual major medical premiums What about employers under 50 lives? • No penalties • No “pay or play” • Employees may also qualify for tax subsidies via public HIEs • HRAs may reimburse the non-subsidized portion of the employee’s premium What is the “Defined Contribution” blueprint? • The Employer: – cancels the group health plan – determines their budget – designs a stand alone HRA – chooses HRA software or HRA Administrator – Implementation How does the employer maintain compliance? • Hire a qualified HRA administrator…or • Use HRA software to keep in compliance with these three key areas: 1. Tax savings & compliance 2. Federal compliance 3. ACA/Health Care Reform Tax Savings and Compliance • The IRS requires that a formal HRA be established in order for HRA reimbursements to be tax-free for the employer & employees • The HRA must have HRA plan documents Federal Compliance • HIPPA – Employer never sees the medical information or the type of claims • ERISA – Employers are not allowed to “endorse” a specific IMM under ERISA • “carrier-agnostic” defined contribution health insurance program for small businesses – HRA software keeps employer complaint • Employers never know what policies are purchased ACA & Health Care Reform • Introduces new requirements for HRAs – Summary of Benefits and Coverage – SBC – New reporting forms (720/5500) – New plan design requirements HRA software makes sure employers have the appropriate documents, data, and plan settings in place to be ACA compliant! HRA Software Features • Defines classes of employees – Each class may receive different benefits • Categories of expenses – May specify different benefits, such as: • • • • Annual maximum Coinsurance Dental Vision Q&A Thank you for attending! Turn in your evaluation forms, please!