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Thursday, 14 August 2014 00:01

Employers work to understand the costs of health benefits

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Donavan Donavan

As the annual open-enrollment period approaches for 2015 policies, employers will begin making decisions in the coming weeks about employee health benefits in preparation for renewing their policies.

Next year brings two new requirements for employers under the federal Patient Protection and Affordable Care Act:

• A mandate for companies with 50 or more full-time equivalents to either offer health benefits that comply with the law or to pay a penalty and send employees to a health exchange to buy coverage on their own, and

• A need to begin measuring and reporting the number of hours worked by employees whose hours vary from week to week.

For some perspective on what’s going on, MiBiz spoke with Guylaine Donavan, a vice president at the Grand Rapids office of Hylant Group Inc.


With the employer mandate kicking in after being delayed for a year, what’s your advice for clients considering whether to keep health benefits or send their employees to the exchange for coverage?

The biggest conversation we have is can you afford not to offer benefits and still maintain your employees and stay competitive with a good employee base. Are you doing something that might not be advantageous to your employees, meaning you may have a retention issue down the road? An employee may say, ‘You know what, I really need an employer who offers me benefits because this (exchange) marketplace is offering everything after taxes.’ So this does have negative implications for these employees.


Among the clients you talk to, how many are actually considering opting out of offering health benefits?

I don’t have any clients that have talked about opting out. Some of them kicked the can around a few years ago but decided they’re going to stay in and see how this plays out.


What kinds of trends are you seeing for benefit changes that employers are considering for in 2015?

There are not a lot of major changes. We’re seeing very minimal tweaks in the plan designs, and that really focuses on just keeping them compliant (with the ACA) and making adjustments maybe to some out-of-pocket maximums so they do not exceed the federal mandate. We’re doing a lot more in the wellness trend, but that has to do a lot with employers really trying to own some of their destiny. Employers are saying, ‘What can we do to change this trajectory of health care increases?’ We’re seeing wellness plans, we’re seeing on-site clinics, we’re seeing tools to help employees make better decisions on their health care purchases.


Have you delivered any policy renewals that indicate what premiums will do for 2015?

Not for the 2015 plan year yet. We did receive a significant number of early renewals for the November-December timeframe who took early renewals last year and bought a little more time before their compliant plans came into play, and those renewals are actually minimal increases, … below 10 percent. What was expected is in the 15 percent-plus range. For some of our fall renewals, we did see 15 percent-plus renewals.


What will the mandate for measuring variable hours mean for employers when it kicks in next year?

Variable hours is for an employee who is not working 40 hours every week. They come in, there’s not a guarantee that I’m going to work 35 hours week in and week out. I may work 38 hours this week, and I may work 28 hours next week. Sometimes those are seasonal employees and they don’t have a defined number of hours, and they typically fall into certain types of industries. They may have seasonal employees or they have employees who may work very hard for six months out of the year and then maybe not work full time.

The objective is to make sure those employees that are meeting that 30-hour measurement (for the average number of hours worked weekly during the year) are being offered benefits. That’s what the employers have to capture and start measuring.

The law basically says that after Jan. 1, 2015, you are going to have to start preparing these reports, and the reports contain a list of fields that an employer has to measure. And that is something that will have to be reported in 2016 for 2015.


What’s one of the things you’ve noticed over the last couple of years that the Affordable Care Act has generated?

Awareness of the cost of health care. We’ve always pointed the finger at the insurance companies that these costs are escalating. Well, the premium costs are escalating because the health care costs (from medical claims) were escalating. There’s a direct connection there, and now people want to understand that and want to have options. (They want to know) how to go to the lower-cost and better quality service. It really is getting people involved at a much deeper level than they’ve ever been involved in purchasing health care.


How has that shift changed what you’re doing?

Our client communications have become much more in-depth, and we’re trying to provide the employees with tools to make better decisions. Most employees, up until a few years ago and because they only had a $10 co-pay, had no idea that you could get a generic drug at one pharmacy for $30 and it might cost you $150 at another. So what we’re trying to do is give these employees a way to look that up so that they can make a better consumer decision. And we try to incent employees as much as possible to do that.


Over the last couple of years, how well do you think employers in the region have adapted to the Affordable Care Act?

The majority have updated their programs, made them compliant, and are looking for ways to curb costs. And that’s really had employers look at every component of their health plan. Everything had always been packaged up until a few years ago. You had your medical plan, your prescription plan, your dental plan with Blue Cross. If you were self-funded, you got your stop-loss there, too.
Now all of a sudden, we’re looking at every component of the plan, what components can be managed a little bit better, managed deeper, and who has better resources and tools that can provide your employees resources.

We’ve really kind of blown up the health plan and that package and made it more a la carte. We’re seeing these boutique vendors that really do a good job of managing costs.

Interview conducted and condensed by Mark Sanchez.

 

Read 32188 times Last modified on Saturday, 16 August 2014 23:11

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