HHS Announces 2017 Out-of-Pocket Maximums

Money and gavelThe Department of Health and Human Services (HHS) has announced the 2017 out-of-pocket maximums applicable to self-funded and fully insured employer health plans. The maximums for 2017 have been set as follows:

  • Individual coverage: $7,150
  • Family coverage: $14,300

All non-grandfathered health benefit plans in effect on or after January 1, 2014 are required to comply with the Affordable Care Act’s (ACA) mandate that employer health plans’ annual in-network out-of-pocket maximums not exceed HHS’ established limits. The 2017 limits represent an increase from the current 2016 maximums of $6,850 for individual coverage (an increase of $300), and $13,700 for family coverage (an increase of $600).

The out-of-pocket limits represent the maximum amount that an enrollee must pay for covered essential health benefits through cost-sharing. It typically includes the annual deductible as well as any cost-sharing obligations the enrollee must meet after the deductible has been satisfied. The out-of-pocket maximum does not include premiums, cost sharing associated with of out-of-network services, or the cost of nonessential health benefits.

According to a recent study by United Benefits Advisors (UBA), out-of-pocket costs have increased significantly over the past decade, although median plan limits have remained below HHS’ out-of-pocket maximums. According to UBA, both individual and family coverage plans saw significant increases in median in-network plan out-of-pocket maximums in 2015. It is expected that out-of-network expenses will continue to increase significantly as well, as employers continue to widen the cost-share gap between employer and employee responsibilities.

For solutions to help mitigate employee health benefit plan costs that don’t simply shift costs to valued employees, contact the benefits experts at POMCO today.

 

2016 Open Enrollment Reminders for Employers

2016 open enrollment checklistOpen enrollment season is already upon us. This year, make sure your health benefit plan is fully-compliant with 2016 regulations, and form a plan to effectively communicate plan changes and open enrollment requirements to your employees.

2016 Benefit Plan Compliance Requirements

As we approach 2016, employers should work with their brokers and benefit plan administrators to ensure their benefit plans are in compliance with the following 2016 regulations:

  • Prepare for 2016 Affordable Care Act (ACA) reporting requirements. The ACA’s Employer Mandate states that applicable large employers (ALEs) that do not offer affordable, minimum value health coverage to the majority of their full-time employees (FT) and their dependent children will be subject to a penalty if any FTs purchase health coverage through the Health Insurance Exchange Marketplace and receive a premium subsidy credit to help pay for coverage. This mandate became effective January 1, 2015. Employers must be prepared to report to the Internal Revenue Service (IRS) whether or not they offered affordable, minimum value health coverage to employees and their dependent children in compliance with ACA regulations. Review the calculation methods available and determine if your plan meets affordability and minimum value requirements. Click here for more information of employer reporting requirements under the ACA.
  • Verify your grandfathered plan status. A grandfathered plan is defined as a plan that was in existence when the ACA was established in 2010. Certain plan changes will result in a loss of grandfathered status which requires compliance with other ACA mandates, such as $0 member cost share for preventive and routine services. Work with your broker or benefits administrator to verify your grandfather status for 2016. Click here for more information on grandfathered and non-grandfathered plan requirements.
  • Verify your out-of-pocket maximum. Effective January 1, 2016 all non-grandfathered health plans’ out-of-pocket maximums for essential health benefits may not exceed $6,850 for individual coverage and $13,700 for family coverage. Check the maximums on your benefits to ensure your plan is compliant.
  • Embed individual out-of-pocket maximums. Effective January 1, 2016 the ACA also requires that for non-grandfathered health plans the out-of-pocket maximum apply to all individuals regardless of whether they are enrolled under a family or individual health plan option. This means that individual out-of-pocket maximums must be embedded in the plan’s family coverage when the family out-of-pocket maximum exceeds the ACA’s out-of-pocket maximum for individual coverage. Speak with your benefits administrator to ensure its claims processing system will accommodate the embedded out-of-pocket requirements. Click here for more information on embedding out-of-pocket maximums.
  • Review your high deductible health plan (HDHP) and health savings account (HSA) limits. For HDHP-compatible HSAs, a plan’s out-of-pocket maximum must be lower than the ACA’s limits of $6,550 for individual coverage and $13,100 for family coverage. Verify that your plans’ limits are in compliance. In addition, verify that your HDHP’s deductible and out-of-pocket maximums comply with the 2016 limits. Click here for more information on 2016 HSA limits.

Employee Communications

Once you have verified that your health plans are compliant for 2016, follow these tips to effectively communicate required information to your employees and eligible plan members:

  • Distribute summary of benefits and coverage documents (SBC). Per ACA regulations, health plans must provide an SBC to applicants and enrollees to help them understand the benefit options available to them and decide in which plan to enroll. Be sure your SBCs are updated to reflect any changes for 2016 and distributed to all eligible employees and their beneficiaries during open enrollment. Click here for more information on SBC regulations.
  • Distribute annual notices. Work with your benefits plan administrator and broker to ensure you distribute all required annual notice to employees, which may include the following:
    • Notice of Patient Protections
    • Notice of Health Insurance Portability and Accountability Act (HIPAA) Special Enrollment Rights
    • Consolidated Omnibus Budget Reconciliation Act (COBRA) Notice
    • Grandfathered Plan Notice
    • Annual Children’s Health Insurance Program Reauthorization Act (CHIPRA) Notice
    • Women’s Health and Cancer Rights Act (WHCRA) Notice
    • Medicare Part D Notices
    • Michelle’s Law Notice
 

How Integrating Benefits with an Expert Administrator Can Save Significant Dollars

Simplifying AdministrationAs the health care industry continues to be refined by the complexities of the Affordable Care Act (ACA), trends toward narrow networks and accountable care organizations (ACOs), and the pressures of the ever-increasing costs of specialty drugs, there may be a simple solution to streamlining administrative services and reducing costs. The solution lies in the integration and consolidation of benefits with a single administrative partner.

While many employers have already transitioned to a service platform in which one administrator serves as the strategic partner and single point of contact for benefits administration, it is a trend that is escalating, with the potential to grow exponentially over the next several years.

For organizations that adopt a single administrative partner model, the tangible and intangible benefits include:

  • A single point of contact for client-level questions and requests
  • Integrated reporting to demonstrate all factors impacting experience costs
  • The convenience of a single member service call center
  • Integrated member communications, such as plan documents, member identification cards, and other notifications
  • Global compliance review of all plan elements
  • A single online/mobile member resource with convenient access to information on all plan elements (medical, dental, prescription drug, consumer-driven health plans, eligibility, population health management, workers’ compensation, and ancillary insured lines of service)
  • Integrated medical management and case management services that incorporate all medical, prescription drug, and wellness data to provide each patient with a comprehensive treatment plan across the wellness continuum
  • Streamlined administrative service billing

In addition to such optimized patient care, member service, and administrative efficiencies, employers that integrate the administration of their medical, dental, vision, prescription drug, and workers’ compensation plans under one administrator can realize significant overall cost savings both as the result of administrative efficiencies, and enhanced quality of integrated patient care.

For example, according to the U.S. Centers for Disease Control and Prevention, the cost of diabetic treatment alone in the United States cost more than $245 billion in 2012. Diabetes can be detected early, however, through a routine eye exam. Through early detection of risk factors, a prediabetic patient can be put on a treatment plan that improves health outcomes and reduces health care claim costs. With an integrated medical plan, medical management program, and vision plan, the most efficient sharing of the prediabetic patient’s health data can be integrated, interpreted, and acted upon in order to address risk factors before they escalate.

Closing gaps in care, encouraging compliance with a prescription drug treatment plan, and monitoring identified risk factors are aspects of an integrated benefit administration model that can support improved health outcomes and lower the overall cost of care. This type of synchronicity can not be as seamlessly or quickly accomplished, however, under an administrative arrangement that utilizes disparate partners for each plan element.

An integrated benefits administration platform also allows for a global analysis of the disease states and risk factors that are most impactful to plan members. An analysis of the global plan populations across the care continuum can lead to the strategic implementation of targeted programs to address those diagnoses with the most potential for adverse and costly health consequences.

By adopting an integrated administrative service model with an expert benefits administration partner, organizations can provide valued employees with a total care solution model as well as reduce overall plan costs, so that available funds can be reinvested back into the organization to further benefit its employees.

For information on POMCO’s integrated service solutions, visit our Benefits Administration Page.

 

The Cost-Saving Potential of Consumer-Driven Health Plans

Cost-Saving Potential of CDHPsOver the past several years, an increasing number of employers have been adopting consumer-driven health plans (CDHP) as part of a strategy to encourage a behavior of consumerism among enrolled members. CDHPs encourage plan members to use pre-tax dollars for out-of-pocket health care expenses. When coupled with a high deductible health plan (HDHP) that aims to shift a larger up-font out-of-pocket cost to members, CDHPs can offer employers a successful total cost reduction opportunity, while still offering an attractive benefit package to employees.

64 percent of large employers currently offer a CDHP, and that number is expected to increase to 76 percent in the next few years. Truven Health Analytics recently completed a study that confirms the potential savings implications for employers that implement CDHPs. The study, which monitored 183,000 continuously enrolled CDHP members over a period of three years, identified an annual savings of $457 to $532 per member per year – an almost 10 percent cost reduction.

The average savings was attributed to several factors including a reduction in overall benefit utilization, with particular decreases in use of radiology services. Significant savings was also demonstrated within the prescription drug category, as members enrolled in CDHPs increased their use of generic drug substitutions which reduced total plan costs.

While an overall decrease in utilization of services resulted in a positive reduction in employer plan costs, the study also identified that CDHP plan members demonstrated reduced use of preventive and chronic care services. It should be noted that the long-term effects of such a trend could negate some of the overall cost reduction benefits of employers’ CDHP strategies. Preventive services are necessary to identify risk factors so that appropriate treatment measures can be implemented before a health risk results in a catastrophic condition or event. Avoidance of preventive care could result in larger claim costs in the future. Member communications may be able to dissuade this trend, as under the Affordable Care Act (ACA) most non-grandfathered plans offer routine preventive services at no member cost share, therefore, members may need to be informed not to avoid preventive care out of a mistaken belief that it will result in increased out-of-pocket costs.

Similarly, patients who do not properly manage their chronic condition long-term by following a prescribed medical and prescription drug treatment plan may be more likely to sustain a catastrophic event associated with their condition. In the event of a catastrophic health incident, an individual could incur more costs associated with the treatment of the catastrophic event than were avoided in reducing his utilization of necessary maintenance services. For example, a patient with high cholesterol who attempts to reduce his out-of-pocket health expenses by not continuing his use of a costly prescription drug, may end up incurring greater overall costs if he suffers a heart attack and finds himself inpatient at a hospital than he would have spent taking his antihyperlipidemic prescription as prescribed and avoiding the inpatient stay.

While CDHPs are a strategic solution that can benefit both employers and employees reduce costs, the Truven Health study demonstrates the importance of member education in the implementation of a CDHP strategy. For example, members may benefit from communications that stress the importance of obtaining preventive and routine care, especially if it is offered at no cost share. In addition, members who are first time enrollees in a CDHP plan may benefit from guidance on how much of their own pre-tax dollars to set aside in order to pay for anticipated medical, dental, and prescription drug costs for the year. With proper communications, members will be prepared to maximize their CDHP funds in coordination with their health benefits, and obtain optimal care throughout the year.

 

Remember to Embed Your Out-of-Pocket-Maximums for 2016

Affordable Care Act (ACA), Out-of-Pocket-MaximumsSix years after the Affordable Care Act (ACA) was passed into law, employers are still addressing ACA requirements by modifying their benefit plan to meet pending mandates. Employers preparing for the 2016 benefit plan year should take into consideration their health plan’s out-of-pocket maximums. The ACA requires that health benefit plans limit the annual maximum cost sharing imposed on plan enrollees for out-of-pocket costs associated with essential health benefits. For plan years beginning in 2016, the maximum out-of-pocket cost limits will be:

  • $6,850 for individual coverage
  • $13,700 for family (or all forms of non-self-only) coverage

On February 27, 2015, The Department of Health and Human Service (HHS) mandated that the $6,850 maximum limit on individual coverage will apply to each individual irrespective of whether that individual is enrolled in self-only coverage or family coverage. Based on this requirement, an enrollee with family coverage would not be subject to cost-sharing for costs associated with covered benefits if one of two scenarios has been met:

  1. The enrollee and his/her enrolled dependents have reached a combined out-of-pocket limit of $13,700. Under this scenario, no members of the family would be subject to cost-sharing for covered benefits in the future.
  1. Any one of the family members reaches the embedded individual coverage maximum of $6,850. Under this scenario, only the member of the family that reached the $6,850 individual limit would not be subject to cost-sharing for covered benefits in the future.

On May 26,2015 it was clarified by HHS and The Department of Labor (DOL) that this mandate applies to all health plans, including non-grandfathered plans, large and small group plans, high-deductible health plans (HDHP), and plans that are both fully insured and self-funded.

Employers implementing this rule within their HDHP should take special care to clearly communicate this change to their plan members. The embedded out-of-pocket maximum requirement may cause confusion for HDHP members since the ACA maximum out-of-pocket limit is not the same as the maximum out-of-pocket limit established by the Internal Revenue Service (IRS) on HDHPs. In 2016, HDHP dollar limits are only $6,550 for individual coverage and $13,100 for family coverage. Therefore, for members enrolled in individual coverage in 2016 in an HDHP plan their maximum out-of-pocket limit for a particular individual will be $6,550 while the limit for individuals enrolled in family coverage in 2016 in an HDHP will be $6,850. These family plan members will also be subject to an earlier limit if the individual’s aggregate family out-of-pocket costs exceed the $13,100 family coverage limit.

Employers that currently do not have an embedded out-of-pocket maximum should begin working with their benefit plan administrator and broker now to make necessary plan changes and to build a member communication strategy, to be prepared for the changes to go into effect in 2016.

 

The Impact of Marriage Equality on Health Benefit Plans

Impact of Marriage Equality on Health Benefit PlansOn Friday June 26, the Supreme Court of the United States ruled in a historic decision in the case of Obergefell v. Hodges, by a 5-to-4 vote, that the Constitution guarantees a right to same-sex marriage. This latest decision comes exactly two years after a majority opinion in United States v. Windsor struck down a federal law denying benefits to married same-sex couples. The Obergefell v. Hodges decision, which comes after decades of activism by same-sex couples, resulted in the legalization of same-sex marriage in thirteen states that had previously banned such unions.

It seems that the ruling to allow same-sex unions is aligned with the spousal benefit eligibility philosophy of the majority of health plans. According to consulting firm Aon Hewitt, 77 percent of employers with employee health plans already offer same-sex partner coverage. The decision to overturn same-sex marriage bans at the federal level will still impact many employer health plans, however. In particular, the employers that will be most impacted will be those in the four states that still banned same-sex marriages prior to the Obergefell v. Hodges ruling: Kentucky, Michigan, Ohio and Tennessee.

In light of the Obergefell v. Hodges decision, employers should consider their spousal benefit classifications in consideration of their employee recruitment and retention goals, as well as any budgetary limitations. Organizations reviewing their dependent eligibility requirements should take the following into consideration in reaction to this impactful legal determination:

  1. Plans that did not already allow for coverage of same-sex partners and that will make the allowance moving forward, may want to conduct an analysis to determine if the cost for spousal coverage should be adjusted to accommodate a greater number of spouses being enrolled onto its health benefit plan.
  1. Depending on their employee culture and benefit goals, plans that allowed for coverage of same-sex domestic partners, but not same-sex spouses, may want to consider changing coverage to allow coverage for anyone who meets the legal definition of a spouse, regardless of whether they are a same or opposite sex spouse, and eliminating the domestic partner eligibility classification.
  1. Conversely, employers that previously only allowed coverage for same-sex, but not opposite sex, domestic partners, want to expand their definition of a domestic partner to allow for opposite gender domestic partners who meet defined financial dependency requirements.
  1. Employers should also discuss with their legal counsel, benefit consultant, and plan administrator or insurance carrier, the impact of any applicable state or local laws that may require employers to offer domestic partner benefits.
  1. Employers should work with their benefits administrator or insurance carrier to ensure that all enrollment forms are updated accordingly to accommodate any changes to classes of eligible dependents.
  1. Employers should work with their benefits administrator or insurance carrier to ensure that all plan documents are updated to document any benefit class changes, and that those documents are made available to plan members.
  1. Organizations should discuss with their legal counsel if they will be impacted by any changes to state income tax requirements relative to employer-provided benefits. With anticipated changes to state income tax treatments, employees with same-sex spouses covered by employer plans may no longer need to pay imputed income on those benefits.

Self-funded employers should also be aware that the Obergefell v. Hodges ruling will be applied differently for fully insured plans and self-insured plans. Any fully insured plan will be required to extend coverage to spouses regardless if they are opposite or same-sex; however, self-funded plans are not legally required to extend benefits to same-sex spouses in certain limited circumstances. Regardless, self-funded employers should seriously consider including same-sex spouses in their coverage, as not doing so may put them at risk of a discrimination lawsuit being filed against them.

 

How to Uncover Hidden Savings in Your Self-funded Health Care Plan

Uncover Hidden Savings in Your Self-funded Health Care PlanTo attract and retain talent, you need a competitive benefit program. Yet it must be cost-effective as well. Unlike insurance carriers—with high administrative costs, profit margins and reserve requirements—third-party benefits administrators (TPAs) tend to operate on lean service platforms. For plan administrators, this service model can mean a significant return on investment from a benefit plan. The ability of a TPA to uncover these savings is an even greater benefit to a self-funded plan, since all savings earned are re-invested into the plan, rather than retained by an insurance carrier as profit and reserves.

When evaluating potential plan administration partners, a comparison of network discounts is usually, and understandably, the first step. Too often, however, it is the only tool used to select an administration partner. Network discounts certainly impact costs. A health benefits plan can save up to 50 percent on charges for doctors or providers who are members of the TPA’s, or carrier’s, provider network. When the TPA or carrier also has the ability to lease access to regional or national provider networks, it can mean an optimal balance of savings and access. However, simply comparing one plan’s contracted rates for sample medical codes vs. another’s does not reveal the full cost-savings potential that comes from a holistic approach to benefits management. Here are three steps that an effective TPA partner can take at the claims adjudication level for truly significant savings:

  • Benefit optimizations: Active management of claims and reimbursements in accordance with the benefits, exclusions, terms, and conditions of the plan document.
  • Eligibility: Ensuring that claims are only paid when coverage is effective, and only for those members who are eligible.
  • Medical management: Improved oversight of catastrophic and complex cases to ensure that high-risk, high-dollar patients are guided toward the most appropriate level of care and have the support needed to follow their prescribed treatment plan. In addition, properly reviewing medical records to identify coding mistakes and non-covered services.

To learn more about what to look for in a truly strategic TPA partner, or how to analyze your plan to ensure it is optimized for cost-containment, download our free white paper.

 

Open Enrollment Checklist for Self-Funded Benefit Plan Administrators

Open enrollment season is well under way for many employers across the nation with benefit plan years beginning January 1. Review the checklist below to ensure your organization is prepared not only for familiar open enrollment requirements, but for Affordable Care Act (ACA) mandates that take effect in January, 2015.

  1. Employer Mandate Compliance and Penalty implications

  2. In 2015, under the ACA’s Employer Mandate, applicable large employers (those with fifty or more full time employees or full-time equivalent employees) must offer health coverage that meets affordability and adequate coverage requirement to at least 70 percent of their full-time employees and their dependent children. Employers who fail to meet the affordability and adequate coverage requirement may be subject to a penalty if at least one full-time employee that is eligible for coverage receives a subsidy to purchase coverage through the Marketplace Exchange. Applicable large employers should complete the following steps prior to 2015:

    • Test their health plan to ensure that it meets affordability and minimum value requirements.
    • Review their health plan document’s eligibility guidelines and revise, if necessary, to comply with ACA requirements that define a full-time employee eligible for health plan coverage as one working 30 hours or more per week (or 130 hours or more per month).
    • Establish a system for identifying full-time employees.
    • Establish a system for monitoring hours worked by variable hour employees to ensure once full-time status requirements have been met, that health coverage is offered in compliance with ACA requirements.
  3. Grandfather Status Analysis

  4. A grandfathered plan is defined as an employer-sponsored benefit plan that was in existence when the ACA was enacted on March 23, 2010. Employers that make certain material modifications to their plan design outside of pre-determined limitations will lose their grandfather status and will have to comply with additional requirements of the ACA.

    Material modifications that would make a plan lose its grandfather status include:

    • The elimination or significant reduction to a benefit that is used to treat, or diagnose, a certain condition.
    • An increase in any co-insurance percentage.
    • An increase in any deductible or out-of-pocket limit that exceeds medical inflation plus fifteen percent.
    • An increase in copays greater than either the sum of medical inflation plus 15 percent or $5, whichever is smaller.
    • An decrease in the employer’s contribution rate toward premium or premium equivalent subsidies greater than 5 percent.

    Employers whose plans will lose grandfathered status in 2015 should work with their benefits administrator or insurance carrier to ensure that their plan will comply with all additional ACA requirements for non-grandfathered plans in 2015. Such requirements include adult preventive care services with no member cost-share and coverage for routine costs associated with clinical trials, among other mandates.

  5. Out-of-pocket limit requirements

  6. Beginning January 1, 2015, the out-of-pocket limits on in network essential health benefits for employer-sponsored health benefit plans may not exceed $6,600 for individual coverage and $13,200 for family coverage. Employers will also need to decide if their out-of-pocket limits in 2015 will separate or aggregate out-of-pocket limits on medical and prescription drug expenses. Separated out-of-pocket limits still must not exceed $6,600 and $13,200.

    Employers should review their health benefit plan documents to ensure proper out-of-pocket limits are established for 2015 and should speak with their benefits administrator or insurance carrier to make a strategic determination on whether it is in the plan’s best interest to aggregate or separate limits.

    In addition, employers offering a high deductible health plan with a Health Savings Account (HSA) will need to ensure that their 2015 plan meets updated federally-regulated minimum and maximum out-of-pocket and contribution limits:

    • HDHP Maximum Out-of-Pocket Amount

      • Individual: $6,450
      • Family: $12,900
    • HDHP Minimum Deductibles

      • Individual: $1,300
      • Family: $2,600
    • HSA Maximum Contribution Amount

      • Individual: $3,350
      • Family: $6,650
      • Catch-up Contributions (age 55 or older) $1,000
  7. Summary of Benefits and Coverage Distribution

  8. As they have done for the past two benefit plan years, employers will need to provide employees with a summary of benefits and coverage (SBC) document outlining their available 2015 benefit plan design options. The 2015 SBC template can be found on the Department of Labor website. The SBC should be included in 2015 open enrollment packets.

  9. Notice Distributions:

  10. During the 2015 open enrollment period, employers will also be required to provide employees with the following notices:

    • Grandfathered Plan Notice – Information about the plan’s grandfathered status must be included in plan documentation, such as its summary plan document (SPD).
    • Notice of Patient Protections – Non-grandfathered plans that require participants to designate a participating primary care provider must provide a notice of specific patient protections in their SPDs.
    • Initial COBRA notice – An initial COBRA notice must be provided to participants and certain dependents within 90 days after plan coverage begins. The notice may be incorporated into an SPD.
    • HIPAA Privacy Notice – Group health plans required to maintain a privacy notice must distribute the notice to new participants when they enroll in cove
    • Notice of HIPAA Special Enrollment Rights – At or prior to the time of enrollment, a health plan must provide each eligible employee with a notice of his/her special enrollment rights under the Health Insurance Portability and Accountability Act of 1996 (HIPAA).
    • Annual Children’s Health Insurance Program Reauthorization Act (CHIPRA) Notice – Health plans covering residents in a state that provides a premium subsidy to low-income children and their families to help pay for employer-sponsored coverage must send an annual notice about available assistance to all employees residing in that state.
    • Women’s Health and Cancer Rights Act (WHCRA) Notice – Health plans must provide notice of participants rights under WHCRA at the time of enrollment.
    • Newborns’ and Mothers’ Health Protections Act (NMPA) notice – Plan administrators must include a statement within the SPD describing requirements related to any hospital stay associated with childbirth for a mother or newborn child under NMPA.
    • Medicare Part D Notices – Health plans must provide a notice of creditable or non-creditable prescription drug coverage to Medicare Part D eligible individuals who are covered by, or who apply for, prescription drug coverage under the health plan.

Model notices are available from the Department of Labor website (Medicare Part D Notice available at CMS.gov/creditablecoverage).

 

Laid-off Workers Must be Notified of ACA Insurance Option

A new rule mandates that employers notify workers who have been laid-off of insurance options available to them under the Affordable Care Act’s Marketplace, as an alternative to the worker purchasing COBRA coverage through the employer.

The Department of Labor (DOL) recently announced a new rule which stipulates that employers must notify laid-off workers who were previously eligible for health benefits, that they are eligible to purchase coverage through the Affordable Care Act (ACA), as an alternative to purchasing COBRA coverage.

Employer termination constitutes a qualified event that would make an individual eligible for COBRA benefits (other than by reason of the employee’s gross misconduct) as well as eligible to purchase benefits through the exchange through a special enrollment period. The DOL’s recent regulations would also require employers to include information on exchange access along with the COBRA coverage notices currently distributed to new hires as well as to those who voluntarily leave their position.

Given their loss of employment, a laid-off employee may even be eligible for Federal subsidy dollars which would off-set the cost of the exchange premiums. This may make premium payments for exchange coverage more affordable for the laid-off worker than the cost of paying COBRA premiums at a cost of 100 – 102% of the employer’s premium or premium equivalent contribution rate. As an additional incentive to purchasing exchange coverage, rather than COBRA coverage, the former worker’s coverage under an exchange policy would not be limited to 18 months after the qualifying event (or 29 months after the qualifying event if there is a disability extension) as is the case with COBRA coverage. If satisfied with their exchange coverage, the former worker could renew his or her plan at the end of the plan year, for another full policy period.

After comparing the cost of exchange coverage, with the possible offset to subsidy dollars, versus the cost to purchase their former employer’s COBRA coverage, a laid-off worker will next need to compare the benefits available to him or her between the two plans. Unless purchasing a silver, gold, or platinum level plan, which are most costly from a premium perspective, a laid-off worker whose former employer offered a generous plan in terms of benefits and employer cost-share, may find that, though more affordable, exchange coverage may not offer the same level of benefit access, or may offer higher cost share than they experienced under their employer’s plans.

For self-funded plans, that are commonly generous in terms of benefits and cost share, the shift of former employees into the exchanges as an alternative to COBRA enrollment, may not be significant for just this reason. Still, the mandate to provide this new notice to laid-off workers may result in a shift of some members off of the plan, which could result in significant dollars saved in the event that the enrollee or any of their qualified dependents are high dollar claimants.

 

Five Benefits Employees Wish They Were Offered

Employee benefits packages often come with health care and retirement plans, but there are certain offerings that workers desire and aren’t always offered. Here are five of the benefits employees wish they were offered:

  • The ability to take vacation without feeling guilty: Most full-time workers are able to take advantage of vacation time, but are often made to feel guilty by taking these days off. People may fear they won’t get their time off approved or that they’ll be labeled as a less dedicated employee for taking a vacation. This can make generous vacation packages not as attractive as they appear. For this reason, employees should be encouraged to take time off and should not be made to feel guilty when they do so. This could lead to higher employee satisfaction, which, in turn, could translate into improved retention.
  • Have the option to telecommute: Many companies are beginning to allow employees to work from home, but not all of them. People who work at organizations that don’t make this possible would like it to become an option. For example, if an employee is a little under the weather, they may want to be able to work from home instead of going into the office. Telecommuting could also prove beneficial to employees who are parents if their children ever have a snow day or other day off from school.
  • Access to an on-site fitness center: With obesity becoming a major issue in the U.S., more people are putting a focus on physical fitness. Organizations in particular can benefit from employees who incorporate exercise into their daily routine as it will help to increase overall wellness. As a result, many employees desire access to an on-site fitness center. Organizations may want to consider adding some exercise equipment to encourage healthy lifestyle choices
    by employees. However, if there is no space to add a fitness center, organizations can make discounted gym memberships available to employees.
  • The option to wear jeans: Not all desired employee benefits are difficult for organizations to offer. For example, many workers desire the option to simply be able to wear jeans more often. Of course, it would be unprofessional for people who meet with clients on a daily basis to have this casual dress, but other staff who don’t leave the office could be offered this benefit. This could be as simple as adding another “casual Friday” on a different day of the week.
  • More training and professional development: During and after the economic downturn, many organizations removed training programs to save money. But, now more than five years removed from the end of the recession, employees are requesting this benefit back. In the current environment, many workers are expected to produce results without much training, which can make jobs much harder and lead to dissatisfaction. For this reason, organizations should consider re-implementing training and professional development programs.