Pay-to-shop health care incentives gaining traction

Laurie Cook went shopping recently for a mammogram near her home in New Hampshire. Using an online tool provided through her insurer, she plugged in her ZIP code. Up popped facilities in her network, each with an incentive amount she would be paid if she chose it.

Paid? To get a test? It’s part of a strategy to rein in health care spending by steering patients to the most cost-effective providers for non-emergency care.

State public employee insurance programs were among the early adopters of this approach. It is now finding a foothold among policymakers and in the private sector.

Scrolling through her options, Cook, a school nurse who is covered through New Hampshire’s state employee health plan, found that choosing a certain facility scored her a $50 check in the mail.

She then used the website again to shop for a series of lab tests. “For a while there, I was getting a $25 check every few weeks,” said Cook. The checks represented a share of the cost savings that resulted from her selections.

Lawmakers in nearby Maine took the idea further, recently enacting legislation that requires some private insurers to offer pay-to-shop incentives, part of a movement backed by a conservative foundation to get similar measures passed nationally.

Similar proposals are pending in a handful of other statehouses, including Virginia, West Virginia and Ohio.

“If insurance plans were serious about saving money, they would have been doing this stuff years ago,” said Josh Archambault, a senior fellow at the Foundation for Government Accountability, a limited-government advocacy group based in Naples, Fla., that promotes such “right-to-shop” laws. “This starts to peel back the black box in health care and make the conversation about value.”

Still, some economists caution that shop-around initiatives alone cannot force the level of market-based change needed. While such shopping may make a difference for individual employers, they note it represents a tiny drop of the $3.3 trillion spent on health care in the U.S. each year.

“These are not crazy ideas,” said David Asch, professor of medicine, medical ethics and health policy at the Penn Medicine Center for Health Care Innovation in Philadelphia. But it’s hard to get consumers to change behavior — and curbing health care spending is an even bigger task. Shopping incentives, he warned, “might be less effective than you think.”

If they achieve nothing else, though, such efforts could help remove barriers to price transparency, said Francois de Brantes, vice president and director of the Center for Value in Health Care at Altarum, a nonprofit that studies the health economy.

“I think this could be quite the breakthrough,” he said.

Yet de Brantes predicts only modest savings if shopping simply results in narrowing the price variation between high- and low-cost providers: “Ideally, transparency is about stopping folks from continuously charging more.”

Among the programs in use, only a few show consumers the price differences among facilities. Many, like the one Cook used, merely display the financial incentives attached to each facility based on the underlying price.

 

Advocates say both approaches can work.

“When your plan members have ‘skin in the game,’ they have an incentive to consider the overall cost to the plan,” said Catherine Keane, deputy commissioner of administrative services in New Hampshire. She credits the incentives with leading to millions of dollars in savings each year.

Several states require insurers or medical providers to provide cost estimates upon patients’ requests, although studies have found that information can still be hard to access.

Now, private firms are marketing ways to make this information more available by incorporating it into incentive programs.

For example, Vitals, the New Hampshire-based company that runs the program Cook uses, and Healthcare Bluebook in Nashville offer employers — for a fee — comparative shopping gizmos that harness medical cost information from claims data. This information becomes the basis by which consumers shop around.

Crossing Network Lines

Maine’s law, adopted last year, requires insurers that sell coverage to small businesses to offer financial incentives — such as gift cards, discounts on deductibles or direct payments — to encourage patients, starting in 2019, to shop around.

A second and possibly more controversial provision also kicks in next year, requiring insurers, except HMOs, to allow patients to go out-of-network for care if they can find comparable services for less than the average price insurers pay in network.

Similar provisions are included in a West Virginia bill now under debate.

Touted by proponents as a way to promote health care choice, it nonetheless raises questions about how the out-of-network price would be calculated, what information would be publicly disclosed about how much insurers actually pay different hospitals, doctors or clinics for care and whether patients can find charges lower than in-network negotiated rates.

“Mathematically, that just doesn’t work” because out-of-network charges are likely to be far higher than negotiated in-network rates, said Joe Letnaunchyn, president and CEO of the West Virginia Hospital Association.

Not necessarily, counters the bill’s sponsor, Del. Eric Householder, who said he introduced the measure after speaking with the Foundation for Government Accountability. The Republican from the Martinsburg area said “the biggest thing lacking right now is health care choice because we’re limited to our in-network providers.”

Shopping for health care faces other challenges. For one thing, much of medical care is not “shoppable,” meaning it falls in the category of emergency services. But things such as blood tests, imaging exams, cancer screening tests and some drugs that are administered in doctor’s offices are fair game.

Less than half of the more than $500 billion spent on health care by people with job-based insurance falls into this category, according to a 2016 study by the Health Care Cost Institute, a nonprofit organization that analyzes payment data from four large national insurers. The report also noted there must be variation in price between providers in a region for these programs to make sense.

Increasingly, though, evidence is mounting that large price differences for medical care exist — even among rates negotiated by the same insurer.

“The price differences are so substantial it’s actually scary,” said Heyward Donigan, CEO of Vitals.

At the request of Kaiser Health News, Healthcare Bluebook ran some sample numbers for a Northern Virginia ZIP code, finding the cost of a colonoscopy ranged from $670 to $6,240, while a knee arthroscopy ranged from $1,959 to $20,241.

Another challenge is the belief by some consumers that higher prices mean higher quality, which studies don’t bear out.

Even with incentives, the programs face what may be their biggest challenge: simply getting people to use a shopping tool.

Kentucky state spokeswoman Jenny Goins said only 52 percent of eligible employees looked at the shopping site last year — and, of those, slightly more than half chose a less expensive option.

“That’s not as high as we would like,” she said.

Still, state workers in Kentucky have pocketed more than $1.6 million in incentives — and the state said it has saved $11 million — since the program began in mid-2013.

Deductibles, the annual amounts consumers must pay before their insurance kicks in and are usually $1,000 or more, are more effective than smaller shopping incentives, say some policy experts.

In New Hampshire, it took a combination of the two.

The state rolled out the payments for shopping around — and a website to look for best prices — in 2010. But participation didn’t really start to take off until 2014, when state employees began facing an annual deductible, said Deputy Commissioner Keane.

Still, the biggest question is whether these programs ultimately cause providers to lower prices.

Anecdotally, administrators think so.

Kentucky officials report they already are witnessing a market response because providers want patients to have an incentive to choose them.

“We do know providers are calling and asking, ‘How do I get my name on that list’ [of cost-effective providers]?” said Kentucky spokeswoman Goins. “The only way they can do that is to negotiate.”

Read the article.

Source:
Appleby J., Kaiser Health News (5 March 2018). "Pay-to-shop health care incentives gaining traction" [Web blog Post]. Retrieved from address https://www.benefitspro.com/2018/03/05/pay-to-shop-health-care-incentives-gaining-tractio/


Financial shocks could disrupt tomorrow’s retirees

While today’s retirees, dependent as they are on Social Security and traditional pensions rather than 401(k)s, are better able to withstand financial shocks, tomorrow’s retirees won’t have it so easy.

They will be more in danger of being forced to downsize or spend down their assets to meet unexpected expenses such as a spike in medical bills or a loss of income through being widowed.

So says a brief from the Center for Retirement Research at Boston College, which investigated the financial fragility of the elderly to see how well they might be able to deal with financial shocks.

The reason the elderly are seen as financially fragile, the brief says, stems from the fact that, “once retired, they have little ability to increase their income compared to working households.”

And with future retirees becoming ever more dependent on their own retirement savings, and receiving less of their retirement income from Social Security and defined benefit plans, those financial shocks will get harder and harder to deal with.

To see how that will play out, the study looked at the share of expenditures a typical elderly household devotes to basic needs. Next, it looked at how well today’s elderly can absorb those aforementioned major financial shocks. And finally, it examined the increased dependence of tomorrow’s elderly on financial assets, whether those assets are sufficient, and how well those assets do at absorbing shocks.

Nearly 80 percent of the spending of a typical elderly household, the report finds, is used to secure five “basic” needs: housing, health care, food, clothing, and transportation. In lower-income households or the homes of single individuals and in households that rent or have a mortgage, those basic needs make up even more of a household’s spending.

And while there are areas in which a household can cut back—such as entertainment, gifts or perhaps cable TV—as well as potential cutbacks on basic needs, typical retirees can’t cut by more than 20 percent “without experiencing hardship.” And among those lower-income and single households, as well as those with rent or mortgages to pay, the margin is even slimmer.

The need for medical care is so important to those who need it, says the report, that the question becomes whether medical expenditures crowd out spending on other basic items.

And while a widow is estimated by federal poverty thresholds to need 79 percent of the couple’s income to maintain her standard of living, other studies indicate that widows get substantially less than that from Social Security and a pension—estimates, depending on the study, range from 62 percent to 55 percent. And that likely does not leave a widow enough to meet basic expenses.

Among current retirees, only 10 percent report having to cut back on necessary food or medications because of lack of money over the past 2 years.

However, retirees tomorrow, if they have failed to save enough to see them through retirement, are likely to experience income declines of from 6 to 21 percent for GenXers—and that’s assuming that GenXers “annuitize most of their savings at an actuarially fair rate…” despite the fact that very few actually annuitize, and cannot get actuarially fair rates even if they do.

And since the brief also finds that the greater dependency of tomorrow’s retirees on whatever they’ve managed to save in 401(k)s means that they’re exposed to new sources of risk—“that households accumulate too little and draw out too little to cushion shocks and that their finances are increasingly exposed to market downturns”—that means that future retirees will be subjected to a reduced cushion between income and fixed expenses.

To compensate, they will need to downsize and cut their fixed expenses. Neither one bodes well for a comfortable retirement.

Read the article.

Source:
Satter M. (1 March 2018). "Financial shocks could disrupt tomorrow’s retirees" [Web Blog Post]. Retrieved from address https://www.benefitspro.com/2018/03/01/financial-shocks-could-disrupt-tomorrows-retirees/


Trump urges legal action against opioid manufacturers

Where does Trump stand on the Opioid Crisis? Find out in this article from Benefits Pro.


President Trump says he wants his administration to take legal action against opioid manufacturers.

“Hopefully we can do some litigation against the opioid companies,” Trump said at an event organized at the White House on the opioid epidemic.

Earlier in the week, Attorney General Jeff Sessions announced that the Justice Department would be filing a statement of interest in support of a lawsuit launched by more than 400 local governments around the country against pharmaceutical manufacturers. The suit accuses drug-makers of using deceptive advertising to sell powerful, addictive pain medication and for covering up the dangers associated with their use.

It’s not clear whether Trump’s remarks were a reference to the action Sessions has already taken or whether the president is envisioning additional legal action, since he said during the event that he would ask the attorney general to sue.

 

Trump also promised during his presidential campaign to take on pharmaceutical companies over rising drug prices, accusing them of “getting away with murder.” Since his election, however, he has done very little to translate those tough words into policy. A meeting between Trump and pharmaceutical companies early in his administration was described in positive terms by both sides.

The president also has suggested stiffer sentences for drug dealers, even reflecting positively on countries that execute them.

“Some countries have a very, very tough penalty – the ultimate penalty,” he said. “And, by the way, they have much less of a drug problem than we do.”

In recent years, public opinion on criminal justice in general and the drug war specifically has shifted in favor of an approach that favors treatment over incarceration. Reducing the prison population has been a goal that has increasingly earned bipartisan support, both at the federal level and in state legislatures around the country. However, Trump and Sessions have both stuck to the “tough-on-crime” mantra that dominated in the 1990’s.

The administration has signaled that it will not support legislation to reduce mandatory minimum sentences for drug offenses. And although the Justice Department has not yet gone after marijuana distributors in states that have legalized the drug, such as Colorado and California, Sessions has rescinded an Obama-era policy that stated that the DOJ would take a hands off approach to pot in those states.

Read the article.

Source:
Craver J. (2 March 2018). "Trump urges legal action against opioid manufacturers" [Web Blog Post]. Retrieved from address https://www.benefitspro.com/2018/03/02/trump-urges-legal-action-against-opioid-manufactur/


Apple launching concierge health care centers for employees

Did you know Apple is now offering healthcare centers for their employees? Check out this article from Benefit Pro for further information.


This spring, Apple employees will see the first phase of Apple’s new approach to employee health care: on-site health clinics.

According to Healthcare IT News, Apple plans to launch a group of internal health centers as it moves to boost the health and wellness of its employees. According to the report, the company has already “quietly published a webpage for the program, called AC Wellness Network, which includes a description of the company’s goals as well as information on a number of open positions.”

“AC Wellness Network believes that having trusting, accessible relationships with our patients, enabled by technology, promotes high-quality care and a unique patient experience,” Apple has said on the webpage. It continues, “The centers offer a unique concierge-like healthcare experience for employees and their dependents. Candidates must have an appreciation for the patient experience and passion for wellness and population health—integrating best clinical practices and technology in a manner that drives patient engagement.”

Apple’s move comes in the wake of an earlier declared partnership among Amazon, JPMorgan Chase and Berkshire Hathaway for their own independent health care company intended to bolster employee health at lower cost than conventional providers.

AC Wellness, says the report, will exist as “an independent medical practice,” although the company is a subsidiary of Apple. Job listings include not just physicians but also such positions as workflow designers, and the website listings suggest the first centers will be located in Santa Clara, California and in the company’s Cupertino, California campus.

Other recent health care steps taken by the company, according to an HRDive report, include its January announcement that it is making personal health records accessible on the latest iPhones, as well as its exploration of ways its Apple Watch could have medical applications, like detecting irregular heartbeats in wearers.

According to a CNBC report, some former Stanford Health Care employees have been affiliated with AC Wellness for at least five months. Says Healthcare IT News, “[t]hese sources also said that Apple will use the centers as a testing ground for its upcoming health and wellness products prior to large-scale consumer rollout, and that the company notified third-party vendors this week about its upcoming health clinics.”

Read the article.

Source:
 Satter M. (1 March 2018). "Apple launching concierge health care centers for employees" [Web Blog Post]. Retrieved from address https://www.benefitspro.com/2018/03/01/apple-launching-concierge-health-care-centers-for/

While Talk About Opioids Continues In D.C., Addiction Treatment Is In Peril In States

How is Washington handling the opioid crisis? Let's find out in this article from Kaiser Health News.


Opioids were on the White House agenda Thursday — President Trump convened a summit with members of his administration about the crisis. And Congress authorized funds for the opioid crisis in its recent budget deal — but those dollars aren’t flowing yet, and states say they are struggling to meet the need for treatment.

The Oklahoma agency in charge of substance abuse has been told by the state’s legislature to cut more than $2 million from this fiscal year’s budget.

“Treatment dollars are scarce,” said Randy Tate, president of the Oklahoma Behavioral Health Association, which represents addiction treatment providers.

It’s like dominoes, Tate said. When you cut funding for treatment, other safety-net programs feel the strain.

“Any cuts to our overall contract,” he said, “really diminish our ability to provide the case management necessary to advocate for homes, food, shelter, clothing, primary health care and all the other things that someone needs to really be successful at tackling their addiction.”

In just three years, Oklahoma’s agency in charge of funding opioid treatment has seen more than $27 million dollars chipped away from its budget — thanks to legislative gridlock, slashed state taxes and a drop in oil prices (with the additional loss in state tax revenue that resulted).

Jeff Dismukes, a spokesman for Oklahoma’s Department of Mental Health and Substance Abuse Services, says the already lean agency has few cost-cutting options left.

“We always cut first to administration,” he said, “but there’s a point where you just can’t cut anymore.”

The agency may end up putting off payments to treatment providers until July — the next fiscal year. Tate says that could be devastating.

“Very thinly financed, small rural providers are probably at risk of going out of business entirely — up to and including rural hospitals,” he said.

Getting treatment providers to open up shop in rural areas is really hard, even in good times, and more financial uncertainty could make that problem worse. In the meantime, according to an Oklahoma state commission’s opioid report, just 10 percent of Oklahomans who need addiction treatment are getting it.

That statistic is similar in Colorado. And as 2018 began, Colorado’s escalating opioid crisis got worse, when the state’s largest drug and alcohol treatment provider, Arapahoe House, shut its doors.

The facility provided recovery treatment to 5,000 people a year. Denise Vincioni, who directs another treatment center, the Denver Recovery Group, says other facilities have scrambled to pick up the patients.

Most of Arapahoe’s clients were on Medicaid. Autumn Haggard-Wolfe, a two-time Arapahoe House client who is now in recovery, worries the facility’s closing will have dire consequences, especially for people who need inpatient care, as she did.

“I feel like the only other option right now in therapy would be jail for people,” she said, “and people die in there from withdrawing.”

Arapahoe House’s CEO blamed its closure on the high cost of care and poor government reimbursement for services.

The mother of Colorado state lawmaker Brittany Pettersen struggled with addiction, and was treated at Arapahoe House. Pettersen says treatment centers rely on a crazy quilt of funding sources and are chronically underfunded — often leaving people with no treatment options.

“We have a huge gap in Colorado,” Pettersen said, “and that was before Arapahoe House closed.”

She is pushing legislation in the state to increase funding for treatment. But to get tens of millions of dollars in federal matching funds, Colorado lawmakers need to approve at least $34 million a year in new state spending.

That price tag may simply be too high for some lawmakers. But either way, she added, “It’s going to take a lot to climb out of where we are.”

Colorado did get new federal funds to fight the opioid crisis through the 21st Century Cures Act, passed in December of 2016, but it was just $7.8 million a year for two years — divvied up among a long list of programs.

Read the article.

Source:
 Daley J.,Fortier J. (5 March 2018). "While Talk About Opioids Continues In D.C., Addiction Treatment Is In Peril In States" [Web Blog Post]. Retrieved from address https://khn.org/news/while-talk-about-opioids-continues-in-dc-addiction-treatment-is-in-peril-in-states/

Ahead of the Midterms, Voters across Parties See Costs as their Top Health Care Concern

From Kaiser Health News is this poll deciphering where the public sits ahead of Midterms. What is there top healthcare concern? Costs. Get all the information in this article.


At a time when the Trump Administration is encouraging state efforts to revamp their Medicaid programs through waivers, the latest Kaiser Family Foundation tracking poll finds the public splits on whether the reason behind proposals to impose work requirements on some low-income Medicaid beneficiaries is to lift people out of poverty or to reduce spending.

The Centers for Medicare and Medicaid Services in January provided new guidance to states and has since approved such waivers in two states (Kentucky and Indiana). Eight other states have pending requests

When asked the goal of work requirements, four in 10 (41%)  say it is to reduce government spending by limiting the people enrolled in the program, while a third (33%) say it is to lift people out of poverty as proponents say.

While larger shares of Democrats and independents say the reason is to cut costs, Republicans are more divided, with roughly equal shares saying it is to lift people out of poverty (42%) as to reduce government spending (40%). People living in the 10 states that have approved or pending work requirement waivers are similarly divided, with near-equal shares saying the goal is to lift people out of poverty (37%) as to reduce government spending (36%). This holds true even when controlling for other demographic variables including party identification and income.

feb-poll-chart-1.png

In addition to work requirements, five states are currently seeking Medicaid waivers to impose lifetime limits on the benefits that non-disabled adults could receive under the Medicaid program. The poll finds the public skeptical of such a shift, with two thirds (66%) saying Medicaid should be available to low-income people as long as they qualify, twice the share (33%) as say it should only provide temporary help for a limited time.

Substantial majorities of Democrats (84%) and independents (64%) say Medicaid should be available without lifetime limits, while Republicans are divided with similar shares favoring time limits (51%) and opposing them (47%).

These views may reflect people’s personal experiences with Medicaid and the generally positive views the public has toward the current program, which provides health coverage and long-term care to tens of millions of low-income adults and children nationally.

Seven in 10 Americans report a personal connection to Medicaid at some point in their lives – either directly through their own health insurance coverage (32%) or their child being covered (9%), or indirectly through a friend or other family member (29%).

Three in four (74%) hold favorable views of Medicaid, including significant majorities of Democrats (83%), independents (74%) and Republicans (65%). About half (52%) of the public say the current Medicaid program is working well for low-income enrollees, while about a third (32%) say it is not working well.

Most Residents of Non-Expansion States Favor Medicaid Expansion to Cover More Low-Income People

Under the Affordable Care Act, most states expanded their Medicaid programs to cover more low-income adults. In the 18 states that have not done so, a majority (56%) say that their state should expand Medicaid to cover more low-income adults, while nearly four in 10 (37%) say their state should keep Medicaid as it is today.

Slightly more than half of Republicans living in the 18 non-expansion states (all of which have either Republican governors, Republican-controlled legislatures or both) say their state should keep Medicaid as it is today (54%) while four in 10 (39%) say their state should expand their Medicaid program.

Favorable Views of the ACA Reach New High in More Than 80 KFF Polls

The poll finds 54 percent of the public now holds a favorable view of the Affordable Care Act, the highest share recorded in more than 80 KFF polls since the law’s enactment in 2010. This reflects a slight increase in favorable views since January (50%), while unfavorable views held steady at 42 percent.

The shift toward more positive views comes primarily from independents (55% view the ACA favorably this month, up slightly from 48% in January).

feb-poll-chart-2.png

Public Remains Confused about Repeal of the ACA’s Individual Mandate

The poll also probes the public’s awareness about the repeal of the ACA’s requirement that nearly all Americans have health insurance or pay a fine, commonly known as the individual mandate. The tax legislation enacted in December 2017 eliminated this requirement beginning in 2019.

About four in 10 people (41%) are aware that Congress repealed the individual mandate, a slight increase from January, when 36 percent were aware of the provision’s repeal.

However, misunderstandings persist. Most (61%) of the public is either unaware that the requirement has been repealed (40%) or is aware of its repeal but mistakenly believes the requirement will not be in effect during 2018 (21%). Few (13%) are both aware that it has been repealed and that it remains in effect for this year.

Costs are Voters’ Top Health Care Concern ahead of the 2018 Midterm Elections

Looking ahead to this year’s midterm elections, the poll finds Democratic, Republican and independent voters most often cite costs as the health care issue that they most want candidates to address.

When asked to say in their own words what health care issue that they most want candidates to discuss, more than twice as many voters mention health care costs (22%) as any other issue, including repealing or opposing the Affordable Care Act (7%).  Costs are the clear top issue for Democrats (16%) and independents (25%), and one of the top issues for Republicans (22%) followed by repealing or opposing the ACA (17%).

Designed and analyzed by public opinion researchers at the Kaiser Family Foundation, the poll was conducted from February 15-20, 2018 among a nationally representative random digit dial telephone sample of 1,193 adults. Interviews were conducted in English and Spanish by landline (422) and cell phone (771). The margin of sampling error is plus or minus 3 percentage points for the full sample. For results based on subgroups, the margin of sampling error may be higher.

Read the article.

Source:
 Kaiser Family Foundation (1 March 2018). "Poll: Public Mixed on Whether Medicaid Work Requirements Are More to Cut Spending or to Lift People Up; Most Do Not Support Lifetime Limits on Benefits" [Web Poll Post]. Retrieved from address https://www.kff.org/medicaid/press-release/poll-public-mixed-medicaid-work-requirements-more-to-cut-spending-lift-people-up-most-do-not-support-lifetime-limits/

Strengthening the Relationship between Education and Employers: Johnny C. Taylor, Jr., Appointed Chair of President’s Board of Advisors on HBCUs

From the SHRM CEO, here is his opinion on the newly appointed Chair of President’s Board of Advisors on HBCUs.


Johnny C. Taylor, Jr., SHRM-SCP, president and chief executive officer of the Society for Human Resource Management, was appointed chair of the President’s Board of Advisors on Historically Black Colleges and Universities (HBCUs) at a White House ceremony today.

In accepting the volunteer advisory appointment to the White House Initiative on HBCUs by President Donald Trump, Taylor gave these remarks:

Thank you, President Trump and Secretary DeVos.

I appreciate the trust you have placed in me to chair the President’s Board of Advisors on HBCUs. It has been my life’s work to unleash talent — in all its forms, from wherever it originates.

As CEO of the Society for Human Resource Management (SHRM), I work with employers across the country.  No matter their industry, size or longevity, today’s organizations all share the same challenge — closing the skills gap while building diverse, inclusive, engaged workforces.

For each of them, the “War for Talent” will never end and, thanks to this incredibly strong economy we’re experiencing, it is now a way of life. And today, people are an organization’s only competitive edge.

Employers depend on our country’s educational institutions as a reliable source of the multi-faceted talent they need. HBCUs are a critical conduit for this talent. Every year, over 300,000 students turn to these institutions for their education and to prepare them for their careers.

This President’s Advisory Board can be the nexus between higher education institutions and employers. As a CEO (in both non-profit and for-profit businesses), a former Fortune 500 chief HR executive, and someone with over 7½ years of experience in the HBCU space, I am up for this very challenge.

At SHRM, we are the experts on people and work and on building powerfully diverse organizational cultures that drive success. SHRM’s 300,000 members impact the lives of over 100 million people in the American workforce. SHRM is also an experienced academic partner, currently providing human resources curricula through 465 programs on 354 college campuses.

By working together, across all sectors, the HR profession, HBCUs and this Advisory Board can strengthen the relationship between education and employers. This Advisory Board can facilitate this critical relationship and support innovations in work-based learning opportunities for HBCU students. And as the world’s largest human resources association, SHRM can work with CEOs to connect industry to the diverse talent at these institutions.

This Board has an incredible opportunity to highlight HBCUs as wellsprings of the diverse talent American employers want and need today. HR and education, along with the support of this administration, must move together, forward.

Read the article.

Source:
 SHRM (27 February 2018). "Strengthening the Relationship between Education and Employers: Johnny C. Taylor, Jr., Appointed Chair of President’s Board of Advisors on HBCUs" [Web Blog Post]. Retrieved from address https://blog.shrm.org/blog/strengthening-the-relationship-between-education-and-employers-johnny-c-tay

Compliance Recap-February 2018

What's been happening in the employee benefits world? Get your latest updates on healthcare in this February 2018 Compliance Recap.


February was a quiet month in the employee benefits world.

The Internal Revenue Service (IRS) updated its Questions and Answers about Information Reporting by Employers on Form 1094-C and Form 1095-C, its Questions and Answers on Information Reporting by Health Coverage Providers, and its Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act.

The IRS released its adjusted penalty amounts under the employer shared responsibility provisions for the 2018 calendar year. The IRS also released its Information Letter on COBRA HRA premium calculation. The IRS, the U.S. Department of Labor (DOL), and the U.S. Department of Health and Human Services (HHS) issued a proposed rule on short-term, limited-duration insurance.

UBA Updates

UBA released one new advisor: DOL Final Rule on Disability Claims Procedures: Eight Things to Know.

IRS Updates Its Employer Information Reporting Q&As

The Internal Revenue Service (IRS) updated its “Questions and Answers about Information Reporting by Employers on Form 1094-C and Form 1095-C.” The IRS made one substantive change to the Q&As. At Q&A #5, the IRS provided the 2018 due dates for furnishing forms to employees and filing forms with the IRS.

For reporting in 2018 (for offers of coverage and coverage in 2017), an applicable large employer must furnish Form 1095-C to each full-time employee on or before March 2, 2018. This due date reflects a 30-day extension from the general due date (that is, January 31 of the year immediately following the calendar year to which the information relates); the extension was provided by the IRS in Notice 2018-06 on December 22, 2017. The extension applies automatically and does not require the submission of any request or other documentation to the IRS.

Generally, Forms 1094-C and 1095-C must be filed by February 28 of the year following the calendar year to which the return relates if filing on paper (or March 31 if filing electronically). The requirement to file Forms 1094-C and 1095-C is met if the forms are properly addressed and mailed on or before the due

 

date. If the due date falls on a weekend or legal holiday, then the due date is the following business day. A business day is any day that is not a Saturday, Sunday or legal holiday. Although the IRS extended the due date for furnishing Form 1095-C for 2017, the due date for filing Forms 1094-C and 1095-C with the IRS was not extended.

IRS Updates Its Q&As on Information Reporting by Health Coverage Providers

The Internal Revenue Service (IRS) updated its Questions and Answers on Information Reporting by Health Coverage Providers (Section 6055) by adding questions 30 through 35. Among other items, the Q&As discussed IRS Notice 2018-06 that extends the due date for furnishing the 2017 Form 1095-B to individuals to March 2, 2018.

Also, the IRS discussed short-term relief available from penalties for incomplete or incorrect returns filed with the IRS or furnished to individuals. For reporting in 2016, 2017, and 2018, the IRS will not impose penalties on employers that can show that they have made good faith efforts to comply with the information reporting requirements.

IRS Announces the Play-or-Pay Adjusted Penalty Amounts

The Internal Revenue Service (IRS) updated its Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act to reflect adjusted penalty amounts for failures to offer coverage in the 2018 calendar year. For Penalty A (or the “no offer” penalty), the adjusted penalty amount per full-time employee is $2,320. For Penalty B (or the “inadequate coverage” penalty), the adjusted penalty amount per full-time employee is $3,480.

IRS Releases Information Letter on COBRA HRA Premium Calculation

The Internal Revenue Service (IRS) released its Information Letter 2017-0027, which discusses how an employer determines a COBRA premium for a health reimbursement arrangement (HRA).

Under COBRA, an employer can charge a premium that is equal to the plan’s cost of the coverage for similarly situated beneficiaries to whom a qualifying event has not occurred, plus two percent for administrative expenses. COBRA permits the plan administrator to choose between one of two methods for determining COBRA premiums for the HRA. The applicable premium can be calculated either on an actuarial basis, or on a past cost basis.

IRS, DOL, and HHS Issue Proposed Rule on Short-Term Limited-Duration Insurance

The Internal Revenue Service (IRS), the U.S. Department of Labor (DOL), and the U.S. Department of Health and Human Services (HHS) issued a proposed rule to amend the definition of short-term, limited-duration insurance for purposes of its exclusion from the definition of individual health insurance coverage.

Short-term, limited-duration insurance is designed to fill temporary gaps in coverage that may occur when an individual is transitioning from one plan or coverage to another. Because short-term, limited-duration insurance is not individual health insurance coverage, it is exempt from individual market requirements.

Under current regulations, short-term, limited duration insurance cannot provide coverage for three months or longer (including any renewal periods) and a specific written notice must be included in the contract and any application materials provided as part of enrollment.

The proposed rule would expand the potential maximum coverage period by nine months. The proposed rule would also revise the required notice that must appear in the contract and any application materials for short-term, limited-duration insurance.

Public comments are due by April 23, 2018.

Question of the Month

  1. When the plan changes, when should I give notice to participants?
  2. Depending on the change that is made, an employer must provide notice within one of three time frames:
  • 60 days prior to the change
  • No later than 60 days after the change (or, within 60 days of the change)
  • Within 210 days after the end of the plan year

For modifications to the summary plan description (SPD) that constitute a material reduction in covered services or benefits, notice is required within 60 days of adoption of the material reduction in group health plan services or benefits. For example, a decrease in employer contribution would be a material reduction in covered services or benefits so notice should be provided within 60 days of the change in employer contribution. As a best practice, an employer should give advance notice of the change. For practical purposes, employees should be told prior to the first increased withholding.

If a plan makes a material modification in any of the plan terms that would affect the content of the most recently provided summary of benefits and coverage (SBC), then notice must be provided no later than 60 days prior to the date on which the modification will become effective.

However, if the change is part of open enrollment, assuming you communicate the change during open enrollment, the open enrollment communication is considered acceptable notice, regardless of whether the SBC or the SPD, or both, are changing. Open enrollment is essentially a safe harbor for the 60-day prior/60-day post notice requirements.

Finally, changes that do not require more immediate notifications, because they do not affect the SBC and are not a material reduction in benefits, must be communicated through a summary of material modifications or an updated summary plan description within 210 days after the end of the plan year.

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Getting to Know HSAs, FSAs, and HRAs

This month’s CenterStage features Hierl Benefit Advisor, Tonya Bahr, discussing the differences, similarities, and customizations of HSAs (Health Savings Accounts) versus FSAs (Flexible Savings Accounts), as well as how HRAs (Health Reimbursement Arrangements) may be a great add-on.

About Tonya

Tonya Bahr has 15 years of experience in human resources and benefits. Throughout her HR career, Tonya has been involved in benefit plan designs, wellness program implementations, and open enrollment facilitation. She has a passion for educating employees and business owners on benefit options, helping them make decisions that best fit their personal and financial objectives.

So, which is better for you: a FSA or a HSA?

Comparing the Differences

Health Savings Accounts (HSA) and Flexible Spending Accounts (FSA) are two popular ways employers can help their employees pay for out of pocket expenses associated with their healthcare costs. Both offer pre-tax advantages, which make them attractive. However, the names of these accounts really do distinguish their purposes. One is a SAVINGS account while the other is a SPENDING account.

Here are some tips and advice Tonya says to keep in mind when choosing between an HSA or FSA:

1.    Unlike the FSA, an HSA is portable and flexible. You can never lose the money in the account (both employee and employer contributions) so if you change jobs, change plan types, or don’t use the money in a given year, it all goes with you. The amount you can contribute toward an HSA is greater and the balance in the account earns interest.

2.    With an FSA, you can use the entire contribution amount upfront even if you haven’t contributed the full amount.

3.    With an HSA, you can only use the money actually in the account, but the FSA allows you to use the full contribution amount elected.

4.    You cannot contribute to an HSA and a full FSA at the same time. However, you can have an HSA and Limited FSA. Limited FSAs can only be used toward dental and vision expenses; whereas HSAs and full FSAs can be used toward medical, prescription, dental, and vision. HSA dollars can also be used to pay Cobra premiums, Long Term Care premiums, and Medicare premiums. Once an individual reaches age 65, money in an HSA can be spent on anything. The money is no longer earmarked for qualified medical expenses.

5.    HSAs are only available with High Deductible Health Plans (HDHP). HDHPs can seem a little intimidating at first given employees are responsible for the deductible before copays apply. However, they offer lower premiums, which is money in an employee’s pocket, which can in turn be used to start funding an HSA.

 

HRAs

Health Reimbursement Arrangements (HRA) are a vehicle used to offset increased plan design changes and employee’s out of pocket responsibility. Under an HRA, an employer purchases a plan design (typically a higher deducible option or out of pocket maximum), but they offer their employees a different plan. The difference is paid by the HRA. Employees submit their claims to a third party who manages the HRA and then in turn sends the employee funds to cover the cost of care. This type of scenario can work well for groups that have a healthier population and don’t experience high claim costs.

The savings is in the premium reduction for going with a higher deductible option and the gamble that employees won’t meet the limits of the HRA. Employers take on a risk with this type of arrangement because if a lot of members experience high claims and meet the HRA limits, the employer is the one paying to fund the HRA.

To conclude, employers can have an HRA with either an FSA or an HSA, but there are restrictions on how far down a qualified HDHP can go and still be HSA-qualified. Tonya’s suggestion is to avoid this risk by contacting her and discussing your options. You can contact Tonya Bahr at 920.921.5921 for more information.

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Health prices to outpace inflation for first time since 2010

Since 2010, our health prices have stayed in pace or below inflation. For the first time since then, they're expected be much, much more. Get the details in this article from Employee Benefit Advisor.


The growth in U.S. healthcare prices is projected to outpace economy-wide inflation for the first time since 2010, the second report in a week to signal the end of a long stretch of restrained medical increases.

This year, price increases for personal health expenditures are projected to rise 2.2%, compared with 1.9% for overall inflation, according to a report released Wednesday by the Centers for Medicare and Medicaid Services. The findings confirmed a recent analysis warning that the U.S. could be at the cusp of a return to higher medical inflation.

Health spending is determined by the price of goods and services, as well as how much health care people use. In recent years, increases in health spending have been driven by volume, as millions more people gained insurance coverage under the Affordable Care Act. While high-cost drugs have made headlines, overall price hikes have been historically low, increasing by an average of 1.1% annually between 2014 and 2016.

Those trends are projected to reverse. Government actuaries expect the number of people without health insurance to increase slightly after Republicans lifted the ACA’s penalty for going uninsured late last year. Medical price growth, meanwhile, will rebound, “in part reflecting more rapid growth in healthcare workers’ wages,” the report said.

 
Bloomberg

Healthcare inflation has been partly restrained by limits on how much Medicare pays hospitals and physicians under the ACA and other legislation, combined with overall slow growth in prices throughout the economy.

In recent days, concerns about higher-than-expected inflation have rattled stock markets and pushed up Treasury yields. Investors feared that a tightening labor market and rising wages could push up prices and spur the Federal Reserve to raise interest rates faster than anticipated to keep the economy from overheating.

Total health spending is projected to increase by 5.3% to about $3.7 trillion in 2018, according to the CMS report, and the growth will average 5.5% per year over the next decade. While that’s still faster than the overall rate of economic growth, it’s an improvement from past decades. Between 1990 and 2007, annual health spending increased by 7.3% per year.

Read the original article here.

Source:
Bloomberg News (20 February 2018). "Health prices to outpace inflation for first time since 2010" [Web Blog Post].Retrieved from address https://www.employeebenefitadviser.com/articles/health-prices-to-outpace-inflation-for-first-time-since-2010?feed=00000152-175f-d933-a573-ff5f3f230000