Compliance Recap - December 2018

December was a relatively quiet month in the employee benefits world.

A U.S. District Court issued an order declaring that the Patient Protection and Affordable Care Act (ACA) is unconstitutional. The Equal Employment Opportunity Commission (EEOC) issued two final rules to remove certain wellness program incentives. The Department of Labor (DOL) updated its Form M-1 filing guidance for association health plans.

UBA Updates

UBA updated or revised existing guidance:

U.S. District Court Declares ACA Unconstitutional

On December 14, 2018, the U.S. District Court for the Northern District of Texas (Court) issued a declaratory order in ongoing litigation regarding the individual mandate and the Patient Protection and Affordable Care Act (ACA). The Court declared that the individual mandate is unconstitutional and declared that the rest of the ACA – including its guaranteed issue and community rating provisions – is unconstitutional.

The Court did not grant the plaintiffs’ request for a nationwide injunction to prohibit the ACA’s continued implementation and enforcement. The Court’s declaratory judgment simply defined the parties’ legal relationship and rights under the case at this relatively early stage in the case.

On December 16, 2018, the Court issued an order that requires the parties to meet and discuss the case by December 21, 2018, and to jointly submit a proposed schedule for resolving the plaintiffs’ remaining claims.

On December 30, 2018, the Court issued two orders. The first order grants a stay of its December 14 order. This means that the court’s order regarding the ACA’s unconstitutionality will not take effect while it is being appealed. The second order enters the December 14 order as a final judgment so the parties may immediately appeal the order.

On December 31, 2018, the Court issued an order that stays the remainder of the case. This means that the Court will not be proceeding with the remaining claims in the case while its December 14 order is being appealed. After the appeal process is complete, the parties are to alert the Court and submit additional court documents if they want to continue with any remaining claims in the case.

At this time, the case’s status does not impact employers’ group health plans. However, employers should stay informed for the final decision in this case.

Read more about the court case.

EEOC Issue Final Rules to Remove Wellness Program Incentive Limits Vacated by Court

On December 20, 2018, the Equal Employment Opportunity Commission (EEOC) issued two final rules to remove wellness program incentives.

As background, in August 2017, the United States District Court for the District of Columbia held that the U.S. Equal Employment Opportunity Commission (EEOC) failed to provide a reasoned explanation for its decision to allow an incentive for spousal medical history under the Genetic Information Nondiscrimination Act (GINA) rules and adopt 30 percent incentive levels for employer-sponsored wellness programs under both the Americans with Disabilities Act (ADA) rules and GINA rules.

In December 2017, the court vacated the EEOC rules under the ADA and GINA effective January 1, 2019. The EEOC issued the following two final rules in response to the court’s order.

The first rule removes the section of the wellness regulations that provided incentive limits for wellness programs regulated by the ADA. Specifically, the rule removes guidance on the extent to which employers may use incentives to encourage employees to participate in wellness programs that ask them to respond to disability-related inquiries or undergo medical examinations.

The second rule removes the section of the wellness regulations that provided incentive limits for wellness programs regulated by GINA. Specifically, the rule removes guidance that addressed the extent to which an employer may offer an inducement to an employee for the employee’s spouse to provide current health status information as part of a health risk assessment (HRA) administered in connection with an employee-sponsored wellness program.

Both rules will be effective on January 1, 2019.

Read more about the EEOC’s final rules.

DOL Updates Form M-1 Filing Guidance for Association Health Plans

On December 3, 2018, the Department of Labor (DOL) published its “10 Tips for Filing Form M-1 For Association Health Plans And Other MEWAs That Provide Medical Benefits” that provides plan administrators with information on when to file and how to complete portions of Form M-1.

The DOL emphasizes that all multiple employer welfare arrangements (MEWAs) that provide medical benefits, including association health plans (AHPs) that intend to begin operating under the DOL’s new AHP rule, are required to file an initial registration Form M-1 at least 30 days before any activity including, but not limited to, marketing, soliciting, providing, or offering to provide medical care benefits to employers or employees who may participate in an AHP.

Read more about the DOL guidance.

Question of the Month

Q: If an employee must increase the hours of childcare needed because the employee changes work schedules, may the employee increase the DCAP amount that the employee elects?

A: Yes, increasing the hours of childcare is a permitted election change event that would allow an employee to increase the employee’s DCAP election amount consistent with the change in childcare cost.

**This information is general and is provided for educational purposes only. It is not intended to provide legal advice. You should not act on this information without consulting legal counsel or other knowledgeable advisors.


The case for self-funded health benefit plans and reference-based pricing

Do you offer a reference-based pricing health benefit plan? A recent survey shows an increase in self-funded plan designs that use reference-based pricing for 2019. Read this blog post to learn more.


Self-funding and reference-based pricing are hot topics with small businesses. They are so popular, in fact, that a recent survey shows an overall increase in their 2019 projection of small employer clients having a reference-based pricing health benefit plan design. Small businesses are seeing these savings, and they’re starting to explore how reference-based pricing can help them, too.

Before we get to why self-funded plan designs that use reference-based pricing are becoming more popular for small businesses, let’s review the basics.

Reference-based pricing is a methodology of calculating payment to providers for covered treatments and services using a “reasonable fee” based on a reference point. A common reference point is the Medicare fee schedule. Some self-funded health benefit plans calculate the reasonable fee as a percentage of the Medicare fee schedule to determine reimbursement for services rendered.

Bottom line: Self-funded health benefit plan designs that use reference-based pricing can allow for a great deal of flexibility with a variety of arrangements and overall cost-savings.

So, what’s behind the recent trend toward reference-based pricing for smaller employers? A few key factors.

First, a self-funded health benefit plan design that uses referenced-based pricing can mean less expensive coverage for employees and employers.

When coupling a self-funded health benefit plan with stop-loss insurance, reference-based pricing provides an affordable way to extend coverage to employees through lower employee contributions. So, employees are happy because they’re saving money.

And employers are happy, too, because they’re allowing for more coverage to more employees. There’s a refund potential for employers if claims dollars are less than funded. There’s also a premium tax savings of around 2% since self-funded claim dollars are not subject to state health insurance premium taxes.

Moreover, self-funded health benefit plan designs that utilize reference-based pricing may also include transparency reports with aggregate health claims data and demographic information, which allow employers to better manage costs. Overall, anytime you can design a plan that’s beneficial for employees and employers, it’s a win.
Second, reference-based pricing can provide employees more flexibility when it comes to choosing a provider. Typically, an important feature of any health benefit plan design for employees is the ability to choose the provider they want. Some self-funded plan designs that use reference-based pricing give employees the chance to pick the provider that’s right for them. And, when employees are happy with their health plan, employers are usually pretty happy, too.

Finally, self-funded plan designs that use reference-based pricing can help employees become smarter healthcare consumers because of all the transparency and choice involved. When employees better understand the healthcare processes and system, costs come down for both the employee and employer. In fact, just understanding their coverage better may help employees better use their health benefit plans.

For example, using telemedicine when appropriate, establishing a relationship with a primary care doctor and using client advocacy services can all help employees better utilize their health benefit plans. In the end, employees get smarter about how they manage their care, and employers win with reduced costs.

These factors are driving more small businesses to consider reference-based pricing self-funded health benefit plan designs with stop-loss insurance. And, for good reason. These plan designs can give employers the opportunity to offer their employees affordable health benefits, provide more choice in their health plans and providers, and encourage more employee engagement. While moving to reference-based pricing may be too big of a leap for some employers, self-funding continues to provide a means for employers to offer comprehensive major medical health benefits at lower costs.

SOURCE: MacLeod, D. (6 December 2018) "The case for self-funded health benefit plans and reference-based pricing" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/the-case-for-self-funded-health-benefit-plans-and-reference-based-pricing


New resource offers guidance on digital tools for diabetes management

Are you considering implementing digital diabetes tools or solutions in your employer-sponsored benefits? Read this blog post for the Northeast Business Group on Health’s updated guide on diabetes management tools.


The Northeast Business Group on Health has updated its “Digital Tools and Solutions for Diabetes: An Employer’s Guide,” to include both enhanced and new solutions—and promising future innovations—to help employers help their workers better manage their diabetes, lower costs and ultimately save more lives.

“Employers are well aware of the costs associated with diabetes in their employee and dependent populations—they continue to indicate this is a top concern and are increasingly aware of the links between diabetes and other chronic and debilitating health conditions, including cardiovascular disease,” says Candice Sherman, CEO of NEBGH.

The market for digital diabetes prevention and management solutions continues to mature since the group published its first guide in 2016, Sherman says. The updated guide provides a detailed checklist of the features and functionalities of the digital tools available now to manage diabetes, as well as information on several unique and innovative digital diabetes solutions that are being targeted to employers but were not part of NEBGH’s research, including Proteus Discover, BlueLoop and do-it-yourself programs.

“Proteus Discover is comprised of ingestible sensors, a small wearable sensor patch, an application on a mobile device and a provider portal,” the guide cites the provider. “Once activated, Proteus Discover unlocks never-before-seen insight into patient health patterns and medication treatment effectiveness, leading to more informed healthcare decisions for everyone involved.”

“BlueLoop is the one and only tool that allows kids and their caregivers to log and share diabetes information—both online and with the app—in real time, via instant e-mail and text message, giving peace of mind to parents,more class time for students and fewer phone calls and paper logs for school nurses,” the provider tells NEBGH. “Online, parents can share real-time BG logs with their clinicians, who can see logs (in the format they prefer), current dosages and reports, all in one place.”

The guide also hints at promising future innovations:

“Technology is constantly evolving: by connecting sensors, wearables and apps, it is increasingly possible to pool and leverage data in innovative ways to provide timely interventions so that people with diabetes can be truly independent and effectively self-manage their care,” the authors write.

The guide lists a hypothetical scenario: A person with diabetes enters a restaurant where a GPS sensor identifies the location, reviews the menu and proposes the best choices based on caloric and carbohydrate content. The technology also proposes and delivers a rapidly acting insulin bolus dose based on the person’s exercise level that day and prior experiences when eating similar meals.

Also included are key questions for employers considering implementing digital diabetes tools or solutions, including:

  •  What does the company want to achieve with a digital tool?
  • How much is the company willing to pay?
  • How will success be measured?
  • How will digital solutions and tools be marketed to employees and their families?
  • What privacy issues need to be addressed when tools or solutions are implemented?

“Digital health tools hold the promise of improved health outcomes and reduced health care expenses through improved engagement, better collaboration and sustained behavior change,” says Mark Cunningham-Hill, NEBGH’s medical director. “However, digital diabetes solutions are not a panacea. Employers will need to address several obstacles such as the difficulty of recruitment and enrollment, lack of sustained employee engagement and the cost of deployment of digital solutions. This can be accomplished through careful planning and learning from other employers that have successfully implemented these tools.”

SOURCE: Kuehner-Hebert, K. (4 December 2018) "New resource offers guidance on digital tools for diabetes management" (Web Blog Post). Retrieved from https://www.benefitspro.com/2018/12/04/new-resource-digital-tools-for-diabetes-management/


4 trends in employee wellness programs for 2019

According to a white paper by MediKeeper, employee wellness programs will be impacted by intelligent personalization, social recognition, virtual wellness and smarter analytics. Continue reading to learn more.


Employee wellness programs will likely be transformed in the coming year by intelligent personalization, social recognition, virtual wellness and smarter analytics, according to MediKeeper’s white paper, “Four Emerging Employee Wellness Trends for 2019.”

“Embracing change and knowing what organizations need to keep driving wellness offerings forward in the next few years will help them lay the groundwork for building stronger employee wellness programs and increasing employee engagement,” says MediKeeper’s CEO David Ashworth. “With health care costs on the rise, companies that pay attention to these key trends will have the greatest success investing in their employees’ overall well-being.”

Intelligent Personalization

Intelligent personalization allows companies to make more informed decisions based on understanding risks and their causes and identifying what is driving present and future cost, according to the white paper.

“Every person is different, so it only makes sense that everyone’s wellness portal experience should also be different — this includes personalization, targeted messages and offerings.,” the authors write. “Adding business intelligence/data mining capabilities delivers the ability to take data captured within the portal, manipulate it, segment it and merge with other sets of data to perform complex associations all within each population groups’ administration portal will be the key to truly managing the population’s health.”

Social Recognition

In the coming year, workplace wellness programs will also implement a multitude of ways to include social recognition that fosters a team-oriented atmosphere intended to encourage people to perform to the best of their abilities, according to the white paper.

“Through social recognition, which can include posting, sharing, commenting and other virtual interactions, employees can help motivate each other to reach their goals,” the authors write. “These interactions foster both a competitive and team-oriented atmosphere that encourages people to perform to the best of their abilities.”

In addition to support from coworkers, managers can also promote their employees’ achievements by offering praise in an online public forum or even further boost morale by handing out incentive points that can be redeemed for tangible rewards.

Virtual Wellness Programming

In 2019, the importance of offering virtual wellness programming will grow as more employees work remotely or set flexible hours, according to the white paper.

“Since employees may work variable hours or work in several locations around the world, it simply doesn’t make sense to solely rely on lunchtime health seminars that may not be accessible to much of the workforce,” the authors write. “Instead of providing physical classes, consider hosting virtual programs that can be viewed at any time or any place. By making your wellness program available online, you’re able to reach a broader audience and make more of an impact within the entire working population.”

Smarter Analytics

Smarter analytics will also be at the forefront in 2019, according to the white paper.

“Now you can generate reports targeted specifically to the information that you are seeking, as well as layering various reports including biometrics, incentives, health risk assessments and challenges, to see what is working and what is not,” the authors write. “You can use these results to inform and better customize the intelligent personalization side of your wellness program. You’ll also be able to send messages from the reports, making them actionable instead of just informative.”

As employers continue to evaluate the effectiveness of their wellness programs, they should keep these four emerging trends in mind in order to ensure that their business is providing all the tools necessary to keep their employees both happy and healthy, according to the white paper.

“Remember that just because you’ve seen success in the past, you can’t just sit back and relax now,” the authors write. “Continual advances in wellness technology mean that you need to stay on top of the trends and adjust frequently in order to remain relevant in an increasingly competitive workplace environment.”

SOURCE: Kuehner-Hebert, K. (28 November 2018) "4 trends in employee wellness programs for 2019" (Web Blog Post). Retrieved from https://www.benefitspro.com/2018/11/28/4-trends-in-employee-wellness-programs-for-2019/


The ACA Remains In Place After Being Struck Down By Federal Court

Overview

On Dec. 14, 2018, a federal judge ruled in Texas v. United States that the entire Affordable Care Act (ACA) is invalid due to the elimination of the individual mandate penalty in 2019. The decision was not stayed, but the White House announced that the ACA will remain in place pending appeal.

This lawsuit was filed by 20 states as a result of the 2017 tax reform law that eliminates the individual mandate penalty. In 2012, the U.S. Supreme Court upheld the ACA on the basis that the individual mandate is a valid tax. With the penalty’s elimination, the court, in this case, ruled that the ACA is no longer valid under the U.S. Constitution.

Action Steps

This ruling is expected to be appealed and will likely be taken up by the Supreme Court. As a result, a final decision is not expected to be made until that time. The federal judge’s ruling left many questions as to the current state of the ACA; however, the White House announced that the ACA will remain in place pending appeal.

Background

The ACA imposes an “individual mandate” beginning in 2014, which requires most individuals to obtain acceptable health insurance coverage for themselves and their family members or pay a penalty. In 2011, a number of lawsuits were filed challenging the constitutionality of this individual mandate provision.

In 2012, the U.S. Supreme Court upheld the constitutionality of the ACA in its entirety, ruling that Congress acted within its constitutional authority when enacting the individual mandate. The Court agreed that, while Congress could not use its power to regulate commerce between states to require individuals to buy health insurance, it could impose a tax penalty using its tax power for individuals who refuse to buy health insurance.

Highlights

  • A federal judge ruled that the entire ACA is invalid due to the elimination of the individual mandate penalty.
  • This ruling is expected to be appealed and will likely be taken up by the Supreme Court.
  • The ACA will remain in place pending appeal.

Important Dates

December 14, 2018

A federal judge ruled that the entire ACA is invalid due to the elimination of the individual mandate penalty

January 1, 2019

Individuals will no longer be penalized under the ACA for failing to obtain acceptable health insurance coverage

However, a 2017 tax reform bill, called the Tax Cuts and Jobs Act, reduced the ACA’s individual mandate penalty to zero, effective beginning in 2019. As a result, beginning in 2019, individuals will no longer be penalized for failing to obtain acceptable health insurance coverage.

Texas v. United States

Following the tax reform law’s enactment, 20 Republican-controlled states filed a lawsuit again challenging the ACA’s constitutionality. The plaintiffs, first, argued that the individual mandate can no longer be considered a valid tax, since there will no longer be any revenue generated by the provision.

In addition, in its 2012 ruling, the Supreme Court indicated (and both parties agreed) that the individual mandate is an essential element of the ACA, and that the remainder of the law could not stand without it. As a result, the plaintiffs argued that the elimination of the individual mandate penalty rendered the remainder of the ACA unconstitutional.

The U.S. Justice Department chose not to fully defend the ACA in court and, instead, 16 Democratic-controlled states intervened to defend the law.

Because the court determined that the individual mandate is no longer a valid tax, but is an essential element of the ACA, it ultimately ruled that the ACA is invalid in its entirety.

Federal Court Ruling

In his ruling, Judge Reed O’Connor ultimately agreed with the plaintiffs, determining that the individual mandate can no longer be considered a valid exercise of Congressional tax power. According to the court, “[u]nder the law as it now stands, the individual mandate no longer ‘triggers a tax’ beginning in 2019.” As a result, the court ruled that “the individual mandate, unmoored from a tax, is unconstitutional.”

Because the court determined that the individual mandate is no longer valid, it now had to determine whether the provision is “severable” from the remainder of the law (meaning whether other portions of the ACA can remain in place or whether the entire law is invalid without the individual mandate).

In determining whether the remainder of the law could stand without the individual mandate, the court pointed out that “Congress stated three separate times that the individual mandate is essential to the ACA … [and that] the absence of the individual mandate would ‘undercut’ its ‘regulation of the health insurance market.’ Thirteen different times, Congress explained how the individual mandate stood as the keystone of the ACA … [and,] ‘together with the other provisions’ [the individual mandate] allowed the ACA to function as Congress intended.” As a result, the court determined that the individual mandate could not be severed, making the ACA invalid in its entirety.

Impact of the Federal Court Ruling

Judge O’Conner’s ruling left many questions as to the current state of the ACA, because it did not order for anything to be done or stay the ruling pending appeal. However, this ruling is expected to be appealed, and the White House announced that the ACA will remain in place until a final decision is made. Many industry experts anticipate that the Supreme Court will likely take up the case, which means that a final decision will not be made until that time.

While these appeals are pending, all existing ACA provisions will continue to be applicable and enforced. Although the individual mandate penalty will be reduced to zero beginning in 2019, employers and individuals must continue to comply with all other applicable ACA requirements. This ruling does not impact the 2019 Exchange enrollment, the ACA’s employer shared responsibility (pay or play) penalties and related reporting requirements, or any other applicable ACA requirement.

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The benefits issue that costs employers big: Ineligible dependents on company plans

Are you paying insurance premiums for dependents who are ineligible for your company health plan? Almost 10 percent of enrolled dependents are ineligible for the programs they are enrolled in. Read on to learn more.


Are you paying insurance premiums for people who aren’t qualified to be on your company plan?

For some employers, too often the answer is “yes.”

In our experience, we find that nearly 10% of dependents enrolled in employee health and welfare plans are not eligible to be in the program. And for a company with a couple of hundred employees that spends around $2 million a year on benefits, ineligible dependents can become a significant financial issue.

When employers pay for ineligible dependents, costs increase for them and employees. Unfortunately, it’s an all-too-common issue that employers need a solid strategy to combat.

So how do ineligible dependents get enrolled in the first place? There are a couple of common ways that employers end up paying health insurance premiums for ineligible dependents. The most basic factor is a change in a person’s situation — children pass the age of 26, spouses get jobs, people get divorced, etc. — and the employee is unaware of the need to notify the plan sponsor. Most often, these situations arise because the employer doesn’t have a process in place.

But some situations are more nefarious: An employee mischaracterizes someone as a dependent. They may claim that a nephew is a son, or that they’re still married to an ex-spouse. In either of these situations, the employer loses.

Prevent ineligible dependents with best practices

Prevent paying for ineligible dependents by putting into place best practices that begin when a new employee joins the company.

During onboarding, investigate each potential plan member when the employee applies for insurance coverage. That means seeking documentation — such as marriage certificates and birth certificates — to verify that a person is, in fact, married, or that their kids are their kids and not someone else’s. Following these processes at the outset prevents the awkwardness of having to question employees about their various family relationships. Nobody wants to ask a colleague if the divorce is final yet.

To make it easy for employees to verify everyone’s eligibility, provide access to a portal where they can upload scans or images of relevant documents. This will also make it easier to track—and keep track of—onboarding documents and dependent audits when the time comes.

Once this best practice is established, it’s important to conduct periodic dependent eligibility audits, as required by ERISA. The employer can conduct an audit or hire an external auditor. This decision is usually driven by the size of the workforce.

The most logical time to conduct an audit is during benefit enrollment. Employees are already considering options for the next plan year, and they likely won’t be confused by the need to submit verifying documents. (During this exercise, it’s also a good idea to ask plan participants to verify beneficiaries on employer-provided life insurance.)

Some employers — again, depending on the size of the workforce — will conduct random sample audits of 20-25% of their employee population. Obviously, the larger the sample size, the better. Benefits administration platforms typically streamline this process.

What happens when employers identify an ineligible dependent?

Many employers offer workers an amnesty period during which an employee can come forward to say they have someone that should be taken off the plan. If the plan sponsor identifies an ineligible dependent, employees are typically offered a one-time pass. Then, they must sign an affidavit attesting that they can be terminated if it happens again.

If the employer has processed insurance claims for an ineligible dependent, they can declare fraud and seek back payment of claims payouts. Again, most in this situation prefer a more benevolent approach and will ask the employee to make monthly differential payments until the account is even. Conducting regular dependent eligibility audits as part of the benefits administration process needs to be handled with finesse for the good of organizational culture.

Some employers may shy away from conducting audits out of concern for creating awkward situations. But frankly, it’s the plan sponsor’s job to help them navigate the waters, educate them and keep them engaged in the process by becoming their best advocates. This will not only help enhance the efficiency and accuracy of employee benefit offerings, but it will result in a smoother ride for everyone involved.

Ensuring that a health and welfare benefits program follows eligibility best practices is the responsibility of the plan sponsor. But employees have a share in that responsibility, too.

SOURCE: O'Connor, P.(28 November 2018) "The benefits issue that costs employers big: Ineligible dependents on company plans" (Web Blog Post). Retrieved from:


Poor employee health costs employers half trillion dollars a year

Poor employee health costs employers half a trillion dollars each year and almost 1.4 billion in missed work days, according to a recent report from the Integrated Benefits Institute. Read this blog post to learn more.


Poor employee health is costing employers in a big way — to the tune of half a trillion dollars and nearly 1.4 billion days of missed work each year.

That’s according to a new report from the Integrated Benefits Institute, which finds that employees miss around 893 million days a year from illness and chronic conditions, and another 527 million days because of impaired performance due to those illnesses. Those days add up to $530 billion in lost productivity.

“To put this in further context, the cost of poor health to employers is greater than the combined revenues of Apple, Amazon, Microsoft, Netflix, eBay and Adobe,” says Thomas Parry, president of Integrated Benefits Institute, an independent nonprofit that serves more than 1,250 employers including Amazon, Kroger, McDonald’s and Walmart.

The $530 billion price tag is on top of what employers already spend on healthcare benefits. Employers pay $880 billion in healthcare benefits for their employees and dependents, which means that poor health costs amount to “60 cents for every dollar employers spend on healthcare benefits,” according to the study.

“There’s not a CEO or CFO that can placidly accept their business expending the equivalent of almost two-thirds of their healthcare dollars on lost productivity,” Perry says. “Illness costs this country hundreds of billions of dollars, and we can no longer afford to ignore the health of our workforce.”

Employers invest in healthcare benefits to maintain a productive workforce. But this new study suggests that more needs to be done to keep employees healthy, or strategies need to be put in place to lower spending. Or both.

“It’s critical that employers understand how strategies for managing healthcare spend — such as cost- shifting to employees or ensuring better access and more cost-effective care — can impact the kinds of conditions that drive illness-related lost productivity,” says Brian Gifford, director of research and analytics at IBI.

The study broke down the estimated costs of poor health into several categories:

Wage and benefits (incidental absence due to illness, workers’ compensation and federal family and medical leave): $178 billion.

Impaired performance (attributed to chronic health conditions): $198 billion.

Medical and pharmacy (workers’ compensation, employee group health medical treatments, employee group health pharmacy treatments): $48 billion.

Workers’ compensation other costs (absence due to illness, reduced performance): $25 billion.

Opportunity costs of absence (missed revenues, costs of hiring substitutes, overtime): $82 billion.

For its study, IBI used 2017 data from the U.S. Bureau of Labor Statistics as well as its own benchmarking data from 66,000 U.S. employers.

SOURCE: Paget, S. (20 November 2018) "Poor employee health costs employers half trillion dollars a year" (Web Blog Post). Retrieved from https://www.benefitnews.com/news/poor-employee-health-costs-employers-half-trillion-dollars-a-year?brief=00000152-14a7-d1cc-a5fa-7cffccf00000


What’s in store for voluntary benefits in 2019

What does the New Year have in store for voluntary benefits? Employee purchase programs allow employees to pay for items even if they don't have the funds or credit available. Read this blog post for more 2019 voluntary benefits trends.


Benefit managers are still catching their breath as the curtain closes on this year’s open enrollment season. But smart benefits managers are already evaluating new products and benefit changes for the 2019-2020 season.

Themes around cost-saving strategies concerning healthcare premiums will continue to resonate — but what else will happen in the upcoming year? Voluntary benefits will continue to hold the key for many benefit managers looking to lower costs and maintain value for employees by providing flexibility to a diverse workforce.

Voluntary benefits offer pivotal advantages to employers and employees alike. By offering these programs through an employer, employees often receive better pricing, plan designs and underwriting support compared to what is available on the individual market. Payroll deduction capability and enrollment as part of their normal core enrollment process and portability are also available.

Here are three voluntary benefits to watch in 2019.

Employee purchase programs.

Nearly one-quarter of all Americans do not have adequate emergency savings, according to a survey by consumer financial services company Bankrate. This means that if they need to make a significant purchase, they are likely to withdraw a loan from their 401(k) plan.

Employee purchase programs help employees pay for items they may need immediately, but may not have the funds or credit available. These programs generally allow employees to spread out the payments on the purchased products — such as appliances, car tires or computers — over a period of time through payroll deduction. Young employees who are trying to establish credit while managing student loan repayments — and may be strapped for cash — can especially benefit from an employee purchase programs.

Group legal insurance plans.

Group legal plans are not new, but they are still valuable for employees. For a cost that is less than a cup of coffee, group legal plans provide employees with access to attorneys for will preparation, estate planning, dealing with elderly parents, traffic violations, real estate purchases, and document review and preparation. These plans offset the expense of professional legal representation and the time it takes to locate the right representation to handle legal matters.

These plans may be especially valuable to employees who are thinking of buying a house, adopting a child or planning for their estate. Still, group legal insurance plans are available to all employees, and can provide a buffer for workers who may need to navigate identity restoration after a theft or combat an unforeseen traffic ticket. These plans also save employees time and money when the need for a legal professional arises.

Student loan benefits.

Student loan benefits have been one of the hottest topics in voluntary benefits in 2018 and it’s not going away any time soon. An IRS private letter ruling this past August allowed one company to amend its 401(k) plan to allow employer contributions of up to 5% to individuals who contribute at least 2% to their student loan. This may just be the start to more legislation concerning student loan debt solutions.

In the interim, as the tuition debt crisis grows, employers are seeking ways to support their employees. There are several strategies that can be employed.

Some solutions can be offered at no cost, while others have administrative charges and the cost of contributions to factor in. For employers who have the budget, a student loan repayment plan may be the answer. There are many vendors who can partner with an employer to help develop a plan that is designed to meet the company’s goals.

Employers without a budget can seek a student loan solution partner that offers comprehensive educational tools such as written materials, debt navigation tools, FAQs, one-on-one counselors and webinars. Another option is to offer student loan refinancing. These lenders can help employees manage their debt. Even though refinancing is not for everyone, well-vetted student loan refinancing partners should be considered as part of a comprehensive student loan debt solution strategy. Understanding the approval rate is important, as well as whether there are any other incentives, such as a welcome bonus, that may be applied to the loan principal.

SOURCE: Marcia, P. (28 November 2018) "What’s in store for voluntary benefits in 2019" (Web Blog Post). Retrieved from: https://www.benefitnews.com/opinion/whats-in-store-for-employers-and-voluntary-benefits-in-2019


2019: A Look Forward

A number of significant changes to group health plans have been made since the Affordable Care Act (ACA) was enacted in 2010. Many of these changes became effective in 2014 and 2015 but certain changes to a few ACA requirements take effect in 2019.

 Changes for 2019 

  1. Cost-sharing Limits – Non-grandfathered plans are subject to limitations on cost sharing for essential health benefits (EHB). The annual limits on cost sharing for EHB are $7,900 for self-only coverage and $15,800 for family coverage, effective January 1, 2019.
    • Health plans with more than one service provider can divide maximums between EBH as long as the combined amount does not exceed the out-of-pocket maximum limit for the year.
    • Beginning in 2016, each individual – regardless of the coverage the individual is enrolled – is subject to the self-only annual limit on cost sharing.
    • The ACA’s annual cost-sharing limits are higher than high deductible health plans (HDHPs) out-of-pocket maximums. For plans to qualify as an HDHP, the plan must comply with HDHP’s lower out-of-pocket maximums. The HDHP out-of-pocket maximum for 2019 is $6,750 for self-only coverage and $13,500 for family coverage.
  2. Coverage Affordability Percentages – If an employee’s required contribution does not exceed 9.5 percent of their household income for the taxable year (adjusted each year), then the coverage is considered affordable. The adjusted percentage for 2019 is 9.86 percent.
  3. Reporting of Coverage – Returns for health plan coverage offered or provided in 2018 are due in early 2019. For 2018, returns must be filed by February 28, 2019, or April 1, 2019 (if electronically filed). Individual statements must be provided by January 31, 2019.
    • ALEs are required to report information to the IRS and their eligible employees regarding their employer-sponsored health coverage. This requirement is found in Section 6056. Reporting entities will generally file Forms 1094-B and 1095-B under this section.
    • Every health insurance issuer, self-insured health plan sponsor, government agency that provides government-sponsored health insurance, and any other entity that provides MEC is required to finalize an annual return with the IRS, reporting information for each individual who is enrolled. This requirement is found in Section 6055. Reporting entities will generally file Forms 1094-C and 1095-C under this section.
    • ALEs that provide self-funded plans must comply with both reporting requirements. Reporting entities will file using a combined reporting method on Forms 1094-C and 1095-C.
    • Forms Used for Reporting – Reporting entities must file the following with the IRS:
      1. A separate statement for each individual enrolled
      2. A transmittal form for all returns filed for a given calendar year.
    • Electronic Reporting – Any reporting entity that is required to file 250 or more returns in either section must file electronically on the ACA Information Returns (AIR) Program. Reporting entities that file less than 250 returns can file in paper form or electronically on the ACA Information Returns (AIR) Program.
    • Penalties – Entities that fail to comply with the reporting requirements are subject to general reporting penalties for failure to file correct information returns and failure to furnish correct payee statements. Penalty amounts for failure to comply with the reporting requirements in 2019 are listed below:
Penalty Type Per Violation Annual Maximum Annual Maximum for Employers with up to $5 million in Gross Receipts
General $270 $3,275,500 $1,091,500
Corrected within 30 days $50 $545,500 $191,000
Corrected after 30 days but before August 1 $100 $1,637,500 $545,500
Intentional Disregard $540* None N/A

**Intentional disregard penalties are equal to the greater of either the listed penalty amount or 10 percent of the aggregate amount of the items required to be reported correctly. 

Expected Changes

  1. Health FSA Contributions – Effective January 1, 2018, health FSA salary contributions were limited to $2,650. The IRS usually announces limit adjustments at the end of each year. This limit does not apply to employer contributions or limit contributions under other employer-provided coverage.
  2. Employer Shared Responsibility Regulations – The dollar amount for calculating Employer Shared Responsibility 2 penalties is adjusted for each calendar year. Applicable large employers (ALEs) must offer affordable, minimum value (MV) healthcare coverage to full-time employees and dependent children or pay a penalty. If one or more full-time employees of an ALE receive a subsidy for purchasing healthcare coverage through an Exchange, the ALE is subject to penalties.
    • Applicable Large Employer Status – ALEs are employers who employ 50 or more full-time employees on business days during the prior calendar year.
    • Offering Coverage to Full-time Employees – ALEs must determine which employees are full-time. A full-time employee is defined as an employee who worked, on average, at least 30 hours per week or 130 hours in a calendar month. There are two methods for determining full-time employee status:
      1. Monthly Measurement Method – Full-time employees are identified based on a month-to-month analysis of the hours they worked.
      2. Look-Back Measurement Method – This method is based on whether employees are ongoing or new, and whether they work full time or variable, seasonal or part-time. This method involves three different periods:
        • Measurement period – for county hours of service
        • Administration period – for enrollment and disenrollment of eligible and ineligible employees
        • Stability period – when coverage is provided based on an employee’s average hours worked.
      3. Applicable Penalties – ALEs are liable for penalties if one or more full-time employees receive subsidies for purchasing healthcare coverage through an Exchange. One of two penalties may apply depending on the circumstances:
        • 4980H(a) penalty – Penalty for not offering coverage to all full-time employees and their dependents. This penalty does not apply if the ALE intends to cover all eligible employees. ALEs must offer at least 95 percent of their eligible employees’ health care coverage. Monthly penalties are determined by this equation:
          1. ALE’s number of full-time employees (minus 30) X 1/12 of $2,000 (as adjusted), for any applicable month
          2. The $2,000amount is adjusted for the calendar year after 2014:
          3. $2,080 – 2015; $2,160 – 2016; $2,260 – 2017; $2,320 – 2018
        • 4980H(b) penalty – penalty for offering coverage – ALEs are subject to penalties even if they offer coverage to eligible employees if one or more full-time employees obtain subsidies through an Exchange because:
          1. The ALE didn’t offer all eligible employees coverage
          2. The coverage offered is unaffordable or does not provide minimum value.
          3. Monthly penalties are determined by this equation: 1/12 of $3,000 (as adjusted) for any applicable month
            1. $3,120 – 2015; $3,240 – 2016; $3,390 – 2017; $3,480 – 2018

Contact one of our expert advisors for assistance or if you have any questions about compliance in the New Year.

SOURCES: www.dol.gov, www. HHS.gov, https://www.federalregister.gov/documents/2018/04/17/2018-07355/patient-protectionand-affordable-care-act-hhs-notice-of-benefit-and-payment-parameters-for-2019, https://www.irs.gov/e-fileproviders/air/affordable-care-act-information-return-air-program


Predictive Analytics Will Be The Silent Game-Changer In Employee Benefits

Have you heard of predictive analytics? Predictive analytics analyzes current and historical data to make predictions about unknown events. Read on to learn how this technology could be used to help fine-tune employee benefits offerings.


Last year’s World Series between the Houston Astros and the Los Angeles Dodgers came down to a seven-game battle based not only on talent, athleticism and coaching but also on data. Just as Sports Illustrated suggested back in 2014 via predictive data, the Astros were the victors.

The publication of Moneyball: The Art of Winning an Unfair Game spurred not only Major League Baseball teams to deploy predictive analytics, but also businesses to take a harder look at what their data means. It's no longer part of the hype cycle: Statista forecasts (paywall) that the predictive analytics market worldwide will reach $6.2 billion in 2018 and $10.95 billion in 2022.

I believe we are also at a transformational point in improving corporate employee benefits and our employees’ lives by embracing predictive analytics. HR is swimming in rich data. Instead of guesstimating needs across multiple generations of employees, employers can turn to their own data to fine-tune what they are offering as benefits solutions. Companies spend 25-40% of an employee’s salary on benefits. It simply makes strategic and financial sense to get it right.

Bring Employee Benefits Out Of The Dark Ages

Hiring and retaining great talent is at the very soul of almost every company’s strategy. Not surprisingly, more companies have turned to predictive analytics to give them a leg up in recruitment. However, HR benefits have lagged behind. As John Greenwood reported to Corporate Adviser, “More than half of reward and employee benefits professionals see predictive analytics as a game-changer, but 90 percent are still using spreadsheets to manage data, research from the Reward & Employee Benefits Association shows.”

One reason for benefits lagging behind recruitment in adopting predictive analytics is that the way companies choose new benefits varies greatly from business to business. Given that the majority of HR departments keep data in disparate spreadsheets, even if some HR departments conduct employee surveys or historical cost analyses, they often do not integrate the data about their workforce. If a new benefit offering is chosen based on a needs analysis, only some know the “why” behind a request from the workforce. Knowing how many employees are logging into a benefits platform is helpful; market standard benefit utilization reports provide this level of information. Yet they do not give insight into the underlying reason for an employee to utilize a benefit. The user of deeper analytics is required to look deeper into employees' behavior.

We have found firsthand that many HR departments do not have a full understanding of how their employees are utilizing their benefits across the entire offering suite. A one-size-fits-all or a one-off strategy no longer is effective. Companies must understand not only their employees’ needs but also the underlying data related to these needs to provide a valuable benefits offering.

Put Your Existing Data To Use

For the past five years, I have watched our clients glean valuable insights into what the real underlying issues are for their employees and what must be done to address these pressing needs. I also have been watching companies realize that what they thought were the core problems at hand sometimes were not.

For example, one of our national high-tech clients, with over 50,000 benefit-eligible employees, believed that a high number of their employees had children struggling with autism. This belief was initially based on input from some of their employees. After approximately 16 months, the client reviewed the masked utilization data from their benefit platform. The data illustrated that the overwhelming majority of employee families (tenfold) in fact faced challenges associated with youth anxiety, a concern that had never been expressed to HR previously. Once they reviewed what employees were doing within our platform, their results mirrored the National Institute of Mental Health’s report that approximately 31.9% of U.S. children ages 13-18 struggle with anxiety disorders.

Their own data helped them understand much more specifically where their employees’ stress lay, and their HR department was able to focus communications around it.

Getting Started

Mining and viewing use data across all benefits is ideal. This enables an employer to determine if the benefit suite is serving employees effectively. We have found that as quickly as year over year, users' behaviors shift. If a company solely chooses a benefit based on what they saw as most heavily utilized the previous year, they are not being strategic.

For that reason, HR should utilize past and current data to better predict future patterns of need for a truly strategic approach to benefit choice. With this insight, they can make better choices and serve their workforce more effectively.

Given the limitations across many employee benefit vendors today, to start initially:

1. Embrace KPIs. Agree upon them internally, and measure benefit vendors on them.

2. Work with your current vendors to determine what data they provide to support your internal analysis. Ensure you have access to all the data you need, and if not, consider a vendor change.

3. Hold possible new vendors to similar data standards, and create a transparent relationship from the start.

4. Collect current and historical data. Existing vendors can provide this history, so make sure to collect at least 2-3 years of information.

These analytics need to go deeper than basic demographics to show patterns of activity. In order to understand the benefit needs of your workforce, you'll want to analyze trends across multiple data sets: medical, pharmacy, worker's compensation, biometric screenings, utilization patterns, FMLA requests and demographic trends. From there, you can start to pinpoint what your employees need -- and the “whys” behind the needs -- in order to make a measurable impact.

While predictive analytics is still in the nascent phase in the benefits and vendor worlds, the easiest and most proactive thing any employer can do is to focus on other insights vendors can provide related to the workforce and benefit use beyond simple utilization. In doing so, you will be able to support your employees both in their work lives and their personal lives by providing them with the benefits they need to be at their best.

SOURCE: Goldberg, A. (2 October 2018) "Predictive Analytics Will Be The Silent Game-Changer In Employee Benefits" (Web Blog Post). Retrieved from: https://www.forbes.com/sites/forbestechcouncil/2018/10/02/predictive-analytics-will-be-the-silent-game-changer-in-employee-benefits/#26648166e182