Health insurance surpass $20,000 per year, hitting a record

An annual survey of employers recently revealed that the cost of family health coverage has now surpassed $20,000, a record high. The survey also revealed that while most employers pay most of the costs of coverage, workers' average contribution for a family plan is now $6,000. Read this blog post from Employee Benefit News to learn more.


The cost of family health coverage in the U.S. now tops $20,000, an annual survey of employers found, a record high that has pushed an increasing number of American workers into plans that cover less or cost more, or force them out of the insurance market entirely.

“It’s as much as buying a basic economy car,” said Drew Altman, chief executive officer of the Kaiser Family Foundation, “but buying it every year.” The nonprofit health research group conducts the yearly survey of coverage that people get through work, the main source of insurance in the U.S. for people under age 65.

While employers pay most of the costs of coverage, according to the survey, workers’ average contribution is now $6,000 for a family plan. That’s just their share of upfront premiums, and doesn’t include co-payments, deductibles and other forms of cost-sharing once they need care.

The seemingly inexorable rise of costs has led to deep frustration with U.S. healthcare, prompting questions about whether a system where coverage is tied to a job can survive. As premiums and deductibles have increased in the last two decades, the percentage of workers covered has slipped as employers dropped coverage and some workers chose not to enroll. Fewer Americans under 65 had employer coverage in 2017 than in 1999, according to a separate Kaiser Family Foundation analysis of federal data. That’s despite the fact that the U.S. economy employed 17 million more people in 2017 than in 1999.

“What we’ve been seeing is a slow, slow kind of drip-drip erosion in employer coverage,” Altman said.

Employees’ costs for healthcare are rising more quickly than wages or overall economy-wide prices, and the working poor have been particularly hard-hit. In firms where more than 35% of employees earn less than $25,000 a year, workers would have to contribute more than $7,000 for a family health plan. It’s an expense that Altman calls “just flat-out not affordable.” Only one-third of employees at such firms are on their employer’s health plans, compared with 63% at higher-wage firms, according to the Kaiser Family Foundation’s data.

The survey is based on responses from more than 2,000 randomly selected employers with at least three workers, including private firms and non-federal public employers.

Deductibles are rising even faster than premiums, meaning that patients are on the hook for more of their medical costs upfront. For a single person, the average deductible in 2019 was $1,396, up from $533 in 2009. A typical household with employer health coverage spends about $800 a year in out-of-pocket costs, not counting premiums, according to research from the Commonwealth Fund. At the high end of the range, those costs can top $5,000 a year.

While raising deductibles can moderate premiums, it also increases costs for people with an illness or who gets hurt. “Cost-sharing is a tax on the sick,” said Mark Fendrick, director of the Center for Value-Based Insurance Design at the University of Michigan.

Under the Affordable Care Act, insurance plans must cover certain preventive services such as immunizations and annual wellness visits without patient cost-sharing. But patients still have to pay out-of-pocket for other essential care, such as medication for chronic conditions like diabetes or high blood pressure, until they meet their deductibles.

Many Americans aren’t prepared for the risks that deductibles transfer to patients. Almost 40% of adults can’t pay an unexpected $400 expense without borrowing or selling an asset, according to a Federal Reserve survey from May.

That’s a problem, Fendrick said. “My patient should not have to have a bake sale to afford her insulin,” he said.

After years of pushing healthcare costs onto workers, some employers are pressing pause. Delta Air Lines Inc. recently froze employees’ contributions to premiums for two years, Chief Executive Officer Ed Bastian said in an interview at Bloomberg’s headquarters in New York last week.

“We said we’re not going to raise them. We're going to absorb the cost because we need to make certain people know that their benefits structure is real important,” Bastian said. He said the company’s healthcare costs are growing by double-digits. The Atlanta-based company has more than 80,000 employees around the globe.

Some large employers have reversed course on asking workers to take on more costs, according to a separate survey from the National Business Group on Health. In 2020, fewer companies will limit employees to so-called “consumer-directed health plans,” which pair high-deductible coverage with savings accounts for medical spending funded by workers and employers, according to the survey. That will be the only plan available at 25% of large employers in the survey, down from 39% in 2018.

Employers have to balance their desire to control costs with their need to attract and keep workers, said Kaiser’s Altman. That leaves them less inclined to make aggressive moves to tackle underlying medical costs, such as by cutting high-cost hospitals out of their networks. In recent years employers’ healthcare costs have remained steady as a share of their total compensation expenses.

“There’s a lot of gnashing of teeth,” Altman said, “but if you look at what they do, not what they say, it’s reasonably vanilla.”

SOURCE: Tozzi, J. (25 September 2019) "Health insurance surpass $20,000 per year, hitting a record" (Web Blog Post). Retrieved from https://www.benefitnews.com/articles/health-insurance-costs-surpass-20-000-per-year


Employers look to virtual services to curb rising health costs

Sixty-four percent of employers believe virtual care will play a significant role in healthcare delivery in 2020, according to the National Business Group on Health. With rising healthcare costs, employers are looking for ways to stem the rising costs of healthcare and find ways to better engage employees. Continue reading this blog post to learn more about virtual services.


WASHINGTON — With the continued cost of healthcare benefits expected to increase by another 5%, topping $15,000 per employee, employers are looking for ways to stem the increase and better engage employees in holistic well-being.

One of those ways is through virtual care. The number of employers who believe virtual care will play a significant role in how healthcare is delivered in the future continues to grow, up to 64% going into 2020 from 52% in 2019, according to the National Business Group on Health’s annual healthcare strategy survey.

“Virtual care solutions bring healthcare to the consumer rather than the consumer to healthcare,” Brian Marcotte, president and CEO of NBGH said at a press briefing Tuesday. “They continue to gain momentum as employers seek different ways to deliver cost effective, quality healthcare while improving access and the consumer experience. Of particular note is the growing interest among employers to offer virtual care for mental health as well as musculoskeletal conditions.”

The majority of respondents (51%) will offer more virtual care programs next year, according to the survey. Nearly all employers will offer telehealth for minor, acute services while 82% will offer virtual mental health services — a figure that’s expected to grow to 95% by 2022.

Virtual care for musculoskeletal management shows the greatest potential for growth, the study noted. While 23% of employers will offer musculoskeletal management virtual services next year, another 38% are considering it by 2022. Physical therapy is the best way to address musculoskeletal conditions and help avoid surgery, but it can be inconvenient and costly, said Ellen Kelsay, chief strategy officer at NBGH.

“Where we’ve seen a lot of development in areas of virtual solutions is to provide remote physical therapy treatments,” she said. “Employees can access treatment through their virtual app wherever it’s convenient for them.”

Regardless, employee utilization of virtual services still remains low. For example, while roughly 70% of large companies provide telemedicine coverage, only 3% of employees use it,according to prior NBGH data.

But many resources are out of sight and out of mind, Kelsay said. However, employers are focusing on offering high-touch concierge services to help workers better navigate the healthcare system.

Employers are reaching a point of saturation with the number of solutions that are available, but from the employee’s perspective, they just don’t know where to start, she added. “These concierge and navigator services really help point employees in the direction to the solution at the point in time they need it.”

In addition, the use of predictive analytics and claims data is also an opportunity to help employers get the right programs in front of employees in the moment, Marcotte added.

“Some of these engagement platforms are getting at personal messaging and predictive analytics. It’s not where we want it to be yet, but as that continues to get better, I think you’ll see utilization go up,” he said.

Source: Otto,N. (13 August 2019) "Employers look to virtual Services to curb rising health costs" (Web Blog Post). Retrieved from https://www.benefitnews.com/news/employers-look-to-virtual-services-to-curb-rising-healthcare-costs

Cadillac tax may finally be running out of gas

The Cadillac tax, a part of the Affordable Care Act, may be in for a change. This tax was supposed to take effect in 2018 but has been delayed twice and recently, the House voted to repeal this tax entirely. Read this blog post to learn more about this potential change.


The politics of healthcare are changing. And one of the most controversial parts of the Affordable Care Act — the so-called Cadillac tax — may be about to change with it.

The Cadillac tax is a 40% tax on the most generous employer-provided health insurance plans — those that cost more than $11,200 for an individual policy or $30,150 for family coverage. It was supposed to take effect in 2018, but Congress has delayed it twice. And the House recently voted overwhelmingly — 419-6 — to repeal it entirely. A Senate companion bill has 61 co-sponsors — more than enough to ensure passage.

The tax was always an unpopular and controversial part of the 2010 health law because the expectation was that employers would cut benefits to avoid paying the tax. But ACA backers said it was necessary to help pay for the law’s nearly $1 trillion cost and help stem the use of what was seen as potentially unnecessary care. In the ensuing years, however, public opinion has shifted decisively, as premiums and out-of-pocket costs have soared. Now the biggest health issue is not how much the nation is spending on healthcare, but how much individuals are.

“Voters deeply care about healthcare still,” said Heather Meade, a spokeswoman for the Alliance to Fight the 40, a coalition of business, labor and patient advocacy groups urging repeal of the Cadillac tax. “But it is about their own personal cost and their ability to afford healthcare.”

Stan Dorn, a senior fellow at Families USA, recently wrote in the journal Health Affairs that the backers of the ACA thought the tax was necessary to sell the law to people concerned about its price tag and to cut back on overly generous benefits that could drive up health costs. But transitions in healthcare, such as the increasing use of high-deductible plans, make that argument less compelling, he said.

“Nowadays, few observers would argue that [employer-sponsored insurance] gives most workers and their families’ excessive coverage,” he wrote.

The possibility of the tax has been “casting a statutory shadow over 180 million Americans’ health plans, which we know, from HR administrators and employee reps in real life, has added pressure to shift coverage into higher-deductible plans, which falls on the backs of working Americans,” said Rep. Joe Courtney (D-Conn.).

Support or opposition to the Cadillac tax has never broken down cleanly along party lines. For example, economists from across the ideological spectrum supported its inclusion in the ACA, and many continue to endorse it.

“If people have insurance that pays for too much, they don’t have enough skin in the game. They may be too quick to seek professional medical care. They may too easily accede when physicians recommend superfluous tests and treatments,” wrote N. Gregory Mankiw, an economics adviser in the George W. Bush administration, and Lawrence Summers, an economic aide to President Barack Obama, in a 2015 column. “Such behavior can drive national health spending beyond what is necessary and desirable.”

At the same time, however, the tax has been bitterly opposed by organized labor, a key constituency for Democrats. “Many unions have been unable to bargain for higher wages, but they have been taking more generous health benefits instead for years,” said Robert Blendon, a professor at the Harvard T.H. Chan School of Public Health who studies health and public opinion.

Now, unions say, those benefits are disappearing, with premiums, deductibles and other cost sharing rising as employers scramble to stay under the threshold for the impending tax. “Employers are using the tax as justification to shift more costs to employees, raising costs for workers and their families,” said a letter to members of Congress from the Service Employees International Union.

Deductibles have been rising for a number of reasons, the possibility of the tax among them. According to a 2018 survey by the federal government’s National Center for Health Statistics, nearly half of Americans under age 65 (47%) had high-deductible health plans. Those are plans that have deductibles of at least $1,350 for individual coverage or $2,700 for family coverage.

It’s not yet clear if the Senate will take up the House-passed bill, or one like it.

The senators leading the charge in that chamber — Mike Rounds (R-S.D.) and Martin Heinrich (D-N.M.) — have already written to Senate Majority Leader Mitch McConnell to urge him to bring the bill to the floor following the House’s overwhelming vote.

“At a time when healthcare expenses continue to go up, and Congress remains divided on many issues, the repeal of the Cadillac tax is something that has true bipartisan support,” the letter said.

Still, there is opposition. A letter to the Senate on July 29 from economists and other health experts argued that the tax “will help curtail the growth of private health insurance premiums by encouraging employers to limit the costs of plans to the tax-free amount.” The letter also pointed out that repealing the tax “would add directly to the federal budget deficit, an estimated $197 billion over the next decade, according to the Joint Committee on Taxation.”

Still, if McConnell does bring the bill up, there is little doubt it would pass, despite support for the tax from economists and budget watchdogs.

“When employers and employees agree in lockstep that they hate it, there are not enough economists out there to outvote them,” said former Senate GOP aide Rodney Whitlock, now a healthcare consultant.

Harvard professor Blendon agrees. “Voters are saying, ‘We want you to lower our health costs,’” he said. The Cadillac tax, at least for those affected by it, would do the opposite.

SOURCE: Rovner, J. ( 19 August, 2019) "Cadillac tax may finally be running out of gas" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/articles/obamacare-excise-tax-may-be-at-an-end 


Employers shouldn’t fear expansion of Medicare

A new survey from the National Business Group on Health found that 55 percent of large employers support a Medicare expansion that's limited to older Americans. In this article from Employee Benefit Advisor, Nison discusses the potential benefits and downfalls of an expansion to Medicare.


Like a significant chunk of American voters, a majority of large employers want to expand Medicare. Just not too much.

A new survey of 147 large employers from the National Business Group on Health found that 55% of them support a Medicare expansion that’s limited to older Americans. Only 23% think eligibility should drop to age 50, however, and 45% don’t think it should expand at all. A majority believe that a broader “Medicare for All” plan would increase health costs.

The same survey also highlights why employers should consider coming around on health reform that reduces their role in the system. The growth in health costs has outpaced inflation and wage growth for years, and the surveyed businesses expect it to rise 5% to $15,375 for each employee next year.

About 70% of those costs will fall on the companies, which plan to try everything from boosting virtual health services to investing in health concierges to rein them in, according to the survey.

History suggests that their best efforts might not amount to much.

Employer-sponsored insurance is America’s single largest source of health coverage. That’s mostly true because the IRS exempted employer health benefits from taxes in 1943, a move that created the federal government’s single biggest tax expenditure. Large companies derive some benefit from the current system because they can provide a significant tax-free benefit that helps them compete for talent and pay people less. But it comes with significant drawbacks. Employers have to devote substantial resources to providing healthcare and controlling costs. Many of them have no particular expertise or advantage in doing so.

The results are mixed. Yes, individuals with private insurance are generally satisfied with the quality of their coverage. They’re not nearly as happy about the cost as deductibles rise. The U.S. pays more than any other developed country for healthcare and medicines and receives worse results on a variety of metrics.

Employers pay particularly high prices and spend heavily on plans that have higher overhead than public alternatives. A recent RAND study found that employer-sponsored plans paid hospitals at 241% of Medicare rates in 2017. Employers are already effectively subsidizing public programs, not to mention the profitability of insurers, health care providers and drugmakers.

It’s not entirely their fault. The American system inherently fragments negotiating power, which gives providers a significant advantage and makes it difficult for even the largest employers to get a good deal. Turning a larger piece of healthcare over to the government would free companies to focus more time and resources on their actual business instead of on navigating the world’s most expensive and convoluted healthcare market.

Big businesses most likely fear big Medicare expansion in large part because it would lead to a significant tax increase. But looking at any tax increase as an enemy is a mistake. Those taxes represent a trade-off; they would replace some or all of the billions of dollars that employers are currently spending on care. Depending on what taxes are imposed and whether the public plan is able to control costs better than the current system — and it could hardly do worse — many employers could come out ahead.

There are a lot of unknowns when it comes to Medicare for All and plans that move the country in that direction. Employers are right to be skeptical until they know more, but the results could well shake out in their favor, and they shouldn’t be so quick to discount the approach.

SOURCE: Nisen, M. (15 August 2019)"Employers shouldn’t fear expansion of Medicare" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/articles/employers-shouldnt-fear-expansion-of-medicare

 


Mastering Healthcare Cost Transparency Within Your Self-Funded Benefits Plan

Finding high-value healthcare providers for your employees is a constant struggle. After interviewing our Executive Vice President, Scott Smeaton, he gave us insight on a strategy for conquering cost transparency while maintaining quality care.

Working with Hierl Insurance for over 24 years, Scott shared how his endeavors working with selffunded plans has led him to believe the best strategy is one that starts at the employee-level.

Filling the Transparency Gap

First, let’s define what a high-value healthcare provider is: A high-value provider is a physician and / or facility that consistently demonstrates better patient outcomes at a lower than average cost. This is accomplished by meeting the highest quality standards i.e. low infection and readmission rates, quicker recovery rates, and high patient satisfaction scores, among others, at a lower than average cost.

These high value providers perform more procedures (volume) in facilities where they have greater control of the outcome (low overhead, low infection rates), and often provide “bundled” pricing where the patient knows how much the procedure will cost before the work is ever done.

Have you, in the last year, bought a big-ticket item without knowing the cost? This is the question Scott starts with when speaking to a company’s employees. Often, no one can raise their hand. Why? Historically, the information hasn’t been available. As an industry, we still have a ways to go. We’re moving in the right direction, working with innovative partners focusing on what patients need to make better healthcare decisions.

As a society, it’s common sense – whether you’re buying a car, a TV, or a house – to do some research as to the quality and cost of a product or service. “That ability to access those numbers and identify cost and quality measures has not been available in healthcare,” Scott explained. This gap is beginning to be filled, though primarily in direct-to-provider contracting exclusive to certain specialties.

Because healthcare information can be overwhelming, businesses struggle to find the most appropriate venue for sourcing the lowest costs without relinquishing the highest quality of care.

“We’ve found that the lower cost providers actually have higher quality of care due to the volume of services they offer,” Scott explained. Hierl partners with third parties to identify these providers. “A great example is an orthopedic specialist we work with. They have finetuned their procedures and their processes so much that they receive the highest quality ratings, yet they are the lowest cost providers, in their area. They tell you what it’s going to cost with a bundled price, before the procedure is performed,” Scott mentioned.

Hierl partners directly with high value providers, designing employee benefits programs that offer incentives to employees who use those providers. When buying big-ticket items like a car, it’s often reasonable to assume the more the car costs, the higher quality and value you are going to get from it. In healthcare, it’s essentially the opposite. Take Lasik Surgery, for example. Fifteen years ago, Radial Keratotomy (RK), which was a precursor to LASIK, was performed with a scalpel by a surgeon and cost roughly $8,000. In 2017, the average cost of LASIK was $2,088. Now, the procedure is much more effective due to improved technology.

With high value providers, such as the orthopedic specialist mentioned previously, that “high value” comes from the fact they are typically operating in freestanding clinics and surgery centers. This means there is lower overhead compared to being in a hospital setting, and they are run by specialized teams that can give their patients more attention. “High volume of services, low overhead costs, and high-quality care – those are the key ingredients we look for in the providers we recommend to our clients,” explained Scott.

Flexibility in Cost Transparency Begins with Self-Funding

Perks such as gym memberships and free lunches have become common practice for companies looking to brand themselves as a great employer. However, it is important to understand these tactics aren’t the answer when it comes to employee experience but rather an engagement strategy. Modern employees want to work in a great environment and want to know their contributions are valued through benefit offerings like discounted healthcare.

For anyone looking to unlock the power of employee engagement through benefits, the time to act is now. With the number of companies catching on to the importance of customer experience, it will not only help you gain an edge on your competition but make your company a favorable place to work – the definition of a ‘win-win’ .

The plans that get the most value from this third-party vendor initiative are self-funded plans, due to their flexibility. “That’s not to say we can’t work with fully insured companies,” Scott insisted. “We have found being self-funded really allows the employer to access the ‘cream of the crop’ or the third-tier beyond typical in-network and out-network providers and facilities, which are those high value specialists.” Aiding employer and employee education through third-party care coordinators and plan incentives, Hierl’s benefits plans are next-level.

We give businesses focus and control over their healthcare expenditures. When it comes to shop-able services, or nonemergency services needed, our care coordinators will ensure you partner with the best high value, low cost provider possible. Scott emphasized, “We are a pilot of health plan partners – a conductor of sorts, pulling all the moving pieces and parts together for our clients to guarantee a more focused, transparent result of their healthcare spending.”

To speak with Scott, contact him today at (920) 921-5921 or by email at ssmeaton@hierl.com.


Your bad work environment may be raising your healthcare costs

Is your company’s culture leading to raised healthcare costs? More and more research is documenting a relationship between stressful work environments and a range of chronic conditions. Continue reading to learn more.


If you want to reduce the cost of healthcare for your employees — while simultaneously improving care — you may need to take a serious look at your work environment. When reviewing areas that could help reduce costs, a much overlooked aspect is a stressful work environment.

While employers have done a lot to reduce the risk of potential injuries in the workplace, they have done far less to reduce stress, which could also be harmful.

Research finds a link between employee health and job performance. There also is a growing body of research documenting the relationship between a stressful work environment and a range of chronic conditions — including depression, hypertension and sleeping problems. But employers often struggle to connect the dots between these health concerns and supporting a healthy environment for employees.

It’s difficult, if not impossible, to manage something that remains unmeasured. That’s why measuring outcomes beyond healthcare cost fluctuations, such as absence, periods of work disability and job performance, can help employers understand a broader range of outcomes important to the successful operation of their business.

When employers ask how they can affect the health of their employees, I ask what they know about the working conditions in their organization. Is there management trouble, high turnover, high illness-related absence or low job satisfaction? Some of this can be determined from employee satisfaction surveys, or analyses of sick leave data and work disability claims. Often, even more can be discovered by gathering employee feedback.

For example, listening to employees, equipping them with the knowledge to recognize safety issues and providing the tools or procedures to correct these issues, were key to improving workplace safety. A successful safety review can result in real change. Employees observe this change and a cycle is created where prevention becomes the focus because all are accountable and all have trust based on experience that their identification of potential or real safety issues will be dealt with effectively.

If employers are unaware of the factors in their own work environment that could be modified to lessen psychosocial stressors, a good place to start is by listening to employees. Many employers already conduct job satisfaction surveys or health risk appraisals that provide some information around work and health issues. These same tools could be used to identify and address psychosocial issues in the workplace.

Whatever the channel — a suggestion box, a designated HR representative, a focus group, a survey — it must provide employees with the opportunity to authentically and safely share their perspectives. And, finally, it must be demonstrably legitimate, resulting in employer actions that are clear and meaningful to all.

Typically employers use health and wellness programs in an attempt to remediate rather than prevent illness. Our interviews with medical directors of some of the leading U.S. corporations revealed a similar finding. Often, the medical director or chief health officer is charged with improving employee health, while the HR benefits manager is charged with reducing healthcare costs. Not surprisingly, these two goals can be at odds with each other. Imagine the company with a large percent of untreated depression.

So how can employers know what works or even what to try?

Evaluators often start their work by asking why particular activities, services or coverage types were chosen or implemented. This helps identify those areas more proximal to the employment setting (something about the job or in the work environment, for instance) and those areas more distal to the employment setting (such as medication formulary). To put a fine point on the problem, Pfeffer notes that “putting a nap pod into a workplace is not going to substitute for the fact that people aren’t getting enough sleep because they are working 24/7.”

Those looking to get started might begin by watching Working on Empty, an 11-minute documentary, which can provide solid direction for the type of information you’re seeking from your employees. Honor their voice and insight, and use it to implement real change. In doing so, you will build trust and a channel for contribution that improves outcomes for employees and employers.

SOURCE: Jinnett, K. (20 May 2019) "Your bad work environment may be raising your healthcare costs" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/workplace-stress-increasing-healthcare-costs


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:


Top 10 health conditions costing employers the most

What health conditions are costing employers the most? As healthcare costs continue to rise, employers are constantly looking for ways to lower their costs. Continue reading to learn more.


As healthcare costs continue to rise, more employers are looking at ways to target those costs. One step they are taking is looking at what health conditions are hitting their pocketbooks the hardest.

“About half of employers use disease management programs to help manage the costs of these very expensive chronic conditions,” says Julie Stich, associate vice president of content at the International Foundation of Employee Benefits Plans. “In addition, about three in five employers use health screenings and health risk assessments to help employees identify and monitor these conditions so that they can be managed more effectively. Early identification helps the employer and the employee.”

What conditions are costly for employers to cover? In IFEPB’s Workplace Wellness Trends 2017 Survey, more than 500 employers were asked to select the top three conditions impacting plan costs. The following 10 topped the list.

10. High-risk pregnancy

Although high-risk pregnancies have seen a dip of 1% since 2015, they still bottom out the list in 2017; 5.6% of employers report these costs are a leading cost concern for health plans.

9. Smoking

Smoking has remained a consistent concern of employers over the last several years; 8.6% of employers report smoking has a significant impact on health plans.

8. High cholesterol

While high cholesterol still has a major impact on health costs — 11.6% say it’s a top cause of rising healthcare costs — that number is significantly lower from where it was in 2015 (19.3%).

7. Depression/mental illness

For 13.9% of employers, mental health has a big influence on healthcare costs. This is down from 22.8% in 2015.

New rule pushes for hospital price transparency

Beginning in January 2019, hospitals will be required to provide patients with a list of the cost of all their charges. Read this blog post to learn more.


The Centers for Medicare & Medicaid Services announced a proposed rule aimed at providing patients with a clear price listing of the cost of their hospital charges. In an effort to fulfill the proposed rule’s objective, CMS suggested an amendment to the requirements previously established by Section 2718(e) of the Affordable Care Act.

CMS issued the final rule (CMS-1694-F), which included the suggested amendment discussed in the April 24, 2018 proposed rule. Currently, under Section 2718(e), hospitals are given the option to either (i) make public a list of the hospital’s standard charges or (ii) implement policies for allowing the public to view a list of the hospital’s standard charges in response to an individual request.

Beginning January 1, 2019, however, hospitals will be required to make available a list of their current standard charges via the Internet in a machine-readable format and to update this information at least annually, or more often as appropriate.

This could be in the form of the chargemaster itself of another form of the hospital’s choice, as long as the information is in machine-readable format. CMS believes that this update will further promote price transparency by improving public accessibility of hospital charge information.

In the final rule, CMS explains that it is aware of the challenges that continue to exist because the chargemaster data may not accurately reflect what any given individual is likely to pay for a particular service or visit.

Additionally, the comments received in response to the proposed rule argue that the chargemaster data would not be useful to patients because it is confusing as to the amount of the actual out-of-pocket costs imposed on a particular patient.

CMS further explains that it is currently reviewing the concerns addressed in the comments, and is considering ways to further improve the accessibility and usability of the information disclosed by the hospitals.

SOURCE: Goldman, M; Grushkin, J; Fierro, C (16 August 2018) "New rule pushes for hospital price transparency" (Web Blog Post). Retrieved by https://www.employeebenefitadviser.com/opinion/cms-rule-pushes-for-hospital-price-transparency


Reference-based pricing is gaining momentum — here’s why

Reference-based pricing has made its comeback. Continue reading to learn what reference-based pricing is and why it is slowly gaining momentum.


In my 25 years in the insurance business I’ve seen many changes. But there’s always been one constant: Healthcare and pharmacy costs continue to accelerate and no regulatory action has been able to slow this runaway train. The problem is that we have focused on the wrong end of the spectrum. We don’t have a healthcare issue; we have a billing issue.

At the root of this national crisis is a lack of cost transparency, which is driven by people who are motivated to keep benefit plan sponsors and healthcare consumers in the dark. Part of the problem is that most cost-reduction strategies are developed by independent players in the healthcare food chain. This siloed approach fails to address the entire ecosystem, and that’s why we continue to lament that nothing seems to be working.

But that could change with reference-based pricing, a method that’s slowly gaining momentum.

Here’s how it works.

Reference-based pricing attacks the problem from all angles and targets billing — which is at the heart of the crisis.

Typically, a preferred provider organization network achieves a 50-60% discount on billable charges. However, after this 50-60% discount, the cost of care is still double or triple what Medicare pays for the same service. For example, the same cholesterol blood test can range from $10 to $400 at the same lab. The same hospitalization for chest pain can range anywhere from $3,000 to $25,000.

Reference-based pricing allows employers to pay for medical services based on a percentage of CMS reimbursements (i.e. Medicare + 30%), rather than a percentage discount of billable charges. This model ensures that the above-mentioned hospitalization cost an employer $3,000 rather than $25,000.

“Negotiating” like Medicare

Reference-based pricing is becoming increasingly popular as more organizations consider the move to correct cost transparency issues as they transition from fully-insured to self-funded insurance plans.

One well-known and considerable example is Montana’s state employee health plan. The state employee health plan administrator received a notice from legislators in 2014 urging the state to gain control of healthcare costs. Instead of beginning with hospitals’ prices and negotiating down, they turned to reference-based pricing based on Medicare. Instead of negotiating with hospitals, Medicare sets prices for every procedure, which has allowed it to control costs. Typically, Medicare increases its payments to hospitals by just 1-3% each year.

The state of Montana set a reference price that was a generous 243% of Medicare — which allowed hospitals to provide high-quality healthcare and profit, while providing price transparency and consistency across hospitals. So far, hospitals have agreed to pay the reference price.

Of course, there is still the risk that a healthcare provider working with the state of Montana health plan, or any other health plan using reference-based pricing, could “balance bill” the member. But a fair payment and plenty of employee education about what to do if that happens could help you curb costs.

If balance billing does occur, many solutions include a law and auditing firm to resolve the dispute. In one recent example, a patient was balance billed almost $230,000 for a back procedure after her health plan had paid just under $75,000. An auditing firm found that the total charges should have been around $70,000, and a jury agreed. The hospital was awarded an additional $766.

Reference-based pricing is a forward-thinking way to manage costs while providing high-quality benefits to your employees. It’s one way to improve cost transparency, which may eventually transform the way that we buy healthcare.

Kern, J. (18 July 2018) "Reference-based pricing is gaining momentum — here’s why" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/opinion/reference-based-pricing-health-insurance-gaining-momentum?utm_campaign=intraday-c-Jul%2018%202018&utm_medium=email&utm_source=newsletter&eid=1e52d1873f9d2e8d6bd477da3e7f49a3