For the first time in U.S. history, it is the legal responsibility of employers to choose plans that offer the health care providers and services their employees need – and pay for it. Under the law, which came into effect last year, companies with 50 or more employees must offer a health plan with an annual premium cost that doesn’t exceed $6,600 or 9.5 percent of an employee’s salary. “This is the first year that the IRS will be carefully policing compliance with the law,” says Patricia Hennessey, a benefits account executive with Brown & Brown Benefit Consultants in Fort Lauderdale. “So far, we have seen most employers complying because they know the penalties are significant for not doing so.”
Tax breaks are available for those individuals who meet certain income criteria, she says. “We have seen lots of employees who are eligible for these plans going to the marketplace to buy plans, indicating incorrectly that they can’t afford to pay for them. So they have been getting tax breaks they are not eligible for. It is likely that they will be flagged by the IRS for doing so this year and have to pay back the benefits they received.”
Employers need to be mindful not only of the plans they choose, but also of the technology they select for the administration of the plans so that they are in compliance with the Affordable Care Act, says Ramona Fiumara, a Certified Employee Benefits Specialist and EVP/COO of MMA Florida. “The IRS will be looking closely at how employers are reporting their compliance. They need to do it a certain way. This means that the process of reporting and administering the plans can often be more complex than selecting the plan itself,” she says. “They need to make sure they have the right tech platform for doing this.”
To cope with the extra cost of offering employees a health plan, many companies have been raising plan deductibles and copays, which means plan participants bear a greater burden of cost for their care, says Steve Sonenreich, president and CEO of Mount Sinai Medical Center in Miami Beach. He maintains that this has driven both businesses and individuals to look more carefully at the price of the care they receive, adding that more transparency in medical billing is needed – especially under these circumstances.
“In South Florida, the cost of health care is higher than in many other regions of the nation,” Sonenreich says. “This could be corrected. The key is price transparency. We can search for the lowest plane fare, or see where we can get the best price for a TV, car or stereo, but we are unable to make a quality and price comparison for health care services. That is one of the main reasons why prices are high. Until we get more transparency, health care costs will continue to rise.”
Hennessey agrees that more transparency is needed to drive down costs, noting that it is possible – but still difficult – to shop the cost of procedures by using the precise coding that insurers use for each one. She also joins Sonenreich in suggesting additional ways health plan participants can get the most for their money. She says that employers should survey their staff members before purchasing a plan to find out what their employees are looking for in health care policy.
“We have found that lower copays and cost for prescription drugs are hot buttons,” Hennessey says. “Knowing whether they want a strong plan or one that is just catastrophic is important, too.” Whichever plan they choose will be useless unless plan participants have easy access to the network of care providers, she notes. “Make sure that wherever your employees are located, there is a large number of providers that they have access to. No matter how great your benefits are, they mean nothing if they can’t be accessed.”
One way to offer a meaningful network of care providers at a manageable cost is to consider a more limited one nearby employees that is most competitive in cost and enhances quality, Sonenreich says. Mount Sinai is in the process of launching its own clinically integrated network, Mount Sinai Health, which will initially manage the health and wellness of its 4,700 employees and their dependents will eventually be available to commercial payers, employer groups and centers for Medicaid and Medicare services.
Health care cost consciousness has driven both employers and individuals to consider what practices and conditions are driving up plan costs. For example, Mount Sinai no longer hires individuals that can’t pass a tobacco-use test, Sonenreich says. The health center also offers free smoking cessation programs and charges employees who smoke a higher health insurance premium rate. “There is an element of fairness here. We are at a point in society where we realize that smoking is hazardous to everyone,” he says. “Public policy is dictating less tolerance for it.” Lower health insurance costs are available for Mount Sinai employees who stop smoking and for those who take preventive measures, such as annual biometric screenings, he adds.
Wellness incentives are common as employers try to lower group health plan costs by showing insurers they have healthy employees. The next step may be employers taking a more active role in monitoring whether employees with chronic conditions, such as diabetes, are compliant with their treatment programs. This may be done via their health care providers or an employer representative.
“Everyone really needs to increase awareness of how healthy our behavior is,” Hennessey says. “We are definitely taking steps forward on this – even if they are only baby steps.” ?
Don’t think of health care, think of wellcare
Wellness programs and screenings are the keys to holding down health care insurance costs for employers, says Rachel Sapoznik, founder, president and CEO of Sapoznik Insurance.
With federal law putting limits on deductibles and maximum out-of-pocket expenses, employers have to look at other approaches to health care to manage costs and avoid double-digit increases, says Sapoznik, who emphasizes wellcare to clients. The good news is that those approaches can have other benefits on the bottom line.
For starters, employers need to ensure they educate their employees on using the plans properly, such as advising them not to go to emergency rooms for non-emergency events. “That increases costs 10 times,” Sapoznik says. Another approach is to make sure they use generic pharmaceuticals that are equivalent to name brands.
Sapoznik is also a big advocate of biometric screenings (such as body mass indexes and cholesterol levels) at workplaces. Heart attacks and strokes can cost $100,000-plus per episode, not to mention the personal and workplace impact.
CEOs need to be willing to have their employees spend time being educated about these topics and promoting screenings, she says. “There are many employers out there who are old school. They think it is a waste of time. Sadly, they are going to face health care cost increases if they don’t address the education component of it.”
Some of Sapoznik’s clients are reaping the benefits of emphasizing these programs. One car dealer was facing double-digit increases, so she helped redesign his company’s approach. “Last year, he had no rate increase and was refunded over $100,000 because his claims had gotten so much better,” she says.
Sapoznik, who is writing a book about wellness, says as employees get healthier, absenteeism goes down and productivity goes up, which helps with happiness in the workplace and employee retention. Employers who are seeking to attract millennials can also improve their recruiting by demonstrating that they care about their employees” well-being.