Posted June 29, 2012 by Megan DiMartino
By Amanda McGrory
Seven in 10 employers provide wellness benefits, including flu shots, health screenings and weight management programs, which are contributing to the improved lives of their employees, according to the International Foundation of Employee Benefit Plans’ recent survey, Wellness Programs and Value-Based Health Care.
The survey shows that wellness programs have become more popular over the past 10 years, and while nearly 60 percent of respondents have implemented new wellness programs since 2008, despite the economy, 23.7 percent of respondents have begun offering them since 2010. Nearly two-thirds of respondents have also increased their wellness budgets over the past five years.
“Without question, employers are beginning to understand the direct connection that wellness initiatives can have on both employees’ health and health care plan cost savings,” says Michael Wilson, CEO of International Foundation of Employee Benefit Plans.
Among the 21.6 percent of respondents that analyzed the return on investment, health care costs declined when wellness benefits are also offered, and 83 percent of respondents measuring ROI report positive returns. In fact, with every dollar spent on wellness initiatives, most respondents realize between $1 and $3 decreases in their overall health care costs.
“Determining ROI can be of great benefit for employers — leading to increased buy-in from organization leaders and workers,” says Julie Stich, senior information and research specialist, International Foundation of Employee Benefit Plans. “However, it’s not an easy process. ROI can be difficult to measure since health improvement may be influenced by a combination of factors and because it takes an average of three years to see cost-saving results.”
The top reasons respondents offer wellness are to help workers attain better physical health at 45.6 percent and to control health care costs at 39.8 percent. For respondents that do not provide wellness programs but plan to implement them over the next year, 50.7 percent say their motivation for doing so is to control health care costs.
The most popular wellness benefits are screening and treatment programs at 85 percent, health risk assessments at 79.9 percent, smoking cessation programs at 67.5 percent, fitness and nutrition programs at 58.6 percent, weight loss and management programs at 52.5 percent, nutrition counseling at 39.6 percent, and on-site fitness centers and equipment at 36.4 percent.
“One measure of success for a wellness program is the participation rate,” Stich says. “Organizations will not realize benefits unless there is sufficient participation.”
The highest areas of participation rates are flu shot programs at 49.6 percent, health screenings at 48.8 percent, health risk assessments at 48.2 percent and health fairs at 44.7 percent. To increase participation, 38 percent of respondents reported using gift cards and gift certificates, 36.7 percent used insurance premium reductions, 30.0 percent offered noncash incentives and 26.9 percent used cash rewards.
Posted June 22, 2012 by PHaynes
Update, 6/28/2012, 10:38 a.m. (EDT):
1 The Affordable Care Act (PPACA), including its individual mandate that virtually all Americans buy health insurance, is constitutional.
2 There were not five votes to uphold it on the ground that Congress could use its power to regulate commerce between the states to require everyone to buy health insurance. However, five Justices agreed that the penalty that someone must pay if he refuses to buy insurance is a kind of tax that Congress can impose using its taxing power. That is all that matters.
3 Because the mandate survives, the Court did not need to decide what other parts of the statute were constitutional, except for a provision that required states to comply with new eligibility requirements for Medicaid or risk losing their funding. On that question, the Court held that the provision is constitutional as long as states would only lose new funds if they didn’t comply with the new requirements, rather than all of their funding.
In short – all theimplementation initiatives that we’ve been discussing with you for the past 3 years should be followed & implemented without delay.
And, here’s the Court’s opinion – all 193 pages of it!
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The U.S. Supreme Court: The Decision on the Affordable Care Act – What impact will it have for my Group’s Health Plan?
With the end of the Court’s business yesterday (6/21), the possibility of a decision from the USSC, this week, ended. The Court is expected to be in session next week, and TV-camera crews are setting up shop again for Monday as they prepare to air the results this “big” decision. Whatever side of the issue you may be on, you have to admit that a bill/law that effects 18% of our economy is huge. With an unprecedented three days of oral argument on the question of the constitutionality of the Affordable Care Act (PPACA), the Court signaled just how seriously the matter deserved their full consideration.
1 PPACA is upheld in its entirety (holding that the individual mandate is constitutional and keeps PPACA in place). This decision would essentially be “business as usual,” and employer, plan sponsors and carriers should continue with their implementation timelines that we’ve been discussing for the past two (2) years. SBCs (Summary of Benefits and Coverage) are the next “big” implementation piece that carriers and employers need to prepare and distribute.
2 Individual Mandate is struck down, but the rest of PPACA remains. This would mean that not only does the USSC believe that the mandate is a legally permissible means by which Congress can regulate commerce between the states, but that they also found that this provision was severable from the rest of the Affordable Care Act. Certainly this will effect carriers and the promise of “guaranteed issue” as well as for the exchange-markets that are due to come online in 2014 and 2015. However, for Employers, it would mean very little—your implementation timeline, duties & responsibilities would proceed without delay or change.
3 The Affordable Care Act is partially upheld. This would mean that the USSC held the individual mandate to be unconstitutional and found that certain provisions of PPACA were intertwined with the mandate and that they are struck down as well (along with the mandate). Depending on how many other provisions are struck down there might be some impact for employers/plan sponsors. It is more likely that the impact would be on the side of the carriers and the states (as it relates to guaranteed issue and implementation/pricing of the exchanges).
4 All of the Affordable Care Act is struck down. This would mean that the USSC held the individual mandate to be unconstitutional and that the rest of PPACA cannot be severed from the mandate. This is the outcome that will have the most impact on group health plans. It effectively would “toss out” all the changes that have been made since PPACA became law in 2010.
Some things to consider:
A. Early Retiree Reinsurance Program – if a plan received monies from the ERRP would they need to be repaid to the federal government?
B. Coverage of children to age 26 – while this is a popular feature of the Affordable Care Act (and no one can argue that not tormenting employees twice a year with proof-of-student-status is a good thing) the fact remains that PPACA expanded coverage to age 26 and the IRS issued guidance making that coverage non-taxable for your natural, adopted and stepchildren. Without PPACA, we are left with IRS Section 152 definitions of tax dependents and could only offer tax-free coverage for children to age 19 and full-time students to age 23 (if all other dependent rules were met/kept; E.g. live with you, you provide more than 50% of their support, they are unmarried, have no dependents of their own, etc.).
C. Lifetime and Annual limits on essential benefits. PPACA threw out lifetime limits, and permitted some restricted annual limits on an ever-increasing scale. Without PPACA what will plans choose to cover? How will that affect their reinsurance? What will fully-insured carriers do (revert to old state mandates)?
D. Rescissions – plans and carriers will have to carefully wade into this topic. There was a great deal of public outcry on the issue of retroactive rescissions prior to PPACA’s enactment. Now they are still possible, but only in cases of fraud or intentional misrepresentation of a material fact and for the failure to pay premiums. So reverting to “old practices” may not be a “best practice” in light of past abuses. Some middle ground will certainly be called for here.
E. Preventive Care. Under PPACA, only grandfathered health plans can still charge a cost-sharing measure on preventive services (deductible-applies, copays, coinsurance, etc.). Since 2007, HDHP/HSA plans have also been able to offer preventive care without jeopardizing the right to have an HSA. If PPACA is struck down, plans will have the ability to begin to charge cost sharing for preventive services again. A few national carriers have already stated that they will keep this provision even if PPACA is struck down. I’m sure we can all see the value in making it easier/cheaper for people to get annual check-ups, physicals, labs, etc.
F. Other considerations that would be tossed out with PPACA that might impact your plans (or save you time/money/work), include: SBC (Summary of Benefits & Coverage), IRC Section 105(h) Nondiscrimination requirements applying to fully insured plans, Internal claims and External Appeals procedures, removing the prohibition on reimbursements for OTC (Over The Counter) medicines (for your HRAs, HCFSAs and HSAs), $2,500 cap on HCFSAs (beginning 1/1/2013), W-2 reporting, Patient Centered Outcomes Research Institute fee/tax and the so-called Cadillac Tax (that is due to begin in 2018).
Other & Future Considerations.
1 Elections 2012. Changes to the makeup of the House and Senate can certainly impact PPACA’s future (as could a new President). The Supreme Court’s decision could impact the elections, alter the makeup of Congress and/or energize elements of both parties to act, elect and spur change (E.g. Key parts of the bill could be overturned by acts of Congress; new directors at DOL and HHS could alter the implementation timeline/funding/structure of key provisions; Executive Orders could also be utilized to alter, modify and even stop key provisions from taking effect).
2. There are still other lawsuits pending. In addition to other pending suits regarding the constitutionality of the Affordable Care Act, Catholic institutions have filed multiple legal challenges to PPACA’s mandate regarding counseling for abortions, copay free birth control, etc. (as part of PPACA’s classification of women’s health initiatives as preventive care).
3. State Mandates have changed. Many state mandates were altered to either raise their plans to the levels required by PPACA, or they were changed to create a new “floor” from which consumers, employers and the like could “buy up from” the floor/entry-level plan. So, even if PPACA is overturned, fully insured plans will still have to contend with augmented state mandates (until/if they are changed).
Rest assured that whenever the Court reaches its decision our In-House-Counsel, Account Managers and Account Executives will collaborate to read, review and analyze the decision. Then, we will follow up with you to:
- Help you and your organization makes sense of the Court’s decision;
- Help you understand the impact of the decision on your organization’s needs, interests and corporate culture;
- Offer our counsel and advice regarding any required changes to your plans; and
- Continue to consult with your organization about your benefit offerings within your region and industry sector–to ensure that your benefit plans remain powerful tools for your company to attract and retain the top talent.
Posted June 22, 2012 by Megan DiMartino
By Kathryn Mayer, Benefitspro.com
Most employees know little or nothing about disability insurance. But when they find out about it, they want it.
So says a national survey of 1,200 employees from the Consumer Federation of America and Unum. When given information about this financial protection benefit, nine out of 10 employees say they want disability coverage and would pay for it.
In the CFA-Unum survey, only 13 percent of all employees say they know “a lot” about this insurance, and less than half of those who say they have coverage know how much it costs (41 percent) or what its benefits are (47 percent).
When given information about disability insurance, the majority (90 percent) say they want this coverage, and nearly as many (8 percent) say that, if required, they would pay half of a $30 monthly premium, with more than half (56 percent) saying they would pay all of this premium, to gain income protection.
“Almost all workers wisely want disability insurance protection and are willing to help pay for it,” says Stephen Brobeck, CFA’s executive director. “But since only about one-third have long-term disability insurance, there is a huge gap between worker desire for coverage and the extent of actual coverage.”
“The ability to earn a living—our income—is the most valuable asset we have, and protecting that asset is increasingly important,” says Thomas Watjen, president and CEO of Unum. “A disabling illness or injury can cause real financial hardship for many individuals and their families, and disability insurance creates a backstop against significant income loss during the period of absence, recovery and return to work.”
The high value employees place on the availability of disability insurance, and their personal desire for insurance coverage, certainly reflect the fact that most workers say they would suffer financial hardship if not able to work.
More than three-quarters of all employees (77 percent) say they would suffer great or moderate financial hardship if they did not work for three months because of injury or illness, with half indicating “great hardship.” And 78 percent say they would experience great financial hardship if they did not work for 12 months.
Lower-income workers are much less likely to have access to disability insurance coverage, but are more likely to want this coverage, than are upper-income workers. Fewer than half (46 percent) of employees with household incomes under $25,000, but 80 percent of those with household incomes of $100,000 or more, say that their employer offers disability insurance. Yet, 72 percent of the lower-income group, but only 51 percent of the upper-income group, say that it is very important to them personally to have this insurance coverage. And lower-income workers are nearly as willing as higher-income workers to pay for this coverage.
Posted June 19, 2012 by Megan DiMartino
By Steven Reinberg
More than one in every five Americans has untreated cavities, a new government report shows.
“Untreated tooth decay is prevalent in the U.S.” said report co-author Dr. Bruce Dye, an epidemiologist at the U.S. Centers for Disease Control and Prevention’s National Center for Health Statistics. “It appears that we haven’t been able to make any significant strides during the last decade to reduce untreated cavities.”
One expert was not surprised by the findings.
“This is information that has been known for a while,” said Dr. Lindsay Robinson, a spokeswoman for the American Dental Association. “More people are on Medicaid and more and more states, in an attempt to balance their budgets, have eliminated dental benefits.”
There needs to be more investment in dental care to cover those who rely on Medicaid, Robinson said. “Only about 2 percent of Medicaid dollars go to dental care. In the private system it’s triple that,” she explained.
“Even people with dental benefits are afraid of any extra out-of-pocket costs,” Robinson added.
The report authors found that the rate of cavities was pretty steady among all age groups, with teenagers having the lowest prevalence, Dye said. Among kids aged 5 to 11, 20 percent had untreated cavities, while 13 percent of those aged 12 to 19 had untreated cavities. People aged 20 to 44 had the highest rate of untreated cavities, at 25 percent.
Usually there is a difference in income when it comes to health care, but in this case children were getting about the same dental care regardless of family income, Dye noted.
For poorer children, this is most likely due to government programs such as Medicaid and CHIPS (Children’s Health Insurance Program), Dye said. Among adults, the poor have a rate of untreated dental problems twice that of others, he noted.
In addition to having cavities that were not treated, 75 percent of Americans have had some sort of dental work.
Other findings in the report include:
- Among children and adolescents, 27 percent had at least one dental sealant. In that age group, 30 percent of whites had sealants, compared to 23 percent of Mexican-Americans and 17 percent of blacks.
- Among blacks, 38 percent had all of their teeth, compared with 51 percent of whites and 52 percent of Mexican-Americans.
- Among those aged 65 and older, 23 percent had no teeth, but most likely had dentures.
To reduce the odds of developing cavities, Dye recommended brushing and flossing daily and going to the dentist at least once a year. In addition, cutting down on sweets and surgery drinks and eating a healthy diet can also help, he said.
Going to the dentist is important, Robinson agreed. When problems are caught and treated early, it saves money, and for people with chronic diseases such as diabetes it can help avoid hospitalizations, she added.
“It is possible to not get cavities,” Robinson said. “It’s amazing how many people think it’s just going to happen.”
Posted June 15, 2012 by Megan DiMartino
Here on the AP Benefit Advisors blog, we’ve covered a number of aspects of group benefits, benefits administration, workplace wellness, and other important news in the industry. Looking back on the last month, these were some of the most read blogs:
Posted June 11, 2012 by Megan DiMartino
Patrick C. Haynes, Jr., Esq., LL.M.
Key Dates for Self-Funded Plans to Keep in Mind
- 07-15-2012 Comments due to the IRS
- 08-08-2012 Public Hearing
- 10-01-2012 $1 per life fee assessed for plan years ending on/after 10-01-2012.
- 07-31-2013 Date upon which a 1/1 Plan must file an IRS Form 720 and pay fee
The Affordable Care Act (PPACA) includes a provision imposing an annual assessment on insurers and group health plans to fund a Patient-Centered Outcomes Research Institute (PCORI), which will assist patients, clinicians, purchasers and policy-makers in making informed health decisions by advancing comparative clinical effectiveness research.
The Institute is funded by a trust fund, which, in turn, is partially funded by fees paid by issuers of health insurance policies and sponsors of self-insured health plans. This “comparative effectiveness research fee” applies to policy/plan years ending on or after 10/1/2012.
Proposed regulations were published on April 12 and, although not yet final, this Proposed Rule provides more information on calculation, reporting and payment of the fee. Read the IRS’ proposed rules here: http://www.gpo.gov/fdsys/pkg/FR-2012-04-17/pdf/2012-9173.pdf
The fee applies to fully insured and self-funded medical plans covering U.S. residents; expatriate plans are excluded. It also applies to individual/family plans, voluntary/mini-med plans and retiree-only plans.
Health Reimbursement Accounts (HRAs) linked to a self-insured health plan are exempt; the employer will pay one fee for the medical plan only. But if the HRA is linked to an insured health plan, the employer will pay the fee for the health plan and the carrier will pay for the insured plan – two fees will be collected.
The fee does not apply to Medicare, Health Savings Accounts (HSAs) or ERISA excepted benefits (such as non-bundled dental and vision).
Fees, Payment and Reporting
The initial annual fee is $1 per average covered life. The fee is not assessed only upon employees, but includes a complicated series of calculations designed to capture the total number of covered lives (including spouses and dependents). The fee increases to $2 in 2013, then to an amount indexed to national health expenditures until 2019, when it is scheduled to end.
Reporting and payment using IRS Form 720 is required by July 31 of the calendar year immediately following the last day of the policy or plan year. For example, the fee for the policy or plan year ending on December 31, 2012 must be filed by July 31, 2013. Liability for a plan year ending on June 30, 2013 must be filed by July 31, 2014.
Comment Period and Public Hearing
Comments are due on 7/15/2012 (90 days after official publication). There will also be a public hearing on August 8, 2012. Anyone wishing to present oral arguments must submit written or electronic comments, an outline of topics to be discussed and the time to be devoted to each topic by July 30, 2012.
Fee Calculation Methodologies
Employers and health plans may choose one option from the following:
- Actual Count Method: Add the total number of covered lives for each day of the policy year and divide by the number of days in the policy year.
- Snapshot Method: Add the totals of lives covered on one date in each quarter of the policy year (or more dates if an equal number of dates is used for each quarter) and divide by number of dates on which a count was made. The date(s) for each quarter must be the same (e.g., 1st day of quarter, last day of quarter, or 1st day of each month).
- Member Months Method: The sum of the totals of lives covered on pre-specified days in each month of the reporting period) as reported on the National Association of Insurance Commissioners (NAIC) Supplemental Health Care Exhibit filed for that calendar year. The average number of covered lives under the policies in effect for the calendar year equals the member months divided by 12.
- State Form Method: An insurer not required to file NAIC annual financial statements may calculate covered lives for the calendar year using a form filed with the insurer’s state of domicile and a method similar to the member months method, if the form reports the number of covered lives in the same manner as member months are reported on the NAIC Supplemental Health Care Exhibit.
Supreme Court Decision Looms
The U.S. Supreme Court’s decision on PPACA’s constitutionality (among the other items/issues that were debated) is due by the end of the court’s current term, June 30th. Assuming PPACA remains the law of the land, the next step for this fee will be the close of the comment period (July 15, 2012), a public hearing August 8, 2012 and then IRS Form 720 completion and payment of the fee in July of 2013 (for 1/1 plans). Please contact your Account Executive or Account Manager for additional information or assistance.
- IRS Proposed Rule (61 pages) – link expired
- IRS Form 720 (Note – this link is to the 2012 Form 720, which has no place to enter the number of covered lives yet. The 2013 form will).
- IRS Notice of proposed rulemaking and notice of public hearing (scheduled for August 8, 2012), Federal Register, April 17, 2012.
- IRS Notice 2011-35, Request for Comments on Funding of Patient-Centered Outcomes Research through Fees Payable by Issuers of Health Insurance Policies and Self-Insured Health Plan Sponsors
Posted June 6, 2012 by Megan DiMartino
By Julie Appleby, KHN Staff Writer
Once a year, employees of the Swiss Village Retirement Community in Berne, Ind., have a checkup that will help determine how much they pay for health coverage. Those who don’t smoke, aren’t obese and whose blood pressure and cholesterol fall below specific levels get to shave as much as $2,000 off their annual health insurance deductible.
At Chicago-based Jones Lang LaSalle, a real estate firm, workers can earn up to $300 in cash for having a physical and hitting certain medical goals, or completing health coaching programs. Gone are the days of just signing up for health insurance and hoping you don’t have to use it. Now, more employees are being asked to roll up their sleeves for medical tests — and to exercise, participate in disease management programs and quit smoking to qualify for hundreds, even thousands of dollars’ worth of premium or deductible discounts.
Proponents say such plans offer people a financial incentive to make healthier choices and manage chronic conditions such as obesity, high blood pressure and diabetes, which are driving up healthcare costs in the USA. Even so, studies of the effect of such policies on lifestyle changes are inconclusive. And advocates for people with chronic health conditions, such as heart disease and diabetes, fear that tying premium costs directly to test results could lead to discrimination.
Employee reaction has also been mixed. “It’s an invasion of privacy,” says Bradley Seff, 54, a court reporter who filed a lawsuit against his employer, Broward County, in August, 2010, for introducing such a plan. Nonetheless, such plans could be the wave of the future. Faced with crippling healthcare costs, the number of employers embracing such programs shot up from 49 percent in 2010 to 54 percent last year — and more say they expect to do so soon, according to a recent industry survey. Big-name participants include insurer UnitedHealthcare, car rental firm Hertz, postage meter maker Pitney Bowes and media owner Gannett, owner of USA TODAY.
And more employers are expected to adopt them starting in 2014, when the health law allows them to offer larger incentives or penalties than they can now.”We’re seeing a big move in this direction driven by employers’ concern about rising health costs and their sense that employee behavior has a lot to do with high costs,” says Kevin Volpp, a professor at the University of Pennsylvania School of Medicine, who has studied the use of incentives in health insurance programs.
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