"medical
Uncategorized

Employer Medical Costs Expected to Rise 6.5% in 2022

As this year sees increased health care spending due to pent-up demand after many people delayed medical procedures in 2020, a new report by PricewaterhouseCoopers (PwC) predicts employer medical costs will rise 6.5% in 2022.

Last year was the first time that medical costs decreased, thanks to the COVID-19 pandemic keeping people from going to the doctor for many ailments and delaying necessary medical procedures. The annual cost of health care for a family of four was $26,078 in 2020, 4.2% lower than the year prior, according to a separate report by global insurer Milliman.

Some influencing trends that PwC predicts for 2022 include:

Drug spending — The report predicts that costly cell and gene therapies will only increase in number as the Food and Drug Administration continues approving new drugs. The use of so called “biosimilars,” which are cheaper versions of branded biologic medicines, has increased, which is expected to result in $104 billion in savings between 2020 and 2024.

The report notes that employers are covering more of the increased costs and insurance on average covers a larger share of prescription drug prices than it did 10 years ago. At the same time, enrollees’ shares have leveled off during that time.

Surprise billing — The No Surprises Act, which addresses surges in billing, takes effect on Jan. 1, 2022. One analysis predicts it will reduce premiums by up to 1% due to “smaller payments to providers.”

On the other hand, other analysts say the law will result in higher spending as costs shift from the consumer to the payer or employer. Specifically, the law bars out-of-network providers from billing patients for more than they would be charged by in-network providers (ground ambulance services are not covered under the law).

Continued spending on deferred treatments — The report describes a “COVID-19 hangover” in 2022 as people who deferred care during the pandemic return to get treatment.

“During the first six months of the pandemic, people with employer-based insurance most commonly deferred their annual preventive visits, and they were also likely to report delaying routine visits for chronic illnesses and laboratory tests or screenings,” the PwC report states. “As such, care deferred during the pandemic that comes back in 2022 may be higher acuity and cost than it would have been in 2020.” 

The report also notes that mental health, substance abuse and overall public health worsened during the pandemic.

Telehealth drives more utilization — The pandemic accelerated the health care sector’s investments in telehealth and virtual care, which had the effect of increasing patients’ access to care. It also introduced new tools to help patients, which has increased utilization of medical services.

Cost deflators

There are also some ongoing trends and factors that are counterbalancing some health care cost increases.

 More use of lower-cost care — Fewer people have been going to emergency rooms for ailments that do not require urgent care. Instead, they’ve been using telehealth services and going to retail clinics and alternative care sites for many run-of-the-mill ailments.

The report found that use of retail health clinics increased by 40% last year during the lockdowns in March and April, and urgent care center usage grew by 18%. During that same period, emergency room visits plunged 42%.

PwC estimates a 10% decrease in unnecessary emergency room visits could save employers nearly $900 million a year.

More health care for less —Health systems can reduce costs with new ways of operating; for instance, using remote work models, especially for administrative staff. They can also increase efficiency, reduce costs and boost revenue through process automation and cloud technology. 

In PwC’s 2021 survey, 31% of provider executives said that adopting automation and artificial intelligence for tasks previously performed by employees is a top priority.

 An increase in at-home testing — The report concludes that people are warming up to at-home, do-it-yourself testing. According to a survey but the Human Resources Institute, 88% of people with employer-sponsored health plans said they would be open to using an at-home COVID-19 test.

Hospitals get more efficient — Like many employers, the health care industry also sent many people to work remotely. Now many are making those arrangements permanent or introducing hybrid schedules for their staff, which can translate into reducing what hospitals pay for space.

UW Medicine in Seattle shrank its office space as a result of permanent shifts to working from home, and is saving $150,000 per month after it terminated leases on two office buildings used by its IT department.

"voluntary
Uncategorized

Pandemic Brings Voluntary Benefits to Fore

One major repercussion of the COVID-19 pandemic is that employees are embracing the voluntary benefits their employers are offering them, but they’d like to see more choices and issues such as mental health and voluntary benefits have risen to the fore.

The Hartford’s “2021 Future of Benefits Study” found that before the pandemic, benefits were mainly viewed as a means of attracting and retaining talent. But the pandemic changed all that due to the stress of having our work and personal lives upended, as well as the widespread suffering and grief that the coronavirus has caused. 

The most significant shift that The Hartford noted has been in what employees value most and they would like to see employee benefits cover better:

  • Voluntary benefits,
  • Mental health and well-being,
  • Engagement and technology, and
  • Paid leave.

Solid voluntary benefits

Most everyone has felt the personal effects of the pandemic, either contracting COVID-19 and being hospitalized or seeing family or friends get sick and check in for treatment. Many have had loved ones die from the disease. 

As a result, voluntary benefits have become a larger priority for many workers.

In addition, employees are expressing more interest in supplemental benefits such as critical illness insurance, hospital indemnity insurance and accident insurance. Employers listened and during the last year:

  • 36% of companies surveyed added accident insurance, half of them due to the pandemic.
  • 32% added hospital indemnity insurance, nearly two-thirds of them adding the coverage in response to the pandemic.
  • 29% added critical illness insurance, 84% of which did so due to the pandemic.
  • 27% added life insurance, three-fourths of which did so due to the pandemic.
  • 21 added long-term disability, nearly two-thirds of them doing so due to the pandemic.

A new focus on mental health

Besides the physical toll that the COVID-19 pandemic took on people who contracted the disease, many have been dealing with mental health and work-balance issues, particularly if they were suddenly thrust into working from home.

That coupled with the overall stress that the pandemic has had on people, has prompted a greater demand for employers to prioritize mental health for their staff. The study found that:

  • 59% of workers said their company’s culture has been more accepting of mental health challenges this past year.
  • 27% of employees said they struggle with depression or anxiety most days or a few times a week (up from 20% in March 2020).
  • 70% of employers now recognize that employee mental health is a significant workplace issue, up from 59% in June 2020.

While the pandemic has brought greater attention to the mental health challenges many workers face, it has also shed light on the opportunities for employers to support their team.

This can be done by ensuring that your health plans include a mental health component, offering your workers an employee assistance program and providing staff with resources, help and education that address wellness and mental health.

Engagement and tech

There was a quantum shift in 2020 to virtual benefits enrollment due to the logistics and danger of turning open enrollment meetings into super-spreader events.

Employers were left having to figure out how to conduct open enrollment and provide benefits education most effectively if a significant portion of their staff was now working remotely. Most employers opted for remote educational and open enrollment events that include teleconferencing and online portals for choosing or renewing health plans. 

The survey predicts that the reliance on technology will only increase, with 75% of employers saying their company’s open enrollment strategy will depend more strongly on online resources this year.

The Hartford said that personalization would be key to the success of any employee benefits program:

  • 58% of workers surveyed said they would like a personalized recommendation for what insurance benefits they should be buying.
  • 76% of employers said that they are offering personalized benefit recommendations during open enrollment, up from 71% in June 2020.
  • Story-driven enrollment tools can offer an employee context. Presenting the material in a relatable way and tailoring the message based on an understanding of an individual’s benefits needs, influences and life stage, can help someone better evaluate whether a certain benefit is right for them.

Paid time off

Paid time off has become a much hotter topic since the pandemic started. COVID-19 prompted a number of states as well as the federal government to support paid time away from work through new laws and regulations.

Employers also took note, and 75% of them ended up increasing the types of paid time away from work they provided, beyond state and federal requirements.

Here’s what happened:

  • 46% of employers expanded their paid medical leave.
  • 46% expanded their paid sick time.
  • 39% expanded paid family leave.
  • 30% expanded paid parental leave.
  • 30% expanded paid time off or vacation time.
"group
Uncategorized

Tackling the Group Health Employee Premium Burden

As the labor market tightens and businesses struggle to attract new talent, many companies are starting to boost their employee benefit offerings, particularly voluntary benefits.

But besides added benefit choices, what many employees want is relief from continually increasing health premiums as well as more options to choose from for their health insurance.

Group health insurance cost inflation has been averaging about 5% annually over the past few years and many employees have been put into plans that may have kept their share of premiums steady (like high-deductible health plans, or HDHPs), but which have instead increased their out-of-pocket costs. 

As we exit the ravages of the COVID-19 pandemic, more workers are looking to their employers to give them some relief from spiraling premiums and health care expenses. Here are a few things you can do.

Reduce the employee’s share of premium

You could choose to pay for a higher percentage of the premium, which would reduce their monthly contributions. If that’s not feasible, one tactic that can end up saving you and your employees money is offering to either pay a certain portion of the premium if they choose a silver plan, or pay for the entire premium for employees who choose bronze plans.

The trade-off for the workers who choose the latter option is having no premiums, but more out-of-pocket expenses when they use health care services.

But if you are thinking about taking this route, please discuss it with us first as it’s best to crunch the numbers to see how cost-effective it would be for you. 

The majority of workers contribute a portion of the premium for their coverage. According to the Kaiser Family Foundation “2020 Employer Health Benefits Survey”:

  • The average U.S. worker contributes 17% of the group health plan premium for single coverage, and 27% of the premium for family coverage.
  • Workers in small firms contribute on average 35% for family coverage.
  • Workers in large firms contribute on average 24% for family coverage.
  • Workers in both small and large firms contribute on average 17% for single coverage.

The other option is to just offer to pay for a greater percentage of the premium across the board on the policies you do offer. Obviously, that comes with added expense. But it’s not a strictly financial decision, as a more generous benefits package can have the added advantage of helping you keep key talent and generate employee loyalty.

Offer different types of plans

This can be a win-win for everyone. Younger, healthy employees that do not use health care services often can opt for an HDHP, which features a lower up-front premium in return for the participant having to spend more out of pocket for services they access. But if someone doesn’t use medical services often, this type of plan may the right and most cost-effective option.

On the other hand, for older workers or those who see the doctor more often or have health issues, they may be more inclined to go with a preferred provider organization (PPO) to pay more for a higher premium in exchange for lower out-of-pocket costs over the year.

For the fifth year in a row, the percentage of companies that offer high-deductible plans as the sole option will decline in 2021, according to a survey of large employers by the National Business Group on Health. That may be a continuation of a trend, but the pandemic has also put an emphasis on improved employee benefits.

Here’s a breakdown of the kinds of small group plans across the country in 2020, according to Kaiser:

  • PPOs covered 47% of workers.
  • HDHPs covered 31%.
  • Health maintenance organizations (HMOs) covered 13%.
  • Point-of-sale plans covered 8%.
  • Conventional (indemnity) plans covered 1%.

Hire more employees

The more people you have in your group health plan, the more the risk is spread around, which can yield lower premiums. 

If you divide the risk amount of a small group of workers compared with a large pool, the law of averages dictates that the insurer will pay less in claims per worker in the larger pool.

In other words, the more employees you hire, the less risk for the insurance company, and the greater premium discount they can offer.

Talk to us

An experienced benefits consultant can help you analyze your spending, and a good broker can help you get the best rates thanks to their network and know-how.

We can provide the insights you need to make the best decision on which types of plans to offer your workers and the best plans for your and your employees’ money ― and we can negotiate the best rates possible on your behalf.

"HSA
Uncategorized

2022 HSA Contribution Limits, HDHP Minimums, Maximums Set

The IRS has set the maximum amounts employees can funnel into their health savings accounts and health reimbursement accounts (HRAs) for the 2022 policy year.

The IRS updates these amounts every year to adjust for inflation in addition to minimum deductibles for high-deductible health plans, as well as the out-of-pocket maximums your employees are subject to. HSAs, which help employees save for medical expenses, are only available to employees enrolled in HDHPs. 

Here are the new figures for 2022:

HSA annual contribution limit

  • Individual plan: $3,650, up from $3,600 in 2021
  • Family plan: $7,300, up from $7,200 in 2021

HDHP minimum annual deductible

  • Individual plan: $1,400, the same as in 2021
  • Family plan: $2,800, the same as in 2021

HDHP annual out-of-pocket maximum

  • Individual plan: $7,050, up from $7,000 in 2021
  • Family plan: $14,100, up from $14,000 in 2021

Excepted benefit HRA

  • Maximum annual employer contribution: $1,800, the same as in 2021

Federal law requires health plan enrollees to use HSAs with HDHPs.

HSAs explained

An HSA is a special bank account for your employees’ eligible health care costs. They can put money into their HSA through pre-tax payroll deduction, deposits or transfers. As the amount grows over time, they can continue to save it or spend it on eligible expenses. 

Employers can also contribute to the accounts, but the annual contribution maximum applies to all contributions in total (from the employee and the employer). 

The money in the HSA belongs to the employee and is theirs to keep, even if they switch jobs. The funds roll over from year to year and can earn interest. Some plans also have investment options for the funds.

There are a number of benefits for employees who have HSAs:

  • The money an employee contributes to an HSA is not subject to income taxes.
  • If employees contribute through payroll deduction, the amount is taken from their pay before taxes are taken out, which reduces their overall taxable income.
  • They are not taxed on withdrawals, and HSAs even help reduce taxable income.
  • If employees contribute to their HSA with after-tax money, they can deduct their contributions during tax time on Form 1040.
  • Employees can tap the funds for any approved out-of-pocket medical expenses.

Here’s how they work:

  • Employees can make withdrawals with a debit card or check specific to the HSA.
  • Employees can use the money in their HSA to pay for care until they reach their deductible, out-of-pocket expenses like copays and coinsurance.
  • They can use the funds to pay for other eligible expenses not covered by their HDHP, like dental or vision care (eye exams and corrective lenses).
"COBRA
Uncategorized

DOL Issues Model COBRA Subsidy Notices

As you will recall, the American Rescue Plan Act of 2021 (ARPA) includes a 100% COBRA subsidy for people who were laid off during the COVID-19 pandemic.

As part of the law, which took effect April 1, the Department of Labor was required to issue model notices that employers can use to send to eligible former employees.

The ARPA requires that employees laid off or who saw their hours cut during the pandemic to the point they no longer qualified for group health insurance, are eligible for COBRA continuation coverage that is 100% subsidized.

Model notices

The ARPA required the DOL to create three model notices (general, election and termination of the subsidy). 

Employers are allowed to use their own notices as long as they satisfy the COBRA notice content requirements.

As with all model notices created by the DOL, employers will need to fill in the blanks for their own COBRA plan and can rely on the boilerplate verbiage to avoid running afoul of regulations. The DOL created four notices in total:

Model general ARPA COBRA notice — This form is to be provided to qualified beneficiaries who have a qualifying event (termination or reduction in hours) between April 1 and Sept. 30. You can download it here.

Model COBRA notice with extended election periods — This form is to be provided to individuals who may be eligible for the COBRA subsidy if they had a qualifying event that took place prior to April 1. You can download it here.

Model alternative notice — This form can be provided to individuals with insured coverage subject to state continuation coverage, who have a qualifying event between April 1 and Sept. 30. The form can be downloaded here.

Model notice of expiration of premium assistance subsidy — This form should be sent to individuals whose COBRA subsidy will end before Sept. 30. You can download it here.

Summary of major provisions and form

The DOL also released a document called the Summary of the COBRA Premium Assistance Provisions under the American Rescue Plan Act of 2021. 

This four-page document is designed to be completed by the employer (or your COBRA plan administrator) and included with any COBRA assistance notice that is sent to an eligible terminated worker. The document includes a summary of the major provisions of the law pertaining to the 100% COBRA subsidy.

The employer must include the name of the COBRA administrator in this document. The document also contains a few pages that will allow a terminated employee to ask to be treated as an eligible beneficiary if the employer has not yet done so.

Once the completed forms have been returned, the employer will complete a section indicating if the request is approved or denied, and if denied, the reason for the denial.

The takeaway

You should review these model notices so you don’t run afoul of the law. You’ll want to make sure that you have sent notices to all of the eligible employees.

If you are using the model notices, ensure that you include all of the relevant information for your own plan.

If you are using your own notices, compare them to the model notices and review the guidance to make sure yours include all the content the forms are required to have.

The DOL notes in its FAQs that it considers the use of the model election notices to be in good-faith compliance with the law.

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