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Alleviating Health Insurance Burden on Employees a Top Priority: Poll

by Inoventive Solutions
July 28, 2022

As the 2023 group health open enrollment season nears, more employers have heard concerns among their staff and are focusing on affordability and easier access to health care services, according to a new study.

Mercer’s “Health & Benefit Strategies for 2023” study, which surveyed more than 700 employers, found that more than two-thirds of businesses are planning to improve their health benefit options to better compete for talent.

The survey found that 70% of all large employers were planning benefit enhancements for 2023. While small employers are somewhat less likely to be planning enhancements, still more than half (53%) say that they are.

One in five employers said they would put a special emphasis on improving benefits for low-wage and unskilled workers, while two-thirds said they planned to focus on all employees. The biggest concern among employers is the increasing costs that employees have to shoulder for their health benefits.

Employers are starting to realize that a high-deductible health plan with an attached health savings account is not a good fit for all of their employees. In fact, the high-deductibles have been blamed for saddling an increasing amount of U.S. workers with more medical debt.

Tackling affordability issue

Businesses are taking different approaches to tackling the affordability issue, both on the front end in terms of premiums or the back end in the form of out-of-pocket expenses. Mercer found that:

  • 41% of employers said they’ve already introduced a low- or no-deductible plan option, while 11% said they are considering adding one.
  • 11% said they offer at least one plan with no employee premium-sharing (meaning the employees pay nothing for their coverage and the employer covers the entire monthly premium). Mercer found that these kinds of arrangements are more common among small employers, although more large employers are starting to offer them as well. Another 11% said they are planning on adding a free option.
  • 16% said they offer a narrow/high-performance network plan with low cost-sharing, and another 24% said they are planning on offering one for 2023.
  • 17% said they offer salary-banded health plan contributions (with lower-wage workers required to pay less for their share of premium than higher-wage colleagues). Another 15% said they plan to offer this type of arrangement for 2023. But employers need to be careful.
    Writes Mercer: “It’s important to be thoughtful about the possible consequences of implementing salary banding for the first time now. While charging lower-paid employees less is the goal, charging some employees more could have a negative impact on hiring at those levels.”

Find out what they want

But just improving benefits or adding benefits without consulting staff can backfire. It’s important employers understand their employees’ needs before embarking on changes to their benefits.

“When it comes to retaining talent, taking a standard approach to benefit design is almost guaranteed to come up short,” Mercer writes.

Mercer also notes that employees are more concerned these days about having the right lifestyle fit at their employer, so employers should take into account differences in their employees’ lifestyles.

Here’s what employers are doing to get the answers they need:

  • Employee surveys: 61%
  • Analysis of needs based on employee demographcis and personas: 46%
  • Input from employee resource groups: 35%
  • Focus groups: 26%
  • Other sources of information: 46%
  • Nothing: 6%

If you are pinched for resources, Mercer notes that offering your staff greater flexibility in their benefits and better targeting communications about their benefits can be the way to go.

Flexibility can be a simple as supporting a work-life balance and giving them the option for flexible hours so they can run errands or tend to family issues like dentist or pediatric care appointments.

Flexibility can encompass a wide range of benefits. Here’s what Mercer found that employers offer or plan to offer in 2023:

  • 66%: Flexible work schedules, such as flex time during the day or a four-day work week.
  • 78%: Option to work from home regularly, but not every day.
  • 9%: Option to work from home every day.
  • 12%: Lifestyle accounts — employer-funded accounts that employees can use for a variety of purposes.
  • 45%: Paid time off to volunteer.
  • 50%: Other benefits/policies to support work-life balance.
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Illness or Injury: How Your Business Can Protect Your Employees

by Inoventive Solutions
July 19, 2022

According to a recent survey, four in 10 American workers live paycheck to paycheck. This means that an unexpected illness or injury that takes someone off the job for more than a few days can have devastating consequences for many of your employees who depend on their wages to survive.

You as an employer can help by offering group disability insurance to your employees.

What it covers

This insurance helps replace a portion of a worker’s income if they loses their income due to an injury or illness. Generally, the benefits are paid monthly for the duration of the illness or injury, and only cover a portion of lost wages.

Typically, disability insurance policies will replace between 50 and 65% of a worker’s income.

Broadly speaking, there are two kinds of disability insurance policies — short-term disability insurance for events that disrupt income for less than 90 days, and long-term disability policies, which cover benefits for a longer period of time.

Advantages of group coverage

Group disability coverage has advantages for both the employer and the workforce. Advantages to the employer include:

  • Reduced costs compared to offering individually underwritten policies to everyone.
  • Increased employee loyalty — especially after someone on the payroll has a claim and word gets out that these valuable benefits kicked in.
  • Tax-deductible premiums.
  • Easy, streamlined administration.
  • List billing.

Advantages of group disability insurance to the worker include the following:

  • Affordability. The employer subsidy makes it possible for workers to get coverage they would be unable to get on their own.
  • Pre-existing conditions that would make it impossible for employees to get coverage as individuals, may be waived in a group plan.
  • Streamlined application process — no medical exam required.
  • No prior year tax returns or income verification are required. The employer reports income information to the disability insurance carrier.

In addition, some policies are portable: If an employee leaves the company, they can sometimes keep the policy, though they lose the employer subsidy. Portability is an important feature, because disability insurance can be difficult to qualify for on the individual market.

Disadvantages

All coverages have advantages and disadvantages. These are some of the disadvantages:

  • Less flexibility. Managers and supervisors may have different needs and risk profiles compared to rank and file employees.
  • Less coverage. Some workers may be able to get more robust plans on the individual market than carriers offer via group plans.
  • Benefits are taxable to the recipient.
  • More restrictive definitions. With disability insurance policies, the definition of the word “disability” in the contract itself is of paramount importance. For example, some policies, known as “own occ” policies, pay benefits if you cannot work in your own profession.
    Other policies will not pay benefits if the worker can work in any occupation. All things being equal, own-occ policies are preferable — but they tend to have higher premiums, and are less prevalent in the group disability insurance market.

Taxation of disability insurance

Group term premiums are generally deductible to the company as a business expense, just like any other wage expense. The value of the premiums, however, is not usually taxable as income to the worker.

Disability insurance benefits may or may not be taxable, depending on the circumstances.

Generally, if the recipient didn’t pay taxes on the premiums, then the benefits are taxable as ordinary income. This is true for most employer-paid group health insurance plans. If the employee paid part of the premiums, then a similar percentage of benefits will be tax-free.

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Importance of Educating Gen Z Workers on Benefits

by Inoventive Solutions
July 13, 2022

It always takes more time than usual to onboard new employees — particularly ones who are new to the workforce altogether — to your employee benefits plans.

Keep in mind that the ritual of choosing a benefits package is a brand-new experience for people who are new to the workforce, and you should prepare to educate new employees on how to effectively choose and use their new coverages, as well as all the details like premiums, deductibles and out-of-pocket expenses.

The importance of this can’t be overstated. If they are not educated on their options and how health plans work, those new to employment can make poor decisions that could have serious financial repercussions. Indeed, a 2021 study found that 29% of Gen Z respondents are carrying medical debt.

If you can help them avoid amassing medical debt, and if they can get the most out of their benefits, you can increase worker satisfaction and retain key talent.

To help these new recruits get the most out of the benefits you offer, you can start by focusing on the following:

School them on health insurance

To many new Gen Z recruits, signing up for health insurance and actually using their benefits is a foreign concept. Many of them may have stayed on their parents’ health plans and they may have no idea exactly how it works. Take the time to help your new hires understand the math behind choosing the right plan for them.

You’ll need to set aside time to teach them about:

Their share of premiums — Explain to them that the payment of health insurance premiums is split between the employer and employee, and that their share of premium may vary depending on the health plan they choose.

Deductibles — Explain how deductibles work and that depending on their plan they may pay the full price for health care services until they’ve met their deductible. This is especially important if they are signing up for a high-deductible health plan (HDHP).

Copays — Every plan has a different copay that your employees are liable for. Typically, the higher the premium up front, the lower the copay. And some copays may only kick in after an employee has met their deductible.

In-network vs. out-of-network care — Most health plans have networks with which the insurer contracts to receive preferential rates that they negotiate with providers. It’s important that health plan enrollees understand that if they seek care outside of the network, they may end up paying for the care themselves with no assistance from the insurance company (except in some circumstances).

Relate to them the high cost of going out of network and the importance of seeking care from in-network providers. Also teach them how to find in-network care and how to shop around for different treatments and procedures.

The freebies — Under the Affordable Care Act, health plans are required to cover a list of 10 essential services, particularly preventative procedures like colonoscopies.

Tax-advantaged accounts — If you offer health savings accounts (which must be tied to HDHPs), flexible spending accounts or health reimbursement accounts, it’s important that you explain how they work, and how employees can fund these accounts with pre-tax dollars.

The various accounts have different rules for what services or medical costs can be reimbursed by these accounts. Explain how and if they can carry over excess funds at the end of the year to the following year for FSAs and HRAs, and how HSAs can be kept for life — and that they can invest the funds in those accounts much like they would a 401(k) plan.

Financial wellness

Most students in the U.S. get very little, if any, education about managing their finances, and it’s falling on employers to help their workers make smart financial decisions so they don’t find themselves swimming in a sea of debt or not having any funds set aside for emergencies.

HR teams and managers can reduce this stress by implementing programs to help educate new hires to understand their benefits packages, particularly if you offer a 401(k) plan. You can teach them about these tax-advantaged accounts and the importance of saving for retirement.

If you match their contributions, explain how that works, particularly how the longer they stay with you the more they are vested until they reach 100% after a certain number of years of service.

Continuing education

You can keep the benefits conversation going all year by having an open-door policy for your employees if they have questions or concerns about their benefits.

Most plans include a number of resources and websites where they can get a full picture of their benefits and how they work.

The takeaway

Educating your Gen Z employees about the benefits they receive from your organization, and helping them make the right decisions, will boost their overall job satisfaction.

The work you do will also show them their employer cares about their well-being, health and financial success. That builds loyalty and helps you retain key talent.

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Time to Comply with Health Plan Transparency Rules

by Inoventive Solutions
July 7, 2022

July 1 was the deadline for health plans to make public their in-network negotiated rates, out-of-network billed charges, and more.

While health plans will be required to post this information, employers who sponsor their group health insurance for their employees will need to take steps to ensure that their plans comply with the law, if they have not already done so.

The transparency rules taking effect were ushered in by the Consolidated Appropriations Act of 2021 and rulemaking from the 2020 Transparency in Coverage Rules by the Centers for Medicare and Medicaid Services.

The rules require that non-grandfathered insured and self-insured group health plans post machine-readable files on a public website no later than July 1, 2022. A public website, under the rules, is one that does not require a log-in or password to access.

The machine-readable files should include:

  • In-network rates for each item or service provided by in-network providers, including any negotiated rates, fee schedule rates used to determine cost-sharing, or derived amounts — whichever rate is applicable to the plan.
    If a rate is percentage-based, include the calculated dollar amount, or the calculated dollar amount for each National Provider Identifier-identified provider if rates differ by providers or tiers. Bundled items and services must be identified by relevant code.
  • Out-of-network allowed amounts and billed charges with respect to covered items or services, furnished by out-of-network providers during the 90-day period starting 180 days prior to the machine-readable file publication date.

What you need to do

Plan sponsors:

  • Must update the machine-readable files at least monthly. So, you should establish processes to coordinate regularly with the carrier in an insured plan, and with the third party administrator in a self-funded plan. You should confirm the date your insurer will make available the machine-readable files each month.
  • Should check with your insurance company if they will be hosting on their public-facing websites the machine-readable files, or if the insurer expects the employer to post the machine-readable files on their own public site.
  • Should Identify the plan or plans you sponsor and retrieve the links to the machine-readable files for each plan.
  • Should post the machine-readable files on your public-facing website if the insurance company has decided to delegate this responsibility to the employer.
  • Should post a link on your website to the insurance carrier’s website if the insurance company plans to publish the machine-readable files on its site. However, if the group health plan contract states that the insurer is fully responsible for posting these files, this may not be necessary.
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