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Worker Enrollment in HDHPs Falls

by Inoventive Solutions
May 29, 2024

After enrollment in high-deductible health plans soared during the last decade, 2022 marked the first year that enrollment in these plans fell among American workers since 2013, according to a new report by ValuePenguin.

The insurance-review website found that 54% of U.S. workers signed up for HDHPs in 2022, compared to 56% in 2021. The dip, while seemingly small, represents millions of workers that have opted for other plans as employers are offering a greater variety of plans to their employees, including preferred provider organizations (PPOs) and health maintenance organizations.

Additionally, fewer are exclusively offering HDHPs to their employees. In 2022, 9% of employers with 20,000 or more workers offered HDHPs exclusively, a drop from 22% in 2018, according to Mercer’s “National Survey of Employer-Sponsored Health Plans.” And 10% of employers with 500 or more workers offered only these plans, compared to 13% in 2018.

Signs of weariness

There are signs that workers are growing weary of high out-of-pocket expenses associated with HDHPs and are more willing to pay a little extra in premium in exchange for lower deductibles, copays and coinsurance.

Indeed, workers who are enrolled in HDHPs are 30% less confident that they will know what their health care costs will be, compared to those who are enrolled in PPOs, which usually have lower deductibles, according to recent research by Arizent, a publisher of health insurance news. Seven in 10 HDHP enrollees also found their health care costs too expensive, compared to 50% of PPO enrollees.

Offering employees a choice of at least one other type of plan besides an HDHP can avoid blowback. It can create bad feelings if staff think their health plan offers little coverage thanks to a high deductible that they never reach. It hurts even more if they haven’t funded their health savings account (HSA), which often happens.

Additionally, if paying for medical costs becomes a burden, employees may forgo necessary care, likely worsening any conditions they are dealing with, which can affect their productivity at work as well. And if they have a medical emergency, they may have to take on debt to pay for the care.

A happy medium

First: HDHPs are not for everyone. People who have chronic conditions are not good candidates for these plans. A huge deductible before receiving coverage year after year can be a barrier to receiving care.

Fortunately, there are many HDHPs with relatively low deductibles. Under the law, for a plan to qualify as an HDHP it has to have a deductible of at least $1,600 for single coverage and $3,200 for family coverage.

If you can offer an HDHP with a deductible at or near the minimum, along with an attached HSA that you partially contribute to, the plan would be less burdensome for employees. And since HSAs are only available for individuals enrolled in HDHPs, employees need some additional education on the importance of HSAs.

The many benefits of HSAs

  • Employees contribute pre-tax dollars to the account.
  • Employers can also contribute to the account.
  • Funds withdrawn from the account to pay for qualified medical expenses are not taxed.
  • Funds in the account can be invested and build value over time, like a 401(k) plan.
  • HSAs can be moved when an employee switches jobs.
  • Funds can be used for medical expenses at any time, even in retirement.

Finally, HDHPs with a high deductible can be a real value for young and healthy individuals.

That’s because under federal law, an HDHP will pay for a number of basic procedures with no cost-sharing on the part of the enrollee for preventive care like checkups and screenings, which insurers must cover with no out-of-pocket expense on the part of health plan enrollees.

"DOL
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DOL Rescinds Trump-Era Association Health Plan Rule

by Inoventive Solutions
May 22, 2024

The Department of Labor on April 29 issued a final rule rescinding Trump-era regulations that expanded the number and types of employers that could band together to create association health plans to cover their employees.

The 2018 regulations, which have been in legal limbo since 2019, also allowed these association health plans avoid many consumer-protection elements of the Affordable Care Act, which critics said would open the door to participating employers offering insufficient coverage.

The DOL said it needed to rescind the law due to concerns about the potential for fraud and mismanagement in association plans. It said that the new rules limit these plans to “true employee benefit plans” that are the result of a “genuine employment relationship” and not an effort to skirt consumer protections built into the ACA.

Once the final rule takes effect in late May, employers that want to create an association plan will have to comply with much stricter rules that narrowly define these plans and limit the instances under which they can be formed.

Background

Prior to 2018, groups or associations that could meet the three criteria below would be considered a single group health plan, which in turn would determine whether they must comply with small-group market or large-group market rules under the ACA:

  • Business purpose standard — Whether the group or association has a business or organizational purpose and function that is unrelated to providing health insurance benefits.
  • Commonality standard — Whether the employers share a commonality of interest and genuine organizational relationship unrelated to the provision of benefits. For example, a trade group for auto shops could qualify since all of the members have a common interest.
  • Control standard — Whether the employers participating in the benefit program exercise control over the program, both in form and in substance.

Trump rules never took off

The Trump-era rules turned the earlier regulations on their head, particularly the first two standards:

Business purpose: Under the 2018 rule, a group of employers could have formed bona fide associations that had as their primary purpose the provision of health coverage.

Commonality: The 2018 rule would have let associations meet the commonality standard solely through the geographic proximity of its members, such as being located within the same state or city, without having any other common interests.

The 2018 rule also eliminated requirements that these plans comply with essential patient-protection elements of the ACA.

In 2019, the U.S. District Court for the District of Columbia held that a large portion of the rule was based on an unreasonable interpretation of the Employee Retirement Income Security Act and inconsistent with “congressional intent.” It later stayed action on the case and ordered the DOL to reassess its rulemaking.

After that, White House administrations changed and the department last year proposed the rule that was finalized April 29.

"African
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Pregnant Workers Fairness Act Final Rules: What Employers Need to Know

by Inoventive Solutions
May 14, 2024

The Equal Employment Opportunity Commission has published a Pregnant Workers Fairness Act final rule that will give new protections akin to disability accommodation under the Americans with Disabilities Act to pregnant workers and those who have recently given birth.

The rule, which takes effect June 18, will require employers to make reasonable accommodations for employees or applicants with known limitations related to pregnancy, childbirth or related medical conditions.

The new regulations apply to employers with 15 or more workers on their payroll. This is a significant new labor law and another source of potential lawsuits for employers.

Who is covered

Essentially, the Pregnant Workers Fairness Act (PWFA) requires employers to make reasonable accommodations for these workers if they ask for it, particularly if they are temporarily unable to perform one or more essential functions of their job due to issues related to their pregnancy or recent childbirth.

Reasonable is defined as not creating an undue hardship on the employer. Temporary is defined as lasting for a limited time, and a condition that may extend beyond “the near future.” With most pregnancies lasting 40 weeks, that time frame would be considered “the near future.”

What’s required

Like what is required by the ADA, if an employee asks for special accommodation due to a covered issue under the PWFA, the employer is required to enter into an interactive process with the worker to identify ways to accommodate her.

The law requires employers to accommodate job applicants’ and employees’ “physical or mental condition related to, affected by, or arising out of pregnancy, childbirth, or related medical conditions.”

The condition does not need to meet the ADA’s definition of disability and the condition can be temporary, “modest, minor and/or episodic.”

The PWFA covers a wide range of issues beyond just a current pregnancy, including:

  • Past and potential pregnancies,
  • Lactation,
  • Contraception use,
  • Menstruation,
  • Infertility and fertility treatments,
  • Miscarriage,
  • Stillbirth, and
  • Abortion.

What’s a ‘reasonable accommodation’

The law’s definition of reasonable accommodation is similar to that of the ADA. The regulation lays out four “predictable assessments,” which would not be an undue hardship in “virtually all cases”. These would allow an employee to:

  • Carry or keep water nearby and drink, as needed;
  • Take additional restroom breaks, as needed;
  • Sit if the work requires standing, or stand if it requires sitting, as needed; and
  • Take breaks to eat and drink, as needed.

Employer rights

As mentioned, an employer may reject an accommodation if it would create an undue hardship, which is defined as a significant difficulty or expense.

Employers may ask for documentation under the PWFA if it is reasonable and the employer needs it to determine whether the employee or applicant has a covered condition and has asked for accommodation due to limitations the condition causes her.

If the worker is obviously pregnant, the employer may not require documentation.

The takeaway

Employers with 15 or more workers will need to add mentions of the new rule in their employee handbooks and train managers and supervisors about it, in order to keep from running afoul of the PWFA.

The ramping up period is short and it’s important that you have in place policies that require supervisors and managers to notify human resources if a worker asks for special accommodations.

"Doctor
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Employers Push Preventive Care to Affect Costs, Staff Health

by Inoventive Solutions
May 7, 2024

Chronic conditions and overall poor health are a key cost-driver of health care costs, which is hitting the pocketbooks of both individuals and employers.

There are a number of factors that are driving this, including poor lifestyle choices, poor diets, lack of exercise and hereditary issues. But another reason for Americans’ declining overall health is the cost of accessing health care, not keeping up with checkups and vaccinations and having a poor understanding of their health insurance coverage.

Employers are recognizing the effects their employees’ poor health is having on the insurance premiums they and their staff pay, and some are taking it into their own hands to help their workers through various programs that help them better utilize their benefits.

Declining health

Recent research from Arizent, parent company of Employee Benefit News, found that 65% of employers feel their staff are generally healthy, but only 35% of employers with less than 100 workers think the health of their employees has improved over the past few years, which they directly correlate with rising health plan premiums.

The survey also found that 40% of employers have seen an uptick in the use of sick days and medical leave by their staff. This may also be an outgrowth of the COVID-19 pandemic. Since then, managers have generally encouraged staff to stay home if they are ill to avoid spreading the love to other staff members.

“However, increased use of medical leave does hint at more serious health challenges popping up for workers,” the report says. “Moreover, approximately one-third of employers are seeing a rise in disability leave and the overall prevalence of chronic illnesses.”

This suggests that more employees need time off for their health. These may be warning signs of declining health among workers.

Besides taking more sick and leave time off, less healthy workers may also not be as productive, may have greater instances of presenteeism and cause group health premiums to grow.

What employers are doing

Focusing on preventive care — Overall, 89% of employers surveyed are taking steps to control health care costs, with a majority focusing on improving preventive care access. They are incentivizing preventive care in a number of ways, according to the Arizent survey:

  • 39% host vaccination sessions at the office,
  • 32% host educational talks or webinars about preventive care,
  • 31% host disease screenings,
  • 28% provide monetary incentives, and
  • 26% offer paid time off specifically for primary care appointments. 

Efforts are bearing fruit for employers that do the above, with 21% of them saying that the health of their staff has improved over the last few years.

Improving health care literacy — Studies have shown that most group health plan enrollees have a poor understanding of their insurance coverage, and how to use it. Many do not understand what deductibles, copays and coinsurance are and how they work.

Choosing the wrong plan can result in significant out-of-pocket layouts for care, which can further suppress a person’s financial ability to pay for it. Other studies have found that more and more Americans are skipping doctor’s appointments and forgoing necessary care due to the costs and their current health care debts.

The report said that if employers want their workers to pick the best care for the best price, they need to ensure their employees are knowledgeable about their coverage and how to choose the group health plan that best fits their health status. That requires that employers educate their workers better about their benefits.

The takeaway

The Arizent study suggests that by helping and encouraging employees to access prevent care and by educating their staff on their benefits, the efforts can pay off in a healthier workforce, and possibly affect premiums.

Employers may need to invest in educational resources and health care navigation tools to help employees better understand the true cost of their plans, beyond what they are paying in premium.

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