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Helping Your Employees Get the Most out of Their Health Plans

by Inoventive Solutions
July 23, 2024

Every year employees across the country choose the wrong group health plan from their employer because they don’t understand the coverage and what type of plan is best for their circumstances.

This ends up costing them hundreds if not thousands of dollars in unnecessary medical and premium outlays each year. But you can help them avoid leaving money on the table by educating them with helpful materials and a process that lets them find the plan that is best for their life circumstances.

The 2023 “Aflac WorkForces Report” found that while 51% of employees have a solid understanding of their total annual cost for health care coverage and care, just 39% have a full understanding of their health insurance policy. Additionally, 30% of employees say they need more information surrounding their benefits.

To help your staff choose the plan that best fits them requires an educational effort and outreach, but it should not consume all of your time. Sometimes shorter presentations, resources in print and electronic formats, followed by individual assistance in helping staff pick the right plan is the best approach.

By giving your communications strategy a boost, you can improve employee confidence in their benefits decisions and save a lot of money and headaches along the way.

Educating employees

Don’t inundate your staff with educational materials that get bogged down in jargon and that are long and complicated. Often clear and concise materials are best, especially ones that use bullet points and infographics.

Benefits experts caution that human resources personnel should not go too far into the weeds in terms of being technical. Instead, provide bite-sized chunks of information that can help them whittle down their choice to a few plans.

The materials should give different scenarios for workers to help them decide on a plan. The documents can point them towards the right type of plan depending on their life circumstances, like:

  • A 27-year-old single female employee with no health problems, spouse or dependents.
  • A 46-year-old married father of three young kids.
  • A 58-year-old divorced woman with high blood pressure and asthma.

One thing that can really help your employees is an online calculator. Most health plans today offer these tools to help employees figure out which plans being offered best fit their needs. They plug in some simple details and the calculator will evaluate all of the plans on offer and recommend which one works best for them.

The tool compares out-of-pocket expenses, copays, coinsurance and premium costs in order to whittle down the plans. Some will even look for plans with the enrollee’s family doctor.

If the calculator doesn’t include this last feature, the employee should take it upon themselves to check before committing to a plan.

Here are the most important items that your workers should be considering:

Their family doctor(s)

Even if you are offering the same plans as last year, it’s a good idea to tell your employees to check the plan to see if their personal physician or their kids’ pediatricians are on the list of providers. Health plans make changes every year, so it’s important to check.

Getting the financial balance right

This is important as some people end up spending more up front on higher premiums in exchange for lower out-of-pocket maximums and/or deductibles. But for a young, healthy person that rarely visits the doctor, that may not be the best option and they may be unnecessarily spending too much on premiums for overly generous benefits they may not even use.

You should ask your employees to look at the deductible they had in the last year and see if they reached it. Then:

  • If they did not, they should consider reducing their premiums in exchange for a higher deductible.
  • But if they surpassed the deductible or came close, paying more for a plan with a lower deductible might save them money overall. If this is the case, they should also look into the plan’s cost-sharing (copays and coinsurance) rules for medical expenses that kick in beyond the deductible.

Besides that, the deductible levels, copays and coinsurance levels must also be considered. They should understand how much they can be out of pocket.

Worst-case-scenario calculation

It’s important that your employees understand the implications for them if they suffer a medical crisis.

For a full perspective, they can:

  • Calculate the total premium they will pay for the entire year (their monthly premium contribution x 12), and
  • Add the out-of-pocket maximum for the plan.

The total is how much they would have to pay overall if they suffered a medical crisis.

One last thing…

Finally, you should consider offering your workers a package of other voluntary benefits that will help fill any gaps in their main health coverage.

Supplemental plans you should be offering include accident, critical illness, or long-term care coverage should they have an unexpected accident or serious illness.

"faster
Uncategorized

Voluntary Benefits Demand Surges as Employees Seek to Defray Costs

by Inoventive Solutions
July 16, 2024

Sales of voluntary group benefits grew at a record pace in 2023 as more employers expand their offerings and demand continues booming as employees seek out benefits that can defray costs, according to new research.

Premiums collected for employer-sponsored voluntary benefits jumped 6.7% during the year to an aggregate $9.3 billion, with all lines of coverage contributing to the growth, according to the Eastbridge Consulting Group’s annual “U.S. Voluntary/Worksite Sales Report”.

The findings underscore the value that employees place on these benefits, particularly in defraying health care-related costs.

According to the report, in 2023:

  • Group term life insurance premiums increased 10% from the 2022 level.
  • Group universal life and whole life were up 9%.
  • Critical illness insurance premiums were up 7%.
  • Hospital indemnity premiums were 6% higher.
  • Dental coverage was up 5%.
  • Short-term disability coverage was up 4%.
  • Accident insurance rose 4%.

The biggest driver: personal finances

One of the main drivers of this surge in employee uptake of voluntary benefits is that they can often defray expensive and sudden expenses.

With the increase of high-deductible health plans and the resulting potential high out-of-pocket expenses workers may face, they are gravitating towards products that can provide much-needed cash in case of an unexpected event. These include many of the benefits that have seen strong sales growth in the last few years:

Accident insurance — This coverage provides a lump-sum cash payment to an individual due to an event covered under the policy. The funds can be used as needed to help cover things like deductibles, out-of-pocket medical costs or everyday living expenses.

Critical illness insurance — This provides a lump-sum payment or monthly payments to help cover expenses if a policyholder is diagnosed with a serious illness covered by the policy. This type of insurance supplements their existing health insurance and is designed to help them focus on recovery instead of costs.

Hospital indemnity — Hospital indemnity insurance supplements existing health insurance coverage by helping pay expenses for hospital stays. Depending on the plan, the insurance gives the policyholder cash payments to help pay for the added costs that may arise while they recover.

Other products that help policyholders save money include dental and vision insurance, pet insurance (in the face of massive increases in veterinary costs), income protection and telemedicine services.

The takeaway

There are a number of other voluntary benefits that employers can offer, but the above are the ones that directly can help your employees if medical bills hit unexpectedly.

Premiums for these various coverages are either paid by the employer, split between the employer and employee or solely paid by the worker. Arrangements will vary between employers. Premiums are often reasonable.

More importantly, these coverages offer peace of mind that in the event of an accident or illness, the related expenses won’t break the bank.

"compass
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New Fiduciary Rule Affects Employers That Offer HSAs

by Inoventive Solutions
July 9, 2024

The Department of Labor’s new fiduciary rule, which mainly applies to 401(k) plans, will also affect employers who offer their staff health savings accounts.

The new rule, which takes effect September 2024, bars employers from providing advice to their workers on how they should invest the funds in the HSA they offer. It should be noted that just offering an HSA does not, in and of itself, make a sponsoring employer a fiduciary, as long as the employer doesn’t cross the investment advice line.

While HSAs are used to save for medical costs in the future, account holders can invest the funds in them just like they can with 401(k) plans and allow those returns to accrue over the years. HSAs are also portable, meaning they can be moved from one employer to the next, and they can be kept until retirement years.

Since HSAs were established 20 years ago, they have typically been exempt from ERISA, but this new rule changes that.

The rule states that a fiduciary may not receive a fee in connection with providing investment advice, which could occur when, for example, an individual recommends an HSA investment, investment strategy or rollover and receives a commission.

More importantly for employers, the new rule expands the definition of fiduciary advice to cover a one-time recommendation. 

Investment education

That doesn’t mean that employers can’t educate their workers on the features of their HSAs. That’s because under current Department of Labor regulations, there has been a long-standing exception from fiduciary status if an individual or organization is providing “investment education.”

For example, employers may provide a wide range of information about the HSA program they offer, including the types of investments account holders have access to, without assuming fiduciary status. Topics that do not create a fiduciary relationship include information about:

  • The benefits of participation,
  • The benefits of increasing contributions,
  • Investment fund strategies and objectives, and
  • Fees and expenses.

To avoid fiduciary status, you simply should refrain from recommending how employees invest their HSA funds.

You should also check to see if your HSA provider offers investment advice regarding your employees’ accounts. If you have concerns, please reach out to us.

"all
Uncategorized

Gen Z Workers Go for HDHPs, but Don’t Forget Your Other Employees

by Inoventive Solutions
July 2, 2024

While the number of U.S. workers choosing high-deductible health plans has leveled off during the last two years, uptake has been growing rapidly among one segment of the working population: Gen Z employees.

The 2024 “State of Employee Benefits Report” by benefits administration provider Benefitfocus found that 45% of Gen Z workers and 43% of millennial workers surveyed were enrolled in HDHPs. The report notes 84% of employers offer both HDHPs and traditional health plans to ensure that they can met the needs of a multi-generational workforce.

It emphasizes that employees often choose health plans that will end up costing them more than it should in terms of out-of-pocket expenses or premiums, and that employers should help by providing assistance and education.  

Study findings

The trend of more Gen Z workers gravitating to HDHPs makes sense, since these plans are best suited for younger individuals who are generally healthier and have fewer health problems than their older counterparts — Gen Xers and Baby Boomers.

HDHPs feature higher deductibles and more out-of-pocket expenses in exchange for lower premiums upfront. The plans are typically tied to a health savings account (HSA), which employees can fund with pre-tax dollars to reimburse for health-related expenses.

But employers are cautioned against offering just HDHPs as they are not a good fit for everyone, particularly those who are regular users of their health plans or have chronic conditions that require more doctors’ visits, medical procedures and medications.

The study suggests that employers should offer a mix of plans that will meet the needs of their workforce. It found that:

  • 64% of health plan enrollees selected a traditional plan in plan year 2024, compared to 69% in 2022.
  • Across generations, higher-salaried individuals choose HDHPs over traditional plans.
  • Generation X has the highest premiums compared to other generations, across all plans.
  • The average employer covers 78% of their employees’ health insurance premiums, up from 74% in 2022. Despite the increase, employees are still facing higher premium outlays.
  • Participation in HSAs and flexible spending accounts fell 20% from 2022 to 2024, indicating that employers are not doing enough to educate their staff about these tax-advantaged accounts.

One of the keys to a successful employee benefits program is to ensure that your workers are all choosing a plan that is best for their life situation. Choosing the wrong plan could end up costing them more in either:

  • Upfront premiums for an unnecessary expensive plan with strong benefits that the employee may not use because they are young and/or healthy, or
  • Out-of-pocket expenses if they choose a plan that has a high deductible when they are frequent users of medical services, either due to pre-existing conditions or other issues that crop up later in life.

What you can do

The report recommends that employers:

Focus on assistance and education — The study found that 70% of workers want help from their employer to better understand the employee benefits they are enrolled in or are considering.

To help your staff choose the plan that’s going to give them the most bang for their buck, your guidance and advice can be crucial. During your educational sessions, provide scenarios of how choosing the wrong plan can financially burden an enrollee. Provide tools that can help them ascertain which plan is right for them.

Offer a mix of plans — To ensure that employees have access to the health plan that is best for their health circumstances and budget, you should offer a mix of HDHPs and traditional health plans like health maintenance organizations and preferred provider organizations.

You can tailor your employee benefits educational sessions to each generation. Make sure not to overgeneralize, as there are instances when a younger person should be in an HMO or PPO.

Offer voluntary benefits — Not all voluntary benefits are created equal, and some add more value than others. These plans complement an existing health insurance plan by providing a financial backstop when faced with an unexpected medical emergency. They include:

  • Accident insurance
  • Critical illness/specified disease insurance, and
  • Hospital indemnity insurance.

As well, benefits that help with other unexpected expenses that life deals increasingly burdened employees, are growing in popularity:

  • ID theft protection,
  • Legal insurance, and
  • Pet medical insurance.
"Therapist
Uncategorized

Addictions Are Rising Among Workers; What Employers Can Do

by Inoventive Solutions
June 25, 2024

According to a study by the Substance Abuse and Mental Health Services Administration, 10% of America’s workers are dependent on one substance or another.

The nation is still battling the biggest drug scourge: opioid and fentanyl. Provisional data from CDC’s National Center for Health Statistics indicate that in 2023 there were an estimated 107,543 drug overdose deaths in the U.S., 81,083 of which were opioid-related. While those are shocking statistics, the majority of addicts are hooked on other drugs or alcohol, and that includes millions of American workers.

A study by the American Addiction Center found that 22.5% of respondents admitted to using drugs or alcohol during work hours. The most common substance used during working hours is cannabis.

Those who work from home at least part of the time are more likely overall to abuse drugs or alcohol than those who work in offices. Overall, people who work from home part-time or full-time are about 10% more likely than people who work full-time in offices to get drunk at work.

As an employer, the costs are great if you have someone on staff who has a substance-abuse problem. Workers with addictions to drugs are alcohol have:

  • Lower or lack of workplace productivity;
  • Higher health care costs;
  • Increased absenteeism and presenteeism;
  • Diminished quality control;
  • More disability claims;
  • Increased workplace injuries;
  • Lower morale;
  • Higher job turnover; and
  • Employee theft.

How your health plan can help

If you have an Affordable Care Act-compliant health plan, it will offer access to mental health and substance abuse treatment, which is considered one of 10 essential benefits plans must offer.

The ACA requires health plans to pay for prevention and early intervention as well for substance abuse issues. 

Health care plans also have to comply with a “parity” law, which requires them to treat mental health issues the same way they do physical diseases. Since the COVID-19 pandemic demand for mental health services has soared, straining both providers of those services and the health plans.

The Centers for Medicare and Medicaid Services in 2024 also started requiring all ACA-compliant health plans to contract with at least one substance use disorder treatment center and one mental health facility in every county where they are available in the plan’s service area.


What else can you do?

Some employers have tried to help employees tackle their addictions or abuse problems by implementing workplace prevention, wellness and disease-management strategies. These programs improve health, which lowers health care costs and insurance premiums and produces a healthier, more productive workforce.

Considering offering an employee assistance program. These programs offer temporary free access (typically a set amount of sessions) to a number of services like counseling as well as substance abuse assistance. These sessions are confidential and the employer will not know if an employee is accessing them.

Consider offering more accessible substance use management solutions, like digital and telehealth-based solutions. There are a growing number of these types of service providers, which make accessing counselors more convenient and cost-effective.

Offer confidential screenings and assessments. There are a number of screening, brief-intervention and referral-to-treatment modules available to help people confront their drinking or drug use and get the help they need. 

"HRA
Uncategorized

HRA Gym Cost Reimbursement? Not So Fast Says IRS

by Inoventive Solutions
June 18, 2024

The IRS has issued a new bulletin, reminding Americans that funds in tax-advantaged medical savings accounts cannot be used to pay for general health and wellness expenses.

The bulletin focuses on medical savings accounts that employers will often sponsor, including flexible spending accounts (FSAs), health reimbursement arrangements (HRAs) and health savings accounts (HSAs), which are funded by employees’ untaxed earnings.

These accounts are only to be used for qualified, legitimate medical expenses, like out-of-pocket costs for medical services, prescription medications and medical hardware.

The IRS said that it had issued the bulletin due to concerns about companies misrepresenting the circumstances under which food and wellness expenses can be paid or reimbursed through one of these accounts.

IRS Commissioner Danny Werfel said some companies behind these plans are employing aggressive marketing tactics that suggest that these accounts can pay or reimburse for things like food for weight loss, “when they don’t qualify as medical expenses.”

Mistaken claims

Some companies mistakenly claim that notes from doctors based merely on self-reported health information can convert non-medical food, wellness and exercise expenses into medical expenses, but this documentation actually doesn’t, according to the IRS.

Such a note would not establish that an otherwise personal expense satisfies the requirement that it be related to a targeted diagnosis-specific activity or treatment; these types of personal expenses do not qualify as medical expenses.

These accounts can only reimburse for services, prescription drugs and hardware that alleviate or prevent a physical or mental defect or illness.

The IRS maintains examples of what these plans can reimburse for, and it has a set of frequently asked questions on its website to address any confusion. The essence of what is reimbursable comes down to whether it’s a qualified medical expense.

Some examples of what HRAs, HSAs and FSAs may or may not cover include:

Gym memberships: You cannot be reimbursed for membership fees if you joined the gym for general health, as it’s not a medical expense.

However, you can seek reimbursement if the membership was purchased for the sole purpose of affecting a structure or function of the body (such as a prescribed plan for physical therapy to treat an injury) or the sole purpose of treating a specific disease diagnosed by a physician (such as obesity, hypertension or heart disease).

Food or beverages purchased for weight loss or other health reasons: The costs can be reimbursed only if:

  • The food or beverage doesn’t satisfy normal nutritional needs,
  • The food or beverage alleviates or treats an illness, and
  • The need for the food or beverage is substantiated by a physician.

If any of the three requirements is not met, the cost of food or beverages is not a medical expense.

Exercise for the improvement of general health: If you are paying for swimming, dance or kayaking lessons, the costs cannot be reimbursed by these accounts, even if a doctor recommends it, because these activities are only for the improvement of general health.

Nutritional counseling or a weight-loss program: This is a qualified medical expense only if it treats a specific disease diagnosed by a physician (such as obesity or diabetes).

Smoking cessation: The cost of a smoking cessation program is a qualified medical expense because the program treats a disease (tobacco-use disorder).

The takeaway

If you offer HSAs, HRAs and/or FSAs to your staff, you may want to consider sharing the IRS bulletin with them so they understand what they can seek reimbursement for. If they are being reimbursed for non-medical items and services, they may run afoul of federal tax law.

"2025
Uncategorized

2025 HSA Contribution, HDHP Cost-Sharing Limits

by Inoventive Solutions
June 11, 2024

The IRS has announced significantly higher health savings account contribution limits for 2025, with the amount increasing 3.6% for individual HSA plans.

The IRS updates this amount annually, along with minimum deductibles as well as the out-of-pocket maximums for high-deductible health plans. Under its rules, HSAs, which help employees save for medical expenses, are only available to those enrolled in qualified HDHPs.

Understanding these amounts now can help you get an early start on human resources planning for next year.

Here are the changes coming in 2025:

HSA annual contribution limit

  • Self-only plan: $4,300, up from $4,150 in 2024
  • Family plan: $8,550, up from £8,300 in 2024
  • Catch-up contribution (for those aged 55 and older): $1,000 (unchanged)

HDHP minimum annual deductible

  • Individual plan: $1,650, up from $1,600 in 2024
  • Family plan: $3,300, up from $3,200 in 2024

HDHP annual out-of-pocket maximum

  • Individual plan: $8,300, up from $8,050 in 2024
  • Family plan: $16,600, up from $16,100 in 2024

What to do

If you sponsor an HDHP for your staff, you should review the plan’s minimum deductible amount and maximum out-of-pocket expense limit when preparing for the 2025 plan year.

If you allow employees to make pre-tax contributions to an HSA, you should also update your plan communications to reflect the new amounts.

The many benefits of HSAs

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 deductions, deposits or transfers. As the amount grows over time, they can continue to save it or spend it on eligible medical and medical-related 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. If they go to a new employer that offers qualified HDHPs, they can continue to fund the account in their new job.

Funds roll over from year to year and can earn interest. Many plans also have investment options for the funds to help savers further grow the account.

There are a number of benefits for employees who have an HSA:

  • The money an employee contributes to an HSA is not subject to income taxes, which reduces their overall taxable income.
  • They are not taxed on withdrawals.
  • 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.
  • They can also grow the account tax-free by investing the funds in the account, sort of like a nest egg for medical expenses in retirement.

HSA-eligible expenses:

  • Payments for services or medicine that go towards health plan deductibles, copayments or coinsurance.
  • Dental or vision care (including orthodontics, eye exams, corrective lenses).
  • Medical devices.
  • Certain over-the-counter medicines, like pain relievers, allergy medication, cold and flu medicine, and menstrual products.
  • Vitamins and health supplements, if recommended by a medical or health professional for the treatment or prevention of a specific disease or condition.
"medical
Uncategorized

Interest in Health Premium Reimbursement Accounts Grows

by Inoventive Solutions
June 4, 2024

Employer adoption of specialized accounts that they fund to help reimburse employees when they buy health insurance on their own is surging in 2024.

The number of employers who offer individual coverage health reimbursement accounts (ICHRAs) grew 30% in 2024 from the year prior, expanding a benefit that provides employers another option than purchasing group health plans for their employees, according to a new report by the HRA Council.

Employers fund these accounts with money that employees can use to purchase health insurance, often on Affordable Care Act exchanges.  

Uptake has been even larger among employers with 50 or more full-time employees (up 85%).  These employers are required to purchase health coverage under the ACA, and offering ICHRAs allows them to satisfy the employer mandate under the law.

Thanks to generous subsidies on the exchanges, the funds that employers contribute are often enough for workers to purchase either Silver- or Gold-level plans, which have the lowest copayments, coinsurance and deductibles.

How ICHRAs work

As mentioned above, employers fund ICHRAs with money that workers can use to help reimburse for the purchase of health insurance, often on an ACA exchange. Excess funds can be used to reimburse them for qualified medical expenses, including copays, coinsurance and deductibles, in addition to medications and some medical equipment.

Funds are deposited into the ICHRA on a monthly basis. These funds are not taxed.

Employers that offered an ICHRA between July 1, 2022 and June 30, 2023 contributed an average $908.80 a month, which was more than enough to purchase the lowest-cost self-only Gold plan on an ACA exchange, according to a report by PeopleKeep, a benefits administration software company.

Some other features of these plans include:

  • No reimbursement limits.
  • Firms of any size can offer an ICHRA.
  • Employers may designate different reimbursement amounts to different types of employees.
  • Employers can offer both group health plans and an ICHRA concurrently.

Satisfying the employer mandate

ICHRAs can satisfy the ACA employer mandate if they meet the standards the law sets out for group health plans:

Affordability: To be considered affordable, employer-sponsored health insurance or benefits for employees should cost no more than 8.39% of the employee’s household income in 2024, using the lowest-cost Silver plan on the ACA exchange as a standard after accounting for the employer’s ICHRA contributions.

In other words, the lowest-cost Silver plan premium, minus the employer’s ICHRA monthly allowance, must be less than 8.39% of the worker’s household income.

Minimum value: Under the ACA, a health plan meets the minimum value standard if pays at least 60% of the total cost of medical services for a standard population, and its benefits include substantial coverage of physician and inpatient hospital services. Any plan a worker purchases on an ACA exchange will satisfy the employer mandate.

Small-employer option

There is actually a similar plan that is only available to employers with fewer than 50 full-time equivalent workers: the qualified small employer health reimbursement account. QSEHRAs differ from ICHRAs in a number of ways.

They have maximum contribution limits, determined by the IRS each year. For 2024, those limits are $6,150 for each self-only employee and up to $12,450 per employee with a family.

While an ICHRA allows for varying allowance amounts based on many employee classes, QSEHRAs only allow employers to vary reimbursement amounts based on age and family size.

All full-time W-2 employees and their families are automatically eligible for a QSEHRA. Employers may offer plans to part-time employees as well.

Employers can’t offer both group insurance and a QSEHRA to their staff.

The takeaway

While these accounts are growing in use, it’s a risky move to stop offering group health insurance and replace it with an ICHRA. These are new accounts and most workers will be unfamiliar with them.

And considering that health insurance is one of the main benefits that employees look for, offering a reimbursement arrangement may turn some workers off. Give us a call if you have questions.

"stethoscope"/
Uncategorized

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
Uncategorized

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.

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