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Employers Use Variety of Strategies to Provide Competitive and Cost-Effective Health Care Benefits

by Inoventive Solutions
September 10, 2024

As they wrestle with providing attractive but affordable health care benefits for employees, employers are trying a variety of strategies. A recent report from insurance brokerage Gallagher shows businesses are balancing workers’ physical and emotional health against ever-rising costs.

There are many cost drivers in health care and insurers and employers are in a fine balancing act of trying to keep a lid on costs and also keeping their employees happy. And while firms are leaving no stone unturned in their quest for reducing costs, some are also adding new services employees are keen on.

Here’s what the report found:

Offering more plans

To combat rising costs, many employers (80%) offer more than one health plan. A growing share of employers offer high-deductible health plans (HDHPs) and health savings accounts (HSAs) to employees. The percentage of companies offering such plans has increased five consecutive years and is now at 56%. At the same time, 24% of employers report more employees choosing HDHPs than the other offered plans.

Employers and employees contribute to the HSAs. When employers contribute, they provide about $500 or more for single coverage and $2,000 or more for family coverage.

Weight-loss drugs

Weight-loss drugs such as Ozempic and Wegovy are growing in popularity. However, these drugs (known as GLP-1s) are expensive, and employers are trying to manage the effects of those costs.

Slightly more than half of employers surveyed include weight management in their benefits programs, but they attach strings to the use of weight-loss medications. This may include:

  • Step therapy, which entails trying other, less expensive yet proven pharmaceuticals and health and fitness regimens first.
  • Prior authorization before approving their use.
  • Eligibility requirements. Around one-fifth of employers set eligibility requirements that include a combination of minimum body mass index and comorbid conditions. They do not pay for the drugs for otherwise healthy employees looking to drop a few pounds.

Plan eligibility and scope

Despite rising costs, some employers are expanding eligibility for and the scope of their health care plans.

The Gallagher report shows a small increase in the share of employers offering coverage to employees’ domestic partners and to part-time employees, though these remain the minority.

Some are also offering more specialty coverages. For example, more than half cover hearing aids and behavior analysis for employees’ children with autism. A small but growing fraction (17%) cover gene therapy.

Almost half of employers cover some form of treatment for infertility, including drugs, specialist evaluations, in vitro fertilization and other fertilization procedures. However, controversies surrounding some of these procedures have led to a patchwork of state mandates and restrictions. This has made providing these benefits more complex for companies.

Mental health and leave

More employers are paying attention to their employees’ mental and emotional states in addition to physical wellness. Most are concerned about staff suffering from burnout and stress.

However, they also believe their managers are not able to recognize the signs. More than a fifth now offer training to managers and human resources staff on identifying warning signs and referring employees for help, and that share has grown in the past two years.

Finally, more firms are offering family-focused leave policies. This recognizes the growing emphasis employees place on work-life balance amid tight labor markets.

Almost 90% offer paid bereavement leave (outside vacation leave,) while almost half provide paid time off to bond with a new child, and 15% provide it for taking care of ill or disabled family members.

The takeaway

Employers are faced with two difficult realities. The workforce is aging, meaning that retirements will shrink the pool of available skilled workers. At the same time, health care costs are ever-increasing.

To meet both these challenges, employers are using the strategies detailed above, as well as other approaches. Some combination of them will help you compete in the war for talent while protecting your bottom line.

"group
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Medicare Changes Could Affect Your Group Health Plan

by Inoventive Solutions
September 3, 2024

New Centers for Medicare and Medicaid Services rules that take effect Jan. 1, 2025 will significantly affect employees’ decisions on whether to continue staying with your group health plan while eligible for Medicare.

Under changes in Medicare Part D drug plan rules for 2025, once a beneficiary pays more than $2,000 out of pocket for prescription medications, Medicare will fully cover their prescription costs for the rest of the year.

Due to the rule changes, if your drug plan’s maximum out-of-pocket employee cost-sharing surpasses that amount it will not be deemed “credible” under CMS rules, and that would have long-term repercussions for your senior employees.

Why? If someone doesn’t purchase a Part D plan when they are first eligible for Medicare, they will face a 10% penalty on their annual premiums in perpetuity. That penalty increases for each year they fail to enroll in a Part D plan. 

There is a provision in the law for Medicare-eligible workers to stay on their employer’s group health plan if that plan provides at least as thorough a level of coverage as Medicare does. Those that do are considered “credible” coverage.

However, if an employee’s plan does not meet the new Part D rules, it may be considered “non-credible” and they would be subject to Part D penalties for failing to enroll in a credible plan.

What you should do

Employers are required to inform affected employees if their plan is credible or non-credible before Medicare Annual Open Enrollment starts on Oct. 15. This way, the worker is given time to elect or decline Medicare Part D coverage based on their employer’s group benefit plan’s prescription benefits and avoid possible penalties. You can find templates of those notices here.

If your current plan doesn’t meet their needs, please contact us to discuss strategies for designing one that caters to affected workers and fits with your company needs and budget. The second option is not to make a change, and to inform your Medicare-eligible staff that your plan is non-credible.

Finally, you should hold a meeting with affected staff to inform them of the changes and if any of the plans you offer comply with the new rules.

Call us so that we can gauge if your health plan, or plans, offer credible or non-credible drug coverage for your Medicare-eligible staff.

"Data
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The Importance of Tracking Health Plan Metrics

by Inoventive Solutions
August 27, 2024

As health insurance costs are rising at their fastest level in nearly 20 years, it’s important to have a clear idea of which metrics to track to ensure you’re seeing a good return on investment and that your employees are satisfied with their health plan.

Having the right metrics can also aid in negotiating better terms during the insurance selection process. This knowledge is essential not only for budgeting, but also for planning benefit offerings that meet the needs of your workforce and your firm.

While the goals for your health plan will differ from other employers, there are a number of common metrics that organizations track to gauge health plan performance. Your insurance company tracks the following metrics, and so should you:

Cost per member

This is typically calculated by dividing your plan’s total health care outlays (in a given month, for example) by the total number of members covered in the same period.

If you do this month after month, you can identify cost patterns and where you should focus on reducing costs without compromising quality of coverage and care.

Loss ratio

This is calculated by your group plan’s total premium divided by how much the plan pays out in claims. The ratio evaluates the health of your plan and is a key factor used by insurance companies when calculating next year’s premiums.

If your plan’s loss ratio is lower than the industry standard, that information provides leverage for you when negotiating premium increases and coverage changes.

You may also be able to forecast future premium increases by tracking your current and historical loss ratio.

Employee utilization

To track how often your employees use their health plans you’ll want to calculate the average claims filed per member. Divide the total number of claims submitted by the number of covered employees.

You can compare your average to the industry average utilization. If your staff are using their plans less frequently than their peers at other companies, it could point to issues, such as the plan being too costly, either via the employees’ share of premiums or out-of-pocket costs.

By digging deeper into claims, you can see where your workers are mostly going for health care services. If they are largely opting for high-cost providers, you can take steps to try to explain the long-run benefits of choosing another provider that may cost them — and the plan — less without sacrificing coverage.

Network quality and response times

It’s vitally important that your staff don’t feel they are stuck in a health plan that requires them to jump through hoop after hoop to get coverage.

You can get an idea of how well your plan’s network is meeting your employees’ needs by measuring the quality of your network. Network sufficiency, as it’s also called, consists of a number of metrics and factors:

  • The number of providers in the network,
  • Accessibility to medical care,
  • Claims response times,
  • Number of medical specialties available,
  • Appointment wait times, and
  • Costs of out-of-network care.

You can use this information to discuss options with us and your carrier for expanding coverage to help your employees better access care.

The takeaway

There are also other important metrics that you can use to get a sense of how well your plan is performing and serving your employees.

Health plan metrics provide you with valuable insights into your plan’s effectiveness and whether or not its expenses are running hot. Having this information can help you work with us and your group health insurer to craft a plan that meets the needs of your workforce.

One word of caution: If you plan to make changes based on what you find, it should be done with prudence and caution as you don’t want to compromise plan coverage or employee health.

"Woman
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What Workers Need to Know About Group Life Insurance

by Inoventive Solutions
August 20, 2024

Voluntary group life insurance is offered to employees as an optional benefit, and often employers will pay the small premium as an employee retention tool and to provide workers some peace of mind for their families.

There are various avenues for funding these group plans, and different underwriting criteria that can either reduce or increase the premium amounts.

The employer may cover the premium directly, or employees may share in the premium burden through payroll deductions after tax. In most cases, life insurance face amounts will vary from policy to policy and will usually be based in part on each employee’s base salary.

Taxation

Employers often provide group term life insurance to their employees at no cost to the individual, usually with a benefit equal to a percentage of base salary. 

Internal Revenue Code Section 79 governs the taxation of this employer-provided life insurance. An employee can receive up to $50,000 worth of coverage tax-free. 

The cost of any insurance above $50,000, less any amount paid for the insurance by the employee, is taxable income to the employee.

Types of group life insurance

There are three different categories for group life coverage:

Guaranteed underwriting – Automatic enrollment is granted to all eligible employees who apply. But they must meet eligibility requirements that the employer and insurance company negotiate.

Guaranteed underwriting requires little paperwork, there is no medical exam and it is issued quickly. It is usually only provided for large groups where employees cannot be denied.

To qualify for guaranteed issue, employers usually agree to a minimum percentage enrollment.

Simplified underwriting – There is no blood test or urine test, and no medical exam is required. Each applicant usually answers several health-related questions in addition to agreeing to a medical record background check.

Full underwriting – Full underwriting is usually required with small groups, with individuals or on larger face amounts. Medical exams are typically required, and a full examination is taken to satisfy the full records check requirement.

With full underwriting, it takes longer to complete the application process and not all people will qualify.

Why offer group life?

Premiums are typically quite low and that’s why employers will often offer this benefit at no cost to the employees.

It’s a great selling point when attracting new talent and retaining your employees.

Group life also benefits those employees who otherwise would not purchase life insurance on their own, either because of apathy or they may not be able to afford individual life insurance policies.

It also allows higher-risk individuals to be given life insurance coverage where they may have a harder time obtaining coverage on their own.

As a rule, experts recommend people purchase eight to 12 times their yearly wages in life insurance when working full time. If workers are young and have a long career ahead of them, experts recommend they purchase even more coverage. This is especially true for people with multiple dependents.

"Medicine
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Health Plans Covering Fewer Drugs, Imposing More Restrictions

by Inoventive Solutions
August 13, 2024

As prescription drug costs continue growing and pricey new pharmaceuticals add to health plans’ cost burdens, some carriers are starting to reduce the number of medications they’ll cover and are imposing new barriers to accessing the most expensive ones.

According to a new study by GoodRx, a website that helps people find discounts and rebates on prescription medications, Medicare Part D insurance companies in 2024 cover 54% of all drugs approved by the Food and Drug Administration, compared to 75% in 2010.

During that same time, the percentage of drugs that Medicare drug coverage plans put restrictions on rose to 50% from 25% of all FDA-approved drugs.

GoodRx notes that the statistics are likely worse for group health plans because they are not subject to the same regulations as Medicare plans are.

This trend makes it vitally important that your employees review formularies of covered medications during open enrollment to ensure they choose a health plan that covers drugs they may need for a chronic condition, or which they need to take regularly for other issues.

It’s also important that they understand how much of a certain drug their health plan will cover and what their estimated out-of-pocket costs will be, so that they can budget accordingly.

Formularies explained

The list of drugs that an insurance plan will cover or pay for is called a formulary. Pharmacy benefit managers, which health insurers contract with to manage drug costs, set these formularies, which determine how much a patient will pay out of pocket for their medication.

PBMs regularly add and remove drugs on their formularies based on their effectiveness, price, demand and available alternatives.

These formularies also dictate copays and coinsurance — the patient’s out-of-pocket costs for each drug.

Getting squeezed

The title of the GoodRx report — “The Big Pinch” — reflects the trend of the past 14 years that’s resulted in patients being pinched between high drug costs and their health plans’ limiting coverage through prior authorizations.

First, copays and coinsurance have been increasing since 2010, usually after PBMs move certain drugs from one tier to another, according to the report. As well, more American workers are now in high-deductible health plans, which require more out-of-pocket layouts in exchange for lower premiums.

Also, a growing number of people have a separate deductible applied to prescription medications. This is referred to as a pharmacy deductible. These deductibles can be anywhere from $134 to $465 per month.

On top of it all, pharmaceuticals are getting more expensive.

Meanwhile, prior authorization rules imposed by PBMs and health plans require doctors to not only prescribe, but also justify why they are prescribing a medication, which may cause delays and make it more difficult for patients to receive drugs. In some cases, prior authorization may dissuade people from filling their prescriptions.

Eight in 10 doctors surveyed by the American Medical Association said that prior authorization leads to patients abandoning treatment.

Also, if patients encounter too many problems trying to fill a prescription, they may opt for paying out of pocket, which means absorbing the exorbitant cash price of the drug.

Help your staff pick the right plan

For workers who are healthy and young, these increasing restrictions may not have a great effect on their pocketbooks and quality of life. But for individuals with chronic conditions and other health problems that require certain medications, it’s vitally important that they are diligent and do their homework during open enrollment to ensure continued access to the medications they need.

If they want to stay in their existing plan, they need to review the formulary every open enrollment to make sure their drug is still covered. And if they are looking to change plans, they’ll need to do the same homework.

If an employee is struggling to pay for their medications, they may need to scale up to a more generous health plan, but it will likely cost them more in higher premiums in exchange for a lower deductible and/or lower copays and coinsurance. That’s the trade-off.

The worst thing is for someone to choose a plan that doesn’t cover medications they’ve come to rely on, or if their plan drops their medication.

"Accounting
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Study Predicts 8% Group Health Plan Cost Increase for 2025

by Inoventive Solutions
August 6, 2024

A new study predicts that group health insurance costs will jump 8% in 2025, on par with what American employers have experienced this year and in 2023.

The higher rates reflect the costs borne by health insurers, which are seeing more claims for care that was postponed during the COVID-19 pandemic and a steady rise in the cost of pharmaceuticals as more innovative and effective drugs come to market, according to the study by PricewaterhouseCoopers.

Additionally, health plans have seen a surge in demand and utilization for behavioral health services, which has been hampered by a limited supply of in-network mental health professionals, who are also demanding higher reimbursement rates.

And while drug costs are rising, some of the medications may actually reduce future health care costs for those taking them. There are also new biosimilar drugs coming to market that cost a fraction of the originals.

Cost drivers

Thanks to a continuing stream of pharmaceutical breakthroughs that are saving patients’ lives and/or improving their quality of life, insurers have to make coverage decisions. Many of the new drugs are costly, but they may also reduce overall health care costs in the long run as they may reduce the need for expensive intervention and emergency treatments.

Two classes of drugs that are on health insurers’ radar in 2024 and 2025 are:

  • GLP-1 agonists (annual cost: about $11,000).Various of this category of drugs treat type 2 diabetes, and can assist with chronic weight management and may reduce secondary cardiovascular events.
    Most health plans offer coverage of GLP-1 agonists for type 2 diabetes. However, health plans won’t cover them solely for weight management, which is not considered an essential health benefit under the Affordable Care Act.
  • Central nervous system drugs (annual cost: about $22,000). This includes various drugs treating conditions such as Alzheimer’s, Parkinson’s, multiple sclerosis and schizophrenia.
    While these medications may make it difficult for health plans to manage their costs, the report notes that despite the initial cost, health plans may see reduced medical costs as patient health improves.

Mental health services are also driving costs, and they were listed among the top three inflators of drug costs by health plans surveyed for the PwC report.

While the per member per month outlays for mental health services have historically been too low to be considered a cost driver of overall medical costs, spending on mental health has jumped 50% since the pandemic. As a result, behavioral health services are accounting for a greater portion of health plan spending.

The main factors affecting costs are a significant supply and demand imbalance for behavioral health services. Health plans are competing with each other to sign on mental health providers from a pool that is not enough to satisfy demand.

Counterbalancing costs

There are three trends that could counterbalance some cost increases.

Biosimilars. — Biosimilars are biological products that are “highly similar” to and have “no clinically meaningful differences” from an existing Food and Drug Administration-approved reference product. One of the most recent drugs that has seen a flood of competing biosimilars hit the market is Humira (adalimumab), a medication that reduces the signs and symptoms of moderate to severe rheumatoid arthritis.

One report estimates that the savings generated by biosimilars in 2022 was $9.4 billion in the United States. Another analysis performed in early 2023 projects total savings from biosimilars to range from $125 billion to $237 billion between 2023 and 2027.

Health plans are increasingly focused on reducing wasteful spending, which is forcing them to look at:

Exploring new pharmacy benefit manager models. — This is in light of continuing reports of the country’s largest PBMs actually increasing the cost of medications for payers (health plans, self-insured employers and insureds).

Integrating medical and pharmacy benefits. — An example of this is a health plan pharmacy team identifying when members haven’t picked up prescriptions, aren’t taking medications as prescribed or not refilling prescriptions on time.

Connected benefits allow for real-time medical, behavioral health and pharmacy data analysis to help maximize management of chronic conditions, close care gaps and monitor prescription use and potential interaction.

A study of its own clients by health insurer Health Care Service Corporation found that large employer groups with integrated pharmacy and medical benefits saved an average of $516 per member per year in medical costs over a three-year period.

The takeaway

As health insurance costs continue to rise, we can work with you to find health plans that will fit your and your employees’ budgets and help you look for actions to take that could have a positive effect on your rates.

"drug
Uncategorized

Addictions Are Rising Among Workers; What Employers Can Do

by Inoventive Solutions
July 30, 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. 

"health
Uncategorized

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
Uncategorized

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.

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