Speak with an adviser 678.821.3508

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Budgeting and Prepping for Open Enrollment

If you are running a business, you need to get an early start on preparations for your small group health plan open enrollment, particularly now as so much confusion abounds about the state of health insurance in the country.

With recent new regulations, options have changed for employers and you need to stay focused on maximizing your outcomes within your budget. You also want to drive participation, as that too can reduce overall rates for you.

Understand your options

Familiarize yourself with the various options that you have:

Health maintenance organizations – HMOs are typically the least expensive plans because they require enrollees to visit their personal physicians and tightly controlled in-network doctors. Going out of network is discouraged with high out-of-pocket costs. An HMO will usually only pay for care outside of the plan network when it’s an emergency or another unusual situation.

Preferred provider organizations – PPOs contract with hospital and provider networks to help control costs. While they will cover services outside of the network, the cost is higher than going in-network. PPOs are more flexible than HMOs, but premiums are often higher – as are some out-of-pocket costs.

One difference from an HMO: PPO enrollees don’t need a referral from their primary care physician if they are going to a specialist.

Point of service – A POS health plan is a mix between an HMO and a PPO-style health insurance policy. With a POS health plan, your staff has more choices than with an HMO, but they will usually need to select a primary care provider and need a referral to see a specialist.

Exclusive provider organizations – The EPO is also a PPO-HMO hybrid. Enrollees need to receive covered services inside of the network, except in a few instances, but they can also see a specialist without a referral from their primary care doctor. 

Besides the above, you will also need to decide if you want to reduce the premium for your organization and staff by offering high-deductible health plans. These plans can be either an HMO or a PPO, but they have the same feature of having a high deductible that needs to be met before benefits really kick in.

For 2024, for a plan to qualify as an HDHP the deductible must be at least $1,400 for an individual and $2,800 for a family. The average HDHP deductible is $2,349, but many plans exceed $3,000.

These plans usually have an attached health savings account to which your workers can transfer funds pre-tax from their paychecks to use for paying deductibles, copays and other medical expenses.

Check your budget

In 2022, group health insurance premiums averaged $659 a month ($7,911 annually) for single coverage, and $1,872 per month – or $22,463 per year – for a family, according to a survey of employers by the Kaiser Family Foundation.

You can reduce your premium outlays by imposing higher premium cost-sharing requirements on your staff. But, make sure you stay within the guidelines of the Affordable Care Act, which requires that plans be “affordable,” meaning they cannot cost more than 9.12% (in 2023) of an employee’s household income. This number changes each year, and the percentage has not yet been set for 2024.

Be mindful, though: if you try to unload too much of the premium on your workers, you may see people leave your plan and, if too many decide not to participate, you may not be able to offer the policy. Try to offer plans that will be valuable to your staff as well as affordable.

Maximizing enrollment

If you want to find out what your employees expect from their benefits, you can run a survey of all your staff. It can cover the basic elements of the plans you are going to choose from, and ask them which ones they would find most valuable. Then, move forward organizing your plan based on their response.

Your goal is maximum participation, and you can work with us to start disseminating materials and reaching out to those who may need plans explained to them. Give them some time to look the plans over. Employees want to know what changes are being made to their benefits packages in advance, so make sure you give them time to look through the offerings.

Next, plan to hold a meeting a month before open enrollment starts, in order to go over the plans and options with your staff, as well as any significant changes you’ve made.

During the meeting, highlight the value of each of the plans you are offering. Unfortunately, there will be those among your staff that haven’t really paid attention at all to the plan documents you gave them earlier.

Focus on the basics:

  • What each plan costs them.
  • What’s covered under the plan, and
  • When and how to use it.
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Uncategorized

Handling Health Insurance for Remote Workers

Since the COVID-19 pandemic, more employers are allowing their staff to work remotely on a permanent basis, often allowing them to never have to set foot in the office again.

This newfound freedom for American workers has allowed many of them to leave the cities they were living in for small towns or even more remote areas around the country. But for employers who have instituted work-from-home policies, they are faced with navigating a more confusing employee benefits landscape.

This is becoming more common as more people work from home. The ranks of remote workers have boomed in recent years, increasing to 27.6 million (or 17.9% of the working population) in 2021 from 9 million (5.7%) in 2019, according to the 2021 “American Community Survey” conducted by the U.S. Census Bureau.

Employers will typically purchase group health insurance with networks that are mainly local or regional. This makes sense for a company with one location or multiple locations in a city or region, since all the employees will be living near work.

But when an employee moves, they can’t take the network with them, and the employer will need to make new coverage arrangements.

If you allow your employees to work remotely, you have a few options for those who plan to move out of state.

The PPO option

If they are currently enrolled in a health maintenance organization, they would have to give up their plan, since HMO plans contract just with medical providers in a specific area. Preferred provider organizations also have networks with which they contract, but some of the nation’s largest PPOs offer more flexibility.

The main thing is having a way out of the HMO contract, as that usually requires a “qualifying event.” If an employee moves out of state or out of an HMO’s service area, that would likely be considered a qualifying event to allow them to choose a new health plan.

The answer for most employers is to place the worker in a nationwide PPO. One of the most common choices is Blue Cross/Blue Shield because of the breadth of its coverage. But some other large players may also offer a good PPO plan that can be used anywhere in the country.

As your health insurance broker, we can help you with this process and ensure that your employees are set up with coverage, wherever they are moving.

Another option

Some employers are taking another approach to out-of-state remote workers. They are setting up individual coverage health reimbursement arrangements (ICHRA), which they fund with pre-tax money that the employees can use to purchase a health plan on an Affordable Care Act exchange.

ICHRAs were made legal during the Trump administration to give employers another option for helping their workers secure health coverage. Some ICHRA administrators are also available to help ensure that the contributions comply with the ACA affordability test and to help plan enrollees choose coverage that is best for them.

Employees moving out of state?

During your next open enrollment, if you have workers who live out of state, you’ll want to ensure they have a plan that they can use in their area. If they are already enrolled in a PPO, that’s a good start, as they are more likely to have dispersed networks.

We can help you review your current plan offerings, and in particular your PPOs. We’ll look for PPOs that have networks that allow enrollees to use in-network benefits in any state.

It’s important that you have a policy requiring your remote staff to notify you if they plan to move out of state, so you can start the process of changing health plans. Both you and the employee (and their family) will want to ensure that they have continuity of coverage if they move.

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SCOTUS Sets High Bar for Rejecting Religious Accommodation Requests

A recent decision by the U.S. Supreme Court will make it more difficult for employers to deny employees’ requests for religious accommodations in the workplace.

The unanimous decision by the court in the case of Groff vs. DeJoy basically upends a standard for accommodating religious beliefs that has been in place since 1977.

The case concerns a mail carrier who asked not to work on Sundays due to his religious beliefs, after his employer, the U.S. Postal Service, contracted with Amazon to deliver its packages on Sundays.

The ruling will require that employers take a new approach to handling their employees’ requests for religious accommodations in the workplace. Legal experts say the decision could spur a slew of new requests as well as renewed ones from employees whose requests had been declined.

The case

When mail carrier Gerald E. Groff’s U.S. Postal Service location started requiring its staff to work on Sundays to fulfill the Amazon contract, he was able to swap shifts with co-workers. But they grew resentful and stopped swapping shifts with him. After a number of shifts went unfilled, the USPS informed him that it could not reasonably accommodate his request not to work on Sundays.

Groff quit and sued U.S. Postmaster General Louis DeJoy alleging Title VII religious discrimination and the case made its way to the Supreme Court, which sided with him in his appeal.

In its decision, the court wrote that an employer must accommodate an employee’s religious practice as long as the proposed accommodation does not create “substantial increased costs in relation to the conduct of [the company’s] particular business.”

The decision jettisons a standard that has been in place since SCOTUS’s 1977 decision in Trans World Airlines, Inc. vs. Hardison: That if making accommodation constitutes more than a de minimis cost to the employer, then the request was considered an “undue hardship” and the employer could deny the request. Even the Equal Employment Opportunity Commission deferred to this standard.

How it changes the equation

“Substantially” increasing costs in relation to the company’s operations is a significantly higher bar and burden of proof for employers that reject religious accommodation requests.

One of the key takeaways from the decision is that employers must explore all of their options, like voluntary shift-swapping.

It also warned that “a hardship that is attributable to employee animosity to a particular religion, to religion in general, or to the very notion of accommodating religious practice cannot be considered ‘undue.'” In other words: If other employees don’t like the fact that their colleague is getting a certain day off, that is no excuse for denying the request.

In light of this ruling, you should revisit your workplace policies for dealing with religious accommodations. If you receive a request and are unsure how to proceed, consider consulting with counsel.

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New Mental Health Parity Rules Would Expand Care

With mental health in the forefront as patients demand greater access to psychologists and psychiatrists, the Biden administration in July 2023 proposed new regulations aimed at requiring health insurers to expand their mental health coverage.

The proposal aims to bring insurers into compliance with existing law requiring that they cover mental health benefits in parity with physical health services.

Despite that law, many insured Americans struggle to access mental health care, often because they need a referral or a health plan does not have enough psychologists and psychiatrists in its network, forcing them to go to providers outside of the network and paying significantly more.

It’s hoped that by adding new provisions that would require insurers to regularly assess how well they are complying with the law, it will be easier to receive in-network mental health care. Additionally, the rules aim to eliminate barriers that keep people from accessing such care when they need it.

The Mental Health Parity and Equity Act has been on the books since 2007, but the COVID-19 pandemic provided the spark that ignited a brewing mental health crisis in the country. The sudden demand for counseling services caught insurers off guard with too few providers in their networks.

As well, many people who needed mental health services were unable to get them due to their insurers’ sometimes onerous prior authorization requirements. In announcing the rule, the administration cited an example of insurers approving nutritional counseling for diabetes patients, but not for people with eating disorders.

The regulations — proposed by the Departments of Health and Human Services, Labor and Treasury — would:

Require health plans to measure outcomes to make improvements. The rules require insurers to regularly analyze their coverage requirements to make sure their insureds have equivalent access between their mental health and medical benefits as required by law. The insurer will need to evaluate:

  • How much it pays out-of-network providers,
  • How often prior authorization is required, and
  • The rate of denials for prior authorization requests.

The goal is to help insurers identify areas where they are failing to meet the law’s requirements and require that they take steps to remedy those shortfalls, such as adding more mental health professionals to their networks or reducing red tape to get access to them.

Stipulate what health plans can and cannot do. The proposed rules will provide specific examples that make clear that health plans cannot use more restrictive prior authorization, other medical management techniques, or narrower networks that make it harder for people to access mental health and substance use disorder benefits than physical medical benefits.

The proposal would require health plans to use similar factors in setting out-of-network payment rates for mental health and substance use disorder providers as they do for medical providers.

The takeaway

The proposed rule is good news for any of your staff that have been having a hard time accessing mental health or substance abuse services.

The regulators are hoping that the legislation achieves their goals of:

  • Making mental health care accessible to more people,
  • Ensuring that mental health professionals’ pay is comparable to that of physical medicine practitioners, and
  • By ensuring comparable pay and boosting demand, attracting more individuals to pursue careers in mental health professions to increase the number of mental health providers.

The proposed regulations still need to be put out for public comment and will likely be changed as the agencies get to work writing the final version.

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Uncategorized

Budgeting and Prepping for Open Enrollment

If you are running a business, you need to get an early start on preparations for your small group health plan open enrollment, particularly now as so much confusion abounds about the state of health insurance in the country.

With recent new regulations, options have changed for employers and you need to stay focused on maximizing your outcomes within your budget. You also want to drive participation, as that too can reduce overall rates for you.

Understand your options

Familiarize yourself with the various options that you have:

Health maintenance organizations – HMOs are typically the least expensive plans because they require enrollees to visit their personal physicians and tightly controlled in-network doctors. Going out of network is discouraged with high out-of-pocket costs. An HMO will usually only pay for care outside of the plan network when it’s an emergency or another unusual situation.

Preferred provider organizations – PPOs contract with hospital and provider networks to help control costs. While they will cover services outside of the network, the cost is higher than going in-network. PPOs are more flexible than HMOs, but premiums are often higher – as are some out-of-pocket costs.

One difference from an HMO: PPO enrollees don’t need a referral from their primary care physician if they are going to a specialist.

Point of service – A POS health plan is a mix between an HMO and a PPO-style health insurance policy. With a POS health plan, your staff has more choices than with an HMO, but they will usually need to select a primary care provider and need a referral to see a specialist.

Exclusive provider organizations – The EPO is also a PPO-HMO hybrid. Enrollees need to receive covered services inside of the network, except in a few instances, but they can also see a specialist without a referral from their primary care doctor. 

Besides the above, you will also need to decide if you want to reduce the premium for your organization and staff by offering high-deductible health plans. These plans can be either an HMO or a PPO, but they have the same feature of having a high deductible that needs to be met before benefits really kick in.

For 2024, for a plan to qualify as an HDHP the deductible must be at least $1,400 for an individual and $2,800 for a family. The average HDHP deductible is $2,349, but many plans exceed $3,000.

These plans usually have an attached health savings account to which your workers can transfer funds pre-tax from their paychecks to use for paying deductibles, copays and other medical expenses.

Check your budget

In 2022, group health insurance premiums averaged $659 a month ($7,911 annually) for single coverage, and $1,872 per month – or $22,463 per year – for a family, according to a survey of employers by the Kaiser Family Foundation.

You can reduce your premium outlays by imposing higher premium cost-sharing requirements on your staff. But, make sure you stay within the guidelines of the Affordable Care Act, which requires that plans be “affordable,” meaning they cannot cost more than 9.12% (in 2023) of an employee’s household income. This number changes each year, and the percentage has not yet been set for 2024.

Be mindful, though: if you try to unload too much of the premium on your workers, you may see people leave your plan and, if too many decide not to participate, you may not be able to offer the policy. Try to offer plans that will be valuable to your staff as well as affordable.

Maximizing enrollment

If you want to find out what your employees expect from their benefits, you can run a survey of all your staff. It can cover the basic elements of the plans you are going to choose from, and ask them which ones they would find most valuable. Then, move forward organizing your plan based on their response.

Your goal is maximum participation, and you can work with us to start disseminating materials and reaching out to those who may need plans explained to them. Give them some time to look the plans over. Employees want to know what changes are being made to their benefits packages in advance, so make sure you give them time to look through the offerings.

Next, plan to hold a meeting a month before open enrollment starts, in order to go over the plans and options with your staff, as well as any significant changes you’ve made.

During the meeting, highlight the value of each of the plans you are offering. Unfortunately, there will be those among your staff that haven’t really paid attention at all to the plan documents you gave them earlier.

Focus on the basics:

  • What each plan costs them.
  • What’s covered under the plan, and
  • When and how to use it.
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Uncategorized

Report: Accommodations for Disabled Employees Are Inexpensive

The Americans with Disabilities Act, now more than 30 years old, requires employers to make reasonable accommodations for employees with disabilities. Many employers may be concerned about the cost of making those accommodations. However, a recent government study shows that the costs are typically minimal or non-existent.

The report, from an office of the U.S. Department of Labor, shows that the median cost of an employee accommodation was $300. The data came from a survey of more than 3,500 employers taken between 2019 and 2023.

The employers were in a variety of industries and comprised sizes from small to Fortune 500. Each of them contacted the department for information about workplace accommodations, the ADA, or both.

The report’s key findings are:

  1. More than half of the contacts were from an employer trying to retain an employee. On average, these were employees who had been on the job more than six years, with an associate college degree or better, and who earned $18 an hour or more.
  2. Almost half the employers reported that the workplace accommodations cost them nothing. Another 43% reported incurring a one-time cost, and the median cost was $300. Only one out of 14 incurred ongoing annual costs, with the median cost at $3,750.
  3. The accommodations worked. More than two-thirds of the employers surveyed said that they were very or extremely effective. Another 18% found them to be somewhat effective.
  4. Employers enjoyed several direct and indirect benefits from the accommodations. The direct benefits included:
  • Improved employee retention
  • Increased employee productivity
  • Increased employee attendance
  • Reduced new hire training costs
  • Increased diversity
  • Reduced insurance costs
  • Better new hires.

Indirect benefits included:

  • Improved interactions with the employee
  • Safer workplace
  • Better workplace morale
  • Better interactions with customers
  • Better company productivity
  • Better overall attendance.

Successful accommodations

The report gave examples of successful employer accommodations involving:

  • Employees suffering fatigue from long COVID. One employer provided frequent short breaks. Another agreed to a four-day work schedule. Neither reported direct costs.
  • A visually impaired employee suffering eye strain from using a computer to write reports. The employer purchased $600 dictation software.
  • A health care worker suffering from anxiety and attention deficit hyperactivity disorder (ADHD) was distracted by co-worker and patient noise. The employer spent $250 on noise-canceling headsets.
  • A grocery store permitted a clerk to bring a service animal to work at no cost.
  • For $150, an employer provided a one-handed computer keyboard for an employee who had lost the use of a hand.

Takeaways

Reasonable accommodations for disabled employees may be less expensive than you fear.

With some flexibility and perhaps the outlay of small amounts of money, you can attract and retain valuable employees, make your business more productive, hold down workers’ compensation costs, and give your business a reputation as a great place to work.

Employers who need help designing accommodations should contact the Labor Department’s Job Accommodation Network. At little or no expense, you can gain an edge in the war for talent.

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Employers Expect Higher Premiums, Little to No Cost-Shifting

Employers who were surveyed for a new report expected that group health insurance premiums would increase 5.4% this year and at a faster clip in 2024 as inflation hits medical costs.

Employers said they are looking to manage growing group benefit costs without shifting costs to employees, as they realize that their staff are likely dealing with inflation in all facets of their lives, including their medical bills, according to Mercer’s “Survey on Health and Benefit Strategies for 2024.”

At the same time the labor market is still very tight, requiring businesses to continue offering attractive pay and benefit packages.

In fact, 64% of large employers (with 500 or more workers) plan to enhance their health insurance and well-being benefits to stay competitive for talent and to keep their staff happy, Mercer found.

With all that in mind, the report advises that employers will have to prepare for higher premium outlays and be creative in how they try to control costs.

“Employers looking to enhance benefits will need to do it carefully — not by adding bells and whistles, but by looking for opportunities to add value,” Mercer wrote in its report.

“That might mean filling gaps in current offerings with more inclusive benefits. It might mean revisiting time-off policies to give employees more flexibility. It definitely means paying close attention when employees say they need better support for their mental health.”

Whether to pass on higher costs

Besides the 64% of employers who said they would boost their benefits in 2024, 28% said they would not but have done so in the past two years. When asked if they would pass on the additional health insurance costs to their employees:

  • 45% said they would not shift any of the higher costs to employees.
  • 24% said they would up employee cost-sharing, but by less than the projected increase.
  • 27% said they would raise cost-sharing enough to keep pace with the projected cost increase.
  • 3% said they would raise cost-sharing enough to reduce the projected cost increase.

Employers are also taking different steps to make health insurance more affordable for their staff, particularly those at the lower end of the wage spectrum:

  • 15% of employers offer free employee-only coverage in at least one plan.
  • 18% use salary-based contributions to premiums, with lower-wage workers paying less than their better paid colleagues.
  • 39% offer a medical plan with no or a low deductible or cost-sharing (e.g., copay plan).
  • 6% make larger health savings account contributions to lower-wage staff to make their high-deductible health plan more affordable.

Other strategies

Besides those steps, employers are using a number of other strategies to slow health

cost growth without shifting cost to employees, including:

  • Programs aimed at enhancing the management of specific health conditions like diabetes and heart disease. Programs also include pain management, which can reduce medical costs and improve patient outcomes.
  • Focused actions to manage the cost of specialty prescription drugs. Strategies include making plan design changes to steer patients to specialty pharmacies, focusing on the site of care and seeking support from drugmakers to reduce enrollee out-of-pocket costs and demanding integrated managed care from health plans and the pharmacy benefit managers with which they contract.
  • Increasing virtual care offerings, beyond standard telemedicine. Already 64% of employers offer virtual programs for a broader range of care, such as behavioral health care, specific care areas like diabetes or musculoskeletal issues, specialty care like dermatology or reproductive care and primary care.
  • Steering enrollees to quality, high-value care via high-performance networks, centers of excellence, etc. These approaches deliver savings by focusing on the quality and efficiency of a provider network.
  • Limiting plan coverage to in-network care only (in at least one plan).
  • Strategies focused on utilization of high-quality primary care (e.g., advanced primary care).

The takeaway

As we enter a period of higher premium increases along with a competitive job market for employers, businesses will need to be creative when addressing costs and offering the benefits that their employees desire.

The three main takeaways from the Mercer report are:

  • Be prepared for faster premium increases in the coming years.
  • Find benefits that will add value for your employees, and not bells and whistles they don’t care about.
  • Consider network and telehealth strategies to help reduce overall costs.
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Uncategorized

More Insurers Pushing Virtual Care for Cost Savings

More and more insurers are expanding the use of telemedicine, just as a new study shows promising cost savings of up to 25% from virtual care when implemented properly.

The latest insurer to announce an expansion of its telemedicine offerings is UnitedHealthcare, which recently said it would eliminate out-of-pocket costs for its 24/7 Virtual Visits program for eligible members enrolled in fully insured employer-sponsored plans, starting July 1.

Besides making care more convenient and reducing costs for its enrollees, the insurer is hoping more access to virtual care will encourage earlier visits, which can reduce the risk of complications or need for emergency care later on.

Other insurers have also been working with their network providers to increase the use of telemedicine in the hopes of making care more accessible for patients and reducing overall costs.

And as more providers, patients and insurers gain an understanding of the breadth of services that can be handled via telemedicine, and the limits, patients will likely make more use of telemedicine.

This is good news for patients and employers, who may end up benefiting from lower plan costs, as well as lower out-of-pocket expenses for employees.

Most large health carriers have adopted some form of telemedicine by either contracting with a tech provider to manage the interface or by purchasing a tech platform.

As well, a growing number of established insurers are starting to sell “virtual-first” plans, often with a zero-dollar deductible and no copays for all visits with virtual-only providers.

Potential savings and other benefits

In a study published in the American Journal of Managed Care, researchers at the Perelman School of Medicine at the University of Pennsylvania found that average per-visit costs for hospitals in Penn Medicine’s OnDemand telemedicine program were 23% less than for in-person visits.

Average per-visit costs in the telemedicine program were $380, compared to $439 for in-person primary care offices, emergency departments or urgent care clinics costs.

“The conditions most often handled by OnDemand are low acuity — non-urgent or semi-urgent issues like respiratory infections, sinus infections, and allergies — but incredibly common, so any kind of cost reduction can make a huge difference for controlling employee benefit costs,” the study’s lead researcher, Krisda Chaiyachati, MD, said in a press release.

The study’s authors noted that there are other benefits besides just cost savings.

The program made care easier, which the study’s senior author, David Asch, professor of Medicine, said promotes more care. Since telemedicine is so convenient, people “who might otherwise have let that sore throat go without a check-up may seek one when it’s just a phone call away,” he explained.

Telemedicine services expanding

Before the COVID-19 pandemic uptake of telemedicine had been slow, but usage increased dramatically when hospitals closed to all but emergency cases and as many people were afraid to see their doctors in a health care setting in fear of contracting the disease.

Additionally, Congress in March 2020 enacted legislation that expanded telehealth access for Medicare beneficiaries, leading to a rapid uptake of virtual care.

All that uptake has forever changed perspectives on medical care delivery and the number of visits that can be handled via telemedicine is growing. Initially, hospitals were using it for primary care visits. While that is still the main type of visit for which patients are using telemedicine, uses are expanding to include:

  • Urgent care,
  • Therapy for behavioral health care visits,
  • Specialty care, like dermatology,
  • Chronic conditions management, and
  • Wellness screenings.

As this technology matures, the number of services that can be handled via video or phone will continue to increase.

Virtual-only plans legislation

Waivers created by the March 2020 CARES Act, an economic rescue package in response to the pandemic, have allowed individuals to choose and buy the use of telehealth services outside of their high-deductible health plan without affecting their health savings account eligibility. Last year, the wavier was extended by legislation through Dec. 31, 2024.

Bipartisan legislation in Congress, the Telehealth Benefit Expansion for Workers Act, would make these waivers permanent and allow employers to offer stand-alone plans to their workers.

It’s envisioned that these stand-alone telehealth benefits would operate similarly to dental and vision benefits, remaining separate from health care plans. They would be another tool for reducing overall medical costs.

According to the bill’s authors, allowing employers to offer stand-alone telehealth coverage would:

  • Help alleviate provider shortages,
  • Increase access to mental health services,
  • Reduce the cost of care for patients by widening provider networks, and
  • Provide timely access to medical care to individuals in rural areas.

The bill also would include telehealth access for part-time, seasonal and contracted workers.

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Uncategorized

ACA Employer Mandate Penalties on the Rise

The penalties for not offering health insurance to your employees if you have 50 or more full-time or full-time equivalent employees in violation of the Affordable Care Act are set to rise again next year.

The IRS has increased the fines for employers that fail to provide health insurance for their workers under the ACA’s employer mandate, as well as for failing to provide coverage that is affordable or coverage that provides “minimum value.” The penalties will apply to plans that start on or after Jan. 1, 2024.

The way most employers find out that they may have violated the employer mandate is if they get a 226-J letter from the IRS, which would be prompted by one of your employees receiving premium subsidies after purchasing coverage on a government-run exchange.

Under the mandate, employers with 50 or more full-time or full-time equivalent workers are required to offer 95% of them affordable health coverage. There are two different penalties for violations:

The A penalty

This is levied on an applicable large employer (ALE) for failing to offer minimum essential coverage to 95% of full-time employees and their dependents and if just one of those employees receives a subsidy when they buy insurance on a government-run ACA marketplace.

New penalty amount:$2,970 per employee, up $90 from 2023.

This penalty can be especially damaging. While it is not assessed for the first 30 employees if triggered, it applies to all of the employer’s full-time employees, meaning costs can quickly add up.

The B penalty

This fine is levied if an applicable large employer fails to offer coverage that is affordable and/or fails to provide minimum value, and just one full-time employee receives subsidized coverage through the marketplace.

Coverage is deemed unaffordable if an employer fails to offer at least one self-only health plan where any employee’s share of the premium does not exceed 9.12 % (the 2023 threshold) of their household income. The affordability threshold has not yet been announced for 2024.

In order to provide minimum value, an employer-sponsored plan must cover at least 60% of average costs and provide substantial coverage for inpatient and physician services.

New penalty amount: The annual penalty for a type B infraction rises to $4,460 per employee in 2024, up $140 from this year. Typically, this penalty is broken down into monthly increments depending on how long an employee receives subsidized coverage on an exchange.

The takeaway

While you no doubt already offer coverage to your employees if you’re an ALE, it’s important to pay attention to next year’s affordability threshold.

Any downward change means you have to recheck to ensure that at least one of your plans offers coverage deemed affordable to your lowest-paid employee.

Also, be especially mindful during the new-employee onboarding process to ensure they are properly identified and offered coverage.

If the IRS suspects you are out of compliance, it will send you a 226-J letter. You’ll be glad you have all your paperwork in order if you receive one of these letters.

The 226-J letters are also sent to employers if they make mistakes on their Form 1095-C.

If you receive one of these letters, contact us for assistance.

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Uncategorized

Insulin Makers Cap Prices for Insured Individuals

Three drugmakers, which account for roughly 90% of the insulin in the U.S. market, in March 2023 announced that they will cap the cost of insulin for people with private insurance plans.

That includes those on employer-sponsored group health plans and plans purchased on a government-run exchange. The changes mean some or many of your employees will see significant reductions in their pharmaceutical outlays, particularly if they have high copays or deductibles.

The moves come after the Inflation Reduction Act, signed into law in 2022, capped out-of-pocket insulin costs for seniors on Medicare at $35 per month. However, the law does not apply to people younger than 65 who also need insulin.

According to the Centers for Disease Control and Prevention, an estimated 28.7 million people — or 28.5% of the population — were living with diagnosed diabetes in 2022, and chances are high that most employers have workers with the condition. Out of that population, 8.4 million use insulin, according to the American Diabetes Association.

Eli Lilly was the first company to announce, on March 1, that it would cap the cost of all its insulin products at $35 per month, with immediate effect.

On March 14, Denmark-based Novo Nordisk announced that it would lower the U.S. list price of some of its insulin products by up to 75%, putting the fast-acting insulins NovoLog and NovoLog Mix 70/30 at $72.34 for a single vial and $139.71 for a pen. The new pricing will take effect Jan. 1, 2024.

Finally, Sanofi two days later announced that it would cap the out-of-pocket cost of its most popular insulin, Lantus, at $35 per month for people with private insurance. This change also takes effect Jan. 1, 2024.

These changes will bring relief to millions of Americans, particularly after years of insulin makers jacking up their prices. A report on National Public Radio in 2022 noted that the cost of insulin had increased 600% in the past 20 years.

Another report found that some people with high-deductible health plans were paying $350 to $600 a month, for a medicine that costs $6 to make.

Next steps

There are moves afoot to force the industry to cap the price at $35 a month. Legislation has been introduced in Congress that would force drugmakers to cap their insulin price at that level.

You may want to circulate this news with your employees, so they are aware of the new pricing. A 2022 analysis by the Kaiser Family Foundation found that most people on private health insurance would benefit:

  • In the individual market, the median cost health plan enrollees pay for insulin is $62 per month. One-quarter of them pay $105 a month.
  • In the small group market, the median cost health plan enrollees pay is $54 per month, while one-quarter pay $83.
  • In the large group market, the median cost health plan enrollees pay is $54 per month, and one-quarter pay $77.
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