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Remote Workers Find Benefits Selection Difficult

by Inoventive Solutions
October 14, 2022

A new survey has found that remote workers have a more difficult time choosing benefit plans that are the right fit for them compared to their colleagues who work on-site or have hybrid remote-office schedules.

The poll by MetLife found that nearly half of remote workers struggle to understand their employee benefits. As a result, these workers may end up choosing plans that do not meet their needs and they may also spend more time on trying to choose their benefits.

The survey results also reflect the challenges that employers continue to face in meeting their employees’ increasingly diverse needs and that they need to improve their communications, particularly with staff who are working remotely full-time — and especially if they are in another state.

It’s crucial that employers get this right in light of the importance these workers place on their employer-sponsored benefits.

The survey of 1,000 full-time employees at companies with at least two employees found that 61% of workers said that employee benefits are a significant part of what’s keeping them at their company. Those figures were even higher for work-from-home caregivers with children (72%) and millennial and Gen Z workers (67%).

Widespread concern

There are a number of benefit issues that concern remote workers. The survey found that:

  • 45% of remote workers are struggling to understand their employee benefits, compared to 29% of their colleagues that work on-site.
  • 55% of remote workers are highly anxious about their finances, compared to 46% of hybrid and on-site workers.
  • 55% of telecommuters spend over one hour per week worrying about their benefits, compared to 37% of on-site and hybrid employees.

In fact, 65% of remote workers said that a better understanding of open enrollment would help make them feel more financially secure. That’s bad news for those employees, as their lack of knowledge can result in choosing the wrong plan, which may end up costing them more than necessary. As a result:

  • Remote workers are twice as likely to say they enrolled in the wrong type of benefits last year.
  • 57% of remote workers require more information to make the right benefit choices, compared to 47% of hybrid and on-site workers.

What you can do

Without clear communication, employees are less likely to understand and utilize their benefits.

Set up virtual information sessions where plan options, including key defining details and specific benefits, are outlined and covered clearly.

Depending on how many employees you have, you may want to consider offering a few sessions for them to choose from, to ensure they can all make it. If not, record the original session for employees to watch later if they can’t attend.

Also, you should make sure your human resources department is available for one-on-one questions. Some of your employees may need additional help in choosing a plan. You may want to consider offering phone or video chat meetings for them in case you need to show them documents and graphics.

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Group Health Premiums Set to Rise 6.5%: Poll

by Inoventive Solutions
August 31, 2022

U.S. employers can expect to see their group health insurance premiums climb an average of 6.5% in 2023 from this year, according to a new study.

Economic inflationary pressures will push the average premium cost per employee to about $13,800, compared to about $13,020 for 2022, according to the study by professional services firm Aon.

While the expected increase is higher than the average 3.7% rises in 2021 and 2022, it’s still lower than the current 9.1% increase in the Consumer Price Index, a key measure of inflation.

One of the reasons costs are not increasing as much as inflation is that health insurers lock in pricing with health care providers for multi-year contracts. As a result, Aon predicts that inflationary pressures will take a few years to be reflected in health care costs after current contracts lapse and new ones are negotiated.

It’s unclear how long it will take for inflation to fully be reflected in health care costs, though it will likely take a few years until most insurance contracts have been renegotiated, according to a Kaiser Family Foundation and Peterson report.

What’s happening

In 2020, the first year of the COVID-19 pandemic, health care usage dropped dramatically as many people put off routine health care to avoid going to a provider and risk infection. Also, many providers stopped doing non-emergency care like knee replacements.

In all, health insurers paid out far less in claims in 2020 than they did the year prior, even though many people were being hospitalized after contracting the coronavirus.

Since then, medical care has returned to the same pre-pandemic level, but with a twist: All those skipped procedures in 2020 and 2021 are now being performed and most hospitals have backlogs for many procedures like colonoscopies and cancer screenings.

Other contributing factors adding pressure on health care trends include:

New technologies — This includes new technologies providers are using, as well as investments in telemedicine by both health insurers and providers.

Catastrophic claims — The severity and cost of catastrophic claims continues increasing substantially.

Chronic conditions — More Americans are battling chronic conditions, which can quickly drive up their cost of care.

Blockbuster drugs — Pharmaceutical companies are developing groundbreaking, yet costly drugs that can cost tens of thousands of dollars a year.

Specialty drugs — Doctors are prescribing more specialty drugs, which also have high price tags.

Employers curtail cost-shifting

As costs have increased, employers seem to be absorbing most of the premium increases and have grown reluctant to pass on more of the premium cost to their employees.

On average, employers subsidize about 81% of the plan cost, while employees pay the remainder. According to the Aon report, in 2022, when the average annual group health insurance premium increased 3.1% to $13,020 per employee, from $12,627 in 2021, employers took on more of the premium burden:

  • Employers on average are paying out $10,500 for their portion of the premium, up 3.7% from $10,123 in 2021.
  • Employees’ share of the premium increased only 0.6% during that same time to $2,520.

Meanwhile, overall employee costs (premiums and out-of-pocket expenses) increased 2.6% from 2021 to 2022:

  • As mentioned above, employees’ share of premium increased 0.6% to $2,520.
  • Average employee out-of-pocket costs (deductibles, copays and coinsurance) jumped to $1,892 in 2022, up 5.1%.

Looking ahead

When insurers quote your group coverage, they look at your claims experience and the costs your employees incur overall. Employees with chronic conditions can quickly increase those costs.

As a result, many employers are focused on helping their workers with chronic and complex conditions rein in those costs. One way is to offer wellness plans that help them improve their overall health, such as smoking cessation, exercise and weight loss programs.

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Two-thirds of Small Firms Are Boosting Their Benefits Packages: Poll

by Inoventive Solutions
August 17, 2022

Now more than ever, employers need to step up their employee benefits game beyond providing group health insurance.

Thanks to the Great Resignation, employees are demanding more from their current and prospective employers. And those that don’t deliver lose employees or have trouble attracting new talent, as long-time colleagues head for the exits.

Good pay and a robust health insurance package still win the day, but employers are having to do more to sweeten the pot, according to a new survey by MetLife.

One of the biggest factors affecting American employees is stress and burnout and the survey reflects these sentiments, with respondents saying they all want more flexibility in their work.

By enhancing benefits packages with an emphasis on physical, mental, financial and social well-being, employers can channel these concerns into action. In so doing, they’re more likely to promote resilience and productivity as the COVID-19 pandemic’s challenges continue, MetLife says.

Seven in 10 employees surveyed told MetLife researchers that a flexible, customizable benefits package would increase their loyalty to their employer.

Furthermore, smaller employers are ramping up their benefits package to attract talent: Two-thirds of all employers nationwide with fewer than 100 employees are planning to add non-medical benefits to their compensation mix.

‘Must-have’ benefits

The popularity of medical insurance is well established. And under the Affordable Care Act, employers with more than 50 full-time equivalent workers don’t have a choice: They must offer a qualified health plan to their employees working over 30 hours per week.

However, a number of other benefits are proving extremely popular — and many employees are considering these benefits “must haves,” and moving them to the top of the list when they consider their employers’ value proposition.

Among these must-have benefits:

  • Prescription drug coverage
  • 401(k)s or other retirement plans
  • Dental insurance
  • Life insurance
  • Vision care
  • Accident insurance
  • Long-term and short-term disability insurance
  • Accidental death and dismemberment insurance
  • Defined benefit pension plans
  • Critical illness insurance
  • Hospital indemnity insurance
  • Financial planning and education workshops
  • Cancer insurance
  • Legal services
  • Pet insurance

Find out what they want

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

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

Employers are using a number of strategies to gather information on which benefits employees will be more interested in. Here’s what they are doing to get the answers they need:

  • Employee surveys: 61%
  • Analysis of needs based on employee demographics: 46%
  • Input from employee resource groups: 35%
  • Focus groups: 26%
  • Other sources of information: 46%

Best practices 

The study’s authors recommend employers consider the following measures:

  • Have a spectrum of non-medical benefits that are relevant for employees in every age group that works for you.
  • Recognize the importance of supplemental benefits such as accident and critical illness insurance that provide vital “gap” coverage. If many employees are living paycheck to paycheck, this could be invaluable in the event of a crisis in their lives — for very little in premiums.
  • Beef up your communication and education efforts, both in person and via technology. Partner with an enrollment communication firm.
  • Integrate financial wellness into your employee wellness plan. Consider workshops, lunch & learns, brown-bag events and other forms of outreach.
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Importance of Educating Gen Z Workers on Benefits

by Inoventive Solutions
July 13, 2022

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

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

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

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

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

School them on health insurance

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

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

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

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

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

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

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

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

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

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

Financial wellness

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

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

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

Continuing education

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

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

The takeaway

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

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

"employee
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Pandemic Spurs Supplemental Benefits Uptake Among Workers

by Inoventive Solutions
October 26, 2021

A new study has found that in response to the COVID-19 pandemic nearly half of U.S. workers added one new supplemental health-related benefit on top of their group health coverage.

The 2021 “Aflac WorkForces Report” found that 44% of employees bought one additional benefit, with life insurance policies seeing the biggest uptake. The fact that so many workers decided to boost their supplemental health benefits reflects the profound effect the pandemic has had on people and how it has opened their eyes to the fragility of life.

“Anxieties over the past year brought questions about health coverage ― especially about whether current coverage is enough for workers and their families,” Aflac wrote in its report. “The survey found that employees sought ways to help offset the financial burdens they experienced, including through supplemental insurance.”

Interestingly, the largest uptake of these benefits was among millennial workers.

With the pandemic still not over and more people having seen the effects on friends, family and acquaintances, the report predicts that the trend will continue.

The most popular additional benefits

The percentages of workers who have purchased a voluntary benefit since the pandemic started:

  • Life insurance: 22% overall and 34% of millennial workers.
  • Critical illness insurance: 16% overall and 23% of millennial workers.
  • Mental health resources: 14% overall and 21% of millennial workers.
  • Hospital insurance: 14% overall and 21% of millennial workers.
  • Accident insurance: 12% overall and 19% of millennial workers.
  • Disability insurance: 10% overall and 16% of millennial workers.
  • Cancer insurance: 4% overall and 6% of millennial workers.

Overall views of supplemental benefits have also improved since the pandemic started. The survey found that:

  • One-third of employees say supplemental insurance is more important now due to the pandemic.
  • 51% of all American workers view supplemental benefits as a core component of a comprehensive benefits program.
  • 90% of employees believe the need for supplemental insurance is increasing.
  • 48% employees (and 63% of millennials) are highly interested in purchasing supplemental insurance to help cover the financial costs related to COVID-19 or other pandemics.

The takeaway

In light of these findings, it’s more important than ever that employers offer more than group health coverage and provide their workers with a slate of voluntary benefit offerings, many of which do not cost the employer much extra.

In fact, the study found that 70% of employers believe supplemental insurance helps them recruit employees and 75% say it helps with retention.

But keep in mind that may employees believe they already have enough coverage to meet their needs. Open enrollment is a prime time to educate them about the health-related expenses that group health insurance doesn’t cover, such as death benefits and long-term care.

One way you can put together a slate of offerings that your workforce needs and is interested in, is to conduct a study of your staff to see which options they would most prefer.  

And finally: Introduce your benefits consultant (in person or virtually) prior to or at the start of open enrollment. That way, employees become familiar with them and can be more comfortable asking questions about the various coverages they can choose from.

"unvaccinated
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Employers Mull Higher Health Plan Cost-Sharing for Unvaccinated Staff

by Inoventive Solutions
August 24, 2021

Some employers are considering a new incentive for their workers to get vaccinated against COVID-19: Charging them higher health insurance premiums if they don’t.

A recent brief from consulting firm Mercer reported that employers are looking at surcharging the health insurance premiums for employees who refuse vaccination for reasons other than disability or sincere religious belief. Many employers apply similar surcharges for employees who use tobacco.

The news comes as the Delta variant of the coronavirus that causes COVID-19 has sent infection rates soaring, with reports indicating that most new cases are occurring in people who have not been inoculated.

Employers may choose this option for a simple reason: The large costs of hospital stays and treatments for COVID-19 patients. When health plans incur large claim costs, they must either accept lower profits or make up the difference by spreading the costs among plan participants. Charging higher premiums penalizes vaccinated and unvaccinated employees alike.

The U.S. Equal Employment Opportunity Commission has said that it is permissible for employers to require workers to be vaccinated. However, many employers have been hesitant to take that step, fearing negative employee reactions, waves of resignations and bad publicity.

Freedom of choice

Surcharging insurance premiums for unvaccinated workers may be an appealing alternative for some employers. Rather than ordering employees to get vaccinated, they would leave them free to choose.

Those who would rather bear higher costs as a consequence of refusing a vaccine would be free to make that choice. In turn, vaccinated employees would not have to subsidize the health care costs of colleagues who make riskier decisions.

A Mercer spokesperson has estimated that any surcharges would be in the range of $500 to $1,300 per year.

Extra costs like that might induce reluctant workers to get the shots. If unvaccinated employees decide to get vaccinated in order to avoid a surcharge, the workplace should be safer and more productive. Absenteeism due to illness can negatively impact productivity.

The takeaway

Employers need to consider the following before implementing surcharges:

  • The EEOC has provided guidelines for employers wishing to offer vaccine incentives. Employers should stay within those guidelines.
  • Are the incentives necessary? They might not be in areas or workplaces where vaccination rates are already high.
  • The line between “encouraging” and “coercing” employees to get vaccinated is not well-defined. Employers should avoid imposing surcharges that could be viewed as coercive.
  • Some employees have pre-existing health conditions that make the vaccinations unsafe. Others seriously practice religions that forbid their use. Federal law requires employers to accommodate these workers.
"ACA"/
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HHS Proposes Higher Cost-Sharing Limits for 2022

by Inoventive Solutions
March 23, 2021

The Department of Health and Human Services has proposed cost-sharing limits that would apply to all Affordable Care Act-compliant health insurance policies for the 2022 policy year.

The ACA imposes annual out-of-pocket maximums on the amount that an enrollee in a non-grandfathered health plan, including self-insured and group health plans, must pay for essential health benefits through cost-sharing.

This means that health plans are not allowed to require their enrollees to pay more than the maximum in a given year for health services. 

The proposed 2022 out-of-pocket maximums are $9,100 for self-only coverage and $18,200 for family coverage. This represents an approximate 6.4% increase over 2021 limits. For 2021, the out-of-pocket maximums are $8,550 and $17,100, respectively.

Penalties to rise

Applicable large employers (ALEs) — employers with 50 or more full-time or full-time-equivalent workers who are required to offer their employees health insurance under the ACA — can face large penalties known as “shared responsibility” assessments if they have at least one full-time employee who enrolls in public marketplace coverage and receives a premium tax credit. There are two types of infractions with different penalty amounts:

The “play or pay” penalty — This can be levied when an ALE fails to offer minimum essential coverage to at least 95% of its full-time employees and their dependent children during a month, and at least one of its full-time employees receives a premium tax credit through a public marketplace.

The per-employee penalty will rise to $2,880 in 2022 from the current $2,700.

The “play and pay” penalty — An ALE can be hit by this penalty if it offers minimum essential coverage to at least 95% of its full-time employees but a full-time employee receives a premium tax credit because: (1) the employer-offered coverage is unaffordable or fails to provide minimum value, or (2) the employee was not offered employer-sponsored coverage.

For 2022, the maximum annual assessment for each full-time employee receiving a premium tax credit will be an estimated $4,320, up from the current $4,060.

"COVID-19
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EEOC Issues New COVID-19 Vaccination Guidelines for Employers

by Inoventive Solutions
February 16, 2021

The Equal Employment Opportunity Commission has affirmed that employers can mandate COVID-19 vaccines for employees, subject to some limitations.

The EEOC’s updated guidance offers direction regarding employer-mandated vaccinations, accommodations for employees who cannot be vaccinated due to a disability or sincerely held religious belief, and certain implications of pre-vaccination medical screening questions under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act.

Asking a patient pre-screening questions is a routine part of a vaccination. These questions may constitute a “medical examination” as defined by the ADA. An employer must be able to show that the inquiries are “job-related and consistent with business necessity” and that an unvaccinated employee could pose a direct threat to the health of others in the workplace.

The guidance does make clear that administration of a COVID-19 vaccination to an employee itself does not constitute a medical examination for the purposes of the ADA.

Urging employees to get the vaccine voluntarily or requiring them to submit proof that a non-contracted third party (physician, pharmacist or public health center) administered it may be a better alternative with fewer legal complications.

Reasonable accommodations

Some employees may be unable to get the vaccine for health or disability reasons. Other employees may have sincere religious objections to getting inoculated. In both cases, employers must make reasonable accommodations for the employees. The law permits them to exclude these employees from the workplace only if no reasonable accommodation is possible.

Employers and employees might not agree on what “reasonable accommodation” means. For this reason, employers should consult with human resources experts and carry employment practices liability insurance. Expert advice will help avoid these kinds of conflicts, and the insurance will pay for legal defense and settlement of resulting employee lawsuits.

Requiring employees to get vaccinated will also have implications for the employer’s obligations under state workers’ compensation laws. On the positive side, a vaccinated workforce should reduce the employer’s exposure to claims that an employee got the virus on the job.

On the negative side, some employees may experience adverse side effects. Since the vaccine would be a job requirement, the employee could make a claim for workers’ comp benefits due to the adverse reaction. In addition, the employer may have to pay the worker for the time spent getting vaccinated and for the cost of the injection.

What you can do

Employers can protect themselves by following these guidelines:

  • Follow federal and local health guidelines for the vaccine.
  • Vary the requirements depending on work conditions and locations, such as requiring vaccines for those who regularly interact with the public but making them optional for remote workers.
  • Accommodate employees unable to get the vaccine or resistant to it, to the extent you reasonably can without endangering other employees or the public.
  • Apply the requirements consistently to all employees.

No one wants to catch or spread this virus. Employers can help halt the spread by thoughtfully addressing the issue of vaccinating employees.

"Affordable
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Trimming Hours to Avoid Employer Mandate Can Land You in Hot Water

by Inoventive Solutions
February 9, 2021

Ever since the Affordable Care Act was enacted, critics of the law have said that employers would cut staff or reduce workers’ hours to avoid coming under the employer mandate requiring them to provide coverage for their staff.

But employers that decided to go that route could find themselves in a costly legal trap thanks to precedent-setting case that has been cited often by judges when confronted with challenges. 

Workers at Dave & Buster’s, a restaurant chain, in July 2015 filed a lawsuit in the Southern District of New York alleging that the national restaurant chain reduced their hours to keep them from attaining full-time status for the purpose of avoiding the requirement to offer them health coverage under the ACA’s employer mandate.

In February 2016, the federal judge in the case, in declining the employer’s motion to dismiss the case, cited its likely breach of the Employee Retirement Income Security Act (ERISA), which prohibits employers from interfering with a worker’s right to benefits.

This case is significant because many other employers have implemented similar strategies striving to limit work hours for certain groups of employees for the purpose of avoiding penalties under the ACA.

Some background

The ACA’s employer mandate generally requires large employers (those with 50 or more full-time workers or full-time equivalent employees) to offer affordable and minimum value health coverage to their full-time employees (employees who regularly work an average at least 30 hours per week).

Employers are not generally required to offer coverage to employees working less than 30 hours per week on average.

Since the employer mandate took effect, many employers have been moving employees to part-time status to avoid triggering penalties under the employer mandate. 

Why the case is important

The Dave & Buster’s employees alleged that the company violated ERISA by cutting their hours. They cited Section 510 of ERISA, which prohibits employers from discriminating against any participant or beneficiary for exercising a right under ERISA or an ERISA benefit plan. 

The workers alleged that by reducing employees’ hours to keep them below the 30-hour weekly average to qualify as a full-time employee, Dave & Buster’s interfered with the attainment of the affected employees’ right to be eligible for company health benefits.

Dave & Buster’s in October 2015 filed a motion to dismiss the case, but the Southern District of New York federal judge denied the motion in February 2016.

The law firm of McDermott Will & Emery in its blog highlighted the importance of the decision, stating, “The opinion focuses on ERISA Section 510 and holds that the plaintiff has a viable claim that reducing her work hours was done for the purpose of interfering with her right to benefits under the company health plan.

“Second, the opinion finds that the complaint successfully alleged the employer’s ‘unlawful purpose’ and intention to interfere with benefits, pointing to allegations that company representatives publicly stated that they were reducing the number of full-time employees to avoid ACA costs.” 

The law firm noted that the decision has given plaintiff’s attorneys a model for filing similar complaints when employers reduce hours to avoid their obligations under the ACA.

It also noted that if judges in other cases deny employers’ motions to dismiss cases, it will put the employer in a more difficult position because the employees’ attorneys will be able to take discovery and depositions, and to compel document production.

Any signs or proof of reducing hours to avoid their obligations under the ACA will make defending the case even more difficult, McDermott Will & Emery wrote.

If you have trimmed hours to avoid the employer mandate, or if you are contemplating doing so, it’s best that you first discuss these plans with your company lawyer.

"employee
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Changes for 2021 Summary of Benefits and Coverage

by Inoventive Solutions
January 26, 2021

There are new Summary of Benefits and Coverage notice requirements for health plans starting with the 2021 coverage year.

The requirements, released by the Department of Labor, have new model templates, new instructions and new information that affects the coverage examples that are required to be in SBC documents that employers with group health plans must distribute to their employees.

Under the Affordable Care Act, all non-grandfathered health plans are required to provide enrollees and prospective applicants an SBC, which is essentially a synopsis of the plan’s coverage and benefits. It must be produced in a specific format, contain specific information, and be written in a way that is easily understood.

Here are the changes that were made to the SBC template for plans that started on or after Jan. 1:

Coverage example

The coverage examples that appear on the last page of the document have been modified to reflect changes in the cost of medical services that occur over time due to inflation and other factors:

  • “Managing Joe’s Type 2 diabetes” (diabetes example): The total amount of expenses incurred for “Joe” has decreased.
  • “Mia’s simple fracture” (fracture example): The total amount of expenses incurred by “Mia,” who visited the emergency room for a simple fracture, has increased.
  • “Peg is having a baby” (maternity example): The costs incurred during “Peg’s” hospital stay have been changed to remove separate newborn charges. The deductible line of the example should now match “your deductible amount” (if applicable).

Minimum essential coverage

Under the entry for minimum essential coverage, the template has been revised to reflect the elimination of the individual mandate penalty, which was repealed effective Jan. 1, 2019.

The entry now indicates that individuals eligible for certain types of minimum essential coverage may not be eligible for a premium tax credit under the ACA marketplace.

Uniform glossary

The uniform glossary has been updated to remove references to the individual mandate penalty.

What to do

If you offer group health plans to your employees, you are a plan sponsor and thus required to distribute SBCs to staff who are eligible for coverage during open enrollment. The SBC must also be given to new hires within 90 days of hiring for mid-year enrollment. 

If you don’t have your latest SBC, you can contact us or your health insurer. The insurer is obligated to provide all covered employers with updated SBCs after the Department of Labor and the Department of Health and Human Services release changes to templates.

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