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Helping Your Employees Find the Right Plan for Them

by Inoventive Solutions
October 28, 2025

Studies have found that nine out of 10 employees opt for the same benefits every year and that around a third of workers don’t fully understand the group health plan benefits they are enrolled for.

Staying in the same plan after year can be a waste of money if someone is in the wrong plan for them. And not understanding benefits can lead to wasted money as well, as workers often skip necessary appointments, check-ups and treatment regimens for chronic conditions, which in turn puts their health at risk.

As coverage has grown in complexity over the past decade, it’s important that you provide the resources for your employees to choose the health plan that is best for them. Here are three tips that will help them get the most out of their benefits.

Don’t skimp on explaining

While some employees’ eyes are bound to gloss over while someone is explaining the various plan options, their networks, their copays, deductibles and more, it pays to take the time to explain them step by step.

That means breaking the benefits down to the basics in language anyone can understand. Avoid getting bogged down in health insurance jargon and keep it simple. The simpler the better.

Don’t think of it as talking down to your employees, because there’s a good chance some of them are not familiar with how health coverage works. Encourage questions, by telling them there are no stupid questions. Invite employees to speak one-on-one with your benefits point person if they have questions they’d rather ask privately.

Make benefits communications all year long

When the new year starts and open enrollment is in the mirror, most employers don’t reach out to staff until a few weeks before the next year’s enrollment period starts.

Plan now for regular benefits communications throughout next year. Send them e-mails and materials during the course of the year that remind them to consider how their current coverage is measuring up to their needs.

This is especially important if someone’s health situation changes. They may be looking to make a change during the next open enrollment, and feeding them periodic memos about their coverage can help them educate themselves and prepare.

Communications could include explainers about cafeteria plans, health savings accounts, how to use their health benefits wisely, and more.

Know your crew

After open enrollment, run a report looking at what plans your employees are signed up for and see if they are concentrated in certain plans. Many employees when choosing health plans ask their co-workers, which often leads to them choosing a plan that is not optimum for them since there are many factors that may vary, including:

  • Their age.
  • Whether or not they are married.
  • Whether or not they have children.
  • Their health situation.

That’s why it’s important to run some analytics on your employees’ health plan choices. We can work with you to make sure that they are in the right plans and identify what might be a better alternative for them.

For example, in many cases, the younger and healthier someone is, the best choice may be a high-deductible health plan with lower premiums, tied to an HSA. Older employees and those with health conditions — those who are more likely to use medical services and be on medication — may need a plan with a lower deductible.

The takeaway

It benefits both your employees and you if your employees are in the appropriate plan for their life and health situation.

Fortunately, you can ensure that they understand their benefits by understanding their needs and helping them learn about their benefits throughout the year.

"Cancer
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Cancer Care Costs Surge for Group Health Plans

by Inoventive Solutions
October 21, 2025

As cancer rates rise among working adults, treatment has become one of the fastest-rising expenses in employer-sponsored health plans, according to a new survey.

The survey by the International Foundation of Employee Benefit Plans (IFEBP) found that 86% of employers have seen their cancer care spending increase over the past year, with a median rise of 11%, making it one of the most significant contributors to overall health care cost growth.

As more employees get diagnosed with cancer, which in turn increases the cost of care for employers, they are increasingly turning to strategies that direct plan members to high-quality, cost-efficient providers and care facilities.

What’s driving the trend

Employers report that cancer-related costs are increasing due to a mix of:

Expensive specialty drugs — Many of the newest cancer drugs can cost $20,000 to $40,000 per month, while gene and cell therapies can top $1 million per course. Even with negotiated network discounts, the compounding cost of these treatments is straining plan budgets.

New treatment technologies — New high-cost therapies like immunotherapies and gene-based treatments are regularly coming on line.

A higher number of working-age adults being diagnosed with cancer — New cancer diagnoses are expected to exceed 2 million cases in 2025, with rising rates among women under 50 and cancers such as colorectal, breast and cervical appearing more often in younger age groups.

More people are surviving cancer — Employees and their dependents are entering treatment phases earlier and remaining in survivorship programs longer, adding sustained costs for employers.

How employers are responding

Employers are increasingly turning to steerage techniques that direct plan members to high-quality, cost-efficient providers and care pathways. According to IFEBP, the most common approaches include:

  • Nurse navigators (63%) to help employees coordinate complex care.
  • Second-opinion programs (58%) to validate treatment plans.
  • Centers of excellence (42%), which offer bundled, value-based pricing.
  • Treatment center networks (24%) and virtual care clinic vendors (18%).
  • Value-based contracts (17%) and point-of-care testing (15%).

Among employers using these strategies, the primary goals are:

  • Improving outcomes (66%),
  • Offering personalized support (59%) and
  • Negotiating lower prices (33%).

Nearly a third is experimenting with alternative payment models such as shared-savings or bundled-rate arrangements that tie reimbursement to results rather than the volume of care.

Prevention and early detection

Experts say early detection offers the greatest potential to control both costs and outcomes. However, only about half of employees receive annual preventive care, and a significant portion of catastrophic cancer claims is linked to individuals who skipped routine screenings.

Employers can help by:

  • Promoting annual preventive exams and age-appropriate cancer screenings.
  • Covering or incentivizing genetic and biomarker testing for at-risk employees.
  • Incorporating AI-assisted diagnostics and at-home testing options for early detection.
  • Providing educational campaigns on modifiable risk factors such as smoking, obesity and inactivity.

To manage this, benefit professionals are urged to take a comprehensive, life-cycle approach from prevention and early screening to treatment navigation and survivorship care. As Julie Stich, IFEBP vice president of content, noted, employers must “offer the most effective cancer care treatments while also exploring cost-control techniques.”

"Voluntary
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Voluntary Benefits Are No Longer Optional

by Inoventive Solutions
October 14, 2025

With health insurance costs continuing to climb, many employers are finding that standard medical coverage alone doesn’t offer enough financial protection for their staff.

Rising deductibles, higher out-of-pocket maximums and the soaring cost of care are pushing workers to look for other ways to fill the gaps. Employers can step in to meet that need with voluntary benefits.

Once considered optional add-ons, voluntary benefits such as accident, hospital indemnity, critical illness, group life, dental and vision insurance are increasingly becoming essential parts of a well-rounded benefits package. Wellness programs, employee assistance plans and financial counseling options are also now viewed as integral to overall well-being.

A shift in expectations

Prudential’s “2025 Benefits and Beyond” study found that nearly a quarter of employees expect these voluntary benefits to be included as part of a modern workplace offering. But often, employers are not providing the benefits that employees say they need. The poll found that 86% of employers say their benefits are modern, but only 59% of employees agree.

This discrepancy has started to resonate with employers. As a result, 70% of employers plan to make changes to their benefits offerings within the next two years, with 22% expecting significant overhauls.

Employees say their biggest concerns are:

  • Saving for retirement (45%),
  • Covering everyday expenses (44%),
  • Paying for housing (29%), and
  • Simply making it from paycheck to paycheck (26%).

When a single medical event can upend financial stability, benefits that offer supplemental protection can provide an important financial backstop and save an employee from financial disaster.

Why voluntary benefits matter now

Voluntary benefits provide cost-effective coverage options that protect employees from the unexpected.

For example:

  • Accident, critical illness and hospital indemnity policies help offset out-of-pocket costs that major medical insurance doesn’t cover, such as co-pays, deductibles, transportation, lodging and lost income during recovery.
  • Dental and vision plans promote preventive care that can reduce larger medical costs over time.
  • Wellness and mental health programs, another key element of today’s voluntary benefits landscape, help employees manage stress and anxiety that affect productivity and retention. (In Prudential’s research, 63% of employees said they have mental health concerns for themselves or a family member, yet only about the same share feels their benefits help them manage overall well-being.)

Benefits for both sides

Expanding voluntary benefit offerings and ensuring you have the benefits your employees really want support recruitment and retention while containing costs.

Because these plans are typically employee-paid through payroll deduction, they add value without significantly raising the employer’s benefit budget. Employers also gain a competitive advantage in a labor market where workers expect more comprehensive protection and well-being support.

Employees gain access to affordable coverage that helps them manage risk and avoid financial hardship. For many, paying a few extra dollars per paycheck for supplemental coverage can prevent a small setback from becoming a financial crisis.

"short-term
Uncategorized

Feds Won’t Enforce Short-Term Health Insurance Limits

by Inoventive Solutions
September 23, 2025

The Departments of Labor, Treasury and Health and Human Services announced that they will no longer enforce a 2024 rule limiting short-term health insurance to three months.

The decision leaves the door open for insurers to once again issue these policies for up to three years, as they were permitted under rules implemented during President Trump’s first term. The agencies emphasized that the rule itself remains in place but said they “do not intend to prioritize enforcement actions” against plans that exceed the Biden-era restrictions.

Officials also signaled that they are considering further changes to how these policies are regulated, though no timeline was outlined.

A shifting regulatory landscape

Short-term health plans have been a political football across three administrations.

  • In 2016, the Obama administration finalized a rule limiting the plans to three months, calling them temporary stopgaps.
  • In 2018, Trump extended the maximum duration to one year and allowed renewals up to three years. Sales surged after that change.
  • In 2024, the Biden administration rolled back the expansion, capping the plans at three months with no more than four months of total coverage including renewals.

With the latest move, enforcement of that cap is on hold, giving insurers room to once again sell longer-duration plans.

How the plans work

Short-term policies are typically less expensive than Affordable Care Act-compliant coverage because they are not subject to ACA rules. These plans were originally envisioned as a bridge between jobs or coverage transitions, not as long-term solutions.

For smaller employers that are not subject to the ACA’s mandate to offer affordable health coverage, short-term policies could be an option for workers seeking lower-cost alternatives.

But because short-term coverage is distinct from comprehensive health insurance, employers evaluating whether to steer workers toward these plans should understand the trade-offs:

  • Preexisting conditions can be excluded.
  • Coverage can be denied based on health history.
  • Annual and lifetime benefit caps may apply.
  • Preventive care, maternity care and mental health services are often not included.
  • No protection under ACA consumer safeguards such as the No Surprises Act or parity requirements for mental health.

Short-term plans can also exclude certain benefits that ACA plans are required to cover.

State restrictions

While federal regulators are stepping back, states still control whether these plans can be sold within their borders.

Fourteen states plus the District of Columbia bar them altogether, including California, New York and New Jersey. Other states allow them but impose strict duration limits or conditions that make them impractical for insurers to offer.

Potential changes ahead

The agencies noted they are considering additional adjustments to the rules governing short-term plans. Possible areas of change could include:

  • Redefining the maximum duration,
  • Revisiting required consumer disclosures,
  • Imposing new standards for renewals, and
  • Allowing for stacking of policies.

 Any proposed rulemaking would undergo a public comment process before becoming final.

Takeaway for employers

The federal decision creates uncertainty in the market, with enforcement discretion now favoring longer short-term policies but no clear timeline on new rules.

Employers with fewer than 50 employees may see these plans as a possible option for workers, but larger employers remain bound by ACA requirements to provide affordable, minimum-value coverage.

As the agencies move toward potential new regulations, employers should monitor developments closely and weigh the risks and limitations of short-term health plans before considering them as part of a benefits strategy.

"group
Uncategorized

New Study Predicts Higher Group Benefits Inflation

by Inoventive Solutions
September 16, 2025

Employers are preparing for what could be the steepest annual increase in health care costs in more than a decade, and many are considering plan design changes, including cost-shifting, to buffer the impact, according to a new report.

The “2026 Employer Health Care Strategy Survey,” conducted by the Business Group on Health, found that business executives project a median 9% rise in costs for 2026, but expect a 7.6% increase after making plan design changes to address major cost drivers. Here are the biggest concerns and how surveyed employers plan to address them. 

1. Obesity treatments add pharmacy pressure

Pharmacy spending has grown to nearly a quarter of employer health care costs, driven largely by demand for GLP-1 drugs such as Wegovy, Mounjaro and Zepbound. Employers report that 79% have already seen increased use of these medications, and another 15% expect growth in the years ahead as the drugs gain FDA approval for additional conditions.

These treatments, effective for both diabetes and weight loss, often cost more than $1,000 per month. Employers are responding by:

  • Requiring “step therapy,” which involves trying proven, less expensive methods or medications before prescribing a GLP-1,
  • Limiting prescriptions to employees with diabetes and a qualifying body mass index,
  • Requiring prior authorization,
  • Mandating participation in weight management programs,
  • Approving prescriptions only from designated providers, and
  • Reducing GLP-1 coverage altogether.

2. Cancer drives long-term costs

For the fourth straight year, cancer has topped the list of conditions driving employer health care expenses. Rising diagnoses, delayed preventive care during the pandemic and an aging workforce are combining to push treatment costs higher.

In response, more employers are expanding cancer prevention and screening benefits, removing age limits for preventive screenings and covering access to cancer centers of excellence. About half of large employers expect to offer such centers by 2026, with more considering them by 2028.

3. Mental health demand continues to grow

Nearly three-quarters of employers report higher use of mental health and substance use disorder services, with another 17% expecting further increases soon.

While nearly all employers now offer mental health support, the challenge is balancing costs with access to appropriate care. Larger employers with more resources are providing access to centers dedicated to acute mental health conditions.

Cost-shifting and vendor changes

More employers are considering passing some of the health care cost burden onto employees. According to a recent Mercer survey, half of large employers said they will likely:

  • Increase employee premium cost sharing,
  • Raise deductibles, and/or
  • Hike out-of-pocket maximums in 2026.

In the Business Group on Health study, most employers said they would at least consider shifting costs to workers if needed.

At the same time, companies are rethinking vendor relationships. Forty-one percent reported changing or reviewing pharmacy benefit managers, while others are reassessing wellness and medical benefit partners.

Transparent PBM models and alternative health plans are gaining traction as employers look for greater value and predictability.

Recommendations

The Business Group on Health report noted that employers can do more than pass along costs to workers, by:

  • Assessing the effectiveness of benefit programs and vendors, and eliminating those that deliver limited value.
  • Helping employees — through training and an open-door policy for questions — use plan resources and navigation tools to find providers that deliver high-value care.
  • Encouraging staff to stay on top of check-ups, doctor visits, medications, screenings, tests and immunizations.
  • Requiring vendor partners to adopt transparent and sustainable financial models, particularly for pharmacy benefits.
"Group
Uncategorized

Group Health Plan Affordability Levels Up, Giving Employers a Break

by Inoventive Solutions
September 2, 2025

The IRS has significantly increased the group health plan affordability threshold, which is used to determine if an employer’s lowest-premium health plan complies with Affordable Care Act rules, for plan years starting in 2026.

The threshold for next year has been set at 9.96% of an employee’s household income, up from 9.02% this year. The higher threshold will give employers more wiggle room when setting their workers’ health insurance premium cost-sharing level to avoid running afoul of the ACA. In addition, penalties for failing to provide coverage that meets the affordability threshold will rise 15% in 2026.

Under the ACA, “applicable large employers” — those with 50 or more full-time or full-time equivalent employees — are required to offer at least one health plan to their workers that is considered affordable based on a percentage of the lowest-paid employee’s household income.

If an employer’s plan fails this test, it will be deemed non-compliant with the law, resulting in penalties for the employer.

The new threshold will apply to all health plans whenever they incept in 2026. The affordability test applies only to the portion of premiums for self-only coverage, not family coverage. If an employer offers multiple health plans, the affordability test applies only to the lowest-cost option. 

Calculating

Employers can rely on one or more safe harbors when determining if coverage is affordable:

  • The employee’s most recent W-2 wages.
  • The employee’s rate of pay, which is the hourly wage rate multiplied by 130 hours per month.
  • The federal poverty level.

Penalties

Failure to provide affordable coverage can result in a penalty of $5,010 per affected employee in 2026, up 15% from $4,350 in 2025.

Another penalty, known as the Employer Shared Responsibility Payment, will also increase. This penalty applies to employers that fail to offer minimum essential coverage to at least 95% of full-time employees and their dependents, and when at least one full-time employee purchases exchange coverage and receives a premium tax credit.

This penalty, which applies to the total number of full-time employees (minus the first 30), will rise to $3,340 per employee in 2026, also up 15%.

The above penalties are both indexed to inflation.

The takeaway

As 2026 approaches, it is important to review health plan costs and premium-sharing to ensure your lowest-cost option complies with the ACA affordability requirement.

We can help assess affordability and confirm your plans meet the standard, so your firm stays compliant.

"New
Uncategorized

New Law Makes Permanent Telehealth Coverage in HDHP

by Inoventive Solutions
August 18, 2025

The sweeping One Big Beautiful Bill Act signed into law by President Trump on July 4, 2025, makes permanent the ability of high-deductible health plans to offer pre-deductible coverage for telehealth and other remote care services without compromising employees’ eligibility to contribute to health savings accounts.

This change, effective for plan years beginning after Dec. 31, 2024, restores a popular pandemic-era flexibility that had otherwise expired at the end of 2024. For employers that offer HDHPs with HSA options, they can now choose whether to incorporate first-dollar telehealth coverage to enhance their plan’s value, reduce employee costs and improve access to care.

Brief background

Under longstanding federal law, to qualify for HSA contributions, a participant must be enrolled in a qualified HDHP and have no other “impermissible” health coverage — meaning no coverage that pays for non-preventive care before the deductible is met. Historically, this included most telehealth services.

That changed temporarily with the CARES Act in 2020, which allowed HDHPs to cover telehealth on a first-dollar basis without affecting HSA eligibility. Congress extended this relief several times, but the last extension expired on Dec. 31, 2024, for calendar-year plans.

What it means for employees

Telehealth services benefit plan enrollees in many ways:

  • Convenience: Workers in rural or remote areas, or those juggling caregiving responsibilities, no longer need to take time off work or travel to see a provider for routine care that can be handled virtually.
  • Lower costs: First-dollar coverage for virtual visits can eliminate out-of-pocket expenses for common services like check-ups, prescription renewals or managing chronic conditions.
  • Chronic care support: Individuals managing ongoing conditions such as diabetes or hypertension may find it easier to stay on top of treatment plans with telehealth check-ins.

What was not included in the final law

While the law’s inclusion of the telehealth safe harbor was celebrated, many other pandemic-era telehealth waivers were left out of the final package. These excluded provisions include:

  • Lifting geographic and originating site restrictions on telehealth under Medicare.
  • Allowing audio-only services to qualify for reimbursement.
  • Extending telehealth coverage by federally qualified health centers and rural health clinics.
  • Eliminating in-person visit requirements for telemental health services.

Unless further legislative action is taken, those waivers will expire by the end of September 2025, limiting broader telehealth expansion — especially for Medicare and rural populations.

Takeaway for employers

Employers looking to implement or reinstate telehealth coverage to their HDHPs should coordinate with their insurance carriers or third-party administrators and update plan documents, summary plan documents and employee communications accordingly.

If your 2025 plan has already started, you may need to send your enrollees special notices informing them of the change.

"Critical
Uncategorized

Critical Illness Insurance Provides Vital Protection to Employees

by Inoventive Solutions
July 29, 2025

The typical family’s income slips by more than $12,000 in the year after a breadwinner suffers a critical illness such as a heart attack, stroke or cancer, according to a study by Metropolitan Life Insurance Company.

This reduction of income isn’t primarily due to lack of medical coverage. It is actually attributed to the inability to work and earn an income. The approximate out-of-pocket medical expenses add about $3,000 dollars of extra costs during the first post-diagnosis year.

Despite these side effects, MetLife found that almost half of Americans with full-time jobs did not even have $5,000 dollars’ worth of accessible savings to cover a major illness diagnosis. More than 28% did not have at least $500 dollars in savings. 

The MetLife study also showed that:

  • In the event of a medical emergency, two-thirds of American workers had three months or less in available savings.
  • Only one-fifth of women and one-third of men were “very confident” that a financial emergency could be handled with their rainy-day fund.
  • A little more than half of those with a full-time job were extremely or somewhat concerned about the possibility of a critical illness impacting the financial stability of their family.

The study concluded that many Americans are unprepared to deal with the short- and long-term loss of income and out-of-pocket expense that is all too often associated with critical illness. Another aspect of the study may reveal the reason so many are unprepared: every surveyed patient had medical insurance, but only 7% had critical illness insurance and only 4% had cancer coverage.

Critical illness insurance

The purpose of critical illness insurance is to provide a one-time or lump-sum payment to assist in offsetting the out-of-pocket expenses associated with certain critical illnesses.

Applicable critical illnesses may include an organ transplant, heart attack, stroke, cancer, loss of vision, burns, HIV, or kidney failure. The critical illness insurance is not a replacement for standard health insurance or disability insurance. The design is purely to supplement such policies. 

Only 28% of the surveyed full-time workers had heard of insurance for critical illness. However, from further questioning about critical illness insurance, the number might be even lower, as three out of every five patients seemed to confuse it with their standard health insurance policy – and one in five confused it with disability insurance or other government programs.

Voluntary employer-sponsored critical Illness insurance

While the study showed a clear theme that many Americans are monetarily unprepared for a critical illness, it also provided evidence that many workers are concerned about their lack of preparation.

By expanding employee benefits to include voluntary critical illness insurance or raising awareness about existing benefits, you are offering important financial protection to employees.

In other words, you can help bridge the gap between the cost of a critical illness and what standard insurance covers, which allows the employee to better focus on recovering and possibly returning to the workforce.

If you want to know more about voluntary critical illness coverage, give us a call.

"legislative"/
Uncategorized

Legislative Wrap-Up: Three Health Benefits Bills Employers Should Know About

by Inoventive Solutions
July 8, 2025

Health insurance is back on the legislative agenda in Washington, with several proposals that could reshape how employers provide coverage to their workers.

Three bills gaining traction in the House aim to overhaul parts of the Affordable Care Act (ACA), expand access to group health plans for small employers and protect the use of stop-loss insurance for self-insured plans.

Here’s a summary of what’s on the table and how it could affect employers.

Health Care Fairness for All Act

Key change: Repeals the ACA employer mandate

Introduced by Rep. Pete Sessions (R-Texas), this bill would eliminate the ACA’s employer health coverage mandate, the requirement that companies with 50 or more full-time employees offer affordable coverage or face penalties.

While the bill removes this mandate, it maintains several popular ACA provisions, including protections for preexisting conditions and guaranteed issue requirements.

To prevent people from enrolling in coverage only after becoming ill, the bill would impose a 20% late-enrollment penalty on individuals who join a plan without maintaining prior coverage for at least 12 months.

Another significant provision is the introduction of “Roth HSAs,” which would replace traditional health savings accounts. Unlike HSAs now, contributions would be made with after-tax dollars, but unlike current HSAs, they could be paired with low-deductible plans and not only high-deductible health plans.

Association Health Plans Act

Key change: Allows small businesses to band together for group health insurance

Backed by Rep. Tim Walberg (R-Mich.) in the House and Sens. Roger Wicker (R-Miss.) and Rand Paul (R-Ky.) in the Senate, the AHPA would revive and expand rules allowing small employers and self-employed individuals to purchase health insurance as a single group.

By pooling together, these employers could access large-group health plans that often offer better rates and more plan options than small-group or individual plans. Supporters argue this would increase access to affordable coverage for millions of workers who currently lack employer-sponsored insurance.

Self-Insurance Protection Act

Key change: Shields stop-loss insurance from state and federal regulation

This bill, introduced by Rep. Robert Onder (R-Mo.), aims to preserve small employers’ ability to self-insure their group health plans by protecting stop-loss insurance arrangements from being classified or regulated as traditional health insurance. Some states have attempted such reclassification to restrict their use among small employers.

Stop-loss insurance reimburses self-insured employers for catastrophic claims beyond a certain threshold. These arrangements make self-funding viable even for smaller businesses with less predictable health care costs.

Proponents say the bill levels the playing field for small employers that want to use self-insurance to control costs. Detractors argue that such plans, when not subject to the same rules as fully insured policies, may not offer sufficient consumer protections or minimum benefits.

The takeaway for employers

Currently, all three bills are awaiting a hearing in the House Education and Workforce Committee, and as of this writing, there have been no votes on the measures.

If these bills gain momentum, employers — especially smaller ones — could see more flexibility and options when it comes to providing health benefits.

While these bills still face political hurdles, they signal where health policy may be headed and what strategies employers may want to prepare for in the years ahead.

"Alternative
Uncategorized

Alternative Group Plan Funding Gets a Second Look

by Inoventive Solutions
July 1, 2025

Watching their group plan premiums climb higher with each passing year, some employers start looking into alternative funding strategies in hopes they can get a better handle on their employees’ health costs.

While group plans are the standard, larger employers have typically had more options for funding their group health coverage. But now even small and medium-sized employers – even companies with fewer than 100 employees – can benefit from alternative funding approaches.

There are three main types of alternative funding strategies that are available to employers:

  • Captives
  • Private exchanges
  • Full and partial self-funding.

Captives

With a captive, multiple employers pool their resources and share the risk in providing health insurance to their employees. It is essentially a self-insured pool built into a captive insurance company (an insurer that is owned by the entity that created it). The captive has staff that will administer the health plan.

Captives are also multi-year agreements, so once an employer commits to make it worth their investment, they need to stick with it for a period of time.

Group captives will often have a specific funding mechanism that is broken down into four layers:

Layer 1: The employer is responsible for the first $25,000 of any claim made by one of its employees.

Layer 2: All employers involved in the captive will share the costs of that claim if it exceeds $25,000, up to $250,000.

Layer 3: For claims that cost more than $250,000, the captive will secure reinsurance coverage to cover amounts above that level. This reinsurance is also called “stop-loss” insurance.

Layer 4: Another layer of protection known as “aggregate stop-loss” coverage protects each employer in the captive for the total claims of their employees, ranging from 115% to 125% of expected claim costs in a year.

Private exchanges

Typically, businesses using a private exchange will offer employees a credit that can be applied toward the purchase of a health plan. Employees can then access a variety of health plans through an online portal and can chose and enroll in plans that meet their needs.

Private exchanges are run by insurance carriers or consultancies, and plans on the exchange are regulated as group coverage. Employees shopping on these exchanges are not eligible for the Affordable Care Act’s tax credits or cost-sharing subsidies.

Most employers currently using private exchanges are large; therefore, most private exchange plans are regulated as large-group coverage and are not part of the ACA’s single risk pool. However, to the extent that smaller employers participate in private exchanges, they are subject to the ACA’s small-group rating regulations and risk-pool requirements.

One of the main features of private exchanges is that they enable employees to comparison-shop among multiple health insurance plans.

Self-insuring

There are many different types of self-insurance, from minimum-premium or risk-sharing arrangements to a fully self-funded plan, in which the employer is responsible for all claims.

Employers can choose from:

Retrospective premium arrangements – The insurer will credit back a portion of the unused premium to the employer (typically as a credit for the following year). This is often used in a fully insured arrangement.

Minimum premium arrangements – The employer pays fixed costs (administration charges, stop-loss insurance and network access fees) and claim costs up to a maximum liability each month.

Partial self-funding -The employer takes on more liability and pays fixed costs (administration, network access, stop-loss premiums and some fees and taxes). It’s partial self-funding because the employer will purchase individual stop-loss insurance, which caps the employer’s liability on any given claim to a certain amount, say $50,000.

That way, the employer is self-insuring most of their employees’ medical needs, but is protected in case some of those claims become catastrophic.

Full self-funding – This is like partial self-funding except that there is no stop-loss insurance and the employer is responsible for all costs that are not shared by its employees.  This kind of arrangement is usually only available to large employers.

The takeaway

These alternative funding approaches are what is available now. But the industry is innovating to making health care and insurance more affordable for all involved.

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