As more Affordable Care Act (ACA) regulations take effect, businesses large and small are searching for ways to find health insurance plans that comply with the law and fall within budget, and the LBM industry is no exception. Recently, the Society for Human Resource Management (SHRM) reported that medical costs for employers in the U.S. could increase by 6.5% for 2016. However, SHRM also cited the possibility for benefit design changes, such as higher deductibles and narrow provider networks, to reduce that increase to 4.5%.
Starting as early as this fall, some businesses may be receiving a letter from the insurance company saying their plan is being phased out.
“A lot of businesses that currently offer coverage have plans that don’t comply with ACA. In some states these plans will be phased out and in others they will be able to be renewed,” explains David Chase, national healthcare policy director at Small Business Majority. “There are a lot of changes in terms of what the benefits look like and the way your premiums are calculated. Even if you’re able to renew your old plan, you might not want to,” he says.
In 2018, the ACA will begin imposing an excise tax on high-value plans. Employers will be subject to a 40% tax on health insurance premiums over $10,200 for individual coverage and $27,500 for other-than-individual or family coverage. Some companies are already making changes in anticipation of the tax.
With open enrollment approaching, here are some ways to streamline your insurance plan selection process.
Use a Broker
Navigating the health insurance world can be no easy feat, and time is money. You may be an expert in the LBM space, but probably not in health insurance. Brokers have access to knowledge and resources that you don’t. They can navigate the technical details and negotiate with insurance providers to find the best solution for your company’s needs. A broker also can tell you what’s available in your state and what plans other companies your size and in your marketplace are choosing.
Some brokers get paid in commission by insurance companies, which could be reflected in insurance premiums, while others charge the employer a direct fee for their services.
“Hire a trusted independent professional who can deliver the options available in the market and let them shop for you. A good broker has access to all carriers and brings you everything. He should provide tech solutions, HR solutions, and payroll solutions to ease the enrollment process,” says Neil A. Merrell, of benefits management firm The Guard Group.
Chase also advises small businesses to work with a broker. “It’s a lot of research to do about health care if you’re not an expert.”
Consider Your Size
The size of your business is important when determining your options. In order to save on cost, many larger companies will need to restructure their health benefits, especially with the excise tax looming. Smaller companies will be able to take advantage of new tax incentives as well as the small business insurance marketplace.
Starting in 2016, small businesses will be defined by the ACA as companies with 50 to 100 employees. ACA previously has held companies with 50 or more employees accountable for offering health coverage, but by expanding the small business definition, mid-sized firms can now take advantage of the small business health insurance marketplace.
If your business is smaller than 50 employees, there is no requirement to offer health coverage. However, Chase says about half of those businesses typically do offer coverage because it’s a powerful way to recruit and retain quality employees. A federal tax credit of up to 50% is available for businesses with less than 25 employees that buy insurance through the marketplace.
One option large companies have to take control of their health care costs is to self-fund. This means the employer pays directly for all medical claims and costs. A third-party administrator processes claims, issues insurance cards, and fields health plan questions.
“When you’re self-funded, you have more control over reducing your claims because you know what’s coming out of your checking account. For example, we noticed we were paying for prescriptions for medications people can buy over the counter. Now we’ve taken those off the prescription plan,” says Sylvia Francis, Regional Transportation District Denver total rewards manager and SHRM member. Francis suggests that companies with 500 or more employees look into self-funding.
Another option available for employers with 50 to 100 employees is the Small Business Health Options Program (SHOP). Employers set a budget in the system and then allow employees to select different individual plans that fit their needs, as long as the plan falls within budget, eliminating the need for employers to attempt to structure a one-size-fits-all plan.
Employers can use SHOP directly or have a broker navigate them through the system.
If you don’t have the budget to pay for vision or life insurance, you can still offer these as voluntary services. Employees get the benefit of a lower group rate and the ability to use pre-tax dollars for these expenses. “This doesn’t really cost you anything, but it’s something people are looking for,” explains Francis.
Employers can also benefit from adding wellness incentives that encourage employees to engage in healthier lifestyle behaviors. Examples of promoting workplace wellness include creating a tobacco-free workplace, swapping out unhealthy vending machine snacks and soft drinks, and giving employees stretching breaks.
In the long run, this helps companies save money on insurance claims because employees are healthier. ACA also offers tax rewards for programs that support a healthier workplace, and many insurance companies offer wellness programs already built into the plan’s cost.
These programs can also aid in worker retention, Chase says. “[They] strengthen the relationship between the employer and workforce and boost morale,” he explains.
Before ACA, health insurance wasn’t a top concern for millennials. As young and healthy members of the workforce, many were forgoing health coverage to save money. Now they will need to find coverage or be subject to a fine.
However, since they’re still less likely to use medical services as often as older generations, many want the option of paying a low insurance premium even if that means a high deductible. In the SHOP marketplace, these are called the bronze coverage options.
Millennials also want easy access to benefits information and health care. They want to be informed consumers and will take advantage of mobile applications, provider websites, and other online offerings. This group is more likely to communicate with their healthcare providers through telemedicine options instead of physically going to a doctor.
Virtual access to healthcare is expected to be much lower in cost and could be a good source of potential cost savings for employers, according to SHRM. There are already several third-party online platforms that assist people in making informed decisions about their health care. These are often aimed at helping users get quality care and save money.