Want to know what is happening in Washington, D.C., as it relates to the now four-year-old Patient Protection and Affordable Care Act (PPACA)? While parts of the law have been implemented, major additional requirements are scheduled to take effect over…
On January 9, 2014, the Department of Health and Human Services (HHS), the Department of Labor (DOL) and the Department of the Treasury/IRS issued Frequently Asked Questions – Part XVIII that provides additional information about requirements in several areas. In this third of a three-part series, we will address some clarifications related to wellness programs.
Wellness programs that have an outcomes-based standard, such as a requirement that the employee achieve a certain body mass index (BMI) or certain blood pressure, glucose, or cholesterol levels, must automatically provide a reasonable alternative. The reasonable alternative may be another outcomes-based standard (with certain additional requirements) or an alternative activity. If the employee satisfies the reasonable alternative, the employee is entitled to the full incentive.
The wellness program regulations also state that the recommendation of the employee’s physician regarding a reasonable alternative must be considered. This raised questions about whether the employer had to completely accept all details of a physician’s recommendation, particularly since the employer generally must pay the cost of a reasonable alternative. The FAQ says that if an employee’s doctor states that an outcomes-based reasonable alternative is medically inappropriate for the employee, and the doctor suggests an activity-based alternative instead, the employer must accept the suggested alternative, but has leeway on how the alternative is implemented. For example, Rachel exceeds the plan’s body mass index (BMI) standard, and the plan’s usual reasonable alternative is a percentage reduction in BMI. If Rachel’s doctor advises that the reduction in BMI is medically inappropriate and suggests a weight reduction program instead, the plan must accommodate the weight loss program request, but it does have a say in which weight loss program Rachel must complete.
The FAQ also states that a plan that offers an annual opportunity to receive an incentive for non-use of tobacco is not required to offer a mid-year opportunity for an individual who was offered, but declined, the original opportunity. For example, as part of fall open enrollment, Jones Co. offers a non-smoker discount and an opportunity for smokers to enroll in a smoking cessation program for the next calendar year. Mary and John are both smokers. They decline to enroll in the smoking cessation program. John quits smoking in July and Mary asks to enroll in the non-smoker program in August. Jones Co. is not required to give John the non-smoker rate for the rest of the year (although it may if it wishes, on either a full or pro-rata basis). Jones Co. does not need to offer the non-smoker program, or the discount, to Mary (although it may if it wishes, on either a full or pro-rata basis).
To help employers understand all the wellness requirements under PPACA, UBA offers “Frequently Asked Questions about Wellness Program’s Legal Requirements”. To see what kind of wellness programs employers are implementing, download the UBA Health Plan Survey Executive Summary.
By Carol Taylor
Employee Benefits Advisor
D&S Agency, a United Benefit Advisors Partner Firm.
Several years ago, I went to the doctor for a sinus infection. While waiting for the doctor to return with a prescription, I happened to look over and notice that every jar, pen, notepad, etc. on the counter had the name of a recently released brand name antibiotic. Sure enough, when the doctor returned, it was for that particular drug. I asked the doctor what the cost of the drug was, since I was covered under a high-deductible health plan (HDHP) and would be paying the full cost. When he responded that it would run about $360 for six pills, I immediately demanded a generic prescription. The generic drug was less than $15 and took care of the infection. To add insult to injury, no one knew at the time, but the brand name later was found to have some unknown side effects — several people died, and the drug was “black-boxed” by the FDA shortly thereafter and removed from the market. I was quite glad that my frugal side had taken over when I read that in the news.
What’s my point? The newest drug on the market may not be the best thing for you!
At nearly every medical plan enrollment meeting, we hear the question: “Are generics really as effective as brand names?” What many don’t realize is that the active ingredients in a generic drug are the same as the brand name drug. The difference between brand name and generic lies in the non-active ingredients. Each manufacturer of a generic may use different inactive ingredients, so if one does not work, another manufacturer’s product might.
Will the generic work just like the brand name? Not necessarily. Everyone’s chemical make-up is different, so the inactive ingredients may cause an issue for you. At the same time, not every brand name will work for everyone either.
The most noticeable benefit to you for taking a generic drug over the brand name, however, is the COST! In my example above, the difference was $245, but on some more expensive drugs, say for heart disease or cancer, the difference can be thousands of dollars! Another way generics can save you money – in some cases significantly — is through your insurance coverage.
According to the 2013 UBA Health Plan Survey special Pharmacy Report, 27.9% of employers surveyed are now using a four-tier drug plan — up 11.5% since 2012. That fourth tier pays for biotech or the highest cost brand name drugs. This usually requires significantly higher copays, or costs are completely out-of-pocket until the major medical deductible has been met, and then you still face a copay or coinsurance. The survey data shows that the median pharmacy retail copays for fourth-tier drugs increased by 25% from $80 in 2012 to $100 in 2013, and many are charging between 10% and 30% of the cost of tier four drugs.
Another strategy employers and insurance carriers use to control pharmacy costs is to place generics before the deductible and brand names after – creating further incentive to give generics some serious consideration.
A lesser-known, but even more significant, benefit is that generics are rarely taken off the market due to side effects. The newest drug on the market has not had that test of time, and all side effects may not be known when the drug is released on the market. Since a generic, at minimum, has been around for at least seven years, the side effects are known.
The point that we like to drive home in those enrollment meetings is this: Don’t hesitate to ask your physician for a generic drug. It might very well save your life, and will certainly save you money. Generics have stood the test of time; it is a very rare occurrence when a generic is pulled from the market. Plus, you may have the added benefit of a significant cost difference.
If you really must take a brand name drug, at least do a quick search online about it. Read the known side effects from the manufacturer’s website and see if any headlines come up about it. Also, if you are taking any other medications, make sure the pharmacist knows about those and can ensure that a newly prescribed drug won’t cause adverse interactions.
Employers interested in finding out the latest trends in pharmacy benefits strategies should download a copy of the 2013 UBA Health Plan Pharmacy Report at http://bit.ly/1cA6PMW.
Now that everyone is focused on basketball, specifically the NCAA Men’s Division I Basketball Tournament, how does March madness translate into workplace madness? In an article in Employee Benefit News, they estimate that approximately 50 to 60 million…
Ask any employer that has a wellness program and their goal is to have a positive impact on their employees. In order to have that, however, employers constantly focus on how to increase worker participation. As can be expected, this is a challenging e…
On January 9, 2014, the Department of Health and Human Services (HHS), the Department of Labor (DOL) and the Department of the Treasury/IRS issued Frequently Asked Questions – Part XVIII. This document provides additional information about requirements in several areas. In this second of a three-part series, we will break down the details related to out-of-pocket limits.
The FAQ clarifies that, for non-grandfathered plans, the out-of-pocket maximum:
-This option may be helpful for plans with multiple vendors.
-This technique may not be used to create a separate out-of-pocket maximum for mental health services because that would violate the Mental Health Parity Act (MHPA).
The FAQ also verifies that, to the extent a large group insured plan or a self-funded plan must consider EHBs, it may use any state’s EHB benchmark plan. A list of the state EHB benchmark plans for 2014 and 2015 is available from the Centers for Medicare & Medicaid Services. (Large group insured plans and self-funded plans do not have to offer coverage for the 10 EHBs, but they cannot impose lifetime or annual dollar limits on EHBs. It will be difficult for these plans to meet minimum value standards unless most EHBs are covered, however.)
For more information about compliance with health care reform, download “The Employer’s Guide to ‘Play or Pay'” which covers PPACA penalties, and how to make “Play or Pay” decisions taking into account factors such as location, compensation, subsidies, Medicaid, family size and income.
President Barack Obama is offering more Americans the chance to put away money for retirement through payroll deductions with a plan for new government-sponsored savings accounts.
The team we have here at Byrne, Byrne and Company is our greatest asset to both our company and the clients we serve daily. The Employee Spotlight is to help our clients get to know the staff they work so closely with and rely on personally and professionally! Read below to learn more about Elena … Continued
By Carol Taylor
Employee Benefit Advisor
D&S Agency, A UBA Partner Firm
Remember when you used to pay a $15 copay for prescription drugs and that was the end of the story? Those days are quickly disappearing and in their place is a complex four-tiered prescription drug plan, with copays becoming less of an option for many.
The fourth tier pays for biotechnology or the highest cost drugs. This plan design enables employers to pass along the cost of the most expensive drugs to employees by segmenting these drugs into another category with significantly higher copays.
With some of these drugs ranging from $1,200 to $20,000 per month (the cost of some cancer drugs), it is very costly for the plans, which in turn affects their premium rates. As a result, we are seeing more and more employers, small and large, raising copays substantially on fourth-tier drugs.
According to the 2013 UBA Health Plan Survey special pharmacy report, the number of employers offering four-tier drug plans increased 11.5% from 2012 to 2013, with 27.9% of employers now using this pharmacy plan design element. The median pharmacy retail copays for fourth-tier drugs increased by 25% from $80 in 2012 to $100 in 2013. Additionally, many are charging between 10% and 30% of the cost of tier four drugs.
We’ve seen this for quite some time with self-funded plans, but we expect it will become more popular among small and large employers with group health insurance. Employees of large employers in particular face significantly higher copay on tier-four drugs.
For example, the tier-four median copay for small employers (less than 100 employees) was $52, on average, between $45-$60 for mid-size employers (100-499), and between $80-$100 for large employers (500+).
There are a number of factors that would cause larger groups to have higher copays for brand/specialty prescription drugs: Small group markets are pooled by ratings areas, but larger groups are rated more independently. They have much more incentive, then, to raise copays, especially for items that will cause rate increases.
Another strategy to control health care costs is to require that the major medical deductible be met before prescription copays kick in. It used to be that all drugs were applied to the deductible, then coinsurance on major medical. Now, quite a few carriers, particularly on high-deductible health plans (HDHPs), require deductible, then copays. We’re also seeing small group and mid-market employers place generic brands before the deductible, but brand names after.
In 2015, as employers are forced to come into compliance with health care reform, this might shift some since the prescription copays/deductibles, etc. must all track to the out-of-pocket maximum.
The ultimate goal of shifting more cost to employees is to drive behavior – to create better health care consumers. Employers want their employees to price shop prescription drugs the way they would a blender, or a car, and by making them face more cost up front, they’re providing plenty of incentive to do so. The truth is, there’s no reason to buy a sinus infection drug at CVS for $295 when you can get the same one at ”big-box” retailers like Costco and Wal-Mart for $100. If, however, you’re prescribed a brand new cancer drug, you certainly have fewer options and tougher decisions to make.
Download a copy of the special UBA Pharmacy Report, or the 2013 UBA Health Plan Survey Executive Summary. Customized benchmarking reports are available from a UBA Partner Firm.
If you are a mid-size employer (50-5,000 employees), you are likely considering a private exchange to affordably handle your benefits complexity (eligibility management, payroll deduction, billing and reconciliation, enrollment and claims issues, defined contribution automation, etc.) while reaping the benefits of cost certainty from a defined contribution model. Indeed, beyond the many advantages of private exchanges, they are particularly appealing to those who can’t afford high reliability organization (HRO), human resource information services (HRIS), Benefits Administration outsourcing and other similar services, since these services are all built in. However, you may not know about three other advantages of private exchanges
“Leakage” is when overpaid premiums and under-deducted payroll deductions sap your bottom line. UBA has found that its private exchange program model has proven to decrease this traditional group insurance phenomenon. In fact, an audit discovered that before moving to the program, which included comprehensive benefit accounting services, one 3,000 life company was losing $50,000 per month in leakage!
UBA Partner Firm Hanna Global also studied their traditional group coverage claimants and found that 60-70% have claims under $1,000 and yet they bought plans that cost and cover a lot more—“Over Insured Syndrome!” Private exchanges more effectively provide decision support and, as a result, 80% of employees are migrating to lower cost plans! In fact, UBA recently weighed in on a CFO article detailing how employees are choosing more appropriate coverage levels on private exchanges.
Health care insurance shopping is the last paper dinosaur — forms to fill out… excel grids showing costs and benefits… a PowerPoint presentation to employees gathered in a conference room. Why is it that way? For the first time, private exchanges allow us to “Amazon-ize” the shopping experience, and employees LOVE it! Finally, HR can offer a “big company experience” without the big company cost!
