Saturday, October 25, 2014 at 10 am Soldier Field Stadium Green 1410 S Museum Campus Drive, Chicago, IL Making Strides Against Breast Cancer is a celebration of survivorship an occasion to express hope and our shared determination to make this breast cancer’s last century. The fight to end breast cancer starts with a single step. … Continued
By Stacey Anderson Compared to women, men tend to drink more, suffer more from stress and seek medical advice less often. However, men are also living longer and their lifespan is catching up to women. Make sure that your later years are as healthy as possible. As you age past 40, following health recommendations from … Continued
By Peter Freska, MPH, CEBS
Benefits Advisor, The LBL Group
A United Benefit Advisors Partner Firm
The Patient Protection and Affordable Care Act (PPACA) is driving companies to look at many aspects of their organization more strategically. With an estimated 2.5 million people in Professional Employer Group (PEO) arrangements totaling $92 billion in annual revenue, the spotlight was cast on them (source: https://www.napeo.org/about/annualreport.pdf). The questions related to the implications of PPACA on PEOs are many, and the law is still out for interpretation.
With this in mind, I have always said that there is a place for PEOs… and they sometimes make sense. However, in my opinion an organization that has grown from the average PEO size of 20 employees (source: https://www.napeo.org/about/annualreport.pdf) to more than 100, likely has an administrative cost higher than a similarly situated organization with a true employer-employee relationship. Keep in mind that in most scenarios the point of a PEO is risk and cost mitigation, but as an organization grows, administrative personnel and functions such as payroll servicing, hiring & firing, training, etc. are still needed internally. Additionally, with companies in the 100 t
o 250 employee range, most health & welfare benefits are pooled, already reducing exposure to medical loss risk. As a company grows past the 250 employee range, cost may be mitigated in other forms such as employee well-being programs, self-funding arrangements, or participation in captives for a variety of insurances. So, if you are a company of more than 100 employees (which is a subject employer under PPACA), then here are seven easy steps to moving out of a PEO.
Decide if it is the right choice for your organization by doing a cost analysis. The cost analysis should include a complete breakdown of everything from workers’ compensation, employment practices liability insurance (EPLI), all health & welfare benefits, retirement plans, human resources, and administrative costs. To best judge these costs and benefits, they should be benchmarked in some fashion. For the health & welfare benefits, the best option is a robust health plan and ancillary benefits survey such as the United Benefit Advisors (UBA) Annual Health Plan Survey and the UBA Ancillary Benefits Survey. Utilizing these tools, your UBA Partner can outline the most appropriate costs and benefit levels for your company based on industry, employer size, state, region, and how it compares to national data.
Steps two, three, four, and five involve understanding what a company currently provides and what it would like to provide post-PEO.
Payroll and HRIS. There are many choices in an ever growing sea of vendors. The best bet is to look for a payroll and Human Resources Information System (HRIS) partner. This would be a company that is looking to the future of technology and is willing to understand the organization’s unique needs. With cloud-based technology becoming the predominant option here, technology companies are really the answer over payroll processing companies. People want the ability to access their information at anytime, anywhere, securely, and on their mobile device. While there are many companies that say they can do this through a variety of looped and bandaged-together products, there are very few with truly cloud-based platforms that were designed from the ground up for today’s users. One worth looking at is Paylocity.
Business insurance: This piece is a driver of many organizations to join a PEO. As stated earlier, risk mitigation (especially with workers’ compensation insurance) is great for small companies. However, requesting an experience modification worksheet from your PEO along with the last five years of loss runs can be an enlightening experience. Couple this with a loss control visit, and I would venture a guess that the PEO will change its tune. Also, according to the California Department of Industrial Relations: “The fact that you engage a PEO does not release you from liability. Employers have a responsibility to ensure their workers are covered by a valid workers’ compensation policy. So before you turn your vital programs like workers’ comp and payroll over to a third party, be sure you are dealing with a reputable, legally insured PEO.” (source: https://www.dir.ca.gov/peo.html).
Retirement: Understanding the entire program that is currently offered to the co-employees (or leased employees within a PEO) can be difficult. A PEO should be able to outline the costs and assets allocated to the portion of the retirement plan that accounts for the company in question. When transitioning out of the PEO’s plan, it is important to schedule individual meetings with all employees in order to properly explain the new employer sponsored retirement plan and how to rollover any existing funds from the prior plan. These funds will be crucial in building up the retirement plan assets to reduce the costs applied.
Health & Welfare: As previously mentioned, benchmarking your benefits is integral. Moving out of a PEO opens the company to the entire market of choices. Knowing what the right fit is for the company in question will allow the management team to allocate the proper funding type and contributions. Request for quotes, carrier negotiations, benefit modeling, decisions, implementation, and enrollment – all must come and be aligned with the latest health care reform rules, regulations and guidance, in order to avoid significant penalties to both the organization and potentially to the employees.
HR Manager: While most companies with more than 100 employees will agree that they need an HR manager, they may have divergent opinions on when to bring them into the fold. One school of thought is that the HR manager to be hired should be part of the process, included in business partner decisions and selection. The second option is that the company team, with or without outside assistance, drives the process and implements each step. This culminates with the hiring of an HR manager to assist in the final enrollment and implementation pieces of the new startup programs. In either method, it is crucial that the company culture be outlined at all levels. While a company may have been in existence for many years, moving out of a PEO is much like starting a new company. Many of the same pieces must be played strategically in order to garner the best result for long-term sustainable growth that attracts and retains the best and brightest team members.
The Final Step: Don’t forget to read the current PEO contract. Many organizations fall victim to termination guidelines and/or costs. Be savvy and aware of the pitfalls, and make sure that the PEO is duly notified in writing of the intention to dissolve the co-employment relationship as of the proper future date.
And that is all. With proper notification to the PEO, an organization can move out of a PEO relationship in just over one month. Generally speaking, it is ideal to move out before January 1 to reduce the payroll tax implications. Ultimately, partner with an advisory firm that can guide the company through the process and the first payroll will work out just right.
Focused provider networks (aka skinny or narrow) are nothing new to the health insurance marketplace. Insurance carriers have been using different sized provider networks in their HMO and PPO portfolios for many years now.
The concept is familiar to most of us. If you offer a smaller provider network, you can offer the same plan at lower premiums than the plan offered with a carrier’s full HMO or PPO network.
The question is, how effective are they in reducing, or maintaining lower premiums?
In order for the insurance concept to work so that people pay as little in premiums as they can, you have to get as many people as possible to participate. That way, when there are claims, the more people who are paying premiums translates into lower premiums for everyone who is participating. It’s simple division; right? A $10,000 claim divided among 100 people is $100/person vs. $50/person when the same claim is averaged among 200 people.
So, with insurance premiums on the rise up to 182% from 1999 to 2013 compared to inflation at 40% over that same time period*, how are the insurance carriers going to get people to participate in the marketplace exchanges so that health care reform can be successful?
Well, they have to start by making it affordable. How did they do that? Well, they increased the maximum out of pocket to the maximum allowed under the Patient Protection and Affordable Care Act (PPACA), reduced the network sizes, and gave the participating providers in the smaller networks a pay cut.
In February of this year, I watched a panel of experts discuss the state of the marketplace exchanges at an industry conference in Orlando, Florida. One panelist made a comment stating that he felt the marketplace plans with the focused networks were going to essentially “blow up.” He felt the narrow network strategy to keep lower premiums was going to backfire.
He cited that the participating providers were potentially of lower caliber than those that chose not to participate because they knew that they could not provide their standard quality of care for the lower rate of pay. He believed that we were going to see more re-admissions to hospitals for patients who were either sent home too soon, or who suffered a relapse, secondary infection, etc. Doctors may be more inclined to see as many patients as possible, so they may not spend the time needed with each patient, and misdiagnose, or miss things altogether that could otherwise have been caught early, or even prevented entirely.
If we see a rise in claims due to re-admissions, and other factors cited above, the insurance carriers will have to increase the premiums for the next year in order to cover their losses if they did not collect enough premiums the previous year, and adjust the rates to cover the cost of projected claims for the next year based on the new data they have collected from 2014. What do we think those increases will be – 5%, 10%, 25%?
In May, I had the opportunity to ask an executive at Blue Shield of California what he thought about this statement made by the panelist. I asked him if he felt they would see higher utilization than expected on these ‘focused’ networks due to the quality of the participating providers. He got a little uncomfortable in his chair (whether because he did not like the question, or because he had not been asked it previously, I’m not sure), paused and then said that he did not know. He said they did not have enough claims data at that time to really be able to give an answer.
A major insurance carrier mentioned at the UBA 2014 Fall Meeting & Expo in Rosemont, Illinois, that they had to submit rates to governing bodies for January 1, 2015, before the end of the second quarter of 2014, before they had most of their new enrollments from the first open enrollment period under PPACA and the marketplace exchanges processed. This means that they had to submit rates based on projections and not actual claims data from 2014. Therefore, they may not know if the narrow network strategy will indeed backfire for at least another year or more.
Some carriers have stated they have seen a higher utilization in the smaller networks this year, mostly due to the newly insured population. One of those carriers reported that the population using the smaller networks also require more administrative time for carriers to educate insureds about the plans and how to use to use the plans.
This makes me wonder how long the providers in the narrow networks will be able to keep up with the demand and the cost of seeing numerous patients for lower payments from the insurance carriers. It costs the provider time/money for their staff to submit claims to the carrier for payment. If they have a higher volume of patients, that means a higher administrative burden on the provider. Will they be able to keep their costs under control with the current pay rates from the carriers? Will they be able to maintain the current contract, or will they have to re-negotiate, or pull their contract altogether?
Another issue that we have been facing with the ‘focused’ provider networks is that most of the carriers did not have a handle on accurate provider network listings when the marketplaces opened. In fact, Covered California had to take down their provider search tool from their site completely because it was not accurate and people were enrolling in plans in which their current providers could not accept.
There were many cases where individuals have been going to see their providers, only to be turned away saying that they do not accept that plan. Once this has been discovered, some individuals have been able to change plans under the “qualifying life events” outside of the open enrollment period, according to Tracy Seipel, a reporter at the San Jose Mercury News.
While this is great for those who have discovered their current providers are not in-network due to a routine office visit, it might not be so easy for those who have to seek services due to an emergency. While a claim in the emergency room due to a possible loss of life or limb will be covered as an in-network benefit at any provider, thanks to PPACA legislation, it does not mean that a subsequent in-patient hospital stay at the same facility will be covered.
Now that we are in September, and are coming up to the open enrollment period, I find myself wondering; did it work? Are we going to see more people leave the marketplace exchanges in January when their renewal premiums skyrocket? Or will they be able to maintain close to the current rates?
I guess we may have to wait another few weeks, or until open enrollment in 2016, to find out how the “focused” provider networks will impact premiums.
To benchmark your plan design and costs with other employers of your size, geography and industry, request a custom benchmarking report from your local UBA Partner firm.
*Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2013. Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1999-2013; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999-2013 (April to April).
Question: Does Illinois recognize same sex marriage/domestic partner relationships for benefit and policy coverage purposes? Answer: Yes. On November 20, 2013, Illinois signed into law the Religious Freedom and Marriage Fairness Act (S.B. 10) which became effective as of June 1, 2014. The law recognizes marriages between individuals of the same sex and extends to … Continued
By Laura K. Brestovansky There are two main types of health insurance, PPOs (preferred provider organizations) and HMOs (health maintenance organizations). There are benefits and disadvantages toward each type of coverage and people considering health insurance coverage should do research before deciding which type of policy is best for them and their family. PPO Definition … Continued
Use of Payroll Debit Cards by Employers On August 6, 2014, Illinois Governor Pat Quinn signed legislation (H.B. 5622) establishing requirements for the use of payroll cards by employers. The law: * Prohibits an employer from making receipt of wages by payroll card a condition of employment. * Sets forth requirements for initiation of payment … Continued
Question: Can we still provide executive physicals or is that now considered discriminatory? Answer: There are existing regulations under the Internal Revenue Code Section 105(h) nondiscrimination rules that allow benefits for “medical diagnostic procedures” to be paid to highly compensated employees without giving the same benefit to the non-highly compensated employee group. Under 26 CFR … Continued
By Mathew Augustine, GPHR, REBC
CEO, Hanna Global Solutions
The advent of state insurance exchanges last year has promoted a paradigm shift in the distribution and sales of insurance programs as part of employee benefit programs. Individuals using their ‘own’ funds to pick from virtual ‘store shelves’ of a wide range of insurance products is not an experience limited to employees of large corporations supported by big technology and service operations anymore. Consumers are making ‘purchase’ decisions as opposed to employees making ‘enrollment’ decisions; choice is being driven from ‘lowest price’ to ‘highest value’; decisions are moving away from employers preselecting a set of comprehensive plans on behalf of their employees, to employees putting together a portfolio of insurance products to suit their specific situation.
Many have compared this paradigm shift to the change that happened in pension plans from defined benefit to defined contribution. This one is even more significant. An employee can make some default decisions (or employers can decide for them) when it comes to 401(k) plans, at the time of enrollment, and then later change fund selections and rebalance their portfolio at any time during the year. This is not the case when it comes to insurance products in an employee benefit portfolio – you have to choose your portfolio at the time of enrollment and are stuck with it for a year until the next open enrollment window.
This places a lot of responsibility on advisors and employers to educate employees and communicate all the benefits and programs that are being made available. It takes the responsibility of employee benefits communication up a level. Classic marketing discipline must be applied to do this right. It is useful to consider the four P’s of marketing – product, place, price and promotion.
Product: A full variety of insurance products can be put together. If offered a range of medical plans, these plans must be complemented by supplemental plans such as critical illness and accident plans so that those choosing high deductible plans can gain protection against catastrophic situations. A young, healthy person should be able to select a low cost, high deductible plan design and redirect the premium savings to a health savings account (HSA) to build a fund for later years of higher utilization.
Place: These products must be offered in an easy to understand, easy to select ‘shelf’. Only those products that are eligible to a person must be presented to him or her, with clear ‘labeling’ of product features and price. That person should also be able to make comparisons among options available, without being limited in their options or decisions being made for them based on some broad generalities.
Price: The benefits manager in a company takes on the role of a product portfolio manager with the responsibility to set the right product-price mix. Use of the defined contribution model of employee cost sharing, with the right combination of options for employees to use their employer contributions, can help realize an employer’s benefit strategy, and help employees make decisions that are appropriate to their family situation and risk tolerance.
Promotion: Clear communication of the benefits program has always been a significant contributor to the level of satisfaction that employees have of their benefits program. The range of options presented, the independent decision making by employees on their choices, and additional products available, all make communication more challenging and necessary. Add to this the compliance overheads of statutory notices and plan documents, the proper promotion of benefit programs requires a professional marketing approach.
The good news is that this marketing approach, if executed well, will deliver results in multiple areas – employee satisfaction, cost control, regulatory compliance, and employee engagement. It is time for HR and employee benefits teams in companies to develop marketing in their skillsets or employ full-time product management or marketing communications specialists to market their employee benefits portfolio.
Download a complimentary copy of the UBA white paper, “A Business Case for Benefits Communications,” from http://bit.ly/1gJR3GE.
By Peter Freska, CEBS, Advisor
The LBL Group
A United Benefit Advisors Partner Firm
I have sat with hundreds of employers that want to make a difference. They want to make a difference in how their teams work, how productive the employees are, and better yet…in how they, as an employer, can attract, retain and engage the best and brightest people for long-term sustainable (profitable) growth of the organization. But many companies fall short. And, while most employees are 100% engaged when they start a new job, a recent Dale Carnegie Training study indicated that only 29% are fully engaged. In another article entitled “Overcoming Employee Disengagement,” the author mentions that the “2013 RAND Health Study found that less than half of employees (46%) participate in health risk assessment (HRA) or clinical screenings, and out of those identified as needing a wellness program, less than one fifth chose to participate.” (August 2014, Benefits Magazine) The point of the article was simple, that people create their own barriers to success.
So the question to pose is: With such low levels of overall engagement and low participation in something like an HRA, a simple thing that could help save a person’s life, what can an employer do to really affect personal change for their employees? The answers are in Total Population Health Management, but let’s concentrate on why employees maintain barriers and what is needed to make a difference.
When companies build and develop programs, they typically have productivity, efficiency, or most likely cost reduction motives. Well, what if a company builds a program that changes this paradigm by concentrating on more than just the bottom line?
For example, Costco is well noted for turning its nose to Wall Street in years past. Costco pays its employees a living wage, provides benefits for almost 90% of its employees, the CEO earns much less than others in similar size companies, and it paid workers $1.50 per hour more over three years during economic crisis. And the result of all these things is a fantastic shopping experience for you and me, with employees who tend to be fiercely loyal to the company and the members they serve.
There are more examples of service to the employees and customers that come to mind…Trader Joe’s, TOMS Shoes, and Dogeared to name a few. All of these companies are working to do their part to make this world a better place, while still being a profitable company.
The methods that these organizations implement tend to break down the personal barriers that employees build up. These personal barriers come in many varieties; from emotional to cognitive, to environmental and deep-rooted habits, and even physiological. By creating a unified mission, vision, and set of core values at the root of an organizations culture, these personal barriers gradually diminish. And, as you know, just saying or writing it is not enough. Organizations need to actually live it every day. In fact, to really establish an organization’s foundation of culture and values, these things need to happen every day through ongoing learning and reinforcement.
Download the complimentary UBA white paper, “A Business Case for Benefits Communications,” from http://bit.ly/1gJR3GE for further information on employee engagement and communication strategies.
