With the rise of GLP-1 drugs like Ozempic, Wegovy, and Mounjaro, conversations surrounding their inclusion in employee benefits programs are expanding in new directions.
Employee Benefits: How will Rising Inflation Affect Healthcare Costs?
From gas stations to grocery stores, you've almost certainly noticed that the costs of goods and services are skyrocketing with no end seemingly in sight. The American Healthcare system is no exception, as the rising costs of inflation coupled with the unrelenting strain of the COVID-19 pandemic on both the workforce and supply chains have led to ongoing challenges. With an unpredictable future ahead, making business decisions about balancing a tighter budget while still offering a competitive employee benefits package is more difficult than ever.
Today, inflation in the United States has reached rates not seen in years. The Consumer Price Index rose by 8.6% year-over-year in May 2022. All indications lead us to believe that it is only a matter of time before healthcare prices catch up to this increase. We've heard from clients that they are surprised that there hasn't been a more immediate substantial increase in healthcare costs currently. These dramatic increases are only being delayed by the unique characteristics of the healthcare industry. While other companies can raise the price of commodities such as food, gasoline, and raw materials immediately, that's not how it works in healthcare, where prices are set by government programs or negotiated with private insurers at an earlier point in time. In healthcare services, prices, reimbursement rates, labor contracts and several other input factors are set two to three years in advance. So, while physicians, hospitals, and other healthcare providers face higher costs—mainly increases in areas with shortages such as nursing and supplies— there will likely be a lag before consumers experience the same pressures.
We see this situation ultimately playing out in two steps. First, providers will demand higher reimbursement rates. Second, payers will pass higher costs to employers and consumers in the form of higher annual premiums and an increase in out-of-pocket expenses such as copays and coinsurance.
As for health insurance premiums, Peterson-KFF Health System Tracker's 23rd annual Employer Health Benefits Survey found that single and family premiums for employer-sponsored health insurance were up 4 percent in 2021. Also, The KFF survey found that the average family premium has risen 22 percent over the last five years and an astounding 47 percent over the past ten years. This burden of higher health insurance costs is shared by employers and employees alike. In 2021, covered employees contributed an average of 17 percent of the premium for single health coverage and 28 percent for family coverage. This means employers covered 83 percent of single premiums and 72 percent of family premiums last year.
Controlling Rising Healthcare Costs
While we can't predict how the inflation rate will fluctuate in the coming years, we can assume that healthcare costs and health insurance premiums will continue to ascend. What can your organization do to mitigate these price increases without sacrificing the quality of your overall employee benefits program?
Because inflation and the increased costs charged by healthcare providers are generally outside of your control, mitigating its effects is the best option for employer groups. Now is the time to be talking to your healthcare advisors and evaluating cost control methods. Evaluating and implementing products and concepts like alternative-funded health plans (self-insurance, level-funding, group captives, and consortiums), reference-based pricing, voluntary benefit offerings, and the utilization of Tax-Advantaged Accounts (HRAs, HSAs, DCAs, FSAs, etc.) are just a few of the strategies that enable employers to better manage healthcare spending. The KFF survey referenced earlier found that 64 percent of covered workers are now enrolled in self-funded plans, and 42 percent of small firms reported using level-funded plans. Both of these numbers are an increase from previous years' surveys, providing further proof that alternative funding models are continuing to gain traction compared to traditional fully-insured health plans.
A small silver lining, the IRS recently announced higher Health Savings Account (HSA) contribution limits for 2023 to help combat the inflation surge. The annual inflation-adjusted limit on HSA contributions for self-only coverage will be $3,850, up from $3,650 in 2022. The HSA contribution limit for family coverage will be $7,750, up from $7,300. The adjustments represent approximately a 5.5 percent increase over 2022 contribution limits, a substantial increase, whereas these limits rose by about 1.4 percent between 2021 and 2022.
Our top priority is to ensure your business is taking advantage of every possible course of action to reverse the trend of annual premium increases that will allow you to reallocate and reinvest those funds into initiatives that will more directly drive business growth. If you are a business owner or decision-maker within your organization struggling with the ever-increasing costs of offering a competitive employee benefits program, please don't hesitate to reach out to me directly or our team at Capstone to start a conversation!
Contact Us:
Joseph Fox
Senior Vice President - Employee Benefits
jtfox@capstonegrp.com
Office: 215-542-8030
Health Insurance & The COVID-19 Vaccines
As we step closer to the availability of the vaccine to the general population, employer groups will be considering many variables for their employees, including the availability of the vaccine, how their workforce fits into the phased rollout, vaccine costs, and what can be done now to prepare. In an effort to help local organization navigate these topics within the framework of their employer-sponsored medical plans, the Capstone Benefits Team has consolidated the most recent guidance being provided by the largest health insurers in our area:
Independence Blue Cross:
IBX does not specifically address how the plans will cover vaccinations, however the federal government has committed to providing the vaccine itself to the American public at no cost)
Click to Read More: IBX COVID Vaccine Update
Aetna:
Aetna will cover the cost of COVID-19 vaccines and their administration without cost sharing for Aetna members in all plans. Our coverage aligns with requirements in the CARES Act and the recent federal regulation. The requirement also applies to self-insured plans.
COVID-19 vaccinations will be available at pharmacies, including CVS, as well as doctors’ offices at other clinical sites of care. HHS recently announced a federal government partnership with large pharmacy chains and community pharmacies to access and administer COVID-19 vaccines as they become available.
Click to Read More: Aetna Vaccine FAQs
Cigna:
Will the vaccine be considered a preventive service waiving cost share for an employer’s workforce?
Any vaccine that receives FDA approval and is recommended by CDC (in partnership with guidance from ACIP), will be covered as a preventive service.
Will my health plan with Cigna cover the cost of a COVID-19 vaccine?
The vaccine will be covered as a preventive service. Initially, the cost of the vaccine serum will be paid by the government. We expect that providers’ charges for administering the vaccine will be paid under your Cigna medical plan, the same as any other immunization administration charge. We also expect that members enrolled in plans that cover preventive services at 100% will incur no additional cost.
Click to Read More: Cigna - Understanding COVID19 Vaccines
United Healthcare:
When COVID-19 vaccines are authorized by the FDA, members will have $0 cost-share (copayment, coinsurance or deductible), no matter where they get a vaccine, including when two doses are required, as outlined below:
Employer and Individual health plans: Members will have $0 cost-share at both in- and out-of-network providers through the national public health emergency period. This applies to fully insured and self-funded commercial health plans.
Click to Read More: UHC Preparing for COVID-10 Vaccine Authorization
For more information or company-specific questions, please contact Sr. VP of Benefits, Joseph Fox:
Email: jtfox@capstoneinsgroup.com
National Public Health Emergency Extension Benefit Plan Impact
On July 23, 2020, the Secretary of Health and Human Services (“HHS”), Alex Azar, declared the Public Health Emergency, scheduled to end on July 25, 2020, will once again be extended for an additional 90 days and as a result, numerous temporary benefit plan changes remain in effect.
Senate Considering Legislation to Improve HSA's
The House of Representatives passed two pieces of legislation that, among other things, purport to improve and “modernize” health savings accounts (“HSAs”). Both pieces of legislation have been sent to the Senate for consideration. Whether the Senate will take up these bills, let alone approve them “as is,” remains uncertain. There appears to be some bi-partisan appetite to loosen the current HSA rules, which means it is possible that we may see changes to these arrangements, which could be effective as early as January 1, 2019.
CLICK HERE TO READ A SUMMARY OF PROPOSED CHANGES
VISIT CAPSTONE'S HEALTHCARE REFORM WEBSITE: WWW.CAPSTONEHEALTHREFORM.COM
The ACA Undergoes a New Legal Challenge
Several states have lodged a legal challenge to the entire Affordable Care Act (“ACA”) on the basis that the lack of an Individual Mandate tax makes the remaining provisions unconstitutional. While the Administration is not intervening, several other states are, defending the ACA’s sustainability without the Individual Mandate tax. No resolution to the legal questions is expected imminently, although the uncertainty that it causes could result in higher premiums now.
How will this affect employers?
Visit our Healthcare Reform Resource Center to read more...
Message from Aetna CEO on Proposed CVS Deal
This week, CVS Health announced that they have agreed to buy Aetna for an estimated $69 billion in a deal that would combine one of the largest drugstore chains with one of the largest health insurers in the United States. The joining of these two healthcare giants has the potential to drastically change how consumers access and utilize care.
In an effort to keep our clients informed, we wanted to share the letter we received from Aetna's CEO, Mark Bertolini, regarding the transaction. As of now, the deal is set to close in the second half of 2018. Our Benefits & Compliance Teams will continue to monitor the situation and provide our clients with updates as they materializeOur Benefits & Compliance Team will continue to monitor the situation and provide updates as they come in.
If you have any questions on how this deal may impact you or your employees, please feel free to contact our Benefits Team at benefits@capstoneinsgroup.com
Trump Halts Cost-Sharing Reductions
On Thursday, October 12, 2017, the White House indicated that President Trump will end ACA cost-sharing reduction (“CSR”) payments to insurance companies effective immediately. This was followed up by a White House statement indicating that the payments had lacked appropriations and therefore the government could not lawfully continue making them. While the impact to insurance companies and individuals who obtain subsidized coverage in the Marketplace is expected to be significant, the direct impact to employers and employer sponsored health plans is expected to be minimal.
Implications for Employers
The direct impact of this decision is minimal. Applicable large employers (“ALE”) - those with 50 or more full time equivalent employees - are subject to ACA employer shared responsibility “A” or “B” penalties for failure to offer affordable and/or minimal value coverage to fulltime employees, if one or more of those employees obtain a subsidy or CSR in the exchange.
Even if CSRs are eliminated, since a prerequisite to an individual obtaining a CSR subsidy is to qualify for a premium reduction subsidy, there should be no change to an ALE’s “A” or “B” penalty exposure since premium reduction subsidies are not impacted by this White House decision.
Further, since an ALE must make an offer of affordable and minimum value coverage in order to avoid “A” or “B” penalties, we do not anticipate a significant increase in employees forgoing coverage in the Marketplace and enrolling in employer sponsored plans (since those individuals would generally have been ineligible for Marketplace subsidies due to the employer’s offer of affordable and MV coverage in the first place).
Additionally, if carriers exit the Marketplace or otherwise cancel plans in light of this change in policy, employers may see an increase in requests for special enrollment in their group health plans due to the loss of eligibility for Marketplace coverage.
The indirect implications are less clear. Stopping CSR payment will make individual insurance more expensive in the Marketplace. This may lead to carriers dropping out of the Marketplace, or if they remain, pricing plans beyond the reach of those individuals who previously benefited from CSR payments. This will likely result in an increase in the uninsured population. All payers in the health care system are affected by higher costs when there is a high uninsured population receiving uncompensated care.
Read more: http://www.capstonehealthreform.com/
New Executive Order and Insight on the Employer Mandate
President Trump signed an Executive Order (“EO”) on October 12, 2017, directing various federal agencies to take regulatory action that will “increase health care choices for millions of Americans.”
Employers should:
- Be aware that we are likely to see new regulations addressing AHPs, HRAs, and STLDIs in the coming months. While changes to existing AHP and HRA rules are unlikely to affect 2018 plan years, such guidance may create challenges for 2019 and beyond.
- As the Administration signaled its intent to enforce the Employer Mandate: • Plan for compliance with the 2017 ACA reporting. The final Form 1094-C, Form 1095-C and Instructions are available.
- Prepare to address any notices issued by the IRS regarding Employer Mandate assessments for the 2015 and 2016 calendar year.
Read More: http://www.capstonehealthreform.com/
Capstone launches site for real-time healthcare reform updates
Capstone Group is proud to announce the launch of a new webpage dedicated to keeping readers informed of recent compliance and health reform updates. Our Benefits Team is committed to providing the guidance needed to understand and make decisions based on the evolving future of our nation's healthcare legislation.
UnitedHealth to pull the plug on individual Obamacare plans in multiple states
UnitedHealth Group, the nation's largest health insurer, will drop out of government-organized health insurance markets in at least 16 states in 2017 as the U.S. industry leader tries to stem losses from participating in Obamacare, the healthcare overhaul that has brought coverage to millions of people.
UnitedHealth hasn’t listed the markets it’s leaving, and confirmations of the company’s withdrawals have been trickling in from regulators in the 34 states where the company sold plans for this year. The insurer won’t sell individual ACA plans for 2017 in states including Texas, North Carolina and Maryland.
UnitedHealth also is withdrawing from some related state insurance markets for small businesses.
Chief Executive Officer Stephen Hemsley said Tuesday that the company will end up selling Obamacare plans in “only a handful of states” next year. The exchange market is proving to be smaller and riskier than UnitedHealth expected, meaning “we cannot broadly serve it on an effective and sustained basis,” he told investors.
UnitedHealth’s reported state departure are Alabama, Georgia, Missouri, Pennsylvania, Arkansas, Louisiana, Nebraska, Tennessee, Colorado, Maryland, North Carolin,a Texas, Connecticut, Michigan, Oklahoma and Washington.
In the states where UnitedHealth stops offering ACA plans for next year, people who are currently enrolled with the insurer will have to choose a new health plan during open enrollment. Their current coverage isn’t affected.
Volatile Markets
The Patient Protection and Affordable Care Act, President Barack Obama’s signature domestic policy achievement, is projected to cover about 12 million people this year, according to the Congressional Budget Office, providing tax subsidies that help many afford private insurance. The program has proven volatile for health insurers selling coverage in the new markets, known as exchanges, with some reporting losses.
Insuring customers in ACA exchanges has turned out to be more costly than expected. That may be because sicker people are choosing to buy coverage, or because people buying plans deferred treatment for their medical needs until they got covered. Insurers also have said some people are buying insurance, using lots of care, and then dropping their coverage mid-year.
ACA Losses
UnitedHealth, which had about 795,000 ACA customers as of March 31, warned in November that it was posting losses on ACA policies. In December, the company said it should have stayed out of the individual exchange market longer.
The exchanges are a small part of the company’s total medical membership of 47.7 million people. Yet the insurer said Tuesday that it expects to lose about $650 million on ACA plans this year.
Hemsley spoke on a conference call after the company’s release of first-quarter results, which topped analysts’ profit estimates, thanks in part to UnitedHealth’s consulting, technology and services unit, Optum. The stock gained 2.1 percent to $130.50 at the New York close.
The impact of UnitedHealth’s decision to leave the ACA markets will vary by state. In North Carolina, a quarter of consumers will see the number of available Obamacare insurers drop to one for next year, according to an analysis from the Kaiser Family Foundation. Many of the rest will have just two carriers to pick from.
Almost 13 Million Americans sign up for 2016 Obamacare health insurance
About 12.7 million Americans signed up for 2016 health insurance coverage through the government insurance exchanges, surpassing its expectations, U.S. Health and Human Services Secretary Sylvia Burwell said on Thursday.
That means Republicans running in this year's elections may find it harder to deliver on their promise of repeal, while Democrats may yet be able to tap the newly insured as a voting constituency.
"It's not the unequivocal success that Obamacare advocates had hoped for, but also not the disaster that critics thought could make it a talking point on the campaign trail," said Larry Levitt, of the nonpartisan Kaiser Family Foundation.
The government began offering subsidies for individual insurance in 2014 under the Affordable Care Act, often called Obamacare, and charges a penalty to Americans who do not have health insurance.
In 37 states, customers can buy these plans on HealthCare.gov, the federally run website, while the other states and Washington D.C. run their own online exchanges. Enrollment closed on Jan. 31 for 2016.
This year was the third sign-up season, and different challenges emerged. The problem wasn't the HealthCare.gov website, which is faster, more reliable and easier to use. The issues involved the cost of coverage, the motivations of millions of people who remain uninsured, and the complexity of Obama's signature law.
Avalere Health said that based on Thursday's numbers, it expects 2016 year-end enrollment will be about 10.2 million, above President Barack Obama's administration's forecast of 10 million people being covered through the exchanges. Enrollment tends to dwindle over the year. Some people leave for employer coverage while other customers can't keep up with the costs, even with considerable financial help from the government.
More than 14 percent of Americans were uninsured in 2013 before the health care law's big coverage expansion. That share dropped to 9 percent last year, according to the government. More than 16 million people gained coverage from the end of 2013 to the middle of last year.
Insurers have been struggling to make money on the exchanges, where low enrollment has contributed to high per-customer overhead and has made it a riskier business for them.
Medical costs have also been an issue for insurers in 2015, with many reporting that they have booked unsustainable losses on these products. UnitedHealth Group Inc in November said that it may exit the exchanges after 2016.
On HealthCare.gov, about 4 million new customers signed up for plans and another 5.6 million consumers returned to buy insurance again, Burwell told reporters on a call.
In all, about 12.7 million people aged 18 to 34 signed up for the insurance, she said.
Customers who are younger tend to have fewer medical costs and are considered an important factor in creating financial stability for the private health insurers like UnitedHealth, Aetna Inc and Anthem Inc that sell these plans.
Andy Slavitt, who runs the Centers for Medicaid and Medicare Services division of the health department, said that the enrollment numbers had surpassed the mid-point of its projection to have between 11 million and 14.1 million people signed up for 2016 health coverage at this point in the year.
Four Ways Companies Could Adjust to Imminent Employee Benefits Tax
The Affordable Care Act's "Cadillac tax" is creeping into the picture, starting in 2018. This tax entails a 40 percent increase in employer-provided health care insurance for single plans costing more than $10,200 and family plans over $27,500. As a result, employers are currently working to cut costs that have been rising for years in order to avoid this tax. Therefore, you may be seeing some changes to benefits provided by your employer during this fall's open enrollment period:
1) Encouraging healthy living: A recent survey found that 42 percent of employers were contemplating adding or expanding programs to improve employee health. These programs begin with a health risk assessment and coaching, which may include help to quit smoking, eat better, or manage chronic health conditions, to help employees improve their well-being. All of this is done with the hope that it will ward off future medical expenses.
2) Adjust Coverage: Companies have been raising deductibles, the amount someone pays before insurance coverage kicks in, which lowers the premium or cost of coverage and could cause employees to shop around for better prices. Many companies are also adding surcharges to the cost of coverage for spouses who have other health insurance options. If your spouse is able to get coverage through his/her job, your employer will most likely encourage that option.
It is also very possible that businesses will cut back on the usage of flexible spending accounts. These accounts allow workers to set aside money before taxes for out-of-pocket medical expenses.
3) Offer new alternatives: More employers and insurers are attempting to shave costs by providing telemedicine options that connect people virtually with a care provider through a smartphone, tablet or computer for relatively minor conditions. These visits can cost half as much as a trip to the doctor's office, which can run around $100 for people with high deductible coverage.
Some companies also are considering moving their employees to a private insurance exchange. For that coverage, employers give workers a set amount of money and then send them to an exchange that offers several different plans.
4) Wait out the debate: Some employers are choosing to not take action yet until they see what happens with the tax.
Republicans and Democrats are both calling for the repeal of the Cadillac tax because of worries that the threshold that trigger the tax will grow more slowly than the actual cost of care, which means that each year more and more plans will be subject to the tax.