what is a health savings account

What is a Health Savings Account and How Can it Benefit Your Staff?

2003 was a strange time for the United States. It was a year that gave us a lot of sad news: the invasion of Iraq, the deaths of Gregory Peck and Johnny Cash, and the explosion of the space shuttle Columbia. But, 2003 gave us a lot of happy news too. Beyoncé released her first solo album, the Chappelle’s Show premiered, and SARS was declared officially contained by the World Health Organization.

Also, in December 2003, the U.S. government established health savings accounts (HSAs) through federal law. The creation of HSAs would go on to change America’s healthcare landscape. In this article, we’ll answer the questions of what is a health savings account, what advantages do they offer employees, and how can they improve your business.

 

What is a Health Savings Account?

A health savings account is a savings account that can be used to cover eligible medical expenses in the current year or in the future. Unlike Flexible Spending Accounts (FSAs), HSAs have no deadlines and funds roll over annually. There are four federal requirements an individual must meet to be eligible for an HSA:

  1. The individual must be covered by a qualified high-deductible health plan. (A high-deductible health plan is a health insurance plan with lower monthly insurance premiums and higher deductibles than the traditional health plan.)
  2. The HSA enrollee cannot be covered by another health insurance plan, such as a spouse’s plan.
  3. The individual must be under the age of 65.
  4. The HSA enrollee cannot be claimed as a dependent on someone else’s federal income tax return.

 

What Advantages Does an HSA offer?

1. Triple Tax Advantages

The first, and arguably greatest advantage of HSAs are the triple tax benefits these accounts offer. A triple tax advantage means:

1. Contributions to HSAs aren’t taxed.

2. The balance grows tax-free.

3. The funds are available for tax-free withdrawals if used to pay for eligible healthcare expenses.

Unlike traditional retirement savings vehicles, employees can withdraw money from an HSA at any time between today and their retirement with no tax deductions, provided the funds are used to pay for healthcare.

triple taxes

 

2. Portability

The second advantage of health savings accounts is their portability. Unlike FSAs, HSAs are portable.  Being portable means the accounts travel with you even if you change employers or exit the job market permanently. This portability means employees don’t have to worry about investing in an HSA and losing it all if they have to change jobs.

 

3. Savvier Healthcare Consumers

Utilizing a health savings account helps your employees become savvier healthcare consumers. According to a 2018 study by Alegeus HSA, employees with HSAs are smarter and more engaged in healthcare decision-making than their peers.

Health savings account holders are 54 percent more confident in forecasting out-of-pocket healthcare costs. They are 46 percent more likely to research and compare costs. Additionally, they’re 37 percent more likely to seek alternatives. Plus HSA holders are 68 percent more likely to have a savings goal. Finally, HSA users are 80 percent more likely to be saving aggressively for their future healthcare savings.

 

4. Improves Financial Wellness

In 2017, one in five working-age Americans with insurance experienced problems paying medical bills. So, even with coverage, healthcare is expensive for a large portion of the country. And, every year employers are placing more and more of the cost burden on the individual consumer. This cost shift only increases the chances of medical expenses negatively affecting your workforce.

Per BenefitsPro, employees who reported some level of financial stress, find an average of 45 minutes a day at work managing their finances. Similarly, according to a 2017 Mercer survey, employers are losing up to $250 billion a year due to employees’ stress about their finances.

Mercer found approximately 5 percent of an organization’s total payroll is at risk, at any given time, from time unproductively spend worrying. But, through health savings accounts, your staff can guard against financial stress caused by excessive medical costs.

 

5. Healthier Employees

Utilizing an HSA can help your staff stay healthier throughout the year. First, having money saved in your HSA allows employees to seek treatment right away instead of delaying a doctor’s visit until they can afford it. Second, HSAs can decrease financial stress, which in turn improves physical health.

As previously discussed, financial stress can have a tremendous, negative impact on productivity, but also has a significant adverse effect on an individual’s physical health. According to a study by Northwestern Mutual, of the 85 percent of Americans who feel financial anxiety, 67 percent say this stress is negatively impacting their health.

Additionally, per the European Society of Cardiology, those with significant financial stress are 13 times more likely to suffer from a heart attack. So, if an HSA can help to relieve financial stress, these accounts can subsequently reduce the impact of this stress on your employees’ physical health.

 

Building Your Business

As you can see, via the previous section of this article, there is a multitude of ways HSAs can positively impact the lives of your employees. The cumulative effect of this positive impact helps give a boost to your business, overall.

First, the savvier your employees are as healthcare consumers, the more they can save your firm. Integrated Benefits Institute, a health research group recently reported U.S. employers spend a total of $880 billion a year on healthcare benefits for their workers and dependents. Every time an employee picks the lowest cost facility for treatment or a procedure, your company saves.

Similarly, healthier employees can save your company thousands to millions of dollars. Poor worker health costs U.S. employers $530 billion a year from lost productivity due to worker absence and impaired performance. Healthy employees can help reduce this strain on productivity caused by poor worker health.

Finally, the more financially well your staff is, the less stressed they are. An HSA can allow your employees to focus more on their job and less on their financial woes. And, the more engaged your staff is, the more productive they tend to be.

 

The Wrap

The year 2003 gave us a lot of good and a lot of bad. But health savings accounts are a clear positive for both employers and employees. Use this article to tell your employee what a health savings account is. Also, how it can help them, and your business as a whole.

2019 open enrollment

2019 Open Enrollment Guide: 7 Healthcare Trends You Need to Know

This year in healthcare has been both interesting and tumultuous. In 2018 alone, the Affordable Care Act has undergone significant changes at the hand of the current presidential administration. First, the Cadillac Plan tax was delayed from 2020 to 2022, in January.

Then, in April the administration announced two new exceptions to the individual mandate and gave states the authority to cut back on the 10 essential health benefits mandated by the ACA. Later the government released new rules that expanded both association health plans, and short-term ones, in June and August, respectively.

These rules, in addition to multiple cuts in government funding, have worked to cripple the ACA. Still, until the act is officially repealed, it’s the law of the land. As such, you’ll need to know how these changes will affect your 2019 open enrollment.

Luckily, The Olson Group is prepared and ready to help. Here’s a list of top seven healthcare trends and changes you need to be aware of for your 2019 open enrollment.

 

Learn more about the recent expansion of association and short-term health plans. 

 

1. Plan Changes and Limit Increases

The IRS, in May of this year, announced new annual contribution limits for Health Savings Accounts (HSAs) for the upcoming plan year. For 2019, the annual limit on deductible contributions to a health savings account will rise by $50 for individuals and $100 for families.

one dollar bills

Now, the annual contribution limits will be $3,500 and $7,000 for individuals and families, respectively. On the other hand, the minimum deductible of a high-deductible health plan (HDHP) is unchanged for 2019. The deductibles for these health plans, the only type that can be paired with an HSA, will remain $1,350 for individuals and $2,700 for families.

Conversely, the annual HDHP out-of-pocket maximums, for 2019, will increase. Next year, out-of-pocket maximum’s for HDHPs will be $6,750 for individuals and $13,500 for families.

 

2. Penalties Are Still Relevant

Beginning late last year, and continuing through this summer, the IRS sent over 300,000 proposed-penalty letters to employers for violations of the ACA’s employer mandate in 2015. Some of these letters proposed penalties for large employers that exceeded $1 million each.

And, as an employer, you shouldn’t predict these letters to stop. Mark Spittell, managing director at KPMG’s Compensation & Benefits Practice, expects 2016 assessment letters to be issued before the end of this year.

Penalties for violating the “employer shared responsibility payments” (ESRP) come in the form of a 226-J letter. An employer has only 30 days to respond to this letter. And, they must complete and return their response, via Form 14765, to challenge any part of the IRS’ assessment.

document

It’s important your firm handles these letters and responses as quickly as possible. Because the penalties can be significant. In a worst-case scenario, an employer with inadequate health coverage could pay for the cost of this coverage, in addition to penalties up to $2,000 a year for every full-time employee.

In addition to ESRP penalties, employers need to be aware that Forms 1094-C, 1095-C, and Summary of Benefits Coverage (SBC) all still need to be filed. Employers that fail to complete Forms 1094-C and 1095-C, or complete them with errors, could face both reporting-related penalties and ESRP penalties.

Additionally, the penalty for a failure to provide employees with an SBC is less punitive but still significant. For 2018, a penalty of $1,128 per participant can apply to the failure to provide an SBC as required.

 

3. Utilize Big Data

Every year, through benefits technology, your organization can collect a treasure-trove of health data. This data, with the help of online resources, can provide an analytics-based guideline for improving employee’s health outcomes.

Employers should use this information to implement personalized clinical management and employee engagement programs. These programs let you maximize your healthcare dollars.

 

4. Digital Tools

Digital tools today, play as important of a role as ever, in both open enrollment and benefits in general. Online enrollment platforms let employees easily pick and enroll in their benefits plan. As mentioned above, they can also help your firm analyze important health data.

digital tools

Similarly, digitally-driven benefits such as telemedicine, are growing in importance and utilization. So, it’s crucial your firm both understands and takes advantage of these digital tools, for your 2019 open enrollment. Because the role of this online equipment will only continue to grow.

 

5. Incentives for Comparison Shopping

Modern consumers are no strangers to spending hours online searching for the best deal for a particular product. Yet, this propensity to comparison shop doesn’t extend to healthcare. According to Employee Benefits Advisor, only a little more than one-third (36 percent) of Americans say they’ve used the Internet or mobile apps during the last year to comparison shop for healthcare.

This number is a huge improvement, since 2012. That year, only 14 percent of consumers said they comparison shopped for healthcare. Still, your business should do all it can to promote comparison shopping for healthcare among your employees.

To encourage your staff to participate in this trend, your firm should consider offering incentives. Even small financial incentives, such as $50 gift cards, can push employees to use these healthcare transparency resources.

The quality and cost of healthcare can vary widely within the same city or even the same neighborhood. So, utilizing these transparency resources can result in significant savings for both your employees and your organization overall.

You wouldn’t expect someone to buy a car without them researching the vehicle first. So, why wouldn’t you expect your staff to do the same for healthcare. Especially, as the cost of healthcare and health benefits continues to rise. In 2019, the cost to provide healthcare coverage is expected to rise to $15,000.

 

6. Integrate Enhanced Benefits

Enhanced benefits, also known as voluntary or ancillary benefits, are more important to your health plan’s success than you may realize. Benefits such as vision and dental care, identity theft protection, or short-term disability all affect the outcomes of your overall benefits plan’s success.

These ancillary lines of coverage help maximize the effectiveness of your firm’s healthcare dollars. Combining medical and enhanced benefits under a single health plan may enable your company to analyze a wider range of data.

As previously mentioned, the more data you have, the better you can engage in proactive outreach and clinical support for employees. Especially for those with chronic conditions.

Those with chronic conditions, often known as high utilizers, cost billions of dollars themselves. The sickest five percent of patients use a full third of Medicare’s budget. Similarly, this five percent consumes over half the spending of Medicaid.

 

7. Employee Education

Employee education is or should be, the most vital component of any open enrollment. According to a 2018 poll by Unum, the average employee spends 30 minutes or less reviewing benefits materials before open enrollment.

Despite this fact, 77 percent of employees say they’re prepared for open enrollment, according to a UnitedHealthcare Survey. But, according to the same study, only 6 percent of these respondents could successfully define all four basic health insurance concepts.

And, per an HSA Bank white paper, just 10 percent of employers believe their workers understand their health plans. Clearly, most employees aren’t taking the time to completely understand their benefits plans. It’s an employer’s responsibility to ensure your staff has a thorough understanding of their benefits.

Your broker or HR team can help employees with their benefits selection. But, holding employees’ hands through the process doesn’t actually help these individuals. To get the most from your healthcare dollars, all your staff must know what benefits are available to them, and how they can affect themselves and their family.

 

The Wrap

Open enrollment is critical for establishing a baseline of prosperity for your employee benefits plan. Follow these seven trends to maximize the success of your company’s 2019 open enrollment.

association health plans

Short-Term and Association Health Plans: New Tools for a New ACA

This year, the White House has shaken up the healthcare landscape, without repealing the ACA. Since the beginning of 2018, the Trump administration has reintroduced both short-term, and association, health plans. Each of these plans, give employers additional options and flexibility for providing healthcare coverage for employees.

In this article, we will define both plan types, detail their qualities, and explore the pros and cons of each. These plans, if used correctly, can be another tool for you in the fight against the rising costs of health coverage.

 

Short-Term Health Plans

Short-term health plans are health insurance policies that offer limited coverage but less expensive premiums. On August 1, 2018, President Trump announced an expansion of these short-term policies. The administration, with their new rules, are seeking to redefine short-term, limited duration insurance.

Now, short-term plans can extend to 12 months at a time.  And, people can renew their short-term coverage for, up to, 36 months. This period was based on the model created by the Consolidated Omnibus Budget Reconciliation (COBRA) Act.

But, consumers can only extend their policy for the same amount of time, as the original length of coverage. So, if you bought a twelve-month policy, you may only renew that policy for 12 months, at a time.

 

Association Health Plans

In June of this year, the Trump administration also announced a rule that expands the consumer availability of association health plans (AHPs). Association health plans allow small businesses to band together to purchase insurance. These kinds of insurance plans have existed for years. Albeit, in a much different form than what they will be.

The new regulations will allow more association plans to come to market. Because of these recent laws, more small businesses and individuals who work for themselves can form and join association health plans. Early association health plans, before this recent rule, usually required the association’s members to share some economic or other common purposes beyond enrolling for health insurance.

Under the new rules, AHP members can be connected by geography alone or simple professional interest. Through these recent regulations, providing members with insurance can be the primary purpose of an association health plan.

 

Possible Effects of More Short-Term Health Plans

The expansion of short-term health insurance could lead to a multitude of effects, both positive and negative. The Trump administration believes the growth of these policies will transform the healthcare system. They believe those unable to afford health insurance under the current ACA, can now afford coverage.

Health and Human Services Secretary Alex Azar reinforced this idea and said the short-term plans will provide a much more affordable option for those unable to purchase coverage through the ACA marketplace. Azar believes these short-term policies, “may be as much as 50 to 80 percent cheaper than the Obamacare exchange plans.”

Similarly, Kev Coleman, lead researcher for HealthPocket, believes the benefits included in short-term plans will improve with their expansion. The better the benefits, the better these plans are for their enrollees. Among the improvements are the policy’s increased coverage and renewal dates.

As previously mentioned, short-term plans can now last for a year. Additionally, you can re-enroll in your short-term plan for up to 36 months. These broadened timeframes create a more useful product for those in need of health insurance but can’t afford traditional ACA marketplace policies. But these are just the positives of short-term plans. There are also many possible disadvantages to discuss.

The clearest disadvantage of these short-term policies is they don’t have to meet ACA requirements for “minimum essential coverage,” and can deny coverage based on pre-existing medical conditions. This lack of ACA requirements means short-term plans don’t necessarily have to provide coverage for issues including, asthma, maternity care, lung cancer, and mental health care.

The lack of these areas of coverage could result in severe financial penalties for those with a chronic disease. According to Chris Hansen, the president of the American Cancer Society Cancer Action Network, people who buy these short-term policies could face astronomical costs of care. And, these costs may force plan members to forgo treatment entirely.

 

Possible Effects of More Association Health Plans

Like short-term insurance, association health plans will offer both positives and negatives. The first positive of association health plans is they can provide more affordable healthcare plan options for small employers and self-employed individuals than what they can currently find on the ACA Marketplace.

Also, unlike short-term policies, association health plans do have to follow certain ACA guidelines. New association health plan regulations prevent these plans from screening applicants based on claims experience or charge higher rates to individuals with pre-existing conditions. Similarly, association health plans can’t have bans on lifetime or annual limits for services covered.

Still, like short-term insurance, association health plans don’t have to follow the ACA’s guidelines on covered health benefits. So, these plans don’t have to cover mental health care, emergency services, newborn care, or prescription drugs. Furthermore, the new rules allow plans to charge different rates based on gender, age, and location.

 

The Wrap

Both regulations create expanded tools for those looking for insurance but can’t afford traditional health plans. Still, before you utilize these either of these policies, make sure you look at both the advantages and disadvantages of each. Short-term and association health plans may change the healthcare landscape, but that change may not be for you.

aca compliance for 2018

What Employers Need to Know About ACA Compliance for 2018

Two years into Donald Trump’s presidency and the Affordable Care Act is still, somehow, alive. Despite the push to repeal and replace the ACA, the law remains intact. So, let’s check out what you need to know, as an employer, about ACA compliance for 2018.

 

What’s Staying the Same (For Now)?

Employer Mandate

The first important piece of the ACA that’s not changing is the employer mandate. Applicable large employers (ALEs) must provide “minimum essential coverage” to at least 95 percent of their eligible employees. Your business will be heavily penalized if you fail to provide this coverage.

 

Applicable Large Employers

Also staying the same is the calculation to determine whether an employer is subject to ACA requirements. As previously mentioned, any employer considered an applicable large employer must provide their staff with coverage. A business is regarded as an ALE if they employ an average of 50 or more full-time equivalent employees during the previous calendar year.

applicable large employer

Minimum Value

Another part of this legislation that’s staying the same in 2018 is the minimum value rule. The minimum value refers to the comprehensiveness of a health plan, i.e., how much it covers. Applicable employers must provide coverage that pays for at least 60 percent of medical expenses. This 60 percent is based on an average for a standard population of employees.

 

What’s Changing?

Individual Mandate

The individual mandate, unlike the employer mandate, is changing soon. Congress, with the passage of the latest tax bill, eliminated the penalties attached to the individual mandate of the ACA. So, individuals will no longer be penalized with a tax if they don’t purchase insurance.

NOTE: The individual mandate is, contrary to popular belief, still in effect for 2018. Next year, 2019 will be the first year the penalty will disappear. Until then, you will still owe the government a penalty if don’t have health insurance or an exemption from the mandate.

 

Enforcement Notices

While not technically a change, in 2018 the IRS has begun sending enforcement notices to employers. Though, these notices aren’t for the current year. Instead, these notices are for compliance in 2015 through 2017. It’s been estimated the IRS has sent 30,000 notices regarding the employer mandate this year already. Your firm needs to be prepared to both receive and respond to an IRS notice if it comes.

form

 

Out-of-Date Form Lines

Some ACA rules have changed due to the enactment of new laws or the expiration of temporary provisions. In some cases, the IRS has failed to update the forms quickly enough. One example, per BenefitsPro, is Form 1094-C. There are lines on this form that only apply to the 2015 and 2016 filing years, and not for 2017.

 

Affordability

The minimum value employers must provide remains the same, but the affordability for the 2018 plan year has changed. This year ALEs must provide employees with coverage that doesn’t exceed 9.56 percent of the employee’s household income for the year. This number is down from 9.69 percent in 2017.

 

Preventive Services

Something else changing in 2018 is the list of preventive services any ACA-compliant health plan must cover. These services include covering:

  • Depression in adults
  • Low dose aspirin for adults over 50 who have cardiovascular risk
  • Preventive care for women; such as breast cancer screening
  • Syphilis screening for asymptomatic, non-pregnant adults

hospital room

SBC Template

Finally, the template for the summary of benefits and coverage (SBC) has been updated for 2018. Any insurance company or employer-sponsored health plan must provide those enrolled with a summary of the health plan’s benefits and coverage. Make sure your business is using the new template for these summaries.

 

The Wrap

During the past two years, the ACA has appeared to be on life support for long stretches of time. So, while we don’t know if the act will survive for much longer, as long as it does, it’s still the law. Make sure your business avoids any unnecessary penalties by staying on top of any updates to ACA compliance for 2018. Check back at The Olson Group anytime an ACA change is announced.

open enrollment

10 Easy Steps to Improve Your Open Enrollment Process

For many HR representatives, open enrollment is similar to the doors of Walmart opening on Black Friday: pure chaos (and the occasional tasing).

In 2017, this period will be especially hectic, as health care reform and political turmoil swirl. These eleven steps can be used to improve your company’s open enrollment process.

 

1. Plan ahead

Employers need to begin planning their open enrollment four to five months in advance. This planning process should include:

— Auditing your materials (pamphlets, memos, videos, etc.) for any errors or changes in facts

— Preparing a marketing plan

— Compiling your support materials

— Discovering what employees want to know more about/know the least about

— Scheduling any meetings, webinars, benefits fairs, etc.

— Beginning communication with your benefit partners to ensure you’re on the same page, and ready to go for open enrollment

Planning ahead will make your enrollment period far less stressful when it comes around, which will benefit all your employees, not just your HR professionals.

diversity committee

2. Consider new benefits

Your business also has to ask itself numerous questions regarding new benefits offerings:

— Would employees be interested in new popular options such as HSAs or wellness programs?

— Should you offer auto-enrollment for certain benefits?

— Did you offer similar plans last year? If so, how interested were employees?

— Which benefits were employees most likely to use?

All of these questions can help you determine if your company should consider offering new benefits, or which old benefits it should replace with new ones. The benefits landscape is constantly changing, and it is up to each employer to adapt how they see fit.

 

3. Review last year’s results and set new goals

Each year you should discuss how your previous open enrollment process went. It is important to figure out what went well and what could be improved. Reviewing last year’s process is the best way to improve this year’s. This review factors directly into the next part of the step, setting clear goals.

The two questions businesses have to ask themselves when setting goals for their open enrollment processes are: What do we measure and how do we measure it? Your company has to decide what metrics it is going to collect and use to measure success. These metrics should be tied directly to your goals. You then need to confirm how you will gather and measure the data.

data

Some examples of open enrollment goals are:

— Increase enrollment in the company’s consumer-driven health plan by __%

— Get __% of employees saving for retirement

— Engage __% of employees in viewing the wellness program video

— Reduce printed OE material budget by __%

— Decrease the number of calls to HR hotline by __%

 

4. Communicate

Communication with your employees is the key to any successful open enrollment period. Ask employees if there is any topic they’d like to know more about, or which topic confused them the most. Discover how employees would like to be contacted (email, phone, meeting, etc.) with information regarding open enrollment and benefits.

Survey employees to find out how their experience was last year. All of this information is key to improving your open enrollment. Ultimately, this time is for your employees, and it is vital to get their point of view.

 

5. Prepare your staff

Your staff should not go into open enrollment meetings and have to ask basic coverage options questions. This information needs to be distributed to all your employees, prior to any official open enrollment meetings.

preparation

Deliver this information through the communication channels we discussed above. The Society for Human Resource Management (SHRM) says there are four main questions your employees want to know:

  • Why do I need the coverage?
  • Which features fit my needs?
  • What value does the program provide?
  • How much is this going to cost me per paycheck?

Answering these questions will give your staff a solid foundation of understanding their employee benefits plan. This knowledge makes the open enrollment process easier and more efficient for everyone.

 

6. Utilize Technology

Any company that doesn’t utilize the latest technology is going to have trouble keeping up with their competition. This statement holds true for open enrollment too. New HR technology can help you both communicate with employees and administer benefits enrollment.

Online enrollment technology allows your employees to enroll on their own time, where they want and provides an improved experience overall. This technology makes open enrollment easier for employees to complete and less stressful for your HR team to manage.

 

7. Identify and Recognize Your Employees’ Needs

If you want to really improve your processes, you have to understand what your employees need. One of the best ways to understand these needs is to develop personas and segment your staff.

drinking coffee

Segmenting your staff allows you to tailor open enrollment materials to specific groups that will be more receptive to them. For example, your millennial employees will likely be more receptive to information about pet insurance, than baby boomers.

Use segmentation, internal surveys, and employee feedback to shape your benefits package. The more input your staff has, the more likely they are to respond positively to the company’s employee benefits offerings.

 

8. Stay Up-to-Date

Unless you’ve gone full ostrich during the past eight months, you’ve probably heard about health care reform. President Trump and Congress have already attempted to pass legislation that would replace the current ACA policy. But up to this point, they haven’t found success.

Still, the battle over health care reform is far from over, and it wouldn’t be a total shock if to see the ACA eventually repealed and/or replaced. This state of flux makes it important that your HR team and benefits broker is staying up-to-date on all of the latest health care reform news.

Additionally, health care legislation, in general, is exceedingly erratic. Your HR professionals and broker have to be able to answer any employee questions about new, or possible health care changes.

 

9. Set Office Hours

Many open enrollment communications occur through materials such as an email or flyer, or in group settings. These are obviously the most cost and time effective options for reaching a group of employees.

handshake

Still, there may be employees who want to ask more sensitive questions, and wouldn’t feel comfortable doing so in a group or electronic setting. Your HR team has to have open office hours for employees to come in and ask questions one-on-one.

 

10. Give Them Enough Time

“It is a rushed process, and I feel like I don’t have time.” This statement was the number two open enrollment frustration, by employees in a recent Namely survey. There is a rather simple solution to this frustration. More time.

Instead of one week of open enrollment, give staff members two or more weeks. Similarly, prepare your employees ahead of time. Beginning at least six weeks in advance of open enrollment, start preparing your team for what they need to know before open enrollment begins.

 

The Wrap

Only 20 percent of workers said they had enough information to make informed decisions about their benefits, according to Aflac’s 2015 WorkForces Report. This type of disconnect is common among workplaces and leads to a chaotic and ineffective open enrollment period.

Use these five steps (and make sure nobody brings a taser to work) to improve your open enrollment process.

healthcare policy

Untangling Health Care Policy Through Your Employee Benefits

As Congress and President Trump recently found out, health care policy is difficult to understand, and next-to-impossible to change.

This recent article from The New York Times delved into some of the reasons why health care policy is so complicated.

The author of the article detailed several different factors that have a large, complicating, effect on health care. These factors include:

  • Externalities
  • Lack of consumer knowledge
  • Spending volatility
  • Overconsumption
  • Adverse selection

For business leaders, these reasons in addition with the tangle of information and regulations that is health care can prove a real challenge. Yet, there remains some hope.

healthcare

This hope comes in the form of employee benefits. Your company’s employee benefits can make a world of difference for your employees and their understanding and utilization of health care coverage.

Here are some of the top methods your company can use to maximize your employees’ use of their health care policy.

 

The Obvious

The most obvious method for uncomplicating health care for your employees is providing them with health insurance. Health insurance is a standard benefit and one that is valuable to a majority of employees.

According to a survey by Glassdoor, a company’s health insurance has the greatest effect on how employees rate their benefits. Clearly, health care coverage is still a big deal to employees.

Externalities can dramatically affect health care, as a whole, according to the article. These externalities, as defined by Investopedia, are a consequence of an economic activity experienced by unrelated third parties.

data trend

Still, individuals who have health insurance can help negate the number of externalities affecting others’ health care.

For example, if all healthy people decided one day that they all wanted to get rid of their health insurance, the marketplace would instantly change. Only unhealthy individuals would remain, and overall costs of insurance would skyrocket.

We will discuss this example in more detail later. But by offering as many of your employees health coverage as possible, it helps to reduce some of these externalities.

 

Inform and Educate

Here at The Olson Group, our mission is to inform, educate, and empower employees to make the best benefits decisions for themselves and their families.

The Olson Group Employee Benefits Omaha

There is a reason we use the words inform and educate. Knowledge, as they say, is power. And yet, too many times healthcare consumers don’t have all the necessary information to make the best decisions for themselves.

For employees to augment the utility they receive from any benefit, let alone health insurance, they need to have the right information. An annual meeting with your broker is not enough to truly educate your employees.

Your company needs to invest in a complete employee education. Educate and inform your staff through instruments such as telehealth, price comparison tools, and service comparison information.

All of these tools let your employees be better health care consumers and get the most out of their health insurance.

 

Attention to Prevention

Preventive care has had an increased emphasis under the ACA. Insurance plans have to cover recommended preventive services without any patient cost-sharing.

According to a 2015 article from The Kauffman Foundation, research has shown that evidence-based preventive services can save lives and improve health.

This research has demonstrated that through identifying illnesses earlier, managing them more effectively, and treating them earlier, preventive care can really help your employees.

One of the factors affecting health care is spending volatility. Preventive care is a good way to avoid some of the unpredictability associated with health care spending.

 

Money in the Bank

Overconsumption is another serious problem for many healthcare consumers. Health insurance, like almost anything else, can be used irresponsibly.

As the article says, when insurance is picking up the tab, people have less incentive to be cost-conscious.

financial wellness

The rise of HSAs and HDHPs has been a direct response to this lack of spending responsibility. Utilizing a high-deductible insurance plan gives employees more “skin” in the game.

The high deductibles of these plans make employees more cost-conscious as they now have to spend a large amount of money, before reaching any cost-sharing thresholds.

HSAs also help your staff become more cost-conscious because they give you a specific, independent, account for your health care costs.

This separate account, not only allows you to save money but can make you more conscious of your spending.

It’s easier to track exactly how much you’re spending on health care because the account is completely separated from any other account, and can only be used for qualified health care expenditures.

Additionally, you can only use money in HSAs for qualified health care expenditures. These rules limit the possibility of frivolous spending on something other than health care.

 

Ending Where We Began

Adverse selection is a final complication of health care. Adverse selection occurs when customers differ in relevant ways and those differences are known to them but not to insurers.

These differences can result in a high-percentage mix of people buying insurance who use more than the average amount and become especially expensive.

affordable health insurance

One way a company can reduce adverse selection is to offer health insurance to more employees. Enrolling more of your employees in health insurance can help fight against adverse selection.

By and large, the more employees, each company can enroll, the more policies there are to spread risk around.

Ideally, spreading risk also works to spread the cost. Individuals who would normally be unable to afford insurance, due to a pre-existing condition, are now able to purchase affordable coverage because their risk is mitigated.

 

The Wrap

Health care policy is like one of the most underrated Disney-animations of all time; Tangled. There’s no way around it, and, as our government found out, it seems unlikely to change in a major way.

Still, the five actions above will help your business reduce the complications of health care policy for all of its staff. These five steps act as a fancy conditioner; they detangle.

ACA compliance-leaves changing

11 ACA Compliance Changes in 2017

“To improve is to change; to be perfect is to change often” – Winston Churchill

The ACA is hardly perfect, but it is trying to improve. Next year will mark an array of changes to ACA compliance. Whether you think theses changes will improve the ACA or not your company must remain compliant with each one.

Here are 11 changes coming to the ACA, you need to know for 2017.

 

1. Transition Relief

Transition relief for the Employer Shared Responsibility for applicable large employers (an average of 50 or more full-time equivalent employees during the prior year) expires on January 1, 2017.

ACA compliance

Applicable large employers have to offer ACA-compliant coverage to their employees starting at the beginning of the new year (2017).

 

2. Flex Contribution Relief

Flex contribution benefits relief will also expire on January 1, 2017. Employers need to review their contribution strategy and ensure they are not providing any flex contribution relief to those plans.

 

3. Grandmothered Plans

Grandmothered Plans, plans that are not entirely ACA-compliant and were purchased between March 23, 2010, and October 1, 2013, can continue to be renewed until October 1, 2017.

These plans, though, have to be terminated at a date no later than December 31, 2017. This termination date means that all grandmothered plans, by the end of 2017, regardless of their renewal date, must be terminated.

ACA compliance

4. Good Faith Effort

Last year, employers were not assessed any penalties for missing or incorrect data on their IRS Forms 1094-C and 1095-C.

This “good faith effort” has not been extended for next year’s reporting. Employers will need to be fully accurate with their reports to avoid a filing penalty.

 

5. Wellness Compliance

Your wellness program must now be in compliance with new rules passed by the EEOC in May 2016. Some of the new rules were immediately applicable, but two parts take effect on January 1, 2017.

These parts are that employers comply with “voluntariness” requirements and the maximum 30 percent reward rule.

ACA compliance

The “voluntariness” requirement states that:

— Companies may not require employees to participate in a wellness program

— Eligibility for a group health plan, or any benefit offered under the plan, cannot be based on participation in the wellness program, with exception for the 30 percent incentive rule

— Your company cannot make any adverse action or adverse employment action against an employee for exercising their rights under the ADA or encouraging other employees to do so

— Organizations must provide employees with understandable written notice that is understandable and describes the medical information that will be obtained by the wellness program and how it will be used

If your company uses a health risk assessment or biometric screening as a part of your wellness program, you need to understand the maximum 30 percent rule.

Any business that uses either of these tests in their wellness program can have a maximum wellness program reward of 30 percent, for self-only coverage under the employer’s group health plan.

 

6. No Extra Filing Time

Last year the government granted employers an extended deadline for employee notification and IRS filing deadlines for the Affordable Care Act. These deadlines have not bee extended for 2017.

As of now the deadlines are as follows:

ACA Information Reporting Forms  2015 Tax Year  Deadlines

 (Forms Filed in    2016)

2016 Tax Year Deadlines (Forms Filed in 2017)
Forms 1095-B and 1095-C due to employees   March 31, 2016  January 31, 2017
Forms 1094-B, 1095-B, 1094-C and 1095-C due to IRS if filing on paper   May 31, 2016  February 28, 2017
Forms 1094-B, 1095-B, 1094-C and 1095-C due to IRS if filing electronically   June 30, 2016  March 31, 2017

 

7. Affordability Requirement Percent

Companies must make sure their employer-sponsored coverage will still be considered affordable for the upcoming year.

Beginning January 1, 2017, plans will only be considered affordable if the employee’s required contribution for self-only coverage does not exceed:

— 9.69 percent of an employee’s household income for the year (for ACA employer shared responsibility rules and premium tax credit eligibility)

— 8.16 percent of the employee’s household income for the year (for an exemption from the individual mandate)

ACA compliance

8. Summary of Benefits and Coverage Model Documents

Any employer that offers a group health plan will have to be prepared to use new SBC model materials and documents on or after April 1, 2017.

 

9. Health Savings Accounts Contribution Limits

New maximum HSA contribution limits for next year have been increased by $50. Beginning on January 1, 2017, HSA contribution limits for self-only plans will be $3,400.

 

10. Risk Mitigation Programs

On January 1, 2017, two of the three “risk mitigation” programs for insurers will expire. The two that will expire are:

— Reinsurance – Payments to plans that enroll higher-cost individuals

— Risk Corridors – Set an allowable range for losses and gains

The elimination of these programs could result in much higher premiums for employers and employees.

 

11. Mental Health Parity

Verify that your plan meets recent parity guidance concerning coverage of mental health and substance used disorders. Prepare your organization for possible U.S. Department of Labor audits of health plans’ compliance.

 

The Wrap

Employers need to know what these changes are and what they need to do to stay compliant with them. Save your company thousands of dollars in avoided penalties by understanding each of these alterations.

Just because the ACA isn’t perfect, doesn’t mean your compliance with it can’t be.

 

Resources

https://www.healthinsurance.org/blog/
http://www.wexhealthinc.com/
https://www.associatedfinancialgroup.com/
http://www.employeebenefitadviser.com/
https://www.shrm.org/resourcesandtools/
https://morningconsult.com/
http://www.plansponsor.com/
medical records

ACA Compliance: Top 5 Issues to Look Out for in 2017

 

2016 is barely half over, but it’s never too early to begin planning for next year. Last year saw an increase in regulations companies had to comply with regarding the ACA.

In 2017, companies will have to deal with even more ACA compliance issues. Employers need to look ahead to safeguard their business against potential fines or legal difficulties.

 

1. Plan for the Cadillac Tax

The Cadillac tax, which is a 40 percent excise tax on plans with annual premiums exceeding $10,200 for individuals or $27,500 for families, doesn’t begin until 2020. Still, it is important for businesses to look ahead while preparing for ACA compliance.

Companies should conduct a financial assessment of their current coverage to determine which plans exceed the thresholds. After determining which plans meet the thresholds, organizations need to determine what steps they can take to avoid this tax.

ACA compliance

2. Determine your number of employees

It is important that each business knows exactly how many workers it employs during 2016. This year is the first year that all companies with 50 or more full-time equivalent employees have to offer minimum essential coverage to at least 95 percent of their employees.

Both of these numbers are increases from previous thresholds. Previously, employers of 100 or more full-time equivalent employees had to offer qualifying coverage to at least 70 percent of their staff.

To get a total number of full-time equivalent employees, use the IRS formula. Add up the hours that non-full-time employees are paid during a year and divide the total by 2,080, then add that amount to your number of full-time employees. The answer is the number of full-time equivalent employees.

 

3. Review compliance tactics

Every organization needs to check their 2017 health plan design and eligibility terms against employer shared-responsibility strategy. Companies need to determine whether medical options meet minimum value and essential coverage, and affordability standards.

Individual and IRS coverage-reporting processes need to be evaluated to confirm they meet any changes necessary for 2017.

ACA compliance

4. Prepare for no extra filing time

This year, 2016, employers received an extra two months to distribute necessary forms to employees, and three months to file with the IRS. Current deadlines are as follows:

 

ACA Information Reporting Forms 2015 Tax Year Deadlines 
(forms filed in 2016)
2016 Tax Year Deadlines
(forms filed in 2017)
Forms 1095-B and 1095-C due to employees (to be postmarked if mailed, or sent by e-mail if applicable conditions met). March 31, 2016 Jan. 31, 2017
Forms 1094-B, 1095-B, 1094-C and 1095-C due to IRS if filing on paper. May 31, 2016 Feb. 28, 2017
Forms 1094-B, 1095-B, 1094-C and 1095-C due to IRS if filing electronically. * June 30, 2016 March 31, 2017

 

*Any employer filing 250 or more information returns during the calendar year must file these returns electronically. For employers with fewer than 250 returns, electronic filing is voluntary.

The government may still offer an extension, later in the year, but companies need to plan as if these dates are concrete.

 

5. Annual out-of-pocket limits

Companies need to be aware that the proposed annual out-of-pocket limits for 2017. Proposed limits for the 2017 plan year are $7,150 for self-only coverage and $14,300 for family coverage.

Both of these numbers are an increase over last year’s limits. Businesses should evaluate and adjust their health plans accordingly.

 

The Wrap

Last tax season was the last date that businesses were extended good faith effort for incorrect or missing data regarding ACA compliance. Employers must now be entirely accurate and thorough when complying with the ACA-related rules.

To avoid penalties, employers should be proactive and remember these five issues when dealing with their company’s 2017 ACA compliance.

 

Resources

http://www.forbes.com/sites/adp/2016/05/06/3-strategies-for-managing-your-aca-compliance-costs/#4d4469f527be
https://www.entrepreneur.com/article/270094
https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/aca-reporting-2017.aspx
http://www.employeebenefitadviser.com/slideshow/10-top-compliance-issues-for-2017-benefit-planning#slide-5
https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/eeoc-wellness-final-rules.aspx
http://www.wexhealthinc.com/healthcare-trends-institute/employer-aca-considerations-2017/

 

TOG Update

TOG Update – June Issue

Changes to Federal Overtime Rules for ‘White Collar’ WorkersWhite collar worker

final rule, effective December 1, 2016, updates the regulations governing which executive, administrative, and professional employees (white collar workers) are entitled to the minimum wage and overtime pay protections of the federal Fair Labor Standards Act (FLSA).

Current Rules
The current federal regulations provide an exemption from both the FLSA minimum wage and overtime pay requirements for bona fide executive, administrative, and professional employees who meet certain tests regarding their job duties and who are paid on a salary basis at not less than $455 per week ($23,660 per year). “Highly-compensated employees” (HCEs) who are paid total annual compensation of $100,000 or more and meet certain other conditions are also deemed exempt.

Key Changes  
The final rule focuses primarily on updating the salary and compensation levels needed for executive, administrative, and professional workers to be exempt. No changes are being made to the current job duties tests. In particular, the final rule:

  • Raises the salary threshold from $455 a week to $913 per week (or $47,476 annually) for a full-year worker;
  • Increases the HCE total annual compensation level to $ 134,004 a year;
  • Establishes a mechanism for automatically updating the salary and compensation levels every three years, beginning on January 1, 2020; and
  • Amends the regulations to allow employers to use nondiscretionary bonuses, incentives, and commissions to satisfy up to 10% of the new standard salary level, so long as companies pay those amounts on a quarterly or more frequent basis.

Note: When both the FLSA and a state law apply, the employee is entitled to the most favorable provisions of each law.

HR360’s section on the Fair Labor Standards Act features additional information on exemptions from the law’s minimum wage and overtime requirements.

Record keepingEmployers Should Continue to Use Current Version of Form I-9 Until Further Notice

As a reminder, U.S. Citizenship and Immigration Services has advised that employers should continue using the current version of Form I-9even though the March 31, 2016, expiration date on the form has passed. The agency recently proposed several revisions to Form I-9 and stated that it will provide updated information about the new version of the form as it becomes available.

Federal law requires employers to hire only individuals who may legally work in the United States–either U.S. citizens or foreign citizens who have the necessary authorization. To comply with the law, employers must verify the identity and employment authorization of each person they hire by completing and retaining Form I-9.

For more information on complying with the employment eligibility verification requirements, please visit our section on Form I-9.

Certain Employers May Receive Marketplace Notices

The Affordable Care Act (ACA) and its accompanying rules require Health Insurance Marketplaces to notify any employer whose employee has enrolled in a Marketplace plan and has been determined eligible for advance premium tax credits and cost-sharing reductions. A sample employer notice that will be used by the Federally-facilitated and individual state-based Marketplaces is now available for review. Because these events may trigger employer penalties under the ACA’s “pay or play” provisions, an employer appeal request form has also been provided by the federal government.

Receipt of Notices
Marketplaces must notify employers within a reasonable timeframe following any month of the employee’s eligibility determination and enrollment. Previously released FAQs indicated that the Marketplaces would begin sending out employer notices in spring 2016, with additional announcements to follow throughout the year.

Employer Appeals Process
Appeal of an employer notice generally must be made within 90 days. In the appeal, the employer may assert that it provides its employee access to affordable, minimum value employer-sponsored coverage or that its employee is enrolled in employer coverage, and therefore that the employee is ineligible for advance payments of the premium tax credit.

Pay or Play section includes step-by-step guidance, worksheets, and calculators that can help employers understand if they will be subject to a penalty and how to calculate it.

Girl loves her employee benefits6 Factors for Deciding Whether to Pay Interns

Are you planning to hire interns this summer? While it can be tempting to allow such individuals to volunteer at your place of business or pay less than the minimum wage, the fact is that internships are most often considered “employment” subject to the federal minimum wage and overtime rules.

The Fair Labor Standards Act
Under the federal Fair Labor Standards Act (FLSA), interns in the for-profit private sector who qualify as employees typically must be paid at least $7.25 per hour and not less than one and one-half times the regular rate of pay after 40 hours of work in a workweek.

Note: When both the FLSA and a state law apply, the employee is entitled to the most favorable provisions of each law. Be sure to check your state wage and hour laws for applicable requirements.

The Test for Unpaid Interns
There are some circumstances under which individuals who participate in for-profit private sector internships or training programs may do so without compensation. The determination of whether an internship or training program meets this exclusion depends on all of the facts and circumstances. The U.S. Department of Labor uses the following six criteria which must be applied when making this determination:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern, and on occasion its operations may be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If all of the factors listed above are met, an employment relationship likely does not exist under federal law, and the FLSA’s minimum wage and overtime provisions do not apply to the intern. (This exclusion is narrow, because the FLSA’s definition of “employ” is very broad.)

Visit HR350’s Employee Pay section for information on other common federal wage issues.

New Rules Apply to Wellness Programs Beginning in 2017Health Care Reform Info

New rules released by the U.S. Equal Employment Opportunity Commission describe how the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) apply to wellness programs offered by employers that request health information from employees and their spouses. The new rules, which apply beginning in 2017, affect all workplace wellness programs (including those in which employees or their family members may participate without also enrolling in a particular health plan).

Background
The ADA and GINA, which apply to employers with 15 or more employees, generally prohibit companies from obtaining and using information about employees’ health conditions or about the sanitary conditions of their family members. Both laws, however, usually allow employers to ask health-related questions and conduct medical examinations if the employer is providing health or genetic services as part of a voluntary wellness program.

New Rules
Subject to certain conditions, the new regulations generally allow employers to:

  • Provide limited incentives as part of wellness programs that make disability-related inquiries or require medical examinations; and
  • Offer limited inducements to an employee whose spouse receives health or genetic services provided by the employer–including as part of a wellness program–and contains information about his or her manifestation of disease or disorder in the context of a health risk assessment.

In general, the maximum incentive or inducement may not exceed 30% of the total cost of self-only coverage under the applicable health plan. Among other things, the new rules also detail several requirements that must be met for participation in a wellness program to be considered voluntary. They also require employers to provide employees with a notice clearly explaining what medical information will be obtained, who will receive it, how it will be used, and how it will be kept confidential.

Additional Information
In addition to complying with the ADA and GINA, certain wellness programs must meet specific requirements to satisfy nondiscrimination rules under the federal Health Insurance Portability and Accountability Act (HIPAA). Due to the changing law and the complexity of the requirements that apply to employment-based wellness programs, employers are advised to check with a knowledgeable employment law attorney to ensure that any program complies with all applicable federal and state laws.

HR360’s section on Wellness Programs provides additional details.

Health Care Reform Info

Five Health Care Reform FAQ’s

Common Questions and Answers for Employers and Group Health Plans

This week marks the six-year anniversary of the Affordable Care Act (ACA). While much of the law is now in effect, questions remain about many of its requirements. Here’s a look at five of the most common questions and answers surrounding the law:

1. Are all employers required to provide health insurance to full-time employees?

Under the ACA, small employers–generally those with fewer than 50 full-time employees, including full-time equivalents–are not penalized for choosing not to offer coverage to any employee. Large employers subject to “pay or play” may be liable for a penalty tax if they do not offer affordable health insurance that provides a minimum level of coverage to full-time employees (and their dependents).

2. Do employers need to offer the same coverage to all employees?

Similarly situated individuals must be treated equally. Distinctions among groups of similarly situated employees may be permitted if they are based on bona-fide employment-based classifications consistent with the employer’s usual business practice–for example, full and part-time employees.

Insured group health plans are not required to comply with certain rules prohibiting discrimination in favor of highly compensated individuals, currently applicable to self-insured plans, until after regulations or other administrative guidance is issued. Health benefits offered as part of a cafeteria plan remain subject to the nondiscrimination requirements of Section 125, and additional testing may apply depending on the types of benefits offered under the plan.

3. Will an employer be liable for a “pay or play” penalty if one of its employees purchases health insurance through a Marketplace?

A large employer will only be liable for a penalty if at least one full-time employee receives a premium tax credit. In general, an employee will not be eligible for a premium tax credit if the employer has offered the employee health coverage that is affordable and that provides minimum value, even if the employee rejects the offer of coverage and instead enrolls in coverage through a Marketplace.

4. Can employers reimburse employees for premiums paid for individual health insurance policies?

No. An “employer payment plan” is defined as an arrangement under which an employer reimburses an employee for some or all of the premium expenses incurred for an individual health insurance policy, or an arrangement under which the employer uses its funds to directly pay the premium for an individual health insurance policy covering the employee. Pursuant to agency guidance, employer payment plans are generally considered group health plans that do not comply with certain ACA market reforms, and therefore may be subject to a $100 per day excise tax per applicable employee under the federal tax code.

5. How does the law impact tax-favored accounts such as HSAs, HRAs, and health FSAs?

The ACA prohibits tax-favored distributions from health savings accounts (HSAs) to reimburse the cost of over-the-counter medicines or drugs that are not prescribed, except for insulin. A similar rule applies to health reimbursement arrangements (HRAs) and health flexible spending accounts (FSAs).

 

HRAs must be “integrated” with other group health plan coverage in order to satisfy certain ACA requirements, and may no longer be used for an employee’s individual insurance policy premiums.

A health FSA must qualify as an excepted benefit and be offered through a cafeteria plan to comply with the law. In addition, the ACA requires that salary reduction contributions to health FSAs be limited to $2,500 annually, indexed for inflation (for taxable years beginning in 2016, the limit is $2,550).

The information and content of this article belong to hr360. Find more articles and updates on Health Care Reform by going here.