Top 5 Business Advantages to a Benefits Education Strategy

By Jim Blazek, DBA – Chicago, Education Director

With employee benefits being one of the highest expenses for organizations, it’s no surprise that a top concern for companies is keeping the benefits price tag manageable. A close second, however, is that in order to operate an effective business and retain top employees; the benefits package must be competitive.

None of this is Earth-shattering news. We are all in the business of getting the greatest value for the least cost. But in the world of employee benefits, there is another—often overlooked—key area to providing a business advantage over your rivals in the race to profitability.

Benefits Education

Effectively communicating the ins and outs of the benefits being offered to your employees will positively impact your organization in five ways:

  1. Competitive Advantage – If you want to retain and attract a loyal base of excellent professionals, then teaching them the value and inner-workings of their benefits is essential. When an employee gains a good understanding of their current benefits and becomes comfortable in how they are supposed to function, they can utilize the benefits to their full capacity. This understanding and utilization is coupled with a higher appreciation of the benefits their current employer is providing and said employee is less likely to look for employment with “better benefits” elsewhere.Many employees will also develop a deeper appreciation toward their employer, noticing that they care about their employees to have their benefits explained fully and properly. This appreciation is further compounded when employees talk to friends or family only to discover that this kind of benefits education is not common practice, which deepens the employee’s value of their company and the benefits offered.
  1. Improved Morale & Productivity – When a strong effort is being made by the company to educate employees on the benefits offered, employees feel more confident in choosing selections based on their unique needs. This support of an employee and their family’s health and well-being positively impacts employee morale and job satisfaction. Those two factors lead to a more productive workforce, which can improve profitability and efficiency.
  1. Saves Time – Executives and HR departments have a multitude of extremely important responsibilities; none of which will benefit from being sidetracked throughout the year by answering all sorts of one-off benefit questions. Having a strong, on-going education structure in place with a team readily available to assist, will lead to fewer questions, headaches, and time-off-task scenarios for all involved parties.
  1. Increased Enrollment – The more an employee understands their benefits, the better prepared they are to make an informed decision. In most cases, employees will realize that the benefits being provided by their employer are far superior to what is available on the individual market, and unquestionably a better option than rolling the dice by not insuring themselves.With more individuals enrolled and a full understanding of their benefits, there comes the higher likelihood of employees taking advantage of health care services, such as preventive visits to ensure optimal well-being. This point will circle back and align with the goals of improved productivity.
  1. Rate Relief – Properly educated employees can make more informed decisions when health care services are needed. This higher understanding can lead to significantly lower claims activity, which can directly impact renewal costs for an employer. Fewer claims equal less of a renewal increase. It’s a financial win for employer and employee alike.

Disregarding proper benefits communication and education can lead to many unforeseen and undetected consequences, not the least of which may be financial. Charge your benefits advisor and their team to structure a properly delivered education campaign, and you will undoubtedly see and feel the difference.

5 Tips to Evaluate Open Enrollment Effectiveness

By Emily Bailey, Principal & Simone Torneo, Senior Advisor | DBA Hartford

With open enrollment for 2016 in the rear-view mirror for many employers, it might be tempting for benefit managers to sit back and relax. However, now is the ideal time to conduct an open enrollment analysis before memories of what worked and what didn’t have faded. During open enrollment, things never go exactly as planned, and now is the time to engage with your employees and understand what can be improved upon next year.

1. Reflect on your 2015 goals

Most employers strive to achieve 90% to 100% participation for open enrollment meetings. With more and more employees working remotely, or working odd hours, this can be a challenge. There has been an increase in web-based and pre-recorded meetings to help employees gain access to the information when not at work.

As more and more benefits technology platforms come to market, an increasing number of employers are trying to go paperless with their open enrollment campaigns. Now might be the time to consider a platform that offers that capability.

2. Evaluate the open enrollment experience

It is extremely important to take some time after the dust settles to evaluate the impact of your enrollment strategy. Did you achieve the participation you wanted at the meetings? Did your employees understand what was being offered? Did employees elect the plans you were hoping they would? Consider new ways to “spice up” the open enrollment experience– for example, use a new technology, add in a fun game, or perhaps offer raffle prizes.

3. Critique your 2015 benefits communications

When is the last time you re-vamped your open enrollment materials? It might be time for a change. We find that the most successful communications are very direct, clear, and also have some graphics and pictures to hold the audience’s attention.

Are you trying to encourage participation in a High Deductible Health Plan? Consider adding some clear charts or graphics that illustrate the cost savings and impact to the employee’s wallet.

Consider sharing some information about why health insurance is so expensive! Employees are very interested to know about their company’s aggregate utilization—and why the costs are increasing. Being fully transparent about costs can help to buffer the delivery of an increase if one is needed.

Give yourself a pat on the back! Many employers are now illustrating in the materials the breakdown of cost between employee and employer. Sometimes this is a nice reminder about how generous your company is with their contributions to the total cost.

Did you provide enough education and guidance on Health Care Reform and what it means to your employees? This can help to ease the amount of questions that your Human Resources team receives throughout the year!

4. Survey your employees

The best way to find out whether employees got the most out of open enrollment is to ask! The month of January is a great time to send out a brief survey to your staff to find out what they liked, disliked, and what they want more of.

5.Choose two guiding words for next year

Now is the time to start planning and preparing to make next year’s open enrollment a success. Think about your goals, and put them into a few words that will help you as you prepare for 2017. Maybe your goal is to implement a web-based enrollment system–your guiding words might be “efficiency” or “technology.” Perhaps your goal is to make open enrollment more fun or unique–your guiding word might be “engagement.”  These words will help you as you begin your strategic planning and draft your materials for the coming year.

Don’t stop communication just because the open enrollment deadline has passed. Consider kicking off Q1 in 2016 with a wellness campaign. Use this time to remind employees of the wellness, fitness, and financial health programs offered to them.  If you continue to provide ongoing learning opportunities that support your employees’ financial and physical wellness all year, they will be more engaged and able to make more educated decisions when it’s time to re-enroll again in 2016.

The 4 Benefits Buzzwords of 2016

By Mike Sullivan, Chief Growth OfficerBenefits Buzz

My sense is that 2016 will see a continuation of trends that have emerged over the past several years. Each trend is a result of structural changes taking place in our business that directly relate to the passage of ACA legislation. Each has economic implications that will play out for years to come. Here’s a breakdown of what I see as the top four trends in health and benefits in the coming year.

First, consolidation will continue to be a reality in every facet of the healthcare, health insurance and employee benefits space. Historically low borrowing costs will drive deals large and small. Changing regulatory dynamics will impact everyone’s margins, so scale of operations will become increasingly important. Carriers, hospital and medical groups – as well as benefit brokerage firms – will need to grow to survive. Mergers and acquisitions are the fastest way to gain scale and this is an arena we feel very comfortable playing in. Our partnership and acquisition team will continue to grow so that we can find more than our fair share of deals in the marketplace.

Emerging technology firms, solutions and business models will remain a major trend grabbing headlines throughout 2016. Most of you have heard the names Zenefits, GoCo, Zen Payroll (now Gusto), Namely, BambooHR and an almost endless supply of newcomers to a very hot investment space. You may be aware that we are in the process of launching our own Simplify solution. Clearly there is a trend of convergence between HR software, benefits consulting and payroll. Sorting out this competitive landscape and making wise strategy and investment choices will remain a top priority for Digital, so stay tuned for more news in this area.

A direct offshoot of this technology and convergence trend will be evolving business models and new alliances between companies. Today in many ways there are new companies with new solutions losing a significant amount of money, giving things away or even charging very little for their products or services. On the other side of the ledger you have a number of entrenched competitors with huge client bases and significant profit streams. Who wins downstream will be about strategy and execution. Who decides to go it alone or align with other firms will be interesting. Who gets in or out of what type of business line also will be interesting. The trend is that siloed offerings are converging, but firms will need to figure out business models that allow them to deliver services profitably. The benefits business is not like taxi cab services, so in my mind the Uber analogy rings hollow. The trend is everyone is talking to everyone to figure out our space. Competitors may end up working together. Again, stay tuned.

The aforementioned trends tie directly to ACA legislation and everyone’s focus on the overall issues of affordability of health insurance and healthcare services. High deductible plans are bringing to light major issues surrounding family budgets and an overall ability to pay for services. At the same time premiums costs continue to rise. There is no silver bullet to address these challenges associated with overall affordability, particularly for small and mid-sized businesses. The politics of this issue will undoubtedly begin to focus on price transparency of services being rendered, and how consumers will increasingly react to this challenge. Of late, the headline has been price gouging by specialty drug manufacturers. My sense is this is just the beginning of a political hot potato.

In all, 2016 will prove to be a year that continues to introduce and evolve new technology offerings, interesting industry partnerships, price transparency as well as an increasing level of debate about affordability from consumers and politicians alike. Through it all, we will continue to look ahead and invest in our business with confidence that our teams and solutions will effectively deliver for our clients in 2016 and beyond.

IRS Postpones ACA 2015 Reporting Deadlines

On Monday, December 28, 2015, the IRS issued notice 2016-4 extending the due dates for the Affordable Care Act’s (ACAs) health plan and employer reporting requirements. This guidance applies to the filing of IRS Forms 1094-1094-B, 1095-B, 1094-C, and 1095-C.

Background

As most employers are well-aware, the ACA requires health insurance carriers, self-insured employers, and applicable large employers to provide annual reports with specific information about the plan and covered individuals. The insurance plan reporting details information about covered participants providing them, and the IRS, with proof of meeting  the ACA’s individual mandate to obtain minimum essential coverage. The employer reporting requires applicable large employers, i.e. employers with 50 or more full-time and full-time equivalent employees, to detail information on their health plan offering and whether the plan meets minimum value and affordability rules of the employer shared responsibility requirement (employer mandate) of the ACA.

The first reporting year is 2015. The final rules impose a penalty for failing to timely file an information return or file an incorrect or incomplete information return. Further guidance clarifies that the health plan and employer reports for 2015 are due on February 29, 2016 ( March 31, 2016 if filing electronically, which is necessary if the employer issues 250 statements or more). Employee statements are due to employees no later than February 1, 2016.

Transition Relief

Understanding that health plans and employers need additional time to adapt and implement systems and procedures to gather, analyze, and report this information, the IRS now issues an extension for compliance with the requirements. Although the due dates are extended, the IRS advises filers to submit reports as soon as they are ready. Further, the automatic and permissive extensions as contained in the IRS reporting instructions will not apply to the extended dates. The IRS confirms that it will take into consideration all efforts and preparations taken if filings extend beyond the due date.

If you have questions about this information and you are a client, please contact your Digital account representative.

Transitional Reinsurance Update

By Carl Pilger, Vice President, Legal Counsel

One of the Affordable Care Act’s (ACA) revenue-generating provisions is a requirement that group health plans pay a designated amount annually, for a three-year period that started last year, known as the Transitional Reinsurance Fee. Congress established this fee to help stabilize premiums in the individual market that it feared would skyrocket with dire effects in the wake of ACA implementation.

The Transitional Reinsurance Fee Program requires health insurance issuers and self-insured group health plans to contribute for 2014, 2015 and 2016 benefit years in an amount to be determined by the U.S. Department of Health and Human Services (HHS). This does not apply to those who do not use a TPA for claims processing, claims adjudication or enrollment. The Transitional Reinsurance Fee was $63 per covered life for 2014, reduced to $44 per covered life this year, and is projected to drop to $28 per covered life for 2016.

Health plans (including most self-insured plans), other than those listed below, must report and pay the Transitional Reinsurance Fee according to a process and schedule HHS established last year. HHS requires plans to report, through a portal on www.pay.gov, annual enrollment figures by no later than November 16.

The following types of plans have no Transitional Reinsurance Fee obligations:

Plans can pay the 2015 fee either in one lump sum by no later than January 15, 2016, or in one installment of $33.00 per covered life due no later than January 15, 2016, and another installment of $11.00 per covered life due no later than November 15, 2016.

Self-insured employers must determine and report the applicable number of covered lives on whom they must pay a Transitional Reinsurance Fee as follows:

  • Actual count method – each covered life for each day of the first nine months of the year ÷ by number of days in first nine months
  • Snapshot method – choose one or more corresponding days each of the first three calendar quarters of the year
    • Count =  add covered lives on those dates ÷ by number of days chosen
    • Factor = add number of participants with self-only coverage on designated dates + 2.35 times the number of participants with other than self-only coverage;  divide sum of covered lives on those dates by number of days chosen
  • Form 5500 method
    • Offering employee coverage only – add number of participants reported at beginning of year to the number reported at end of year and divide by two
    • Offering employee and any other family coverage – add the total participants covered at the beginning of the plan year to the total participants covered at the end of the plan year

CMS has announced that it will provide a hotline to assist contributing entities in completing the 2015 ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission form. This hotline will be open during the dates and times specified below (all times ET). In addition, CMS will respond to questions sent to ReinsuranceContributions@cms.hhs.gov and has web-based training available at https://www.regtap.info/ricontributions.php.

If you have any questions regarding the Transitional Reinsurance Fee Program, or any other aspect of the ACA, please contact your Digital Benefits advisor.

Video Benefits Guy for Open Enrollment

ModernBenefitsConsumerBy Lori Legel, Senior Advisor, DBA Richmond

Open enrollment season is here! Now, more than ever, employers are looking for solutions to improve the employee communication process and experience, while still delivering valuable educational pieces to assist employees in making informed decisions. Video Benefits Guy is an online communication portal that can be used for both annual open enrollment and new hire onboarding.

Video Benefits Guy allows employers to develop and customize simple, yet consistent, messages about their benefits in a video format. Through this technology, employers can post messages to their employees, and create a customized experience using these videos. Employers also have the ability to find videos explaining the fundamentals of the benefits available to them and much more. The videos are fun to watch and the use of technology can help reduce the cost of materials, time and scheduling. The videos also provide clear and consistent messages to all employees regardless of their physical location.

Our extensive Video Benefits Guy library has educational videos explaining everything from insurance terms, to how employees can manage their healthcare costs, to the impact of the Affordable Care Act. The ability for employees to access these video, provides a great resource when introducing new benefits and solutions.

As an employer, if you –

  1. want to improve employee communication;
  2. save time for you and your employees, while still communicating a well understood and detailed benefits package;
  3. need to cater to your employees in various locations, as well as eliminate scheduling conflicts;

then the Video Benefits Guy can be the solution for your organization.  Please contact your benefits consultant for more information.

When It Comes to Health Carrier Mergers, Is Bigger Ultimately Better?

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By Pete Gruenberg, Chief Operating Officer

As the January 1st, 2016 benefits renewal season and open enrollment process is in full swing for many employers, questions loom about the impact of the pending Aetna/Humana and Anthem/Cigna acquisitions, most predominately–is a bigger carrier really better? 

That’s the question CEOs from these carriers are currently defending in front of Congress and Justice Department officials who want to understand if these mergers will be a positive game-changer for employers and consumers or if they will limit competition and actually increase costs.

The review process will take months and stretch well past the current renewal season, leaving many wondering how it will all shake out. The range of outcomes will likely run the gamut from outright approval to divestiture in designated markets—to not approved—which is probably the most unlikely result. Overall, it’s not about any one deal, but how the approval of both transactions may adversely impact choice and affordability for the corporate and individual purchase of health insurance coverage. Let’s look at each deal and examine the implications of these consolidations and what the government may be most concerned about.

The Aetna/Humana deal at a high level combines Aetna’s strong nationwide employer-focused medical business with Humana’s large and very successful Medicare Advantage business. In the employer arena, there are some overlapping markets that may raise concerns from regulators and create a possible need for divestments, but our assumption is that the impact will not be significant. 

The Anthem/Cigna deal appears complementary in certain core areas, but has a couple of interesting dynamics. Anthem brings a real expertise in small group and individual exchange market presence. They provide significant national account capabilities in conjunction with their access to the nationwide Blue Card and all the Blue Cross Blue Shield (BCBS) plans across the country. Additionally, Cigna is a strong carrier in the mid-market and national account segments, with a compelling blend of medical plan funding options. Their expertise in group insurance and pharmacy benefit management are additional strengths. Like the Aetna/Humana deal, there may be added scrutiny in certain markets that regulators will examine very closely. 

The interesting twist facing Anthem/Cigna is not so much a regulatory issue, but more related to how the independent Blues organizations will respond to the ongoing access to the Blue Cross Blue Shield (BCBS) network in states where Anthem has no presence. Anthem is very dependent on these networks for multi-state employers. Cigna currently competes in many of the independent BCBS states, so the question remains, will they get the same access to the BCBS networks when they become part of Anthem? The assumption is no, but the merger will certainly test Anthem’s relationship with the BCBS Association. Anthem seems confident that there will be no disruption in their ongoing partnership with these independent BCBS organizations, but only time will determine the success of this aspect of the deal.

While the scrutiny of these mergers continues to unfold, carriers will increasingly be expected to answer the following questions:

  • Will medical premiums go down or rise more modestly in the future?
  • Will touted efficiencies and service levels improve the customer experience after the integration?
  • Will we see disruptions or expansion of choice in providers?
  • Will the carriers need to divest in certain markets where the consolidation will be deemed anti-competitive?

Stay tuned for these answers and more as we continue to monitor this rapidly changing area of the industry.

Small Businesses with HRA Plans Get Clarification

In June 2015, the IRS released draft forms for certain employers to use to meet their reporting obligations under the Affordable Care Act (ACA).  The instructions confirmed that employer-sponsored health reimbursement arrangements (HRAs) are subject to the ACA’s annual reporting requirements, regardless of employer size.  This was the first official guidance declaring that small employers with fully insured health plans indeed could have ACA reporting requirements.

The ACA includes annual IRS reporting requirements for health plans and applicable large employers (ALEs), i.e. those employers with 50 or more full-time and full-time equivalent employees.   A 2013 IRS notice clarifies that HRAs are considered health plans.  As such, they are responsible for complying with health plan requirements under the ACA.

Most understood that health insurance companies, employers with self-funded health plans and ALEs would need to report under Internal Revenue Code section 6055 or section 6056.  IRS released Notice 2015-68 clarifying reporting requirements for employer-sponsored HRA plans.  This came just in the nick of time for small employers who had begun to scramble after having learned they were suddenly subject to ACA reporting for their HRA plans, even though they were integrated with fully insured group health plans.

On September 17, 2015, IRS issued final reporting forms and instructions.  The revised instructions state that when an employer offers a minimum value health plan coupled with an HRA plan, only one of the plans needs to report.

The following chart explains the reporting requirements in light of the guidance in the final instructions: tableDI2

ICD-10 Medical Codes Changed on October 1- What Does This Mean?

Here are the answers to frequently asked questions.

What are ICD-10 codes?

ICD, or International Statistical Classification of Diseases and Related Health Problems, codes are the worldwide standard for tracking illness, injury and disease.  All health plans, medical facilities and physicians under Health Insurance Portability and Accountability Act (HIPAA) are required by federal mandate to use ICD-10 codes with dates of service of Oct. 1, 2015 or later.

Why the move from ICD-9 codes to ICD-10 codes?

The transition for medical providers and all insurance plan payers is a significant one since the 18,000 ICD-9 codes are to be replaced by 140,000 ICD-10 codes.  ICD-10 replaces ICD-9 and reflects advances in medicine and medical technology over the past 30 years. Doctors and hospitals use ICD codes to classify diseases, illnesses and injuries, and insurance companies use this information to process claims. The expanded code sets in ICD-10 allow for more detail in diagnosis and procedure codes.

Some of the codes appear strange, why are they needed?

Crazy ICD-10 codes have been published all over the internet like contact with a kitchen utensil, injury in an art gallery, crushed by an alligator, burn due to water-skis on fire, lips stuck to musical instrument, very low level of personal hygiene, struck by duck, walked into a lamp post, knitting accident, holiday exhaustion, etc.  The transition from the 1970’s based codes to today will provide health care givers and agencies like the Centers for Disease Control (CDC) more information on how to treat disease, what demographics are more likely to contract certain diseases, more specificity on illness and injuries like – which particular bone was broken, where someone was injured, how exposure to different outside factors may result in injury or illness, etc.  It is expected that this additional information will help to shape treatment protocols in the future, anticipate needed vaccines, and understand and communicate more specific prevention techniques

How does this affect me?  

The significant transition for medical providers and insurance companies could cause delays or errors in billing or claim payments, in the short term, as all affected businesses work to comply.  Watch your medical bills and explanations of benefits closely to make sure that information is represented correctly and you are receiving the right benefits.

New Reporting Requirements for Mid-to Large- Size Employers

New Reporting RequirementsAs the countdown to 2016 approaches, employers must begin to grapple with new annual reporting responsibilities related to the Affordable Care Act (ACA). In short, the IRS wants to know if, and what type of, health insurance, employers offered to full-time employees during 2015. The purpose is to determine whether employers and individuals owe the government money (i.e. whether penalties should be assessed) and who qualifies for tax credits.

There are two essential takeaways: 1) Now is the time to take action. 2)  It’s complicated…very complicated! While your benefits advisor can provide more details, here’s a look at some significant highlights for companies and organizations with 50 or more full-time and full-time equivalent employees.

1. Act Now

Don’t let filing deadlines mislead you into thinking you can delay taking action until next year. Proper compliance involves a lot of detailed prep work. In addition, while many companies plan to contract with third parties to manage the reporting process, some experts suspect these services may become inundated with business, and they are beginning to raise their prices.

Let’s take a look at key deadlines:

  • Feb. 1, 2016: Employee Statements are due. (Technically, the annual is Jan. 31, but in 2016 that day is a Sunday, so the regulations instruct employers to file on the next following Monday).
  • Feb. 29, 2016: IRS reporting is due for paper filings. (Again, the deadline is actually Feb. 28, which also falls on a Sunday next year).
  • March 31, 2016: IRS electronic reporting is due. (Employers issuing 250 or more individual statements must file electronically).

2. The Devil is in the Details

Proper compliance involves filling out the correct form with the appropriate information at the right time. There are different forms for Employee Statements and IRS reporting. Companies with 50 or more full-time and full-time equivalent employees have separate requirements than those with fewer such employees. Other variables include whether a company is self-insured, the type of insurance offered and eligibility of each employee during each month of 2015. For example, if a part-time employee with no benefits became a full time employee with health insurance and was then terminated with COBRA coverage, the information required to be reported for that individual would change at least twice during the year.

Corporate ownership issues also impact the process. Among the considerations that could affect the way a company files include whether it is part of a controlled group of companies.

In addition to full-time employees, employers must include information about the following employee classifications, which are all coded differently:

  • COBRA
  • Retirees
  • Non-eligible employees
  • Variable hour employees in measurement period

Finally, an employer must be sure to design its plan offering and recordkeeping systems properly to be certain to be compliant with its ACA obligations, as well as to collect and report the correct data.  Employers need to be sure they have properly addressed applicable large employers (ALE) status, which classes of employees receive an offer of coverage, whether their plan designs are affordable and provide the required minimum value and other critical ACA concerns.  Once an employer has addressed these issues, it can focus on the right reporting solution.

3. Consider Utilizing a Third-Party Administrator

By now, the complexity involved in this type of reporting should be obvious. That’s why many companies are turning to external vendors for help. Frankly, the cost is usually fairly reasonable considering the value provided. Ask your benefits advisor for recommendations – some may have negotiated proprietary pricing for their clients.

The source typically most prepared to handle your ACA reporting requirements would be your existing payroll service provider. And, because of the need, new ACA reporting companies are being established. It is essential to ask questions to determine the scope of services provided – even with an established vendor. Among the factors to address with your representative:

  • Do your ACA reporting services include sending the required filing to the IRS and distributing forms directly to employees? If not, can this be an added service?
  • Do you already have all of the required information elements, or do we need to provide additional information?
  • Please confirm your organization takes responsibility to determine the proper codes to be included on the form. If not, what is the process to complete this?
  • What is the timing for you to file the information?
  • Are there additional costs for this service, and if so, please confirm the cost structure.
  • If our employees have questions regarding the forms, do you provide call center services so they can speak to a representative?

4. Be Aware of Compliance Penalties

Employers will face penalties of up to $250 per return and employee statement for failure to comply. There is an annual cap of $3 million for entities with gross receipts in excess of $5 million; or a $1 million annual cap for those with not more than $5 million in gross receipts.

There is some good news, however. The IRS will not impose penalties in 2016 if an employer files incomplete or incorrect forms, as long as it demonstrates a good faith effort to comply. However, this exception does not apply to untimely filings or employee statements. Also, if a third party administrator helps with filing, this does not relieve employers of related liabilities.

For more information about ACA reporting requirements, contact your benefits advisor.