Like most of my clients, you're probably immersed in health planning activities for 2017. I recently took stock of some of the interesting topics that I have been discussing during planning conversations with clients. I asked my colleagues to weigh in with their thoughts on things to consider now for 2017, or for the years ahead. Some of our best minds contributed posts in their areas of expertise that will help you evaluate initiatives around CDHP enrollment, behavioral health, value-based care, financial wellness, and more. Appropriately, we kicked off the series with a discussion of how to cope with – and maybe even enjoy – the challenges of innovation.
I hope you find the posts in our 2017 Planning Checklist series both informative and helpful as you finalize your plans. We've already published four of the posts at the links listed below and we’ll continue to update this page as new posts become available.
- How to Avoid the Innovation Summertime Blues
- A Fresh Look at Behavioral Health Benefits
- Want to Increase Your CDHP Enrollment? Try This
- Addressing Financial Risk Challenges of CDHPs
House Republicans last week issued their plan to repeal and replace the Affordable Care Act (ACA) which, as expected, calls for capping the employee tax exclusion for the value of employer-provided health care coverage. The plan doesn’t offer details but argues that the current unlimited exclusion encourages overspending on health care, holds down wages, and disproportionately benefits wealthier workers. The proposal would replace ACA’s insurance subsidies with a universal tax credit for individuals and families. The credit would be adjusted for age and indexed over time, although no specifics were offered.
Other proposals in the 37-page paper include promoting consumer-directed health care plans; providing legal clarity for employer wellness programs; retaining certain popular insurance market reforms; and encouraging greater competition among insurers.
The House passed legislation (HR 5447) June 21 that would restore small employers’ ability to provide pre-tax dollars through health reimbursement accounts (HRAs) to help their employees buy individual-market health insurance. The “Small Business Health Care Relief Act” would apply to companies with fewer than 50 workers and overturn 2013 Treasury Department guidance that barred employers from helping active employees buy individual policies on a pre-tax basis. A Senate companion measure (S 3060) was recently introduced with bipartisan support and strong backing from the employer community, suggesting that the legislation has a chance of enactment this year.
Employers and others face a June 30 deadline for e-filing with IRS 2015 forms containing health plan eligibility and coverage information (IRS Forms 1094/5-C and 1094/5-B). Mandated by the ACA, this data helps IRS determine whether individuals and employers owe any shared-responsibility assessments. In addition, IRS has already posted 2016 drafts for coverage statements from public insurance exchanges (Form 1095-A) and other providers (Form 1095-B), along with a draft 2016 transmittal form (1094-B). However, draft 2016 Forms 1094/5-C for employers or instructions for any of these forms are not yet available.
Employers implementing HSA-eligible consumer-directed health plans will almost certainly confront participant concerns about greater cost exposure from higher deductibles and other required cost-sharing features. There are a number of creative approaches employers and participants can take to manage financial risk while leveraging the tax-preferred features of an HSA (or a health reimbursement account). Participants can consider the following strategies:
Full contribution rule. An individual who is otherwise ineligible to make a full-year HSA contribution (because, for example, they enroll in the plan mid-year, or have a health FSA grace period balance from the prior year) can make a full-year contribution for the current year, if they (1) are HSA-eligible on December 1, and (2) remain HSA-eligible for the entirety of the following year. This helps participants who are subject to the full annual deductible but would otherwise be unable to fund an HSA to pay for qualifying expenses.
Provider payment plans. While not specific to CDHPs, it’s worth noting that providers – namely hospitals and physicians – generally permit patients to establish a payment schedule to retire their out-of-pocket expenses. This means a plan member might not have to pay their entire deductible or other out-of-pocket exposure with a single payment. Participants could work with their provider(s) to align payments with their pay periods, so they can fund their HSA on a pay period basis and simultaneously pay the provider with tax-free HSA distributions.
Permitted coverage / supplemental health insurance. Certain types of insurance that can be disregarded when determining whether an individual is eligible to contribute to an HSA, for example, critical illness insurance, certain types of accident insurance, and hospital indemnity policies. While these types of coverage are generally offered on a voluntary basis, it is possible for the employer to subsidize this coverage, although the coverage will then generally be being deemed subject to ERISA, invoking compliance-related considerations. Regardless, some employers may find it beneficial to subsidize these types of coverage. Lower-wage / risk-averse participants may value the additional coverage more highly than an employer HSA contribution.
The rise of the CDHP has brought real and perceived financial risk challenges to the forefront for both employers and participants. It’s important for employers to ease participants’ concerns and build their confidence with effective benefits communications about how they can get the most out of an HSA.
Employee well-being programs have become a mainstay in employers’ overall benefit offerings. Most large employers offer programs designed to support health and well-being, and each year our National Survey of Employer-Sponsored Health Plans finds that more are contracting optional and niche services from health plans or specialty vendors, as opposed to offering just their plan’s standard services or in-house initiatives (48% did so in 2015, up from 30% in 2012). That’s why we were surprised to see a recent Wall Street Journal article suggesting that employers may be taking a step back from wellness programs. The article pointed to SHRM’s 2016 Employee Benefits Survey, which found that certain wellness program elements have decreased in prevalence, notably onsite seasonal flu vaccinations and 24-hour nurse lines. But although certain services are being offered less, the study reports that more employers are increasing wellness offerings (45%) than decreasing them (19%). It also highlights that employers are becoming more strategic in their program offerings; if employers are taking a ‘step back’, they’re doing so to take stock of their current offerings and evaluate what works best for their workforce.
Other developments in the health care ecosystem may account for changes in wellness program offerings. As access to retail health clinics continues to expand, making flu shots easier and cheaper to obtain than with a primary care physician, some employers may pull back on this offering and dedicate those budget dollars to other well-being resources. And our survey found sharp growth in offerings of telemedicine in 2015 (from 18% to 30% of large employers) and advocacy services (from 52% to 56%), both of which may be taking the place of some previously offered 24-hour nurse lines.
Employee well-being programs will continue to evolve as employers assess their offerings, whether based on participation levels, employee surveys or ROI analysis. Health care market developments and innovations that arise will also impact well-being offerings, but it’s clear that these programs have become an essential part of the American workplace and are here to stay. There was lot of buzz earlier this year over a study published in JOEM (which we’ve written about here) linking robust health and well-being programs with better stock performance – perhaps because the findings resonated with many sponsors of high-performing programs who have been hoping for a better way to measure the value of their investments in employee health.
According to a new Gallup survey, 15.5 percent of adults say the cost of health care is not affordable. That’s the lowest number since Gallup began tracking this in 2008, which is the good news. But we think there’s reason to be concerned about affordability in the future.
Mercer’s annual survey Inside Employees' Minds includes questions on the affordability of health care. The latest survey found that only 9% of employees say health care is not affordable –- but that 30% say it is not easily affordable. And when we ask about the cost of health care in five years, 23% worry it will not be affordable, with an additional 36% concerned it will not be easily affordable. It is safe to say that higher deductibles and higher prescription drug costs are fueling this concern.
We all know stress and financial concerns impact employee health and job performance. There are many things employers can do to help –
Provide tips on how to “shop” for health care using cost transparency tools
Arm employees with questions to ask when making an appointment or at the doctor’s office
Raise awareness of lowest-cost options for accessing care (like telemedicine)
Promote use of health savings accounts for current expenses and also for retiree medical costs
Remind employees about services available through the EAP and other programs that can help them with household budgeting and financial planning to make the best use of their money
Employees have access to so many tools and resources that it is hard to keep track of them all and know when to use them. Once again, communications is the key.
The e-file deadline for ACA reporting (Form 1094-C) is just days away. But before we take a collective sigh of relief, I would be remiss not to talk about corrections. After all, how often do you submit an electronic file to a third-party with zero errors? For 2015 reporting, the IRS will not penalize you for making a “good faith” effort to comply with the reporting requirements and error correction is part of that good faith effort.
If you haven’t seen it yet, you might check out this helpful video from the IRS on ACA information returns corrections. It covers:
- information reporting requirements
- what the IRS means by a corrected return
- how errors are identified; what errors require filing a correction and examples of corrected errors
- the timing for making corrections
- the electronic correction process
- penalties for ACA Information Returns
Consumer-directed health plans (CDHPs) have become a mainstream benefit offering. Spurred on by the need to avoid the excise tax, employers have added these low-cost plans at a fast clip over the past few years. In 2015, 29% of all employers – but 59% of those with 500 or more employees – offered an account-based CDHP, and a total of 25% of all covered employees were enrolled in one, according to Mercer’s National Survey of Employer-Sponsored Health Plans. Now more than a decade old, CDHPs were designed with the goal of holding down cost by encouraging cost-consciousness among consumers. The best CDHPs promote personal responsibility for maintaining or improving health and for choosing cost-effective, quality health care providers.
Most employers still offer a CDHP as an option alongside a traditional PPO or HMO plan. If you’re looking to increase your CDHP enrollment this year, we have a few tips to get your numbers up – whether you have a new or existing plan:
- Sweeten the deal. Offer some great features that you can advertise to your employees in your benefit communications. For instance, seed the HSA and provide funds in January to give employees a start. Our survey shows that in 2015, 37% of eligible employees enrolled in HSA-eligible CDHPs (if offered as a choice) when their employers contributed $800 or more to their HSAs, compared to just 22% when their employers didn’t contribute at all. Another idea is to pay for supplemental health policies, such as critical illness and accident coverage, to help fill gaps for employees.
- “Upset the apple cart” and disrupt current plan offerings and/or employee contributions by plan. The most effective way to get employees to migrate to HSA-eligible plans is, quite simply, to offer only these plans. But if, like most employers, you want to continue to offer a choice of a traditional plan, change up the entire array of plan offerings. Disruption can be a big motivator; without their current plans to fall back on, employees have to pause and spend time to review their options and choose a plan. Employees will be more likely to consider CDHPs under these circumstances, especially if employee contributions are favorable. Also, requiring active enrollment in this situation can translate into higher CDHP enrollment since employees can’t default into their current plan and must make an election.
- Provide decision support. Benefits enrollment isn’t exactly what most employees would call fun. You can at least make it easier by providing a tool during enrollment that allows employees to model which plan has the best cost/features for their situation. It’s also important to create a seamless enrollment experience for your employees, for electing an HSA-eligible plan and for opening the HSA at the same time. Some employees miss out on the employer’s HSA seed because they didn’t open the HSA (don’t need to add, but clarifies a bit).
And, once you’ve done all (or some) of this, make sure to get the word out to your employees. Communication is vital. Just over half of HSA plan sponsors say they provide extensive or very extensive communication to their employees, and among these employers, the average enrollment is 35%, compared to a mere 24% among those providing less extensive communication. In other words, it’s not enough just to provide tools and resources – you have to motivate your employees to use them to take control of their benefits decisions.
The House Republicans released a white paper outlining their plan to provide “High Quality Health Care for All” – the GOP’s proposed approach to replace the ACA. While it lays out some interesting strategies that could potentially be attractive to employers, the paper lacks the details necessary to be able to evaluate the impact on employer-sponsored health benefits as we know them today. And we all know the devil is in the details.
Here are some of the highlights:
- Let’s start with the good news for employers – no more employer mandate. The document doesn't go into detail on what exactly goes away. Presumably scratching the employer mandate would mean no more 30-hours requirement, hours tracking, minimum plan standards, affordable contributions, or reporting (pinch me, am I dreaming?). But none of these are specifically called out in the paper.
- No surprise, the most popular features of the ACA will remain. Dependents will continue to be eligible for coverage until age 26. Lifetime maximums and pre-existing condition exclusions will still be banned.
- The Excise Tax is replaced with a new cap on the employee tax exclusion for employer-sponsored health care coverage. Currently employees are not taxed on the value of the health care benefits provided by their employer. The GOP plan will cap the exclusion “at a level that would ensure job-based coverage continued unchanged”. The authors think employers will keep benefits under the cap and convert the reduced benefits to additional cash compensation. While this theory is continually touted by economists and academics, in numerous Mercer surveys, employers have told us they will not increase wages to “make up” for cuts in benefits.
- Which leads us to Health Savings Accounts. The proposal expands catch-up contributions for spouses and increases maximum contribution limits, among other changes to encourage broader use of these savings vehicles. In addition, HSA contributions won’t count when calculating the cap on the employee exclusion.
- In a show of support for private exchanges, employers would be allowed to fund health reimbursement accounts to be used by employees to buy coverage on a private exchange.
- Other notable features include changes to support insurance competition, medical liability reform, individual tax credits for those not eligible for an employer-sponsored plan, and additional reforms to Medicaid and Medicare.
Employers will no doubt push back on the cap on the tax exclusion. It’s important to note that this is only the beginning – it’s a white paper; not proposed legislation. Step one in what could be a long journey, or – depending upon the election results – no journey at all.
Model ADA notice for wellness programs posted
The Equal Employment Opportunity Commission (EEOC) has posted a sample notice for employer-sponsored wellness programs that must comply with recently issued Americans with Disabilities Act (ADA) regulations. An accompanying set of Q&As explains who must provide the notice, what formats are acceptable, and when employees must receive the notice. Employer-sponsored wellness programs that collect health information must provide the ADA notice. Employers can craft their own version to use in lieu of the EEOC sample, as along as the notice contains all required content. The ADA notice requirement takes effect for the plan year starting in 2017.
House panel OKs mental health parity changes
Bipartisan legislation (HR 2646) to improve federal-state enforcement of mental health and substance abuse parity rules received unanimous approval from the House Energy and Commerce Committee on June 15. A full House vote on the bill could occur as early as this summer.
The measure directs regulators to come up with an "action plan" for coordinating enforcement and to issue more guidance on parity topics, such as nonquantitative treatment limits that satisfy Mental Health Parity and Addiction Equity Act regulations. Other provisions would clarify that parity standards apply to any eating disorder benefits, including residential treatment, covered by a plan.
Similar legislation (S 2680) cleared a Senate committee in March, and bipartisan talks are underway on how to advance the Senate bill, but the outlook is uncertain. Propelled by concern over the opioid abuse crisis and gun violence, both House and Senate bills include a host of reforms aimed at improving the nation's delivery system for mental health care and better integrating it with medical care.
Here are a couple of eye-opening statistics. Behavioral health issues account for 4% of all medical claims on average, yet contribute to 21% of health care costs. And for employers, there are other consequences of failing to address behavioral health in the workplace: Costs associated with employee absenteeism and lack of productivity due to behavioral health issues account for nearly $17 billion dollars annually.
Employers across the country have noticed an uptick in medical claims related to behavioral health. One driving force behind this trend is substance use disorders in the adult dependent population (dependents ages 19-26 who are covered on their parents’ employer medical plan).
Here are some actions that employers can take to address behavioral health in the workplace:
- Integrate behavioral health resources
- Start with your EAP. Examine ways to integrate EAP services with your behavioral health coverage, whether offered through the medical plan or a carve-out vendor. Establishing formal referral practices will help ensure members receive the right care at the right time.
- Have an employee well-being program? Find out if the vendor or carrier offers a behavioral health screening tool to help members self-identify a need for behavioral health services. Be sure your well-being partner includes referral information to EAP and other relevant benefits on their portal.
- Talk to your medical carrier about utilization management. What are they doing to address out-of-network use for mental health and substance abuse services? Are behavioral health issues considered primary conditions within their case management services?
- Boost engagement with the EAP
- EAPs are often underutilized, in part because employees don’t know their services are available. Work with your EAP provider to create custom marketing campaigns that motivate members to use the service. Promote any work-life services offered, such as child-care concierge and financial and legal advice.
- EAPs can provide acute behavioral health care services. Effective referral pathways between your medical carrier and the EAP can get members who can benefit from EAP to the right care.
- Innovative EAP providers are leveraging technology to deliver enhanced services: web-based mindfulness solutions and cognitive behavioral therapy; tele-mental health services; video counseling; and text message interaction.
- Assess your organization’s culture
- Do employees feel comfortable addressing behavioral health issues in the workplace, or is stigma preventing individuals from seeking the care they need? Publicly available resources on addressing mental health stigma are available. (National Alliance on Mental Illness, Partnership for Workplace Mental Health)
- Consider developing behavioral health policies, including a vision statement, and specific objectives around behavioral health in the workplace.
- Ensure compliance Mental Health Parity & Addiction Equity Act (MHPAEA). A parity assessment might be appropriate if:
- You have a carve-out behavioral health vendor
- You recently changed your benefit design or cost-sharing
- You have a tiered network
- Your plan has exclusions or limitations on certain levels of care for mental health and substance abuse
- You have medical management or other non-quantitative limitations in your plan design
 Melek S, Norris D. Chronic Conditions and Comorbid Psychological Disorders. Seattle: Milliman, 2008.
 Hertz RP, Baker CL. The impact of mental disorders on work. Pfizer Outcomes Research. Publication No P0002981. Pfizer; 2002
Wow, it’s June already. Kids are playing outside, the smell of barbeque is in the air, and some of us, just maybe, are feeling the onset of the innovation summertime blues. What, you’ve never heard of this particular brand of the blues? Let me paint a picture and maybe it will look familiar.
You’d been hearing about all these new startups and innovations in the healthcare market, and one or maybe two of them caught your attention. So you took the plunge, and now you’re in the midst of planning a pilot or even a full blown rollout. But three to six weeks in, what you’re feeling now is “Wow, this is a lot of work! Is this all worth it?” or “Hmmm…this isn’t all that I expected. Seems like there’s some vaporware here that needs to be built before launch.”
Those, my friends, are the innovation summertime blues! The initial buzz and excitement has worn off and the real work, some of it pure drudgery, has begun. But take heart. Here are six tips to help battle this summer affliction:
- Preview your innovation with some potential employee users. Those who love the product will recharge your energy with fresh perspective…and those who are critics may push you harder to try to win them over.
- Become a real user of the product. If you really kick the tires on the system, you’ll reduce unpleasant surprises – like finding out that something you assumed was part of the product suite or service model, isn’t.
- Take a break and listen to this short motivational excerpt from Steve Jobs!
- Talk to other employers who have already rolled out the program. Hear what went well and what didn’t and see if there are learnings that you can apply.
- Put together contingency plans. What if user engagement is lower than your targets? (First off, what are those initial targets?) Do you have a plan (and potentially budget) to address low engagement? On the flip side, what if engagement is higher than expected? (One can dream…it has been known to happen!) If there is too much stress on the system, what’s Plan B? You can only foresee so much, but scenario planning can minimize anxiety beforehand and improve your response to problems afterwards.
- And last but not least, breathe! All these bumps in the road and challenges are supposed to happen – it’s the nature of innovation! In any case, before you know it, fall will be here and you’ll be in the thick of open enrollment. At least the kids will be back in school. :)
You won’t find many business leaders who would disagree that a healthy work-life balance is important for employee well-being and ultimately good for business. But when I looked at the most recent results from the HERO Health and Well-being Scorecard in Collaboration with Mercer, only 22% of the nearly 500 respondents say that their organization’s leaders are role models for prioritizing health and work/life balance – for example, they don’t send e-mail while on vacation. When I mentioned this disturbing statistic to my colleague Tracy, she pointed me to a recent WSJ article in which Marsh & McLennan CEO Dan Glaser discusses his approach to work-life balance. Over time, he says, he got better at keeping work and family life separate, but he wishes he’d figured it out sooner: “Your kids are only young once, and you can’t get that moment back,” he said. Others quoted in the article acknowledged the importance of setting an example for employees rising in the ranks. “It is critical for the CEO to set the tone,” said one exec. “If he doesn’t, there’s a secret kind of code, ‘if you take vacation, you’re not as serious an executive.’ ”