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Mercer

The recent US Supreme Court decision legalizing same-sex marriage seems likely to affect employer offerings of domestic partner (DP) coverage. Many employers that now offer DP benefits chose to do so because their employees did not have a legal right to marry their same-sex partners and thus could not qualify for dependent coverage. But more often than not, DP benefits are also extended to unmarried opposite-sex domestic partners, so a change in policy could affect those couples as well.

 

Offerings of DP coverage have been growing steadily. According to Mercer’s National Survey of Employer-Sponsored Health Plans, over the past five years offerings of domestic partner coverage have risen from 39% to 55% among large employers (500 or more employees). Among jumbo employers – those with 20,000 or more employees – 76% offer DP coverage. There is still a wide variation by geographic region, however. Fewer than half of all large employers in the South and Midwest provide DP benefits (46% and 45%, respectively), compared to solid majorities of large employers in the Northeast and West (60% and 78%, respectively).

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As you finalize medical plan designs for 2016, make sure you consider these five compliance elements of the Affordable Care Act (ACA).

 

1. Embed individual out-of-pocket (OOP) limits. The ACA’s annual in-network OOP statutory limit for self-only coverage ($6,850) applies to all individuals, whether enrolled in self-only coverage or another tier (e.g., family). Be sure to confirm your medical carrier’s capabilities to adjudicate this benefit design feature. The penalty for non-compliance is $100 per day per individual.

 

 

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Every year when we tabulate our survey results, we eagerly dive into the results for jumbo employers (those with 20,000 or more employees) to identify and measure movement in the latest health benefit management trends. The jumbo employers have long been the pioneers driving health care innovation. They cover more people, so more at stake. They also tend to have more resources - people and financial - to devote to the cause. Their focus is not just cost, but also includes the other two components of the triple aim - quality and engagement. How do we know it works? Historically they have demonstrated lower rates of increase in health care cost than the overall averages and at the same time maintained richer benefits (lower deductibles, etc). But the real proof is in an analysis we do of 25 best practices across large employers in three areas – plan design, workforce health, and care delivery – where those in the top quartile for most best practices outperform those in the bottom quartile with about one percent lower trend.

 

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A few weeks ago, we provided a list of five considerations for open enrollment regarding Affordable Care Act (ACA) compliance, focused on avoiding shared responsibility payments, imbedding deductibles in out-of-pocket limits, and complying with the new ACA reporting requirements. Today’s list addresses some requirements that expand beyond the ACA — including a few items you’ve probably checked off your list but might need to look at again because of recent guidance.

 

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While employer plans typically provide comprehensive coverage, there are a number of health services that some employers cover and others don’t. The ACA requires qualified plans offered through state public exchanges (and small, fully insured group plans off-exchange) to cover “essential health benefits” (EHBs). States were allowed to define EHBs by selecting a benchmark plan from current insurer offerings, and some state benchmark plans included less common coverages — for example, autism treatment, bariatric surgery, and infertility treatments.

 

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Health reform has accelerated employer adoption of consumer-directed health plans (CDHPs). More than a third of all large US employers (500 or more employees) — and nearly two-thirds of jumbo employers (20,000 or more employees) — offered an account-based CDHP in 2013. However, because CDHPs are usually offered as an option alongside PPO or HMO medical plan choices, enrollment remains relatively low, at 18% of all covered employees.

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In Mercer’s most recent survey of employer-sponsored health plans, we saw PPO deductibles increase and more employers move to consumer-directed plans, which typically have higher deductibles than traditional PPO plans. For many, escalating upfront deductibles are a real financial burden. What are employers doing to soften the blow? According to our survey, 18% of employers are offering a telemedicine option for employees, up from 11% in 2013. The largest employers are moving fastest — 34% of those with 20,000 or more employees offered telemedicine services in 2014, nearly double the number offering it in 2013.

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The Commonwealth Fund released findings from its Health Care Affordability Tracking Survey, which focused on those with private insurance between the ages of 16 and 64. The primary finding was that three out of five privately insured adults with low incomes, and half of those with moderate incomes, reported that their deductibles are difficult to afford. The survey also found that some individuals delayed or avoided care as a result.

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The Equal Employment Opportunity Commission (EEOC) grabbed headlines this week by filing for a temporary restraining order against Honeywell, claiming that the company’s wellness program violates both the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA). While the EEOC had filed two previous suits in this area, both were against companies that had taken fairly extreme measures against employees who didn’t perform actions required to receive wellness incentives. In this case, the EEOC is alleging violations by a wellness program closer to the mainstream in which employees are required to undergo biometric testing to help identify health risks as well as a blood test to determine whether the employee or spouse uses tobacco.

 

According to the EEOC, the financial impact of not taking part in the screenings — two separate premium surcharges and the loss of an HSA contribution, amounting to a maximum of $4,000 for an employee and spouse — is enough so that employees are essentially being forced to undergo screening. Honeywell has called the suit “frivolous” and says the EEOC is “out of step” with the current health care marketplace — especially given that their program meets the requirements of both the ACA and HIPAA. Employer groups have been frustrated that the EEOC has not issued guidance about how the ADA and GINA apply to wellness programs, despite repeated appeals over the past few years.

 

While the EEOC action is obviously worrisome for employers that use financial incentives, here are a couple of points to keep in mind before panicking: First, we don’t know yet whether the restraining order will be granted — a hearing will take place on Monday. Second, even if the restraining order is granted, the case is being heard in a lower court in Minnesota, so it will have limited jurisdictional impact (although the ripple effect could be significant). So even if your program design is similar to Honeywell’s, it’s most likely that you’ll have time to consider a response. Long-term, it’s worth asking yourself two questions about your incentive strategy: how much of an incentive — and what type of an incentive — is enough to accomplish your goals, and what’s the best way to communicate the incentive to avoid employee backlash.

 

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Last year saw the biggest one-year enrollment increase ever in account-based consumer-directed health plans – from 18% to 23% of all covered employees – as employers added plans at a rapid pace. All the growth is in plans with Health Savings Accounts – HSAs – and yet the other type of account, the Health Reimbursement Account, hasn’t gone away. About one in ten employers still offer an HRA, as they have for the past three years. In this informative article "HSAs Surge, Leaving HRAs in a Niche" in Managed Care Magazine (p.27), Mercer’s own Jay Savan explains the pros and cons of HRAs and why some employers prefer the doughnut to the bagel. 

 

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Final rules released last week on the mandate for nongrandfathered health plans to cover preventive services without cost sharing largely consolidate and clarify existing guidance. For closely held for-profit entities with religious objections to covering all or certain contraceptive services, the regulations give new details on how to obtain the same accommodation available to nonprofit religious organizations and their affiliates. The regulations will apply for plan years starting on or after 60 days from the date of publication in the Federal Register (Jan. 1, 2016, for calendar-year plans).

 

President Obama has officially nominated Andrew Slavitt to become CMS Administrator. Slavitt has been serving as Acting Administrator since Marilyn Tavenner stepped down earlier this year. He previously was an executive with Optum, a division of United Health, and was involved in ACA implementation in that capacity. Slavitt needs Senate confirmation and will face tough questioning from Republicans who want to grill the administration over the ACA in addition to drilling down on Medicare and Medicaid issues.

 

This week in Congress, the Medicare prescription drug program will be the focus of a House hearing, while the Senate Finance Committee examines the security of the federal insurance exchange website.

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A recent article in The New Yorker entitled “OverKill” by Atul Gawande describes the harmful effects of unnecessary medical care, with a focus on the resulting adverse medical consequences. It framed the issue of medical waste using a different lens than I typically apply, and I find myself thinking about the implications frequently.

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