When your boss asks about how the election will affect your benefit program, your response could be as easy as "It all depends." But you might want to provide more of an answer, and if so we'd like to help you out.
- We hosted two webcasts -- one focused on health benefits and time-off, and a second covering retirement, talent, investments and health. If you missed one or both, those links will take you to the replays.
- Depending on how deep you want to get into the possible options, we have developed a Post-Election Game Plan for our clients. Reach out to your favorite Mercer consultant if you are interested.
- The news is full of articles every day speculating on what will happen next -- transition plans, political appointments, etc. We will be tracking all the news and will do a roundup at the end of the week with the articles you don't want to miss. Watch for the first one this week.
A lot is going on. While it is certainly an exciting time to be in our business, there is no "Easy" button. We'd like this site to be a trusted resource for you in the weeks and months ahead.
The new Mercer Survey on Absence and Disability Management found that employers continue to embrace workplace flexibility, in part demonstrated by a migration from traditional vacation/sick plans to paid time off (PTO plans). PTO plans are now in place in 63% of the organizations surveyed, up from 50% in 2013 and 38% in 2010. PTO plans provide employees more flexibility and reduce the need to determine (and track) what type of day off is being taken.
But despite their focus on time off, many employees do not use all of the days available to them: 44% of participants report that their employees take less than 80% of their allotted PTO time. And for the growing number of employees who work remotely, time off may not truly be time away from work. Employers are rethinking time-off program design to take into account all of these dynamics and help employees to achieve a healthier work/life balance.
Some employers -- more than one in 10 respondents -- have taken the step of offering unlimited vacation, at least to executives. However, most employers that have implemented unlimited vacation have found that employees take about the same time off as they were allotted previously under a standard plan.
But other types of paid leave -- particularly parental leave -- are increasingly important as well. Generous parental leave policies implemented by a number of companies, particularly in the tech industry, were covered widely in the press and drew national attention. While for most employers, disability benefits are still the only official company-sponsored paid leave for new moms that are provided, 24% of respondents provide paid parental leave for bonding to the birth parent.
In addition, 25% of employers reported providing a paid parental leave benefit to the non-birth parent. Whereas parental leave for the birth parent begins when the disability ends, parental leave for the non-birth parent usually begins upon the birth of the child. For those providing a paid parental leave benefit, the median number of weeks offered is six weeks for the birth parent and four weeks for the non-birth parent. In the vast majority of cases, the paid parental leave benefit covers 100% of the employee’s pay.
Additional findings from the survey include:
- Employers grapple with increasingly complex federal and state leave requirements
- More employers are choosing to outsource FMLA administration. In 2015, 40% of respondents outsource or co-source FMLA, up from 38% in 2013.
- Improving FML administration and reducing the impact of absence on operations are respondents’ top priorities for their absence and disability programs (cited by 44% and 42%, respectively).
- Nearly two-thirds of respondents (65%) have experienced an increase in leave requests over the past two to three years, and about a third reported an increase in the number of ADAAA leave accommodation requests (32%).
- Clinical management and formal return-to-work (RTW) programs for non-occupational disabilities remain a largely underutilized strategy for managing disabilities.
- Only about a third of participants formally communicate objectives and expectations regarding occupational or non-occupational absences or disabilities to managers and supervisors -- and of those, about half formally communicate objectives for occupational injuries/illnesses only.
- The Americans with Disabilities Act Amendments Act (ADAAA) has caused employers to revisit their treatment of disabled employees. Employers are now more likely to end employment after determining that return to work is not feasible and conducting the required discussion about accommodations. Historically, employers waited for Medicare eligibility to terminate medical coverage for disabled employees.
- Nearly half of respondents have revised (or are considering revising) their policies on terminating disabled employees as a result of ADAAA.
Mercer recently published a report on our 2015 Survey on Absence and Disability Management, a survey of over 450 US employers. The complete survey report, which includes data tables with results broken out by employer size, region and industry, is available for purchase here. We also will post survey highlights periodically on select topics here.
The IRS has released draft instructions for 2016 Forms 1094-B and 1095-B, confirming that health insurers and self-insured employers can expect few changes when reporting minimum essential coverage (MEC) provided to individuals in 2016. The Service posted preliminary 2016 versions of these forms in June, but instructions noting what's new became available only last week. The IRS uses data from this reporting to administer assessments under the Affordable Care Act’s individual mandate provisions. Separately, the IRS earlier released draft 2016 employer shared-responsibility forms and instructions that applicable large employers will use to report coverage offered to employees and their dependents.
There have been lots of stories in the news over the past week about the Department of Justice suit to block Anthem’s purchase of Cigna and the Aetna and Humana deal. As Tom Murphy reports, leadership from both Anthem and Aetna have committed to defend the lawsuits. The final outcome remains uncertain and could entail a prolonged legal process. The two questions we have been hearing from employers are “what does this mean to us?” and “should we go out to bid now or wait and see what happens?” From an employer perspective, nothing changes – you should continue to refresh your benefits strategy and actively manage your health benefits to meet your goals and objectives. This includes aligning with vendor partners that best support your strategy. We recommend that employers not delay a vendor selection due to this potential consolidation. As the legal proceedings unfold, employers will have visibility into any activity that could impact their vendor partner and their member population. The cost trend for employer-sponsored health coverage has hovered around 3% for the past several years – proof we are managing cost while still providing meaningful health benefits. Don’t let this slow you down!
Mercer’s Washington Resource Group recently released our top 10 compliance priorities for 2017 health benefit planning. There aren’t any surprises on this list. In fact, we’ve recently blogged about many of them. Employee Benefit News created a slide show on our Top 10 and here is a list of related posts and podcasts if you want to take a deeper dive into a topic.
- Wellness Plans (podcast): More innovative designs make it critical to know the new rules that begin on January 1, 2017.
- Essential Health Benefits (podcast): Check those dollar limits and maximum out-of-pocket maximums against updated benchmark plans for 2017.
- Mental Health Parity (podcast): Make sure your benefits are aligned with current law and best practices.
- Employer Shared Responsibility: Affordability (podcast): Know the impact of opt-out cash and flex credits; 30-hour (podcast): Understand what payments must be converted to hours of service; ACA Reporting (podcast): Make sure it’s right – no more good faith standard and the old deadlines return for the 2016 reporting year.
- Preventive care: Modify benefit terms to reflect latest recommendations and guidance on preventive care.
- Summary of Benefits and Coverage (podcast): New model SBC must be used for open enrollments on and after April 1, 2017.
- FLSA overtime rules: It’s not just a compensation issue – don’t forget to consider the benefits implications.
- Expatriate group health plans: Position group health plans covering globally mobile employees to take advantage of ACA relief.
- HIPAA privacy, security, and electronic transactions: Revisit health plans’ privacy and security obligations.
- DOL fiduciary rule: Assess the impact on welfare plans with an investment component.
The beginning of June serves as a reminder that we’re approaching the halfway point of 2016. Now is a great time to pull out those strategic plans and assess what you've accomplished and what's left to do. And don't forget to do a mid-year compliance check. I know, it's not the most exciting task, but it is a necessary evil. To make it a little easier, I’ve asked Mercer's compliance experts to describe – in just two minutes each – the top 10 compliance issues on their checklists. Here’s what they had to say.
1. Employer Shared Responsibility: Transition relief ended this year – coverage of “substantially all” increased from 70% to 95%. Are there ACA full-time employees that you don’t cover?
2. ACA Reporting: Make sure it’s right – no more good faith standard and the old deadlines return for the 2016 reporting year.
3. Cost-sharing limits: Know your limits – the ACA in-network out-of-pocket maximums differ from the maximum for high deductible health plans used with health savings accounts (HSAs).
4. Wellness Plans: More innovative designs make it critical to know the new rules that begin on January 1, 2017.
5. Mental Health Parity: Make sure your benefits are aligned with current law and best practices.
6. Cadillac Tax: Remember it hasn't been repealed – it's in your best interest to prepare.
7. Essential Health Benefits: Check those dollar limits and maximum out-of-pocket maximums against updated benchmark plans for 2017.
8. Affordability: Know the impact of opt-out cash and flex credits.
9. 30-hour: Understand what payments must be converted to hours of service.
10. Summary of Benefits and Coverage: New model SBC must be used for open enrollments on and after April 1, 2017.
We’ve been tracking employer adoption of, and interest in, private health exchanges through Mercer’s National Survey of Employer-Sponsored Health Plans for the past few years. Currently 6% of large employers either use an exchange now or will implement one this year for 2017. That’s doubled from 3% using an exchange in 2014 – a strong rate of growth, even if the numbers are still small. Perhaps more telling, more than a fourth of large employers say they are considering moving to an exchange within five years.
To look more closely at how one exchange works, we must turn to a different source of data: the 222 employers that now provide benefits to their active employees through Mercer Marketplace. We now have three years of data behind us on the cost reductions our clients are experiencing with Mercer Marketplace.
- On average, they have saved 9% (and up to 15% in some cases) on their benefits plans. That averages $975 per enrolled employee.
- While the average health benefit cost per employee increased 3.8% from 2014 to 2015 across the market, Mercer Marketplace clients experienced an average year-over-year increase of only 1.6%.
- One of the keys to savings on both sides – employer and employee -- is that employees are more informed in their decision-making. For some, that means realizing the benefits of enrolling in higher-deductible plans. In fact, 56% of enrolled employees choose high deductible plans on Mercer Marketplace. That’s much higher than the average 29% enrollment reported by large employers that offer a HSA-eligible consumer-directed health plans as a choice.
Contributing to these savings is the enhanced purchasing power, network influence, state-of-the-art wellness program and buying coalitions that are all part of the Mercer Marketplace value proposition. And, as Tracy Watts describes in her recent post, these savings are achieved while the employer’s administrative burden gets lighter, not heavier.
To provide the Affordable Care Act's summary of benefits and coverage (SBC), health plans will have an updated final template and related materials to use beginning with open-enrollment periods after March 31, 2017, according to a new triagency FAQ. This means calendar-year group health plans will use the new SBC materials during fall 2017 open enrollment for the 2018 plan year.
The latest proposed SBC materials, issued for public comment last month, incorporate some modifications to the current models. The new FAQ says regulators plan to review feedback and "expeditiously" finalize the updates once the comment period closes March 28. The new SBC materials will apply for the first annual open-enrollment period starting on or after April 1, 2017, for a plan year beginning on or after that date. Plans that don't hold annual open enrollment will have to use the revised SBC materials starting with the first plan year that begins on or after April 1, 2017.
The health care market is getting more and more complicated. More than $4 billion has been invested in digital health in each of the past two years and investment activity remains strong in 2016. Just keeping up with all the latest developments is challenging, never mind the work required to evaluate solutions, decide what to implement, and then communicate and manage them. Conversely, we continue to see consolidation in the market -- health plans, PBMs, and health systems are consolidating and developing ACOs. Fewer choices and more choices all at the same time.
Enter consumers, who are feeling the demands of being given more responsibility and having to sort through all the tools being thrown at them to help them become better shoppers. The only problem is that shopping for health care is not like shopping for a flat screen TV or for a car. Besides the complexity of understanding the specifics of the care you are shopping for, the variation in cost can be unbelievable (for example, the price for a knee replacement in the US ranges from $18k to $57k or more). Further, studies show that many think health care that is more expensive is better quality. In short, we have not yet perfected the health care shopping experience. And yet, at the same time, consumer expectations are rising. We have evolved into a culture that expects to find the answer to everything on our phones -- either Google it or ask Siri.
Is there a better answer? What if you could build a program that would help your employees live healthier lives, simplify the health care experience and save money? What if someone had already built it -- would you buy it? As health care becomes more complicated, do you have the bandwidth to evaluate every new invention? Employers are giving serious consideration to delegated solutions. Recent articles have claimed growth in private exchanges has fallen short of expectations, yet between 2015 and 2017 the percentage of large employers offering an exchange for their active employees is expected to double (from 3% to 6%) and an additional 27% say they are considering moving to an exchange within 5 years. So I’m not sure I agree that activity has fallen short of expectations -- especially considering that a lot has been learned from the first-generation programs. I agree with NBCH's new CEO, Michael Thompson, and his comment in a recent EBN interview. The proof of the approach is in what happens next. We have been able to exceed the financial expectations of our clients who have signed on to Mercer Marketplace. We are ready with next-generation features. Why not give us a look?
ERISA pre-empts Vermont's all-payer claims database (APCD) reporting law, the US Supreme Court has ruled. The court held the state statute imposes duties that are inconsistent with ERISA's central design of providing a uniform national scheme for plan administration without interference from multiple state laws. Vermont's law requires all health plan payers to report to state regulators an array of claims and other data about their plans. APCD laws have taken effect or are planned in at least 18 states and several other states have considered such a program. The ruling limits state databases' potential to improve health care transparency but relieves ERISA plan sponsors of complying with multiple APCD laws.
Much of the pressure driving up pharmacy benefit cost comes from specialty drugs. While some new drugs represent important breakthroughs in the treatment of complex diseases, the spike in the specialty drug cost trend rightfully has employers looking for creative strategies to manage cost growth.
There are at least three areas to consider: Sourcing (getting the best price for the drug), site of care (getting the best price for administration, since many of these medications are infused), and clinical management (establishing best-practice rules for the circumstances under which a specific drug is administered).
Here are some of the simpler strategies to discuss with your carrier or PBM:
- Comprehensive site-of-care review. It may make sense to have some specialty drugs purchased through the medical plan rather than through the pharmacy plan; for example, oncology. In some cases, doctors can get these medications more cheaply than PBMs.
- Exclusive specialty. All specialty drugs are handled by one provider as a way to obtain better unit costs. However, this is not always the best option, as it limits flexibility.
- Specialty formulary. This strategy may be considered for drug classes where there is adequate competition, for example, four or more drugs with similar profiles.
- Clinical rules audit. Reviewing current clinical rules (usually from the PBM or carrier, if drug benefits are carved in) compared to best practices.
- Home health care. As part of a site-of-care review, consider the patient’s home as a venue for infused medication. This may require patient education to self-administer the medication, and is currently common in hemophilia and certain other disease states.
Larger employers may want to consider these more complex cost management approaches:
- Specialty carve-out. Investigate these new specialty-only PBMs (Acaria Health, Magellan and Diplomat Specialty Pharmacy). While they aren’t mainstream yet, specialty-only PBMs -- which address sourcing, site-of-care and clinical rules -- will get more attention in next few years as specialty drug costs continue to rise.
- Members with hemophilia may be able to access 340B pricing through Hemophilia Treatment Center. (The 340B Drug Discount Program is a federal government program created in 1992 that requires drug manufacturers to provide outpatient drugs to eligible health care organizations/covered entities at significantly reduced prices.)
- 340B pricing. While this is far from mainstream, a few employers have established relationships with a local hospital, ACO and/or contract pharmacy to get deeply discounted specialty drug pricing. Note that the 340B program has some complex rules regarding patient requirements to access the better pricing so this fact should be included in any review of this option.
Cost for specialty drugs will continue to rise for the foreseeable future, and none of these strategies is likely to solve the problem once and for all. But with specialty drug costs now squarely in the spotlight, we’re starting to test innovative new approaches to cost management, and learning more about the trade-offs between medical and specialty drug costs. In other words, it’s far too soon to throw in the towel.
After 37 years leading the Employee Benefit Research Institute (EBRI), Dallas Salisbury has settled into his new role as president emeritus and resident fellow – but not before giving an “exit interview” to Employee Benefit News about what he’s most proud of and where he believes U.S. health care is headed. In this article, Dallas talks about the vastly different health care landscape in 1978, when EBRI was first founded, and the current state of the industry and employer-sponsored health plans in the wake of the Affordable Care Act. Dallas discusses the advantages of the employment-based system – in particular, the facilitation of enrollment, group design, and payroll deduction – and the increased role of technology and data going forward. Says Dallas: Health insurance “keeps people at the office, it keeps people working. It contributes to productivity. It's the whole, if you will, wellness movement.” In other words, employers need to invest in their workers’ health to help keep them engaged and productive.
Dallas is proud that the work EBRI has done (and will continue to do) “has made a difference to individuals, a difference to families, a difference to enterprises, a difference to employers, a difference to government decision makers.”
Congratulations to Dallas, for his many accomplishments at the forefront of benefits, and to his successor, Mercer alum Harry Conaway, on his appointment as CEO and President of EBRI.