Alcott In The News
Lou Basso of Alcott HR Group was recently interviewed for a Newsday Article published on December 29th, 2011. Read what he has to say the about Empire BlueCross BlueShield’s cutbacks in coverage and how this will affect small companies in New York. You can view the original article on Newsday.com by clicking: Small Business
Small Business:
Small businesses on Long Island, already struggling with high health insurance costs, are dreading Empire BlueCross BlueShield’s looming cutbacks in coverage.
The changes will mean hard decisions for many employers, who may have to limit coverage or offer high-deductible plans. Companies will need to take a hard look at employee needs if they’re going to try to manage costs, with the likelihood of even more of the burden being shifted to employees, say experts.
“Gone are the days of rich health plans with very little out-of-pocket for the policy holders,” says Lou Basso of Alcott HR Group, a Farmingdale organization that provides human resources services to businesses, including managing their health plans. “The options in New York State will now be significantly less based on the Blue’s decision to eliminate these plans.”
Empire has announced it is eliminating about seven of its 13 small-group plans. It has since added two small-business products back, says spokeswoman Sally Kweskin. Empire also has said it will discontinue the products on their renewal dates, rather than the originally announced April 1.
Still, many of those products being eliminated were “pretty competitive,” says Basso, noting there’s no magical solution to lower costs.
For starters, some companies may have to choose a high-deductible health plan, which carries greater upfront out-of-pocket costs for employees than a traditional managed care plan but could be 5-10 percent less in annual premiums depending upon the deductible, he notes.
Bill Tobia, owner of Home Medical Equipment in Garden City, says he will have to consider a high-deductible plan once he can no longer stay within his Empire plan.
Limited choices
“My company is under 50 employees, so I don’t have a lot of options,” says Tobia, noting each year he sees double-digit premium increases and has had to pass on more costs to employees. The company, which has renewed with Empire’s Prism EPO for now at a 16 percent average increase in premiums, pays about $163,000 annually in health insurance costs, he says. He’s not sure how long he’ll be allowed to remain in the Empire plan.
“People who are generally healthy might find the transition to a high-deductible plan effective,” says Paul Essner, a certified financial planner and a partner at The Signature Group of Companies, a Garden City insurance, employee benefits and financial services firm with 100 clients impacted by Empire’s decision, including Tobia’s company. Signature is working with clients to help them make plans, says Essner.
Employers can help offset increased upfront costs to workers by creating an employer-funded health reimbursement arrangement (HRA), he says. These are often paired with high-deductible plans and offer employers a tax-advantaged savings vehicle to help fund employees’ unreimbursed medical expenses, says Essner.
Other options
Other options include joining a private health insurance exchange, which offers multiple plan and provider choices to members and allows employees to choose the plans that best suit their needs, rather than have the employer select one plan for everyone, says Vince Ashton, chief executive of HealthPass New York, a not-for-profit commercial exchange.
“We work with insurance carriers to pick the best plans with the best value,” adds Paula Calame, interim executive director of the LIA Health Alliance in Melville, a private exchange, noting they offer plans including Emblem that are competitive with the Empire plans being phased out.
If you can’t afford to offer health insurance, there are options like Healthy NY, a reduced-cost health insurance program sponsored by New York State (see dfs.ny.gov), and Transparent Health Network (transparenthealth.com), which provides access to a network of doctors who have agreed to offer services at a lower, contracted rate if paid at the time of service.
And some employers could qualify for a federal tax credit for providing health coverage to employees (see irs. gov/newsroom/article/0,,id= 220839,00.html).
read moreHealth Care Reform Drives More Interest in High-deductible, Consumer-Driven Health Plans
Even before health care reform took hold, consumer-driven health care plans such as HSAs, health reimbursement accounts (HRAs) and flexible spending accounts (FSAs) were already growing in popularity. The steady increases in group health plan premiums are one of the main reasons. The data on just how much premiums have increased depends upon whose survey you use and the timeframe involved.
A Kaiser Family Foundation survey of over 2,000 employers found that group health plan premiums increased 9% in 2011 or to an average cost of $15,703 for family coverage. A state-by-state analysis performed by the Commonwealth Fund (a nonprofit organization that studies health care quality, access and affordability) found that health insurance premiums for employer-based plans increased 50% from 2003 to 2010. The analysis also found that the increase in premiums was greater than the growth in the median household income for every state. The Commonwealth Fund’s analysis projected an additional 72% increase by 2020 if no reforms were made.
According to a National Center for Health Statistics finding, the percentage of group health plan enrollees in high-deductible health plans (e.g., those with deductibles of $1,200 for self-only coverage and $2,400 for family coverage based on how the Department of Health and Human Services defines them), grew from 12.9% in 2007 to 20.3% in the first quarter (Q1) of 2011. Enrollment in consumer-driven health plans — high-deductible plans linked to an HSA or HRA – experienced even greater growth, going from 4.5% in 2007 to 8.8% of group plan participants in Q1 of 2011. FSAs growth grew from 16.7% of group plan participants in 2007 to 20.7% in the Q1 of 2011. The National Center for Health Statistics cited healthcare reform as one of the primary drivers for the growth in consumer-driven health plans.
Based on employers surveyed by Mercer LLC regarding their rising group health plan premiums, 47% said they planned to raise their plans’ deductibles or increase the percentage of plan premiums paid by their employees in 2012. Using high deductible health care plans is a way to contain costs and provide an incentive for employees to be more conscientious health care consumers. A Towers Watson & Co. survey, conducted in the fall of 2010, found that 66% of employers were planning to offer a consumer-driven health plan in 2012.
Consumer-driven healthcare plans offer a win-win for employers and employees alike. They provide financial and tax advantages for both employer and employees, while also encouraging employees to become better informed and more prudent consumers of health care.
read moreThe Benefits of A PEO in Addressing Health Care Reform
Most businesses owners view health care reform as just another headache from Washington they didn’t need. They are looking for solutions to ease this added pain. For those who were not already considering outsourcing their payroll, benefits, compliance and other employee-related and human resources needs to a Professional Employer Organization (PEO), the reality of healthcare reform has them gravitating toward this comprehensive HR resource. They recognize the broader benefits of a PEO relationship and also how a PEO can help them manage their compliance with this latest legislation.
PEOs can be a tremendous resource in helping businesses with the due diligence and compliance aspect of the new legislation. Compliance with complex tax-related changes, changes pertaining to certain health care plans such as health savings accounts (HSAs), and associated tax reporting is assumed by the PEO and is one less worry for business owners. Additionally, through their health care offerings, PEOs give businesses access to a menu of competitive health insurance options for their employees, including the most cost-effective consumer-driven plans such as HSAs . Additionally, and in view of the higher healthcare insurance burden now placed on businesses, the PEO’s wellness programs and other related value-added benefits such as discounts to health and fitness clubs, which help contain healthcare costs, are another strong incentive. This, in turn, helps businesses attract and retain the best employees.
A Mercer LLC survey found that small employers (i.e., those with between 10 and 499 employees) experienced an average 9.9% increase in health care plan costs compared with 3.6% increase in plans offered by larger employers. One of the primary reasons cited for the differential was compliance with the new health care reform legislation, which is impacting smaller employers’ more than larger employers. When served by a PEO, the playing field becomes much more level for small businesses.
Coming to Terms with Health Care Reform
“The Patient Protection and Affordable Care Act” (“PPACA”) signed into law by President Obama on March 23, 2010 is still being hotly contested, but some changes are already in effect. Take note of the following:
Tax Credits for Qualifying Small Businesses and Nonprofits
One of the bright sides of health care reform for small businesses are the tax credits for which they may qualify and which will make it more affordable for them to provide health insurance for their employees. To qualify for the PPACA tax credit an employer must have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible). Additionally, the employer must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate. And, the employer must pay annual average wages under $50,000. Currently, the credit is up to 35% of a small business’ premium costs, and for nonprofits meeting the same criteria the tax credit would be up to 25%. In 2014, the tax credit increases to 50% for qualifying small businesses and 35% for nonprofits. However, the credit phases out gradually for businesses with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.
Guaranteed Renewals
Group plans can no longer be cancelled by insurers due to the illness of a covered member of their group. As for the overall key components of the “Patient Protection and Affordable Care Act” affecting all individuals with health insurance, following are some key points already in effect:
- Insurers can’t drop people from coverage when they become sick.
- Lifetime coverage limits are eliminated and annual limits restricted.
- Children can’t be excluded from coverage due to pre-existing conditions.
- Young adults can remain on their parents’ health plans until age 26 (versus being dropped at age 19 or after finishing college).
- Uninsured adults with pre-existing conditions can obtain health coverage through a new program. Note: The program will expire once the insurance exchanges start operating in 2014.
- Medicare drug beneficiaries who fall into the “donut hole” coverage gap can get a fifty percent discount when purchasing covered brand name prescription drugs.
- New health plans are required to cover preventive services at no or little cost to patients.
Alcott In The News
Recently, John Bradley, Director of Operations and Sales, Alcott HR Group Western NY Division was featured in a Buffalo Business First article highlighting Professional Employer Organization’s (PEO’s) helping foreign owned businesses transition to the U.S.
