after aca · •state health insurance marketplaces established •low income premium subsidy...
TRANSCRIPT
After ACA Identifying and Taking Advantage of Your Alternatives
September 3, 2015
After ACA Agenda
• Health Care Reform Update - Timeline
- Health Care Reform At-a-Glance
- Cadillac Tax
- Wellness Incentives
- Other ACA Updates
• Where Do You Go From Here? - Benefit Strategy
- Comparing the Options
- Today’s Top Trends
- Defined Contribution Healthcare
- Private Exchanges
- Tools and Engagement
• Questions
Proprietary and Confidential 2
September 3, 2015
Health Care Reform At-a-Glance
Proprietary and Confidential
Health care reform timeline
for employer group health
plans
2012 2013 2014 2015 2016 2017 2018 2019 2020
40% excise tax on high-cost health
coverage (Cadillac tax) effective
Part D “donut hole” filled
• Health FSA salary reduction contributions capped at $2,500
• Retiree drug subsidy deduction ends
• Comparative effectiveness research tax (PCORI) fees must be paid
• Medicare Hospital Insurance tax increased for high income filers
• Medicare tax applies to investment income of high income filers
• Excise tax on medical device manufacturers
• Employer notice of state insurance exchanges and premium credits
• 60-day advance notice of mid-year changes (Notice of Material Modification) required
• Annual dollar limits prohibited on essential health benefits
• Pre-existing condition exclusions prohibited for all enrollees
• Child coverage to 26 even if eligible for other coverage
• Waiting periods over 90 days no longer permitted
• Coverage of routine patient costs in connection with clinical trials
• Limitations on out of pocket maximums
• Plans may not discriminate against providers with respect to plan participation
• Auto enrollment required (effective date delayed)
• Individual “shared responsibility” provisions effective
• State health insurance marketplaces established
• Low income premium subsidy available for marketplace coverage
• HIPAA wellness incentives limits increased and new rules
• Insurer tax
• Transitional reinsurance program
Provisions in blue italics only apply to new plans or plans that have lost
grandfathered status.
• Uniform summary of benefits and coverage (SBC)
• Form W-2 reporting of health coverage begins
• Self-funded plans must have external appeal contracts
• ERRP funds exhausted
• Plans may begin to receive medical loss ratio (MLR) rebates
Employer “shared
responsibility” provisions States may open insurance
marketplaces to large
employers
Selected provisions for calendar-year plans – note
effective dates may vary for non-calendar year plans
Employer reporting of 2015 health insurance coverage
4 Proprietary and Confidential
Health Care Reform At-a-Glance
Provision Effective date
Health plan provisions applying to both grandfathered and non-grandfathered employer plans
Annual and lifetime
dollar limits
• No lifetime or annual dollar limits on essential health benefits (EHB)
• Not applicable to most FSAs, HSAs, and integrated HRAs
• Self-funded and large group plans must use “authorized” definition of
“essential health benefit” (“benchmark plan”) beginning in 2014
Plan years
beginning on/ after
January 1,
2014 (annual limits
phased in for 2010-
2013)
Extension of child
coverage to age 26
• Up to age 26 for medical coverage regardless of marital or student status,
residence, or support. Excludes stand-alone dental and vision coverage
• Cannot charge more than for other similarly situated individuals
• Beginning January 1, 2014, grandfathered plans cannot exclude children
eligible for other employer coverage
Plan years beginning
on/after September
23, 2010
Income tax exclusion
for child coverage to
age 26
• Exclusion through end of calendar year in which child reaches age 26
• Includes dental, vision, health FSA, and HRA (different rule for HSA)
March 30, 2010
Pre-existing condition
exclusion
• No pre-existing condition exclusions for enrollees Plan years beginning
on/after January 1,
2014
Health Care Reform At-a-Glance – Mandates and Reforms Grandfathered and Non-grandfathered Employer Plans
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Health Care Reform At-a-Glance – Mandates and Reforms Grandfathered and Non-grandfathered Employer Plans (cont.)
Provision Effective date
Health plan provisions applying to both grandfathered and non-grandfathered employer plans
Waiting periods • Waiting periods over 90 days prohibited Plan years beginning
on/after January 1,
2014
Treatment of OTC
drugs as medical
expense
• Health FSAs, HRAs, and HSAs prohibited from reimbursing cost of OTC
drugs (other than insulin) unless prescribed by a physician January 1, 2011
Health FSA cap • Salary reductions capped at $2,500 in 2013; indexed. In 2015, indexed cap
was $2,550, and it is projected to stay at the same level for 2016 Plan years beginning
on/after January 1,
2013
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Health Care Reform At-a-Glance – Mandates and Reforms Grandfathered and Non-grandfathered Employer Plans (cont.)
Provision Effective date
Health plan provisions applying to both grandfathered and non-grandfathered employer plans
HIPAA wellness
incentives
• No discrimination regarding eligibility or coverage on the basis of a health
status-related factor. Incentives increased to 30% (and an additional 20%
(up to 50%) for tobacco use) of cost of coverage
Plan years beginning
on/after January 1,
2014
Automatic enrollment • Auto-enrollment required for employee with option to opt out of coverage
• Not enforced until regulations are issued
After regulations are
issued
Marketplace notice • Notice to current employees concerning availability of health insurance
marketplace provided by October 1, 2013, and to all new employees hired on
and after that date
• Model notices include one for employers that offer coverage to some or all
employees and one for employers that do not offer coverage
October 1, 2013
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Health Care Reform At-a-Glance – Mandates and Reforms Grandfathered and Non-grandfathered Employer Plans (cont.)
Provision Effective date
Health plan provisions applying to both grandfathered and non-grandfathered employer plans
Summary of benefits
and coverage (SBC)
• 4-page, double-sided summary of benefits with a prescribed format, content,
language, and timing must be provided to new enrollees and at open
enrollment
• Latest revisions deferred to 2017
Open enrollment
periods beginning
on/after September
23, 2012
Reporting plan value on
Form W-2
• Total value of medical coverage on an employee-specific basis reported on
Form W-2 issued in January for preceding calendar year
• Some exemptions, such as coverage provided under certain church or
multiemployer plans
Reporting first
required in 2013 for
coverage provided in
2012
Medical loss ratio
(MLR) reporting and
rebates
• Insurers to submit MLR reports to HHS and issue rebates to enrollees in
insured plans in large group market (more than 50 employees) where loss
ratio (ratio of claims to premium) is less than 85%. Note that this provision
applies on a calendar year, not plan year, basis
• Rebates payable by August 1. Starting with 2014 reporting year, reporting
due date is July 31, and rebates are payable by September 30
January 1, 2011
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Health Care Reform At-a-Glance – Mandates and Reforms Grandfathered and Non-grandfathered Employer Plans (cont.)
Provision Effective date
Health plan provisions applying only to non-grandfathered employer plans
Preventive care • Preventive care services must be covered at 100% when provided in-
network Plan years beginning
on/after September
23, 2010 Insured plan
nondiscrimination
• Insured plans prohibited from discriminating in favor of highly compensated.
Enforcement delayed until guidance released
OB/GYN,
pediatrician, ER
services
• Preauthorization or referral requirements prohibited
Appeals process • Mandatory internal and external claims and appeals process
• Self-funded plans must contract with at least three independent review
organizations (IROs)
Women’s preventive
services
• Additional preventive services for women covered at 100% Plan years beginning
on/after August 1,
2012
Plan quality of care
reporting
• Group health plans and health insurance issuers required to submit an
annual report to HHS addressing plan or coverage benefits and provider
reimbursement structures regarding the cost and quality of care
After guidance issued
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Health Care Reform At-a-Glance – Mandates and Reforms Grandfathered and Non-grandfathered Employer Plans (cont.)
Provision Effective date
Health plan provisions applying only to non-grandfathered employer plans
Clinical trials • Must cover routine patient costs in connection with participation in approved
trials Plan years beginning
on/after January 1,
2014 Maximum deductibles
and out-of-pocket
(OOP) limits
• In-network OOP maximum for EHB same as for HSA- compatible HDHP in
2014. For 2015, $6,600/$13,200 (indexed annually). For 2016,
$6,850/$13,700.
• Plan’s maximum OOP limit can be divided among different coverage
categories of benefits so long as the combined amounts don’t exceed the
annual OOP limit. (Special transition rule for 2014 for carve-out vendors
such as prescription drug)
• Must apply an embedded self-only OOP maximum to each individual
enrolled in family coverage if the plan’s family OOP maximum exceeds the
ACA’s OOP limit for self-only coverage (also applies to deductibles)
Provider
nondiscrimination
• No discrimination against provider acting within the scope of license
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Health Care Reform At-a-Glance – Mandates and Reforms Grandfathered and Non-grandfathered Employer Plans (cont.)
Provision Effective date
Taxes and fees
HSA nonqualified
withdrawals
• Penalty tax increased from 10% to 20% January 1, 2011
Pharmacy manufacturer
tax
• Annual fee on manufacturers of branded prescription drugs based on market
share 2011
Comparative
effectiveness research
(PCORI) fee
• Fee on insured and self-funded plans to fund clinical effectiveness research
• For plan years after October 1, 2013, fee equals $2/covered life/year;
indexed thereafter
• Payment due by July 31, of each year
Plan years ending
after September 30,
2012 and
before October 1,
2019
Itemized medical
deduction
• Itemized medical deduction threshold increased from 7.5% to 10% 2013
Medicare hospital
insurance tax
• Tax rate increased from 1.45% to 2.35% for income in excess of $200K
(single or head of household) /$250K (joint filers)
• 3.8% unearned income tax on net investment income in excess of $200K
(single or head of household)/$250K (joint filers)
• Employer required to collect tax only for employees earning
• $200K or more from employer
Medical device excise
tax
• 2.3% excise tax on the manufacturer or importer for the sale of certain
medical devices
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Health Care Reform At-a-Glance – Mandates and Reforms Grandfathered and Non-grandfathered Employer Plans (cont.)
Provision Effective date
Taxes and fees
Health insurance
providers fee
• Annual fee on entities that provide health insurance (self- insured employers
specifically excluded) 2014
Transitional reinsurance
fee
• Fee paid by insurers and self-funded plans (major medical coverage) from
2014 to 2016 to help fund reinsurance program
• For 2014, contribution rate is $63 per covered life per year ($5.25 per
month); for 2015, contribution rate is $44 per covered life, for 2016, it will be
$27.
"Cadillac plan" excise
tax
• 40% tax on value of coverage above:
• $10,200/individual and $27,500/family
• $11,850/$30,950 for pre-Medicare retirees
• Future years indexed at CPI-U+1% for 2019, CPI-U only after 2019
• Adjusted for high risk industries, age, and gender
• Excludes dental and vision. For multiemployer plans, all coverage is
considered family coverage
2018
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Health Care Reform At-a-Glance – Shared Responsibility
Provision Effective date
Employer Mandate
Shared responsibility payment for failing to offer coverage to at least 95%* of all full-time employees (FTE) and children if any FTE gets subsidy in marketplace
• $2,000 (indexed) times the number of FTEs (excludes first 30* FTEs).
• FTE defined as working 30 or more hours per week.
• Not required to offer coverage to part-time employees, retirees, or spouses
but must offer to broader category of children.
• No minimum employer subsidy required.
* 95% threshold lowered to 70% and first 80 FTEs excluded for 2015 only.
Penalties first imposed in 2016 for failure to satisfy mandate in 2015
Shared responsibility payment for full-time employees who opt out of employer plan and get subsidy in marketplace
• $3,000 (indexed) for each FTE who enrolls in marketplace and receives low
income subsidy if: (1) employee’s contribution for single coverage under
employer plan exceeds 9.5% of W-2 income, rate of pay, or the federal
poverty level (FPL) for individuals, or (2) employer plan fails to provide
“minimum value,” i.e., the actuarial value of plan is below 60%.
Individual Mandate
Penalty for failure to have minimum essential coverage
• Greater of 1.0% of Modified Adjusted Gross Income or $95/person in 2014
• Greater of 2.0% or $325/person in 2015
• Greater of 2.5% or $695/person in 2016
• Indexed for individuals who fail to maintain minimum essential coverage.
• Family dollar amount capped at 300% of individual penalty.
Penalties first imposed in 2015 for failure to satisfy mandate in 2014
Note: Individual and small group plans may keep their current plans for renewals up to
October 1, 2016.
Proprietary and Confidential 13
Employer shared responsibility assessments
Yes
No
Yes
No
Does employer
offer minimum
essential
coverage (MEC)
to a least 95% of
FTEs (and
dependents)?
For 2015
only,70% of
FTEs.
For “5% group”
who are not
offered coverage
(30% in 2015 only)
potential employer
assessment.
Employer assessment
lesser of:
• $3,000 x FTEs who
receive subsidized
marketplace
coverage.
Assessment of $250
payable monthly.
• $2,000 x FTEs (less
30; 80 in 2015)
Does the employer
offer at least one
option that is
affordable (under
9.5%) and satisfies
minimum value (60%
or more)?
No
Employee
chooses:
• Employer plan
• Individual
penalty
• Marketplace
coverage without
subsidy
• Spouse / parent
plan
• Medicaid
No employer
assessment
No
Employer assessment:
• $2,000 x FTEs (less
30; 80 in 2015), if at
least one FTE
receives subsidized
marketplace
coverage.
Assessment of $167
payable monthly.
Applies separately to
each member of
controlled group
Employer reporting to
IRS and employees/
retirees:
• 6056 Reporting
• 6055 Reporting
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Cadillac Tax
Proprietary and Confidential
Cadillac Tax - Overview of the Excise Tax
Starting in 2018, a 40% excise tax will apply to each employee’s excess
benefit, which is the aggregate cost of applicable employer-sponsored
coverage that exceeds the limit calculated on a monthly basis
The tax is allocated by the employer to insurers, TPAs,
PBM and other coverage providers for payment to the IRS.
Aggregate cost of applicable coverage
Less: ‘self-only’ or ‘other than self-only’ limit
Excess benefit
Multiplied by: 40%
Excise tax attributable to that individual
For each employee,
former employee,
surviving spouse, or
other primary insured
individual
Insurers, TPAs, PBM and other administrators expected to
charge back cost to employer, perhaps with tax gross-up.
16 Proprietary and Confidential
Cadillac Tax - Applicable Coverage
Generally, “applicable employer-sponsored coverage”…
Includes:
• Health coverage excludable from income,
including HRA contributions
• Health FSA/HSA employee and employer
contributions
• Onsite clinics if considered a group health
plan
• EAP if considered a group health plan
• Wellness programs, if COBRA premium
charged
• Executive physical programs and
supplemental medical programs if excluded
from income
Excludes:
• Insured dental (self-insured dental?)
• Insured vision (self-insured vision?)
• Long-term care
• Accident and disability benefits
• Coverage for a specified disease or illness
or fixed indemnity coverage (e.g., critical
illness and hospital indemnity plans) if 100%
employee paid with after-tax dollars
• Auto insurance
• Liability insurance
• Credit insurance
• Workers’ compensation
Based on total cost of plan, not net of employee contributions
17 Proprietary and Confidential
Cadillac Tax - Aggregate Cost
• For self-insured plans, calculated like COBRA premium
− Includes employer- and employee-paid portions
− Separate rates for “self-only” and “other than self-only” coverage
− For retirees, option to combine pre-65 retirees with post-65 retirees
− Will future guidance require actuarial certifications and standard assumptions?
o Actuarially sound and self-supporting rates
o Claims base, trend, margin, tiering, plan changes, etc.
• For the health HSA
− Includes employee salary reduction contributions
− Includes employer contributions
18 Proprietary and Confidential
Cadillac Tax - Impact of Health FSA
2018 Projected
Per Capita
Cost
2018 Blended
Per Capita
Cost FSA
Total
Projected Per
Capita Cost 2018 Limits
Excess
Benefit
Per
Employee
Excise Tax
Employee $9,663 $9,663 $0 $9,663 $10,200 $0 $0
Employee $9,663 $9,663 $2,500 $12,163 $10,200 $1,963 $785
Employee only tax allocation (Based on assumed split of medical and Rx costs):
Medical 67% $526
Rx 17% $133
FSA 16% $126
$785
While illustrated on an annual basis, the tax is calculated on a monthly basis for each
employee/retiree.
19 Proprietary and Confidential
Expected Leveraging of Cadillac Tax
20 Proprietary and Confidential
Cadillac Tax - Tax Mechanics
Will vendors pass along the cost? Since excise tax is not deductible for
vendors, will they also gross up for taxes to stay whole after taxes?
A Hypothetical Example 2018 2019 2020
Excise tax on employer’s plans $61,000 $135,000 $448,000
Vendor’s corporate marginal tax rate 35% 35% 35%
Expected charge-back to employer
(income vendors need to stay whole)* $93,846 $207,694 $689,231
Grossing up increases the cost to employer by about 54%
* Excise tax/(1 – marginal tax rate)
• Payments may vary between not-for-profit and for-profit
administrators
• Penalty for underreporting tax liability equal to amount that
would have been paid, plus interest (effectively a 100% penalty)
21 Proprietary and Confidential
Anticipating the Cadillac Excise Tax
• Absorb the cost o Could offset another source of total rewards to cover the expense
• Migrate employees to lower cost medical options
• Improve plan efficiency o Improved networks, discounts, wellness, move to self-insured
• Reduce medical benefits to delay, reduce, or eliminate the tax o Could replace lower medical value with increase in other total rewards
• Implement HDHP/HSA plan o Eliminate or reduce employer HSA contributions
o Eliminate or cap pre-tax employee contributions if subject to the tax
• Eliminate ancillary health care benefits such as the health FSA
• Ensure dental and vision in separate plans
• Review COBRA rating assumptions
• End health plan sponsorship for actives and/or retirees o Subject to ACA $2,000/employer shared responsibility assessment
22 Proprietary and Confidential
Wellness Incentives
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Common Designs and Applicable Laws Disclaimer: this is a generalization; analysis depends on facts and circumstances
Component ADA HIPAA GINA Tax Other
Nutrition classes
(Reasonable
accommodation)
(Participatory
program)
Cash reward for walking
a mile per day
(Reasonable
accommodation)
(Activity-only program
30% max reward)
(Included in
taxable income)
Premium discount for
meeting biometric
standards – offered to
employee and spouse
(30% max reward; ee-
only coverage)
(Outcome-based
program; 30% max
reward)
(confidentiality/ privacy, election
change)
Tobacco surcharge if test
shows presence of
nicotine
(30% max reward; ee-
only coverage; family
not addressed)
(Outcome-based
program; 50% max
reward)
(confidentiality/ privacy, election
change)
Reward of car seat for
maternity management
enrollment
Pregnancy
Discrimination Act
(confidentiality/ privacy)
Proprietary and Confidential 24
Common Designs and Applicable Laws
Component ADA HIPAA GINA Tax Other
Achieve 3 biometrics
within normal range, or
show 2 improvement
from previous year
(including BMI) –
employee only
(30% max reward; ee-
only coverage)
(Outcome-based
program; 30% max
reward; RAS
required; special
participatory rule)
(confidentiality/
privacy)
Premium reduction if
attest to not smoking
(Reasonable
accommodation)
(Outcome-based
program; 50% max
reward)
Reward for completing
HRA – offered to
employee and spouse
(30% max reward; ee-
only coverage; family
not addressed)
(Participatory
program)
Weight loss challenge;
reward is gift card
Age/gender appropriate
preventive screenings ;
reward is health FSA
contribution
(confidentiality/ privacy; ADEA)
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ADA Proposed Regulations Analysis – Flow Chart
Does wellness program
include a medical exam for
disability-related injury?
Part of group health plan?
General ADA rules apply
(e g , no discrimination,
reasonable
accommodations)
• Provide notice to
participants
• Incentives limited to 30%
of cost of employee-only
coverage
• Comply with HIPAA
privacy rules
• Must be reasonable designed
• Must be voluntary
• No requirement to participate
• No denial of coverage under
any plan or benefit package
• No adverse employment
reactions
• Meets confidentiality
requirements
• Complies with other non-
discrimination laws
Yes Yes
No No
Proprietary and Confidential 26
Other ACA Updates
• Employers with 50 to 99 employees o Subject to the Employer Shared Responsibility rules effective 1/1/16
• Part D doughnut hole continues to be filled in o In 2015, the retiree pays 65% of the cost of generic prescriptions and 45% of
the cost of brand name prescriptions
• No Health Reimbursement Account without an accompanying sponsored benefit plan o Not allowed to reimburse employees through an HRA for premiums of
individual insurance purchased in the public marketplace
o The HRA would not meet ACA requirements and would be subject to $100 per day per employee penalty
• May need “embedded” cost-sharing limits in 2016 o Self-funded and large groups may need to apply the 2016 Federal cost-
sharing limits of $6,850 self-only, $13,700 family, by individual
o Problem for CDHP where no embedded deductible is allowed by individual
o For example, $4,000/$8,000 CDHP deductible would not comply with $6,850 individual OOP requirement
27 Proprietary and Confidential
Where Do You Go From Here?
Proprietary and Confidential
Benefit Strategy - Where Are You on the Consumerism Spectrum? Where Do You Want to Be?
Paternalism Consumerism Individualism
Essence of
“Contract”
“We’ll take care of it
for you”
“We support each
other and share
responsibility”
“You’re on your own”
Employer
Role
Architect/custodian
providing, at a minimum,
adequate benefits, fair
policies
Partner, enabling
employees to make
informed decisions for
their well-being
Limited obligation or
involvement in the
individual’s choices
Employee
Role
Passive, “entitled”; waits
for employer to make
decisions; little concern
about costs or impact
Engaged consumer;
seeks information,
weighs alternatives,
considers cost and
outcomes
Like an independent
contractor; simply
minimizes cost and
maximizes personal
outcomes
Consumerism Spectrum
29 Proprietary and Confidential
“Best-in-class” designs
and partners
Outsource functions:
• Vendor partners
• Quilted network
• Portfolio of designs
• Engagement resources
• Self-funded or insured
“I believe better
performance is
achievable, but lack the
resources on my own”
“I will actively support
the activities that have
proven outcomes, and
outsource wherever it
makes sense”
Private Exchange –
with Flexibility in
Design, Paternalism
No benefit
relationship with
employees
“I am no longer in
the benefits
business”
Send employees
to Public
Exchange
Benefit Strategy - Benefit Delivery Options
Facilitate Exit
Existing plans
and financing
Uncommon except
for:
• Labor contracts
• Grandfathered
plans
• PPO - Only
“Status Quo is
working for me”
“I am
contractually
obligated”
Typical Current
Strategy
Simplify and
streamline plans
Insourced focus on
cost management:
• Vendor selection
• Plan design
• Communication
• Engagement
• CDHPs and H.S.A.s
“I will make the
investment to
improve
performance”
“Our unique benefits
differentiate us”
Typical Objectives
Today
DC model with
insurance focus
Outsource functions
and risk:
• Insured choices
• Fixed DC cost
• Low focus on health
engagement
“I want to provide
broad access to
benefit programs
while not having a
role in day-to-day
management”
“My CFO insists on a
fixed cost model”
Private Exchange –
DC design, no
Paternalism
Maintain Manage Sponsor
30 Proprietary and Confidential
Benefit Strategy - Progression of Plan Design
Defined Contribution
Risk Shifting
Managed Care
CDHC
Flexible Benefits
Indemnity
Employee: Increase financial responsibility and health management
31 Proprietary and Confidential
Resources, services
and tools that enable
individuals to take action
Motivators that
encourage greater
individual accountability
Elements that educate
and promote your
benefits and build
personal awareness
Information
“I understand”
Incentives
“I want to”
Infrastructure
“I’m able to”
Mandates that enforce
accountability for
specific behaviors and
actions
Imperatives
“I must”
• Vendor partners
• Technology
• Individualization
at time of need
• Plan design
• Incentives
• Social/behavioral
techniques
• Communication
• Branding
• Data
• Dashboards
• Leadership support
• Environmental
support
• Social contract
mandates
Benefit Strategy - Philosophy of Shared Accountability
32 Proprietary and Confidential
Comparing the Options
“Pay” “Play”
Public marketplace Private exchange Standard employer group plan
• Easier to cost shift to employees
• Potentially no resources required to respond
to employee health concerns
• Cost savings could be transferred to
employees as taxable income
• More choices
• Easier to cost shift to employees
• Fewer employer resources
required to respond to employee
health concerns
• More choices
• Focus on wellness and
disease promotion
• Self funded
• Less administrative hassle
for employer
• Offer plans that meet specific
employer needs
• Ties health benefits to corporate
culture and broader employment
package
• Retain direct control of vendor
relationships
• Directly influence employee health
• Retain input on regional and
national delivery of care
• Website/enrollment problems
• No national approach, varies by state
• Employees lose buying leverage and
employee costs rise, often dramatically
• Fundamentally changes/erodes benefit package
• Potentially poor employee consumer experience
• Reduced ability to promote employee health
and productivity
• Limited employer adoption, thus far
• Limited employer input on
options or vendors
• Requires material
communications effort to educate
employees
• Requires continued resources &
diligence to manage program
• Harder to limit employer’s cost
increases below medical inflation
Ad
va
nta
ge
s
Co
nce
rns
33 Proprietary and Confidential
Today’s Top Trends
Clarity on health reform is fueling rapid transition…
• Migration to consumer driven health benefit designs
• True shared responsibility and costs with employees
• Use of account-based plans to encourage financial awareness
• Engagement of workforce with communications, tools and resources
• Introduction of 1st and 2nd generation wellness and health management
programs
• Reliance on partners- general and specialized- to integrate employee
experience
• Serious consideration of exchanges and defined contribution benefits
34 Proprietary and Confidential
Defined Contribution Healthcare
Defined contribution can take many forms:
• Insured or self-insured group plans – Company announces fixed employer
subsidy or credit amount, and determines employee premium contributions for
each plan based on total plan cost minus fixed subsidy amount
• Group plans offered through a private exchange – Fixed employer subsidy or
HRA amount provided to employee, and employee uses that subsidy to offset
cost of plan selected in the private exchange
• Individual plans offered through a private exchange – Fixed employer subsidy
or HRA amount provided to employee, and employee uses that subsidy to
offset cost of plan selected in the private exchange
35 Proprietary and Confidential
Defined Contribution Healthcare
Key components of Defined Contribution Health Care:
• Clear and concise communication of the defined contribution commitment
from the employer
• Employer makes conscious decision from year to year on if and how much
that DC commitment will change
• Typically includes multiple plan offerings to allow employees to choose a plan
that fits their needs and budget
• Employee cost determined by total cost of plan reduced by the DC
commitment
• Includes tools for assisting in plan choice, transparency in cost and quality of
services, and support in delivery of benefits
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Best Practices with CDH Benefit Design
Driver Best Practices to Consider
Pricing and plan design • Premium differential to promote wellness and
consumerism
• Covered benefits parity
• Financial levers- co-pay, co-insurance, etc.
Account contributions
and fund access
• Amount by employer to steer participation to
CDHP
• Contribution approach – promote wellness
• Ease of access and understanding
Communications • Broad calendar
• Multi-media approach
• Engagement and personalization
Decision support • Health plan selection approach
• Contribution/distribution decisions and
management
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Evolving Wellness Program Models
Drive business
results
Multi-year strategy
Target all employees
and dependents
High
Significant
outcomes-based
Thorough metrics,
analysis & reporting
Promote healthy
activities
Some coordination
Voluntary with
heavier promotion
Some
Small
activity-based
Some evaluation
Improve morale
and loyalty
Unmanaged
Voluntary
None
None
None
Health-Related Fringe Benefits
Typical Wellness Program Today
Strategic Health & Productivity Initiative
Focus
Oversight
Participation
Personalization
Incentives
Measurement
& Evaluation
Emerging trend
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Health Advocacy
• Find the right doctors, dentists, hospitals,
other healthcare providers; expedite
appointments
• Address complex medical conditions,
research and locate latest treatments
• Coordinate care and schedule follow-up
visits with the medical team; help transfer
X-rays, medical results
• Arrange specialized treatments and tests;
answer questions about results, treatments and
prescribed medication
• Clarify benefits including copays, and help
facilitate access to appropriate care
• Provide health cost estimates for common
medical procedures for informed decisions
• Help resolve insurance claims, negotiate
billing
• Gaps In Care Coaching. Ongoing tailored
“gaps in care” health coaching by Personal
Health Advocates
• Offer personal contact with a nurse and
web-based health information
• Locate eldercare including assisted living,
adult day care and other issues facing parents,
parents-in-law
• Secure second opinions
• Prepare members for doctors appointments
including questions to ask
o Identify “best-in-class” medical institutions for a
serious illness or injury
o Find community services and government
programs when needed
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The Emergence of Private Exchanges
• Operated by “for profit” private companies (e.g.
insurers, consulting firms, specialty firms)
• Vary in structure: single or multiple carrier, fully
insured and/or self-funded, group or individual,
active employees and/or retirees
• Plans and services can extend beyond ACA-
driven structure of public marketplaces
– Flexibility in plan offerings, although many
follow “metals” designs
– Can also offer other forms of insurance and
related services
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Comparing Apples to Apples – High Level Questions
• Fully insured/self funded?
• Employer control of plan design?
• Help with enrollment?
• Other administrative bells and whistles?
• One carrier or multiple carriers?
• Cost? Who is paid for what?
• Platform for employees?
• Vendor relationships?
• Contracting responsibility?
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Comparing Apples to Apples (cont.)
What’s included?
• Insurance products, administration capabilities, and decision support tools for the
employees both during enrollment and throughout the year
How much can you customize?
• Ranges from complete customization to a fixed set of both carriers and plan designs
How sustainable is the solution?
• Determine what happens after year one to both the employer and the employee costs
How much choice is right for your employees?
• Complexity of decisions you are asking your employees to make, the adequacy of the
support they will have to make decisions, and if those choices truly add value
What role does HR now serve?
• Understand your role after the exchange is deployed to ensure you are not too far removed
from your data to be able to impact the productivity of your workforce
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Emerging Practices – Typical Engagement Tools and Technology
• Common engagement interface (web-based) between employer and
employee/family
• Health plan selector tools and decision guides
• Calculators for short and long-term health costs
• Shopping tools
• Financial transparency to health costs, provider quality ratings, location services
• Carrier-based, CastLight, Healthcare Blue Book, Healthgrades, etc.
• Health condition web tools and search functionality (e.g. WebMD)
• Mobile apps and social media
• Integrated health records and personalized services
• Personalized avatars/coaches and gamification
• Devices (e.g., FitBit, pedometers, Body Media, etc.)
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Principle #1: Make it Personal and Relevant Personalized
interests Know my
numbers
Spending Account
Balances
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#2: Drive Actions and Outcomes
Personalized recommendations
Targeted messaging
Incentive
rewards
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#3: Make it Accessible and Convenient
Centralized access to all plans
and programs
Mobile access
Single Sign-On and
Deep Links
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# 4: Use Social Influence
Leadership
Support
Social Media
and
Grassroots
Support
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#5: Apply Behavioral Science
Aspiration Loss aversion
Statistical optimism
Regret aversion
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Questions?
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