Making the Most Out of Open Enrollment

OpenEnrollment

Nearly half of employees are stressed by the open enrollment process and only half are confident about the benefit decisions they made last year, according to a study by MetLife. Millennials are the most stressed and confused. When asked about the most effective benefit resources, respondents ranked one-on-consultations well above other resources. In fact, Millennials led their generational counterparts in valuing one-on-one consultations. However, only half of employers offer one-on-one consultations. Sixty percent of Millenials consult with their families and friends on benefits. MetLife says that employers need to help their employees connect the value of non-medical benefits to their day-to-day lives. Employers should also do the following:

  • Make sure that employees fully understand key terms such as “deductible,” “premium,” “PPO,” and “HMO.”
  • Have employees ask themselves, “Do I have a big life event coming up, such as marriage or retirement?” It’s critical to choose benefits based on present and future needs.
  • Make sure that employees review their benefits and fully understand them. Only half of employees said they thoroughly reviewed their benefits choices last year.

The survey also reveals how employees feel about their benefits:

  • Financial uncertainty: In contrast to decreasing unemployment numbers, American workers remain pessimistic about their financial future. Less than half feel in control of their finances. Even fewer expect their situations to improve in the next year (46% in 2015, compared to 52% in 2014). More than half are concerned about having enough money to cover out-of-pocket medical costs as well as meeting monthly living expenses and financial obligations. These worries that have increased every year since 2012.
  • Job Satisfaction: More than half of employees are satisfied with their jobs and are committed to the organizations’ goals. An increasing number plan to be with their companies a year from now.
  • Financial Benefits: 71% of employees consider work to be the foundation of their financial safety net. Sixty-two percent of employees want more financial security benefits. Millennials are more financially vulnerable compared to their counterparts. Gen Xrs say they are less secure than other generations.
  • Appreciation of benefits: Half of employees agree strongly that their benefits help them worry less about unexpected health and financial issues. Seventy percent of employees say that having customizable benefits would increase their loyalty to their employer.
  • Supplemental benefits: Employees continue to ask for a range of solutions, especially for more common benefits, such as medical, prescription, 401(k), dental, life, and vision care. Employers are keeping pace with many of their employees’ top benefit requests. However, there are large gaps in accident insurance, critical illness, and hospital indemnity. Most employers understand how non-medical benefits can provide financial protection, such as offsetting out-of-pocket medical expenses. Yet, only 47% of employees believe that supplemental health benefits can help close these gaps.
  • A streamlined plan design: Plan design, claims management, and implementation rank highly as advantages of streamlining the number of carriers that employers use.
  • Use of enrollment firms: Three-quarters of employers have positive attitudes towards enrollment firms. Seventy-one percent of employers say that working with an enrollment firm helped them improve benefit communications.
  • Wellness plans: More than two thirds of employees are interested in physical well-being programs that reward healthy behavior. This is especially true among Millennials (75%) and female employees (72%).
  • Retirement Benefits: Forty percent of employees say that having retiree benefits is a key reason to stay with their employer. Millennials feel the most strongly about this, probably due to their lack of financial confidence. About a third of employees plan to postpone retirement, an increase of 5% over 2015. Almost 6 in 10 employees plan to work or consult once retired. Of this 60%, 44% plan to work part-time.
  • Older workers: With today’s workers redefining what it means to be a retiree, employers must also redefine what retiree benefits look like in order to appeal to this rich reservoir of talent. For example, 63% of employees say that dental is a must-have retiree benefit while only 42% of employers offer it. Similar gaps can be found across other critical non-medical benefits, such as vision and life insurance. More than half of employees say that their employer does not offer any employer-paid non-medical benefits. With retiree benefits being such an important loyalty factor for many employees, employers have an opportunity to keep pace in 2016 and beyond.

Bill Targets Pharma Tactics to Delay Generics

The Senate Judiciary Subcommittee held a hearing on S. 3056, the Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act. The bill would allow generic-drug companies to bring actions in federal court to get the drug samples they need to develop generic versions of brand drugs. It would authorize judges to award damages. Proponents say that the bill would prevent brand drug manufacturers from abusing risk evaluation and mitigation strategies to block generic competition. It would encourage more development of generic and biosimilar drugs and reduce drug costs. “This legislation will help bring generics to market faster, which is key to reducing drug costs,” said Pharmaceutical Care Management Association (PCMA) president and CEO Mark Merritt.

The bipartisan legislation was introduced by Senators Charles Grassley (R-IA), Patrick Leahy (D-VT), Amy Klobuchar (D-MN), and Mike Lee (R-UT). The legislation is supported by a broad group of stakeholders, including the Generic Pharmaceutical Association, the Academy of Managed Care Pharmacy, Public Citizen, Consumers Union, and the Blue Cross Blue Shield Assn. PCMA also suggests these solutions to bring down drug prices:

  • Accelerate FDA approvals of drugs that face little or no competition.
  • Make copay coupons an illegal kickback for all insurance that receives any federal subsidy.
  • Modernize the Medicaid pharmacy to make it more like the commercial market and Medicare Part D.
  • Create new incentives for physicians to prescribe biosimilars.

Employees set their sights on vision plan benefits

Eighty percent of employees with access to a vision plan through their employer enrolled in one last year, making vision one of the top supplemental benefits, a recent survey found. A large proportion said it is at least somewhat important that their vision plan cover advanced materials for frames and lenses, and many also want a choice of vision care options. Employee Benefit News (2/26)

Cadillac Tax Implications and SHOP Awareness

Eighty-two percent of employers offer at least one healthcare plan. Companies of all sizes are offering more options for healthcare plans. Forty-five percent say they are at risk for paying a Cadillac Tax for high-end health plans in 2018. Eighty-four percent of those at risk plan to change their health benefits to avoid the tax.

Fifty-five percent of companies with less than 50 employees are aware of the Small Business Health Options Program (SHOP), compared to 50% last year. A third say they know how to access SHOP coverage for their employees.

Other key findings include the following:

  • 84% of employers say the ACA has had a positive or neutral effect on their business, yet 65% say the reporting requirements are burdensome.
  • Twenty-three percent of small businesses (less than 50 employees) say the ACA has had a negative effect on their business compared to 11% of mid-sized businesses and 10% of large businesses. The reporting requirements have hit medium and large companies the hardest.
  • 84% of employers agree that healthcare benefits are important in attracting and retaining employees. Eighty-eight percent of employees agree healthcare benefits are important to job satisfaction.

More Companies Increased Contributions to Help Employees Pay Premiums

HelathCareMoney

Companies are more likely to have added or increased contributions to their employees’ premiums this year compared to the last two years, according to a study by the Transamerica Center for Health Studies (TCHS). The study of 1,500 employers was conducted by the Harris Poll from August 14 to September 3. Forty-four percent of companies expect their healthcare costs to increase in the next 24 to 36 months.

Most employers are trying to keep constant their contribution to employees’ premiums (57%), deductibles (60%), and co-pays/coinsurance (58%). Thirty percent want to maximize their contributions to employees’ premiums to help manage health insurance costs. TCHS Executive Director Hector De La Torre said, “The anticipated increase in healthcare costs correlates to improved quality for many employers.” Forty percent expect the quality of health insurance they offer employees to improve in the next 12 to 36 months while only 10% expect the quality to decline. Companies are most concerned about managing healthcare costs related to cancer (71%), drug expenses (69%), and diabetes and obesity (68%).

Sixty-one percent of employers offer wellness programs. Forty-nine percent of employers that have had a wellness program in the past 12 months say that saving money was the motivation. Eighty-two percent of companies say their wellness program improved workers’ health; 80% say it improved productivity and performance, and 71% say it reduced healthcare costs. De La Torre said, “Providing the best healthcare benefit package possible remains the top healthcare-related priority for employers. Interestingly, employers that offer healthcare benefits are more likely to anticipate profitability, hiring and wage increases in the next two years.”

Companies favoring bonuses over wage increases, Aon says

Companies are dedicating a smaller percentage of payroll budgets to raises than they were before the recession, while allotting more money to short-term rewards, Aon Hewitt says. “It’s really hard to cut wages and salaries, so the more compensation you can give in other forms, the more nimble you can be,” Cornell University’s Linda Barrington said. The New York Times (tiered subscription model) (5/25)

Companies Look to Transition Retirees to Health Exchanges

Two-thirds of companies are considering altering their pre-65 retiree health strategies over the next few years, according to a new Aon Hewitt survey. Of those, 35% are favoring sourcing health coverage through the public exchanges under a defined contribution approach. Twenty-eight percent are considering eliminating pre-65 retiree coverage and subsidies altogether.

Just six percent of companies have decided to move some portion of their pre-65 retirees to the public exchanges, and another nine percent offer retirees a choice between the group program and the public exchanges.

John Grosso of Aon Hewitt said, “Most companies are looking closely at altering their pre-65 retiree strategies to reduce cost and relieve the looming excise tax risk facing employers and retirees, but they are waiting on the outcome of the King v. Burwell U.S. Supreme Court case before taking action. Health exchanges are attractive because they enable companies to take advantage of the health care efficiencies found in the individual market; when you have efficiency on top of competition, you will see better financial outcomes for both companies and retirees.”

Eighty-four percent of companies plan to make changes to their pre-65 retiree strategies to mitigate the excise tax on high cost employer health plans when it goes into effect in 2018. Of those, 23% favor sourcing coverage through the exchanges under a defined contribution approach. Employers are also considering these strategies:

  • Reducing costs by managing copays and deductibles or having a health savings account (HSA)/High-Deductible Health Plan (HDHP) strategy (32%).
  • Changing retiree premium cost sharing requirements (19%).
  • Eliminating pre-65 coverage (8%).

Employers are likely to follow the trends already occurring in the post-65 retiree space. Fifty-eight percent of companies are reassessing their long-term post-65 retiree health strategies. More than 33% of companies that have decided to make changes have moved forward to direct post-65 retirees to an exchange, often accompanied by a defined contribution subsidy. Thirty-three percent of the companies that expect to make changes to their post-65 retiree strategies indicate strong interest in this approach.

Cary Grace, CEO of Aon Exchange said, “Companies that transition post-65 retirees to a private retiree health exchange are generally providing subsidies that allow the vast majority of retirees to buy at least comparable coverage to their group plan, with many retirees finding greater value in the individual market. This benefit, coupled with the high-touch customer service model and data-driven tools offered by the Aon Retiree Health Exchange, helps retirees find a plan that best meets their needs.”

CFOs Expect A Shift Toward Part-Time & Temp Workers

fullpartU.S. chief financial officers are concerned about a shift toward temporary and part-time workers driven by the Affordable Care Act (ACA) as well as overall economic uncertainty. In spite of all this, profits are expected to jump by more than 10%, full-time employment is expected to increase 2%, and capital spending could rise nearly 5%, according to a survey by Duke University andCFO Magazine.

Chief Financial Officers expect full-time domestic employment to rise nearly 2% in the U.S. This increase comes in spite of some reluctance to hire full-time employees due to the ACA. Fifty-nine percent of CFOs have increased the proportion of their workforce made up by temporary and part-time workers or shifted toward outside advisors and consultants. Among these firms shifting away from full-time employment, 38% say the shift has occurred, in part, due to implementation of the Affordable Care Act. Another 44% say they are hiring temporary workers in response to extreme economic uncertainty. For more information, visit http://www.cfo.com/magazine

Companies balance lavish perks with wellness initiatives

Many small, high-growth tech companies offer lavish employee perks, from gourmet meals and free food pantries to happy hour on the job, and then balance them with wellness programs aimed at keeping people healthy. Andrew Burke, head of talent development at Squarespace, says the company wants to have an environment where workers are comfortable because it pays off in productivity. The New York Times (tiered subscription model) (6/20)

State Reaches Settlement with Life Insurance Companies

State Controller John Chiang announced multi-state settlements over unpaid life insurance benefits with 11 life insurance companies, including Transamerica and New York Life. The Controller’s five-year investigation revealed an industry-wide practice of failing to pay death benefits to beneficiaries and ignoring a legal duty to turn the money over to the State for safe keeping.

Instead, companies would draw down the policies’ cash reserves to continue collecting premium payments from the deceased and then cancel the policy once the cash reserves were depleted. Also, insurers did not routinely crosscheck the owners of dormant accounts with government databases of the deceased. In other cases, companies had direct knowledge of the policy owner’s death, but still did not notify the beneficiaries of the policy. The companies have agreed to make policy beneficiaries whole, pay 3% compounded interest, and adopt business procedures to ensure full compliance with the unclaimed property laws. California’s 50-year-old consumer protection law requires businesses to send lost or abandoned properties to the State after three years of inactivity. These multi-state settlements are worth up to $763 million nationwide, with up to $86.7 million going to California beneficiaries.

Companies involved in the latest settlements include Transamerica, New York Life, Western & Southern, Pacific Life, Genworth, Hartford, ING, Symetra, Northwest Mutual, Sammons (Midland and North American), and TIAA-CREF.

Like previous settlements, the agreements announced require the companies to do the following:
• Restore the full value of all effected accounts dating back to 1995.
• Fully comply with California’s unclaimed property laws and cooperate with the Controller’s efforts to reunite these death benefits, annuity contracts, and retained asset accounts with their owners or, in many cases, the owners’ heirs.
• Pay beneficiaries 3% compounded interest on the value of the held amounts from 1995, or from the date of the owner’s death, whichever is later. To date, Controller Chiang has reached global settlements with 18 life insurance companies, with an aggregate value of $266.7 million belonging to California beneficiaries, and an estimated $2.4 billion nationally. These 18 companies write more than 50% of all the issued and active life insurance policies nationwide.

Last Updated 09/12/2019

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