Calls for Expanded COBRA Coverage

self-fundingWith nearly 40 million workers laid off or furloughed as a result of the Coronavirus, many organizations have urged Congress to expand COBRA coverage. Most of their concerns are focused on encouraging Congress to subsidize COBRA premiums for these workers so that existing health conditions will not get worse because care is delayed.

To date, the Department of Labor and the IRS have extended the time period workers have to decide to enroll in COBRA. With the President’s order setting the end of the national emergency for COVID-19 at June 29th, individuals would have until August 28th to enroll in COBRA. DOL and IRS have also given workers 30 days beyond the end of the national emergency to pay their COBRA premiums for March, April, May and June. Should the Administration decide to extend the national emergency, these timelines would be adjusted accordingly.

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How a Premium Dollar Is Spent

premium-dollarAmerica’s Health Insurance Plans, a national trade association whose member companies provide insurance coverage and health-related services to consumers and businesses, has released a study revealing the breakdown of today’s healthcare premium dollar, as follows:

  • 23.3 cents of every premium dollar is used for prescription drugs
  • 22.2 cents cover the cost of physician services
  • 20.2 cents are used to pay for office and clinic visits
  • 16.1 cents are used to cover hospital stays
  • 13.5 cents are applied to care management, administrative expenses, business expenses, provider management and other fees
  • 4.7 cents of every dollar go to taxes, and…

AHIP reports that on average, 2.3 cents of every premium dollar make it to the bottom line as net profit.

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Older Workers and Medicare

It’s doubtful that many technology companies are concerned about employees nearing age 65. Other employers, however, may want to brush up on Medicare eligibility in order to help older workers understand their options and avoid any potential gap in coverage. Here are just a few Medicare-related concerns:

  • For employees who will lose access to employer-sponsored group health coverage at age 65 or who choose to sign up for Medicare upon becoming eligible, the Initial Enrollment Period (IEP) is 3 months before to 3 months after the month they turn 65.
  • Medicare-eligible workers who leave employment with a retiree health plan or COBRA coverage are classified as “former workers” and therefore need to enroll in Medicare during their IEP.
  • Employees who have enrolled in Social Security before their 65th birthday will automatically be enrolled in Medicare Parts A and B. In order to avoid paying for 2 health plans, they may need to inform the Social Security Administration that they do not want Medicare Part B at this time.
  • Finally, for companies with fewer than 20 employees, Medicare becomes primary coverage. Workers and/or their spouses who are 65 or older must enroll in Medicare Parts A & B.

While employees must enroll in Medicare on their own, a little help from HR can go a long way. When questions about Medicare eligibility and enrollment arise, never hesitate to encourage a visit to a local Social Security Administration office or Medicare.gov.

Surprise Bills

A survey of individual healthcare consumers shows that the lack of cost transparency is taking a big toll, with more than half of respondents saying they have passed on doctor visits or prescriptions because of cost. The vast majority of those foregoing treatment cite the cost of higher deductibles and copays as the top concern along with consistently rising prescription drug costs.

HSAs Become More Flexible

hsaCurrently, patients with high deductible health plans and health savings accounts have to pay for treatment of chronic illnesses out-of-pocket until they have reached their required deductible. According to IRS Notice 2019-45, those with chronic conditions such as diabetes, high blood pressure or asthma, will reduce their financial burden prior to reaching their health plan deductible.

The notice, which becomes effective on January 1, 2020, states that the service or item needed must be low cost and supported by medical evidence showing that it will prevent the chronic condition from getting worse or causing other related health issues.

Moving Patients Can Be a Win-Win

From hospitals to insurers, you’ve probably heard many say that the goal is to provide the right healthcare, at the right time, in the right place. When it comes to the infusion of high-priced specialty drugs, location can make a huge difference. As an example, the variance in the cost of hospital-administered multiple sclerosis drugs can be staggering. One third party administrator saved a self-funded health plan more than $30,000 by moving a patient from a local hospital to a beautiful treatment facility in the Cayman Islands. The patient not only received their prescription in a beautiful, clean, state-of-the-art facility, but air travel and lodging were included.

Other cases compare the administration of specialty drugs in independent physician offices and patient’s homes rather than hospital outpatient settings. Savings ranged from $16,000 to $37,000 annually and the patient received the same level of personalized care without the hassle of a hospital visit. While the patient’s condition and circumstances always take precedence, finding a more appropriate location for treatment can make a positive difference for the plan and the patient.

Judge Rules Against Drug Price Disclosure

In a very recent decision, a federal judge ruled against Trump Administration efforts to require drug manufacturers to include the price of prescription drugs in their television commercials. Filed in federal court in mid-June, the lawsuit claimed that HHS does not have the legal power to enforce the rule and that including prices will mislead patients and discourage them from seeking treatment. In the decision rendered on July 9th, U.S. District Court Judge Amit P. Mehta agreed, adding that the administration had overstepped its authority.

A spokesman for HHS was quoted as saying “we are disappointed in the court’s decision and will be working with the Department of Justice on next steps.” While the decision is a blow to the administration’s efforts to increase cost transparency and drive down drug prices, many expect their efforts to continue.

Small Groups Will Celebrate New HRAs

The IRS recently published finalized rules easing restrictions on health reimbursement arrangements (HRAs) to allow employers to provide their workers with tax-preferred funds to pay for the cost of health insurance coverage they buy in the individual market. The regulation is part of the Trump Administration’s commitment to deliver more health coverage choices to Americans.

The HRA rule should be extremely valuable to small businesses that have had a really hard time providing group health coverage. So hard, in fact, that the Kaiser Family Foundation Employer Health Benefits Survey recently reported that the percentage of businesses with 25 to 49 workers offering group coverage has fallen from 92% to 71% since 2010.

Two New Options Will Be Available
Effective January 1, 2020, employers will be able to help employees buy individual health insurance policies by offering two different tax free HRAs. The first is an Individual Coverage HRA, which can only be offered to similar classes of workers when a traditional group health plan is not currently available. Classes refer to groups of employees with similar circumstances, such as full-time, part-time, seasonal, salaried, temporary, etc. A class must include at least 10 employees for employers with fewer than 100 employees and 20 or more employees for employers of 200 or more workers.

The other option, an Excepted Benefits HRA, is designed to be offered with a traditional group health plan, although employees do not have to enroll in the health plan. The maximum annual benefit for an Excepted Benefits HRA is $1,800.

Tax-Preferred Benefits Can Extend to Millions
The new HRA rules will make it easier for small businesses to compete with larger organizations that provide high quality group health benefits. More importantly, the employees who buy individual health plans financed by a new HRA will receive the same tax advantages as those with traditional group coverage.

The Departments of Labor, Health and Human Services and Treasury estimate that HRA expansion will benefit as many as 800,000 employers and more than 11 million employees and family members, 800,000 of whom will have been previously uninsured. To learn more about these new HRAs as you begin your planning for 2020, contact your account representative at your convenience.

Executive Order Aims to Improve Price Transparency

Self-FundingIn late June, President Trump signed an executive order directing HHS to develop rules requiring hospitals to publish clear and understandable pricing that reflects what people will actually pay for services. HHS Secretary Alex Azar added that the order should also make certain that providers and insurers provide patients with information about potential out-of-pocket costs they will face before receiving healthcare services.

While details about how the rules of the order will work are yet to be determined, hospital and health plan lobbyists criticized the order, saying it will increase prices and reduce competition. The President and CMS Administrator Seema Verma emphasized that the intention of the order is to combat the huge price variations that have long existed among healthcare facilities and make it easier for patients to find low cost, high-quality care.

Can Chronic Disease Management Really Work?

With the Centers for Disease Control and Prevention projecting that 83 million people will soon have three or more chronic diseases, the number of employers working to manage chronic conditions like diabetes, high blood pressure and coronary artery disease is staggering.

Not only do the average medical costs for a diabetic exceed $16,000 per year, but the loss of productivity is estimated to add an additional $1,700. How can your health plan cope?

Begin with Good Information
Reviewing claims data, diagnostic tests and prescription drug data is a critical starting point. Once plan members with chronic illnesses are identified, care managers, nurse navigators or health coaches can talk with them to learn about their lifestyle, ask about medications, nutrition, their family situation and other factors that may be impacting their condition.

Chronic disease management is not a one-step process. It involves partnering with a member’s physician and other professionals to understand the patient’s needs and develop a personalized care plan. This level of personal involvement will not only help the member receive the care they need but also help them better understand how to use their health plan to their benefit.

Experience shows that 80% of a company’s healthcare spend is often attributed to 20% of plan members. Chronic illness is likely the reason, making disease management a critical part of high-quality healthcare plans.