The Employee Benefit Research Institute reports that nearly 20% of mid-sized employers made the jump to self-insurance from 2013 to 2015. A major attraction is the availability of data and analytics, enabling the employer to learn how healthcare dollars are being spent. A growing number of employers are using this data to incentivize employees who lower claim costs by choosing more efficient hospitals or free standing imaging centers when tests such as an MRI are needed.
Press Release from Education and the Workforce Committee Chairwomen Virginia Foxx on April 5, 2017.
The House today passed the Self-Insurance Protection Act (H.R. 1304), legislation that would protect access to affordable health care options for workers and families. Introduced by Rep. Phil Roe (R-TN), the legislation would reaffirm long-standing policies to ensure workers can continue to receive flexible, affordable health care coverage through self-insured plans. The bill passed by a bipartisan vote of 400 to 16.
“By protecting access to self-insurance, we can help ensure employers have the tools they need to control health care costs for working families,” Rep. Roe said. “Millions of Americans rely on flexible self-insured plans and the benefits they provide. Federal bureaucrats should never have the opportunity to limit or threaten this popular health care option. This legislation prevents bureaucratic overreach and represents an important step toward promoting choice in health care.”
“This legislation provides certainty for working families who depend on self-insured health care plans,” Chairwoman Virginia Foxx (R-NC) said. “Workers and employers are already facing limited choices in health care, and the least we can do is preserve the choices they still have. I want to thank Representative Roe for championing this commonsense bill. While there’s more we can and should do to ensure access to high-quality, affordable health care coverage, this bill is a positive step for workers and their families.”
BACKGROUND: To ensure workers and employers continue to have access to affordable, flexible health plans through self-insurance, Rep. Phil Roe (R-TN) introduced the Self-Insurance Protection Act (H.R. 1304). The legislation would amend the Employee Retirement Income Security Act, the Public Health Service Act, and the Internal Revenue Code to clarify that federal regulators cannot redefine stop-loss insurance as traditional health insurance. H.R. 1304 would preserve self-insurance and:
- Reaffirm long-standing policies. Stop-loss insurance is not health insurance, and it has never been considered health insurance under federal law. H.R. 1304 would reaffirm this long-standing policy.
- Protect access to affordable health care coverage. By preserving self-insurance, workers and employers will continue to benefit from a health care plan model that has proven to lower costs and provide greater flexibility.
- Prevent bureaucratic overreach. Clarifying that regulators cannot redefine stop-loss insurance would prevent future administrations from limiting a popular health care option for workers and employers.
For a copy of the bill, click here.
For a fact sheet on the bill, click here.
Instead of preparing for the changes that were expected from the American Health Care Act (AHCA), employers now need to continue or resume their efforts to maintain compliance with the ACA. As House Speaker Ryan said, “I don’t know what else to say other than Obamacare is the law of the land. It’ll remain law of the land until it’s replaced,” he said. “We’re going to be living with Obamacare for the foreseeable future.”
Determining where we go from here seems to be anyone’s guess, but after watching the industry ebb and flow for decades, our best advice is to stay calm and carry on as self-funded health plans continue to cover an estimated 75% of the U.S. workforce.
ACA The Law of the Land
Until the Republican majority decides to try again or Obamacare implodes, as President Donald Trump and others say is inevitable, individuals and employers with 50 or more full-time employees will have to live with the Affordable Care Act. Many who thought the American Health Care Act (AHCA) meant the certain loss of coverage made possible by the ACA can breathe easier. Providers and employer groups, many of which have adopted self-funding in order to better cope with the added regulations of Obamacare, can take comfort in the fact that drastic change has been avoided, at least for the foreseeable future.
EBSO will be monitoring the events on Capitol Hill and will continue to provide updates as things arise. As always, thank you for being a valued Client and/or Business Partner.
When Congress delayed the Cadillac Tax until 2020, the same law placed a one-year moratorium on the annual fee the ACA imposes on health insurance carriers. While the fee does not have a direct impact on TPAs or self-funded plans, it does sometimes impact stop loss premiums.
Since this fee applied to insurance carriers and not the majority of self-funded plan costs claims, some small group plans that moved to level funding may experience a slight cost increase in 2017. When the tax returns in 2018, the revenue targets are expected to increase. If the tax increases from its previous levels of 3% to 4%, the potential savings available to self-funded and level-funded plans will increase as well.
With research showing that the average cost of healthcare surpassed $11,000 per employee in 2015, stretching every healthcare dollar is a must. Since self-funding is the foundation from which so many cost control strategies emerge, we encourage you to take this step if you haven’t already done so.
Understand the Needs of Your Group
Since every employer group is unique, it’s imperative that you look closely at demographics, prior claims and medical conditions. The availability of meaningful data is one of the biggest advantages of a self-funded plan, and key to making sure that those with chronic conditions such as diabetes or hypertension are receiving the treatment and attention they need. If your administrator isn’t helping in this critical area, you have the wrong administrator!
Self-funded health plans involve several parts that need to be working together. If you think healthcare is complex, put yourself in the shoes of your members and their families. Programs such as utilization review, hospital pre-certification, disease management and healthcare coaching can go a long way in managing costs. Services like patient advocacy and telemedicine can help members get the care they need in an efficient setting. For example, while office visits cost about $130, a telemedicine visit can be equally effective at a cost of about $40. With so many variables available today, it’s easy to see why customer service and care coordination are as important to your bottom line as they are to your employees.
Education and Wellness
Once a self-funded plan design and professional administration are in place, employee education and wellness integration must follow. Few factors influence healthcare costs more than lifestyle choices and the need to make informed buying decisions. And whether it involves understanding benefits or choosing a high quality, efficient provider, studies show that members need more support. To help in this area, many TPAs are integrating online access to comparative data on costs and providers.
When you consider that we can only manage what we can measure, delivering meaningful information to members, when they need to make a healthcare decision, should result in happier, healthier employees and lower costs for all.
In a 6-2 decision on a case involving Liberty Mutual Insurance Company, the Supreme Court, in early March, held that ERISA pre-emption blocks the state of Vermont from requiring self-funded health plans to put claims data into a statewide health claims database.
This decision appeared to be consistent with the original intention of Congress to place ERISA plans under the jurisdiction of the U.S. Department of Labor rather than state insurance departments. In describing the decision as a victory for employer-sponsored health benefit plans that would avoid complications with plan administration, the CEO of the National Business Group on Health stated “while employers support the intentions behind Vermont’s law, we believe that a national approach to rules for all payer claims databases will be more productive and less costly.”
Dissenters, led by Justice Ruth Bader Ginsburg argued that the decision could hamper efforts to provide cost transparency by creating gaps in the data that employers, insurers, consumers, providers and state policymakers need to understand the effects of benefit plans and payment models.
The Affordable Care Act (ACA) has sparked a renewed interest and growth in self-funding as more organizations look for ways to continue to offer quality healthcare benefits to their employees, but also create opportunities for savings. Self-funded health plans are not new. In fact, they have been around for decades. However, many businesses have simply been unaware of their advantages and the differences between self-funded and fully insured plan options.
Organizations of many sizes have turned to third party administrators, such as EBSO, to help design, administer and manage a self-funded plan that manages risk and promotes wellness while keeping costs in line.
As Obamacare gives employees even more reason to identify and manage plan costs, TPAs can provide greater access to health plan data and work closely with you and your plan participants to build individualized programs that manage both cost and quality.
In this FREE whitepaper we examine “5 Reasons Why It’s Time to Consider Self-Funding Your Employee Healthcare Plan.”
Still Still trying to get a handle on the differences between a self-funded and fully-insured plan? Click to watch our short video, Discover the Benefits of Self-Funding and in less than 2 minutes we will explore those differences, give you the advantages of self insured health benefit plan and help you understand how self-funding works.
Nearly two-thirds of employers have made the switch, discovering the many benefits of a self-funded healthcare plan. With Obamacare driving healthcare cost increases, employers need to know they have options in providing quality healthcare benefits – with options that can increase flexibility and expand the services offered, all while offering an opportunity to reduce administrative costs.
Self-funded plans allow your organization to keep any savings that may result from lower claim costs, all while giving you access to better claims reporting and data. As a leading third party administrator, EBSO can help design and administer a self insured plan that works best for your company and your employees and complies with healthcare reform.
Knowing if self-funding is right for your organization can be difficult, but this short video will help you better understand how self-funding works. Let EBSO get you started on the path to a better healthcare plan today!
For decades, employers determined to get a handle on runaway health care costs have compared self-funding to their traditional fully insured plans. Many who have made the move have discovered that the opportunity for savings is just one advantage. Others include flexibility in plan design, access to plan and utilization data and the ability to use that data to influence employee health for the better.
Plan Design Flexibility
Having control over the design of your employee health benefit plan is huge – especially in light of the Affordable Care Act (ACA) and the costly benefit mandates that came with it. Partially self-funded health plans, those with stop-loss coverage to cap claim costs, are subject to federal ERISA laws, thereby avoiding state regulations and some ACA provisions. Best of all, programs can be designed to meet the needs of your population and evolve as needs change.
With a self-funded health benefit plan, your company pays only for fixed expenses like administrative fees and stop-loss insurance premiums and claims that your covered group incurs. Profit margins, risk charges, reserves and most state premium taxes, common to fully insured plans, are avoided.
Access to Claims Data
Access to plan and utilization data enables a self-funded plan to modify far more than contribution levels. Data analysis can help identify factors driving claims. Those with chronic conditions can get the help they need when they need it. Worksite wellness measures can be designed for greater impact and costly health issues that do arise can be addressed earlier.
Just like the many aspects of our lives that can now be customized at the click of a button, the days of one-size-fits-all health insurance plans are gone forever. Subject to state regulations, an increasing number of employers of 25 or more will discover that flexibility and control in health benefits will belong to those organizations that work with an independent third party administrator to adopt partial self-funding.
While there is plenty of discussion about the tax on high cost health plans, the tone has changed somewhat since the CBO said the federal government would forfeit over $80 billion if the tax were repealed.
One of the big concerns related to the Cadillac Tax is its impact on benefits that help reduce out-of-pocket costs for working families. When the tax takes effect in 2018, a 40% levy will apply to benefits that exceed the government-set threshold. Employer contributions to FSAs and HSAs, and even costs associated with on-site clinics, would be included in the tax calculation.
Doing away with these accounts would increase out-of-pocket costs for millions of Americans. While lawmakers on both sides of the aisle support a bill to repeal the tax, they face an uphill battle. Not only is the government counting on the tax to raise a projected $87 billion over 10 years, but President Obama has stated he will veto any legislation that weakens the health care reform law.
A trend that many say is related to the tax is a continued rise in deductibles, which according to Kaiser Family Foundation research, have increased by about 8% from a year ago. Recent polling by consultant Mercer shows that 41% of employers have already added a high deductible plan in anticipation of the tax.