Offering Insurance - Blessing or Curse? - Iowa League of Cities
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Offering Insurance - Blessing or Curse? - Iowa League of Cities

The Benefits PrisonIs this where you aretoday?• Increasing Costs• Limited Options• Negative EmployeePerceptions• “Paycheck to PaycheckEmployees”Which Leads to…• Employees feel trapped• Employee Savings• Employee Satisfaction• Shrinking BudgetsWhich evolves to…• Costs spiral higher• Employees suspicious, resentful• EE/ER relationships suffer

Evolution of the Employee Benefits1932• BCBS first offered group insuranceplans with negotiated discounts fromdoctors and hospitals1990’s• Consumer Driven Healthcare entersthe market1940’s• General Motors offered generousbenefits plans in response togovernment imposed wage freezes1980’s• Cost Control is introducedthrough HMO and managedcare plansEarly 2000’s• Health Savings Accountsbecome a reality• Wellness programs increasein popularity

Evolution of the Employee BenefitsThen Comes……..2008……Screech!!!

Evolution of the Employee BenefitsAnd Finally……….PPACA

HoldingSupreme Court Decision• PPACA Individual Mandate is constitutionalTake Away• Initiatives under ACA already implemented remain unchanged andforthcoming requirements will be implemented as originally planned

Key Parts of PPACAIntended to increase the number of Americans with health coverage's• Imposes penalties for individuals without coverage• Encourages employers to offer coverage• Market reforms to improve access• Expands Medicaid eligibility

Individual ObligationIndividuals must obtain “minimal essential coverage” through anemployer, an exchange, an individual policy , the government, or paypenaltyPenalty is;• $95 and 1% of income in 2014• $325 and 2% of income in 2015• $695 and 2.5% of income in 2016

Individual Penalties• Penalty is paid as part of your federal income tax• IRS has limited authority to enforce collection of the penalty• Supreme Court found this requirement is constitutional under Congress’power to tax

Employer EncouragementEmployers are not required to offer medical coverage, but a penalty appliesto employers with 50 or more employees who do not offer “minimumessential” coverage, or who offer coverage but the coverage does notprovide “minim value” or is not “affordable”

Employer Penalties• Coverage is not “affordable” if the employee’s cost is more than 9.5%of household income• Coverage provides “minimum value” if the actuarial value of thecoverage is 60% or better• 60% considers employee’s cost share (deductible, co-pays, coinsurance)• 60% does not consider premium costs

What are the options?1. Maintain the current program offering2. Reduce benefits to a “minimum value”3. Drop coverage all together and rely on the exchanges

ExchangesIntended to make it simpler for individuals and smallemployers to purchase health insuranceOrbitz or Expedia• Provideenrollmentassistance• Plans withminimumcoverage• Cost SharingRequirementsEach state will have anexchange by 2014• Federal Government willrun if Iowa isn’t ready• Fewer than 20 states are ontarget to create oneExchange Landscape• Public• Private• Hybrid• Defined Contribution• Budget• Store

ExchangesFor 2012 FPL for;• Single Person is $11,170• Family of four is $23,050Individuals are eligible for a premiumtax credit if these conditions are met1. Income is between 100% and 400%of the Federal Poverty Line2. Have purchased coverage throughthe exchange3. Do not have access to employerprovided coverage that is affordableand provides minimum value4. Not Eligible for Medicade

Summary of Costs Already Implemented1. Preventive services covered at 100%2. Dependent eligibility to age 263. 3 rd party appeals process4. Removal of annual and lifetime limits5. Comparative effectiveness research fees

Summary of Costs to Come2013: SBC’s W-2’s FSA -$2,500 RDS Subsidy PECORI Fee Women’s Preventive Notification of Exchanges2014: Pay or Play Temporary Reinsurance Fee Unlimited Essential Benefits No Pre-Ex 90 Day Waiting Period Deductible/OPM Maximums No Provider Discrimination Auto Enrollment

Why?• Increased Cost• Increased Compliance Regulations• Increased Administrative Burden

What is a City’s Biggest AssetWhat role should cities play ensuring employee well-beingIncreased ProductivityDecreased AbsenteeismStronger Bottom Line

Medical andPharmacyPlanWagesWellnessCultureDental PlanHealthPlansRetirementPlanEmployeeBenefitsLeaveManagementVision PlanLong TermCarePlanningDisabilityProgramsEAPLifeInsurance

Think out of the BoxKyle Mertzkylem@fbanda.com515-401-2002Uncertain times create opportunity

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