From a benefits perspective, the last couple of years have been unprecedented. Due to the COVID-19 pandemic, virtually every aspect of the workplace has changed. And now, employers are also faced with a troubled economy and looming recession.
Adapting to an Ever-Changing Business Environment
Historical processes and benefits budgets may no longer be sufficient. All of this has caused the benefits industry to remain creative and flexible as best it can in this new environment. Employers also need to think creatively about how they can accommodate employees’ needs and desires while still controlling costs.
HR and benefits teams are needing to find a new way to process, enroll, and communicate the value of the employee benefits program as much of the workforce has become remote or hybrid. Moving to an online enrollment platform as well as providing a virtual overview is a creative and useful solution. Yet this process change takes time. We need to educate and train employees on how to make good benefit choices for themselves and their families. We need to assist them in becoming educated consumers.
Offering a Competitive Employee Benefits Package
The current labor market has employees looking for greater value in their benefits programs. At the same time, employers are still determining how to deal with the increased cost of their existing fully insured plans with no legislative changes in sight. With a fully insured program, this has us looking more closely at high deductible plans with increased education in health savings accounts.
Telemedicine has become hugely successful in the last few years. As of mid-2021, 46% of consumers were using telemedicine in place of in-person health visits. Reminders and education in this area are key to its success. We are experiencing some of the highest cost increases in the area of prescription drugs. Employee education in how the plan and systems function may help to lower an employee’s costs.
Using Alternate Funding Methods to Lower Medical Plan Costs
Alternate funding methods may also be a cost-saving alternative for a fully insured medical plan. Level Funding and ICHRA (Individual Coverage Health Reimbursement Arrangement) are the two most popular alternatives that we are installing at this time.
Level Funding as an alternative is reviewed at each client renewal. With a level-funded plan, in general, the employer will pay a set amount to the carrier each month. This amount consists of an administrative fee, other fees, and the maximum amount of expected claims. At the close of the plan year, actual claims will be deducted from the claims fund. If an excess remains, a portion of this fund will be returned to the employer. If the claims exceed the claims fund, this is typically handled through a stop-loss policy.
ICHRAs became available as of January 1, 2020. An ICHRA for some is a problem-solving solution with significant cost savings, yet it does come with limited design flexibility. With an ICHRA, an employer will establish an annual Health Reimbursement Schedule. This schedule states what the employer will provide to the employee once they purchase individual health insurance. Systems and portals are used to assist with all processes.
When comparing ICHRA and small group, the small group fully insured market requires an employee to pay 50% and enroll 50%. Often, especially with a small group plan (under 50 eligible), this is not reachable. With a small group under an ICHRA, you are not required to provide 50% and are not required to enroll 50%. The same can apply to a large group (over 50 eligible), especially in a high-turnover industry. A large group is also able to establish an ICHRA schedule that will allow them to meet the requirements of the Employer Responsibility section of the Affordable Care Act.
With the current environment, employers need to review their employee demographics and benefit programs desired to determine a reasonable employee benefit budget. Often, we work backward to this number and then modify it from there. Employers then should work with a knowledgeable broker to determine the best way to utilize these budget dollars. Work with a broker who will provide you with a thorough review of what is available to you and your employees as it pertains to their employee benefits program.
An educated workforce with options is a more satisfied workforce.