Healthcare Collaboration

 

April Melvin spends most of her day on hold. Eight hours straight is her personal record. As an insurance broker at The Insurance Shop, she works on other accounts while she waits to speak with a customer service agent at the health insurance marketplace, established from the 2010 Affordable Care Act.

Melvin’s job is to help clients navigate the ins and outs of health insurance laws, which have changed every year. For small business owners, understanding options for their employees and the legalities surrounding health insurance choices can be a challenge.

“It’s a big issue.” “It’s a lot to keep track of.” “I couldn’t do it on my own.” Each person interviewed expressed those sentiments. It’s more difficult for one person alone to stay up to date on healthcare law. As small businesses adjust to changing health insurance regulations, they’re relying more on professional services. In order to manage the increase in regulatory responsibility and obey the law, small businesses are reaching out for help.

‘Business is not ready’

For Anne Williams, president of JobFinders, her company has purchased software to manage health insurance and hire an additional payroll specialist to set up insurance premiums.

Beginning in 2015, employers with 100 or more full-time employees needed to provide a group plan under the shared responsibility provision of the ACA. It took JobFinders a year to get ready before selecting a group plan in October 2014, Williams says. After shopping for months for the right plan, she says, “You just have to pull the trigger.”

Before changing plans, JobFinders offered a minimal voluntary pay plan for temporary staff. The company has about 350 employees, 80 percent of which are full-time.

Williams estimates the premiums have cost the company at least $50,000 this year. Going in to year two of this plan, she does not expect an increase in premium cost.

That expense had to be absorbed somewhere, and Williams says some of that was passed on to clients. Larger clients expected it; smaller companies struggled with the increase of three to five cents per hour per employee that JobFinders staffed. But overall, Williams says the increase hasn’t affected her number of clients.

And the benefits have improved with the new plan for employees. Some of JobFinders’ temporary staffers have never had insurance before, Williams says. Some of her employees have declined the insurance, but that doesn’t lessen the amount of paperwork the company has to do.

Erin Lent, accounting and administrative manager for the company, says the reporting and auditing required to insurance companies and the government has become more burdensome, especially for temporary staff, as their employment changes so regularly.

“I do think it’s great that our employees have the benefits,” Williams says. “We’ve had other plans that weren’t wonderful. They offered a little bit, but it was not good. This is a much better plan.”

It’s been a year-long learning process, says Williams.

“Business is not ready,” Williams says. “Businesses, overall, are not ready. They don’t know how the reporting is going to go for sure. They are still learning their new systems.”

‘I feel like now I’m in the dark’

Focus on Health Chiropractic co-owner Krista Kippenberger says that last enrollment season her business almost had enough employees to utilize a group plan. The company has 10 employees. But instead, she’s sent each employee to work with an insurance broker to pick out individual plans. Some pay $25 a month, some $50 a month, depending on salary.

Prior to ACA regulations making it illegal, Kippenberger was paying a stipend for 50 percent of her employees’ individual insurance premiums. She now increases employee annual pay to cover 50 percent of their insurance costs.

Krista and her husband, Dr. Curt Kippenberger, are on an individual plan as well. “It’s been good,” she says. “But mostly I think it’s more of a catastrophic plan, so if you’re a person who goes to the doctor frequently, and you’re on a lot of medicine, I don’t know if it’s the greatest plan for you.”

For Focus on Health’s employees, the biggest headache has been communication. One of Kippenberger’s employees signed up for his insurance and didn’t get an insurance card for six months. “He couldn’t go to the doctor because he didn’t have a card. He didn’t feel like he could go to the pharmacy,” Kippenberger says. “That was kind of disheartening.”

They may consider a group plan now that they’ve hired more employees, but Kippenberger feels like she needs to think about how it will impact her staff.

“[One employee] is a single person and pays like $90 a month,” she says. “So if she was in a group plan with us, she’d probably be paying $150, $200. She doesn’t want to do that. So I want to look out for my employees to make sure they’re getting the best price. But I know a group plan might cover us better.”

She says they rely more heavily now on their CPA, insurance broker and the professionals around them. “I felt like it was pretty straightforward [before]. We took in insurance, I have insurance. I knew most of that. But I feel like now I’m in the dark and that a lot has changed. So I do rely heavily on them.”

From a business standpoint, Kippenberger says handling patient insurance has changed. Previously the company had been in network with many insurance carriers – meaning they were a healthcare provider health insurers contracted with to provide health care services. After the ACA went into effect, they realized Focus on Health wasn’t in some networks – nor had they been asked.

“When we got payments back, they told us we were out of network. What do you mean we’re out of network, we’re in network with Anthem, so why aren’t we in network with Anthem’s ACA plan?”

Because it takes 30 days for insurance to tell the Focus on Health office if they’re going to pay for a patient’s claim, some new patients were being billed for hundreds of dollars, as new patients come several times a week at the beginning of treatment. Some patients left to use other providers that were in network.

For now, they’re on waiting lists to get in network. They have been since last summer. They’ve heard from multiple insurance companies that no one else is getting in network right now. They end up referring more patients instead of sticking them with a bill they can’t pay, Kippenberger says.

“It is frustrating,” she says. “Especially after they’ve heard good things and they want to try us out. They have insurance, they’re paying for insurance, they should be able to use it where they can or where they want to.

“And it’s not for the fact that we don’t want to be in network. It’s that they’ve closed us off. Now if it was my choice to be out of network, that’s a different story. But mid-Missouri people like to use their insurance. They don’t like to pay cash.”

Some patients have benefited from improved copays. Kippenberger says some patients, many of whom students and single moms, have a $100 deductible and $3 copays.

‘No benefit to DIY’

Many business owners once provided employees with a stipend to go find an individual plan

The fine for providing a stipend is $100 per employee per day.

“Employers can certainly wage up the employees to compensate if they choose to,” Melvin says. “But the employers that are providing those insurance premium rebates or kickbacks need to stop doing that.” Melvin says she knows of companies in Missouri still being advised to provide the stipend.

It all adds up to spending time and energy trying to figure out the system. A business owner going through the process alone has the potential to be misinformed. The marketplace has customer service representatives, Melvin says, but like any call center, some reps are helpful are more helpful than others. That’s when professional services can help a small business owner navigate complexities of ACA.

Melvin says she’s seen people who try to navigate the marketplace independently end up with everything from increased tax plans to purchasing a completely wrong plan.

“[Someone] got into some short term medical plan that wasn’t really ACA compliant, ended up paying a lot of money for something that didn’t really cover anything,” Melvin says. “We were able to get him into a fully-funded plan, and it’s been extremely affordable for him. I think he and his wife are covered for maybe $130 a month, and he was paying $600 to $700 [a month].”

Melvin’s own uncle shopped the marketplace himself and ended up in a non-compliant plan.

“I think people need to understand there’s no benefit to DIY,” Melvin says. “It would be like buying a fence with free installation and then putting it up yourself. You’re already paying the [fee] to work with a broker, regardless of whether you use one or not.”

Melvin says ACA has blended the insurance world, tax world and payroll world. And getting a second opinion from a different insurance broker, CPA or payroll company doesn’t hurt, she says. “There is so much coming down the pipeline, and you can’t always stay on top of it. So just because someone tells you it’s fine, it’s not a bad idea to talk to somebody else.”

Moresource president Kat Cunningham says post-ACA, emails to her internal staff regarding health insurance are no longer sent to just one department. She copies human resources, payroll and insurance.

“We’re having to integrate and disseminate that information to the entire team because it’s impacting everything everybody touches,” Cunningham says. “So if you don’t have an HR professional or you don’t have a team that can work together like that, you’re going to be in a world of hurt.”

Lent says she tries to be a resource for JobFinders employees who have questions about their benefits, but she’s grateful to have an insurance broker to put them in contact with. “We’re not expected to know it all,” Lent says. “Which is good, because that is so not our field.”

Getting it right

It’s not just about providing health insurance, but providing affordable health insurance, Melvin says. That means businesses must meet requirements that premiums won’t cost more than 9.5 percent of the lowest paid employee’s salary.

“It is really costly in certain industries,” Melvin says. “If you’re paying somebody $9 or $10 or $11 an hour, you’re looking at a monthly premium that can’t really exceed about $160 a month. The plans that are out there, it’s hard to find a composite rate that’s even close to that.”

And, Melvin says, there are no benefits to sticking with the same provider year after year. Each carrier has filed for increasing rates for next year. There’s no loyalty, she says, and employers have to re-evaluate and shop each year to find the best deal.

Moresource insurance and benefits specialist Jenny Mullette says “Misunderstandings can cost big time if people don’t understand what they’re buying. For example, individual seeking health insurance through the Exchange need to be aware that they input their annual wage to apply for an insurance policy. That same individual policy holder needs to update income estimates throughout the year, in order to avoid future penalties.”

“I don’t think some people technically really understand what ‘tax credit’ means or ‘subsidy’ means in terms of utilization,” she says. “It seems oftentimes the individual finds out they can buy a policy and not have to pay very much for it because they qualify for the credits or subsidies, use it as much as they need, because that’s what it is there for. However, when it comes time to file income taxes, it’s going to be a wake-up call for some of them. Wages reported are sometimes under-reported to gain access to credits and/or subsidies. The truth comes out at tax filing time.”

Tax considerations

Cheryl Edington, CPA and firm partner of Baer & Edington, says that, from a business perspective, the ACA regulations have been negative because health insurance costs have gone up.

“So either small businesses had to pay the additional premiums or pass it along to their employees,” Edington says. “So I’m seeing businesses who used to be able to pay 100 percent or 80 percent of their employees health insurance costs, now they pay 50 percent or had to drop employer-sponsored plans because the cost is too high.”

Another down side for small businesses, Edington says, is many with under 50 employees qualified for a tax credit for paying for 50 percent or more of health insurance for employees. The credit is available for businesses with no more than 25 employees and average wages no more than $50,000 who were paying 50 percent of employee premiums. From 2010-2013, she saw many clients qualify for the tax credit. Starting in 2014, employer health insurance had to be purchased through the marketplace to qualify for the tax credit and none of her clients qualified, since they kept their old plans.

Edington says most of her clients fall under 50 full-time equivalents and so are not mandated to provide health insurance for their employees. For those businesses, the biggest changes have been an increase in premiums, but most of those plans have been grandfathered in for now.

Now small business employers must also add health insurance to W2 forms at the end of the year. She says when preparing tax returns she and her associates have additional requirements to ask individuals questions about health insurance  to determine if penalties should be calculated on their return. They have to ask if the person has health insurance, if they purchased it, it if it was purchased by an employer or through the marketplace and if they received subsidies through the marketplace.

Because of this new reporting, Edington says it’s possible they are considering taxing health insurance benefits as a revenue raiser down the road.  Right now that is not the case.

“But in the back of my mind I wonder down the road, is that something they’re considering for a revenue raiser: potentially taxing everyone’s health insurance? Right now, it’s not.”

Edington says she advises small businesses to watch cash flow when providing group insurance for employees. That may mean passing on the cost of health insurance to employees or increasing product costs.

Changes

Melvin says businesses under 50 employees who have never offered insurance before probably won’t offer health insurance in the future. Instead, many businesses offer an avenue for employees to get an individual policy through an insurance broker.

“Especially once that transitional relief goes away, and in companies that are never going to see 50 or more employees, the rates on these ACA compliant plans are so high that, in a lot of instances, it doesn’t make sense,” Melvin says.

She works with the employees one-on-one to understand if the marketplace is the best place to go and to help them navigate the system.

Melvin thinks that more companies will start to eliminate group plans.

“I do think that employers will start to get more creative on their benefits package but then again, the industries that need health insurance, like our company, are always going to offer health insurance to our employees,” Melvin says. “We need that to attract and retain good employees.”

Cunningham says the expense and the time put into navigating the system and reporting requirements are not encouraging for small business owners to pursue health insurance. She has heard consultants reporting time for the required paperwork completion can be up to 4 and 5 hours per employee. Payroll companies have the software that speeds up the process, but companies doing payroll in-house will struggle with the time commitment.

Between the tax credits and subsidies individuals can receive through the marketplace and the costs of premiums on a business owner, Mullette says she thinks more small businesses will do away with providing group plans. It would allow individual employees to purchase a plan, potentially pay a lower premium, and be able to take advantage of lower deductibles and lower out of pocket expenses. But individuals need to know that if there is a group plan available through the employer, and they don’t participate, it could often times affect the subsidy amounts.

Alternative Benefits

Some companies are using alternative benefits, such as retirement plans and ancillary benefits, a secondary health insurance that covers hospital stay expenses.

Partially self funded plans are gaining popularity, Melvin says. It’s a high-deductible plan, non-community rated, meaning gender is taken into account, which has an impact on male-dominated industries. The healthier the group, the better the rates. Melvin says for the right group, they’re less expensive than ACA compliant fully funded plans. Whatever is left in the claims account goes back to the group. It gives the employer the ability to gamble that employees are going to be healthy.

Edington says she sees self-funded plans gaining popularity for businesses with young, healthy employees as a way to keep costs down. But if something major happens, premiums could go way up. She says several businesses she works with have received insurance refunds back because there were so few claims.

Some businesses are incentivizing healthy lifestyles, Cunningham says, with wellness programs. Business will pay for more of the premium for employees with no tobacco usage or low cholesterol.

Looking Ahead

Next up, Melvin says, employers should be aware of the Cadillac Tax, an excise tax on high-cost, employer-sponsored health insurance, according to the IRS.

“Basically, if you’re providing insurance that’s too good, too expensive, even if it meets the safe harbor requirements for your employees, you could still get a Cadillac tax,” Melvin says.

Businesses with 50 full-time equivalents need to be shopping for their plans, and in 2016 businesses with 50 or more full-time employees will be penalized if they don’t offer health insurance.

“They need to be looking, they need to be shopping, and really by the time this [article] comes out, they really need to figure out what they’re going to do,” Melvin says. “Because November is going to be a crazy time to find a plan.”  CBT

 

Health Insurance Terms to Know:

source: healthcare.gov

Affordable coverage – Employer coverage is considered affordable if the employee’s share of the annual premium for the lowest priced self-only plan is no greater than 9.56 percent of annual household income.

Cost sharing – The share of costs covered by your insurance that you pay out of your own pocket. Generally includes deductibles, coinsurance and copayments, but it doesn’t include premiums, balance billing amounts for non-network providers or the cost of non-covered services.

Deductible – The amount you owe for covered health care services before your health insurance or plan begins to pay. For example, if your deductible is $1,000, your plan won’t pay anything until you’ve met your $1,000 deductible for covered health care services subject to the deductible.

Marketplace – A resource where individuals, families, and small businesses can: learn about their health coverage options; compare health insurance plans based on costs, benefits; choose a plan; and enroll in coverage. In some states, the Marketplace is run by the state. In others it is run by the federal government.

Grandfathered health plan – A group health plan that was created on or before March 23, 2010. Grandfathered plans are exempted from many changes required under the Affordable Care Act. Plans or policies may lose their “grandfathered” status if they make certain significant changes that reduce benefits or increase costs to consumers.

Group health plan – In general, a health plan offered by an employer or employee organization that provides health coverage to employees and their families.

Individual health insurance policy – Policies for people that aren’t connected to job-based coverage. Individual health insurance policies are regulated under state law.

Open enrollment period – The yearly period when people can enroll in a health insurance plan through the Health Insurance Marketplace. For 2016 coverage, the Open Enrollment Period is November 1, 2015 – January 31, 2016.

Premium – The amount that must be paid for your health insurance or plan. You and/or your employer usually pay it monthly, quarterly or yearly.

Self-insured plan – Type of plan usually present in larger companies where the employer itself collects premiums from enrollees and takes on the responsibility of paying employees’ and dependents’ medical claims.