INSIGHT ON: Health Insurance – Insurance headaches

Posted on Oct 1, 2015 :: Health Insurance , Insight On
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Posted by , Insight on Business Staff Writer

Health condition score report. Stethoscope on medical background.There’s no doubt that when it comes to choosing health care insurance plans, human resource managers and business owners can find themselves quickly confused.

Not only are there seemingly endless rules and regulations in place, there are also questions about cost and who’s going to pay for what.

“It’s a maze out there for business owners,” says Chris Hanson of Appleton-based Hanson Benefits Inc., who works primarily with small businesses and individuals on figuring out the path that’s right for them. “It’s also very confusing since regulations change and vary depending on business size.”

That confusion is rooted in the Affordable Care Act, which extended health care to millions of Americans, but also put in place a multitude of rules and regulations that insurance companies and businesses need to follow. While the ACA opened the door to people who weren’t able to purchase affordable insurance previously, it made things more challenging for businesses, Hanson says.

Despite the headaches, most employers are sticking with their plans.

“I’ve only had a couple of companies who have just thrown up their hands and said they’re not going to offer insurance as a benefit anymore,” she says. “Even small employers know they need to offer insurance as a way to compete for workers.”

Thomas Schultz, a senior human resources consultant with Schenck SC, hears that too.

“Employers see value in offering insurance since it takes stress off employees wondering about what they’re going to do,” he says.

Elena Kambitsi, chief sales and strategy officer for Menasha-based Network Health, says one common solution she hears from businesses is a “buy down” of benefits. That means that companies may be offering plans with a higher deductible, but are also opening Health Savings Accounts to help employees deal with the costs.

“We don’t know where the bottom is. Is it a $5,000 deductible? A $10,000 deductible? A lot more costs are being transferred to employees,” she says. “The challenge is to come up with the best solution to provide employees with the coverage they need at an affordable cost.”

While some companies may toy with the idea of eliminating plans and offering employees a stipend to buy insurance on the federal exchange, Schultz says that’s not a viable option.

“Employers are able to take a tax deduction by offering a health insurance plan. If they just do the stipend, that deduction is gone,” he says. “Also, if the employer is large enough and mandated (under the ACA) to offer a plan, they face a financial penalty, so once it’s all added up, it just makes more sense to offer insurance.”

Those insurance offerings are getting more expensive.

Schultz, who works with large- and medium-sized organizations, says companies are seeing anywhere from 5 percent to 10 percent increases in their costs.

“The rate increases are partially because of the loss insurers may be taking on plans sold in the federal marketplace as well as the extra costs they’re incurring to keep everything compliant under the ACA,” he says.

With the higher costs, employers have several options to choose from including absorbing the higher costs themselves — not likely — sharing the cost increase with employees or becoming self-insured.

“Employers are doing a lot of different things — a little bit of this, a little bit of that — to help keep costs down,” Schultz says. “They may work with the insurer to tighten up the network. For example, they may limit what doctors or systems employees can use or mandate that generic drugs must be used unless there’s no other alternative.”

While going the self-insured route used to be only for large companies with hundreds or thousands of employees to spread out the risk, Network Health is debuting a new product that allows small- and mid-sized businesses to band together and self-fund their own plans.

“There’s more consistency to the costs involved,” Kambitsi says.

Insurance policies are usually offered at four different levels, ranging from bronze to platinum, with bronze having the lowest premium and highest out-of-pocket costs and platinum having a high premium and minimal out-of-pocket expense. Schultz says some companies are moving down to the bronze level of coverage and then also offering HSAs as a way to help employees pay the higher deductibles.

“There’s just so many options out there, which is why businesses are asking for help in figuring it out,” says Schultz, adding some employers also are opening onsite clinics where workers and family members can receive care for free.

Another possible cost-saving mechanism down the road harkens back to the past: the return of health management organizations or HMOs, which limits which providers a patient can see, Kambitsi says.

“Everything is so cost prohibitive, I wouldn’t be surprised if HMOs started coming back,” she says. “It’s a tough choice because the first thing everyone wants to know is if their doctor is in the network. Employers need to rely on consultants and their insurance carriers to help them keep costs at a reasonable level. There’s a lot of misinformation out there.”

Companies also look to wellness programs to help improve the overall health of their workers since that should lower health costs long term, Hanson says. She adds that very small companies, which aren’t in a position to offer health insurance and not required by law to do so, may offer other benefits, such as life insurance, disability coverage or even a very flexible schedule, to attract and retain employees.

Hanson says the market is still adjusting to the influx of the newly covered, many of whom may have expensive health issues.

“Those who are unhealthy have been the winners with ACA since they are paying less overall while healthy ones tend to be the losers and wind up paying more,” Hanson says. “Unfortunately, I don’t see a light at the end of the tunnel.”