Pub. 12 2013-2014 Issue 2

N e w J e r s e y C o a l i t i o n O f A u t o m o t i v e R e t a i l e r s 25 new jersey auto retailer w w w . n j c a r . o r g Under the final Affordable Care Act well- ness regulations, screening results for Body Mass Index (BMI), blood pressure, LDL Cholesterol, glucose, and tobacco are al- lowed to be tied to contribution incentives of up to 30% of premium. Once employees are engaged in the program, those not screening well will have access to resources to improve their health including web por- tals, online and telephonic health coaching, and face-to-face seminars. By introducing a Health Contingent Well- ness Program, dealers can create a healthier employee population. The resulting be- havioral modifications will reduce health care costs for both the employer and the employee. Selecting the right wellness plan for your group is the first step in reaching that goal. Health Savings Accounts – A Health Sav- ings Account (HSA) paired with a high- deductible, HSA- compatible health plan, provides an opportunity to reduce overall health insurance costs. In order for this strategy’s opportunity to be fully realized, it is best when employees and their employer work together to maximize savings while maintaining a strong benefit program. In an HSA-compatible health plan, a significant deductible must be met before any benefits other than preventive care are covered by the policy. After the deduct- ible is met, the post-deductible benefits may be covered under traditional copays, or through coinsurance or cost sharing. This approach can often reduce premiums 20%-40% below traditional insured health insurance programs. And because the cost can go down, employee payroll contribu- tions are often reduced as well. To offset the additional out-of-pocket ex- pense an employeemight see as a result of this high deductible plan, themost effective HSA arrangements have each employee set up an individual HSA bank account as well. The HSA deposits assist with covering expenses during the deductible period. Deposits to an HSA can be made by the individual em- ployee, as well as the employer. The deposits are tax advantaged for both, and can roll over from year to year. To minimize costs and maximize benefits, HSA’s create an excellent opportunity for employees and employers to work together towards a mutually beneficial outcome. A key to the success of an HSA approach is to build up sufficient balances in each em- ployee’s bank account to address the added deductible expenses. This is done most effectively by having both the employee and employer contribute to the HSA. Since there will likely be a premium savings by introducing the HSA plan approach, employers may have additional funds avail- able that will allow them to make contri- butions to each of their employees’ HSAs. Additionally, it is possible the lower cost will result in employees having reduced payroll contributions which will allow them to make additional HSA contribu- tions, as well. Level Funded Self Insurance – A Level Funded self-insured program is an “ad- ministrative services only” (ASO) arrange- ment, where administration, stop loss insurance, and expected claims are conve- niently billed in fixed monthly premiums. This removes the budgeting challenge of funding a self-insured program, where costs due to claims can vary widely each month. Because fixed costs are often lower in this type of arrangement, the overall cost of coverage can be less. A Level Funded, self-insured health insur- ance program has many of the attributes of a traditional fully insured program. Fixed premiums are billed each month, for the entire contract period. New hires throughout the year are charged that same fixed premium, and at the end of the contract period, an employer can leave without penalty. What makes a Level Funded program different is the opportunity for employ- ers to participate in surplus claims fund- ing. If claims run better than expected, some or all of the surplus will be returned to the employer. For this strategy to be effective there must be extensive cooperation between the em- ployer and its employees. Level Funded ASO programs require individual under- writing. This means each employee must complete a medical questionnaire before pricing can be finalized. This point is often a struggle for employers and employees, as they may feel it could be an infringement of privacy. However, by having employees work with the employer to promptly and accurately return the questionnaires, it is a chance to reduce costs for both parties. Above are three examples where both employers and employees can benefit by working together to reduce overall costs attributed to employee benefits. Employers and employees can save money, employees will be healthier, and an opportunity can be created to regain claims surpluses that often stay with the traditional carriers in the form of increased profits. Bruce Mazzarelli and Carolyn Andress of Fotek Insurance Solutions, can be reached at (732) 556-0446. Employers and employees can save money, employees will be healthier, and an opportunity can be created to regain claims surpluses that often stay with the traditional carriers in the form of increased profits.