HEALTHCARE EXCHANGES AND COVERAGE COSTS

January 1, 2014 and people are flocking to the health exchanges to find cheap health coverage because the Affordable Care Act (ACA) has promised "Affordable Health Care". According to the ACA, affordable means the cost will be no more than 9.5% of income.  If it is higher than 9.5% there will be tax credits and/or subsidies given to make it affordable.  

Interestingly, the cost of a person who is 64 years old cannot be any higher than 3 times the cost of a 20 year old.  In other words, the cost for older people, who use on average 5 times the amount of health care than a 20 year old, would pay less while the 20 year old will pay more, than in our current market.  In addition, if you are a smoker, your premium can be up to 50% more than a non-smoker at the same age level.  The question is, if I am a smoker and paying 50% more than a non-smoker making it unaffordable for me, will I get a subsidy even though if I wasn't a smoker it would be affordable?  Since the smoking surcharge is considered a penalty, the answer seems to be no.  

Since coverage in the exchanges will be guaranteed issue, it seems that younger, healthier people will find cheaper coverage elsewhere while older, sicker people will flock to it. If this happens it won't be long before the exchanges implode and/or we are taxed even more to supplement the deficit. 

EHHHH......WHAT'S UP DOC?

It seems employers are just getting tired of paying for unhealthy lifestyles.  Many companies are instituting wellness programs where if you sign-on and get your blood pressure checked and do some smoking cessation classes or a walk here and there, you get rewards.  Maybe you get $25 or $50 for participation or an umbrella or a beach blanket.  A pat on the back could be just the right kind of encouragement to get employees engaged in a healthier lifestyle.

There is a second school of thought however, and it is shared by companies such as Walmart, and Veridian Credit Union which are going the route of the "stick" versus the "carrot".  These companies are charging employees higher premiums for unhealthy lifestyles.  For those that can't get their obesity or cholesterol in check or stopping the smoking habit, they will pay.  Employers are getting tired of making the healthier employees pay for the bad habits or lack of attention to health issues of the unhealthy employees.

The Cleveland Clinic has decided to cut smoking at their medical centers, refused to hire smokers, implemented a comprehensive wellness plan, gym and weight loss classes.   In addition they reduced premiums to those employees who maintained or improved their health.

It seems as though trying to be "nice" regarding having employees become serious about their health isn't working for some employers.  Under health reform (PPACA), employers will be allowed to have a premium differential of 30% in 2012 and could go as high as 50% in 2014 for healthy versus unhealthy employees.  This means that for some unhealthy employees,  that choose to remain that way, health care could get a lot more expensive for them.

PPACA: Should I Care About a Wellness Program for My Company?

The answer to this is maybe.  Many carriers offer some version of a wellness program.  Some may even customize to your population.  They can be very helpful pin-pointing certain illness' that can truly affect your claims. Perhaps a walking program or a smoking cessation campaign would be helpful to your employees.  Much of the time it's about showing your employees that you care.  You care about their physical health, mental health, morale etc.  By doing this you may create a more effective and productive employee who wants to come to work and do a great job.  And at the same time may be reducing your claims exposure which ultimately lowers medical premiums. 

Except if you are in the fully-insured small group market in Maryland.  Since there is no pre-existing condition limitation it doesn't matter how healthy or sick you are and your rates are primarily based on a community pool.  However, if you have a relatively healthy group, you may want to consider partially-self insuring.  These plans protect you from claims like a traditional health insurance plan does, except if you are healthy and use less claims, you may get a refund.  In addition, the initial premiums are typically less costly.  If you have a bad claims year, you are not on the hook for any additional premium and if the renewal is high, you can move back to the fully-insured market.  Besides being friendly to you employee's, wellness programs can help your bottom-line especially if you are partially or fully self-insured. 

In addition, through Health Reform there may be grants for employers who currently haven't established a wellness program.  Also, the success to any wellness program is that the senior management be fully-on board and that there is high participation within the employees.  Wellness programs can be crafted to encourage employees to participate by way of rewards or penalty.

If you haven't had a conversation with your consultant about wellness or partially self-insured plans, you should.  If the are unfamiliar, please give me a call at 410-239-5009.  I'd be happy to discuss.

Ben

Free Money For Small Group Wellness Programs!! Maybe.....

If you are thinking of starting a Wellness Program for your small group (Under 100 Employees), there may be funding available for you.  Under PPACA (Health Reform) certain provision have been set-up to fund a five year $200 Billion grant program.  However, with the nations check-book getting a little light, who knows if and when there will be funding available and to what extent. 

Starting with the next fiscal year (October 1, 2011), the PPACA authorizes an appropriation of $200 million over five years (fiscal years 2011 through 2015) for certain small businesses that implement wellness programs.[Section 1201 of H.R. 3590, adding section 2705 to PHSA]

• A five-year/$200 billion grant program will be available to small employers (less than 100 employees working 25 hours per week) that did not provide a wellness program as of March 23, 2010.  The grants are intended to apply to "comprehensive" wellness programs that include the following components:

• Health awareness initiatives (including health education, preventive screenings and HRA(Health Risk Assessment)
• Efforts to maximize employee engagement (including mechanisms to encourage employee participation).
• Initiatives to change unhealthy behaviors and lifestyle choices (including counseling, seminars, online programs and self-help materials).
• Supportive environment efforts (including workplace policies to encourage healthy lifestyles, healthy eating, increased physical activity and improved mental health). 
• It is expected that regulations will be issued to clarify various aspects of the program, such as the criteria for a qualifying wellness program, how to apply for a grant, etc.

Grant application
Eligible employers seeking to participate in the grant program must submit an application to the Secretary of HHS that contains a proposal for a comprehensive workplace wellness program meeting the criteria and requirements listed above.  However, the PPACA fails to indicate whether grants will cover part or all of the cost of a qualifying wellness program. It is anticipated that HHS will issue guidance on the grant application and other details surrounding workplace wellness programs prior to October 2011.