What is the Medical Loss Ratio?

Posted by Emily Kubis on Fri, Apr 06, 2018 @ 08:04

Is the MLR driving up employer healthcare costs?

A piece of the Affordable Care Act that seeks to cap insurer profits may be driving employer healthcare costs in some cases.

The ACA’s Medical Loss Ratio intended to cap the profits of insurance companies by requiring them to pay out 80 percent of what they collect in premiums, leaving 20 percent for administrative costs, marketing and profit.

The reasoning behind this was to put eight out of every ten insurer dollars toward claims, as opposed to other parts of their business.

However, this also means the maximum profit insurers can collect is 20 percent of premiums. As a result, the avenue to profit growth is to increase premiums altogether, especially for those not surpassing the 80 percent threshold.

Employers are left to question whether insurers are best positioned to help employers lower medical claims, and what really drives annual premium increases of 10 percent, 15 percent, 20 percent or more.

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Tags: employee benefit adviser, employer digest, health insurance small employers, Self-Insured, self-insurance, self-funded, reference based pricing, network discount, Medical Loss Ratio, healthcare costs

What is an insurance network discount worth?

Posted by Emily Kubis on Wed, Apr 04, 2018 @ 09:04

Consider the value of insurance discounts

Some self-insured employers are adopting new strategies to pay for their group benefits plan. These plans, including direct contracting with hospitals or reference-based pricing, typically do not use a traditional insurance network.

Many employers are finding they can obtain better value for the services they pay for by either negotiating with the hospital directly, or by paying an excess of Medicare’s reimbursement rate.

Why would employers want to adopt these strategies? Generally, the benefit that insurers provide to employers are their network discounts for services. But with healthcare prices skyrocketing, are employers getting the most value through this set up? Let’s look at how it typically works. 

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Tags: employee benefit adviser, employer digest, health insurance small employers, Self-Insured, self-insurance, self-funded, reference based pricing, network discount

Self insurance on the rise

Posted by Emily Kubis on Wed, Mar 28, 2018 @ 06:03

Rising healthcare costs make self-insurance more attractive

A new study from Arthur J. Gallagher & Co. reports that self-insurance is on the rise across the employer spectrum, including lower midsize, upper midsize and large employers.

The rate of employers self-insuring has increased between 8 and 10 percent since 2016, the study found.

This trend is expected to continue as costs associated with traditional, fully-insured plans become prohibitively expensive, especially for small and midsize employers.

The big benefit of self-insurance is the savings potential. Because employers pay the claims, they reap the benefit of low-claim years. Additionally there are also blended options, where employers can take on less risk and still benefit in low-claim years while minimizing risk in high-claim years.

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Tags: employee benefit adviser, employer digest, health insurance small employers, Self-Insured, self-insurance, self-funded

How a 40-employee group saved $100,000 with reference-based pricing

Posted by Emily Kubis on Fri, Mar 23, 2018 @ 10:03

A more cost-effective way to pay for healthcare

Reference-based pricing is a new payment model for employer-sponsored healthcare. Through reference-based pricing, self-insured employers forgo the traditional insurance contract. Instead, employers pay employee claims directly to hospitals and providers, typically in excess of Medicare. In other words, employers pay the hospital 140 percent of what Medicare would reimburse for the same service.

This strategy can save employers thousands of dollars per year—below is a case study of one of our clients who saved $100,000 on premium and plan costs by transitioning to this strategy.

But why would an employer want to forgo the traditional insurance contract? A piece of the Affordable Care Act is the reason why.

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Tags: employee benefit adviser, employer digest, health insurance small employers, Self-Insured, self-insurance, self-funded, reference based pricing

UnitedHealthcare to share drug rebates with consumers

Posted by Emily Kubis on Wed, Mar 14, 2018 @ 09:03

Industry responds to growing consumer frustration

UnitedHealthcare announced this week it will begin sharing the rebates it receives from drug companies with consumers next year.

According to UnitedHealthcare, the savings will apply to plan participants who are filling a prescription for a drug where the manufacturer provides a rebate. The savings from rebates will be provided at the time of sale to reduce members’ out-of-pocket costs.

Currently, UnitedHealthcare keeps those rebates, using them to “keep premiums lower for the benefit of all member and customers,” rather than distributed to individual consumers.

Manufacturers do not provide rebates for every drug, but for those that do, the expanded pharmacy discounts will begin for UnitedHealthcare plan members January 1, 2019.

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Tags: employee benefit adviser, employer digest, health insurance small employers, employers, UnitedHealthcare, drug rebates

How to help employees file taxes with an HSA

Posted by Emily Kubis on Fri, Mar 09, 2018 @ 08:03

What employees need to know

Filing taxes with a Health Savings Account can be confusing, but it doesn’t have to be. Here are tips to share with employees about how to file taxes with an HSA.

As you gather all the necessary paperwork to file your taxes, here are three forms you’ll need to have on hand:

Year End Status Filing Report
This report shows account activity for the previous calendar year, and is not an official tax document.

IRS Form 1099-SA
This report provides you with ‘distributions made,’ or where you spent HSA dollars during the tax year.

IRS Form 5498-SA
This form provides you with the contributions you made to your HSA during the tax year.

These three forms are necessary to complete the IRS Form 8899 on your taxes. Typically, these are sent to you from the HSA administrator, such as HSA Bank.

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Tags: employee benefit adviser, employer digest, health insurance small employers, employers, HR, HSA taxes, HSA, health savings accounts

Tax bill reduces HSA contribution limits

Posted by Emily Kubis on Wed, Mar 07, 2018 @ 07:03

What employees need to know

The IRS published information this week describing changes to the contribution limits for family health savings accounts due to the Tax Cuts and Jobs Act of 2017.

The new limit will not affect individual consumers with self-only coverage, but the HSA contribution limit for family coverage has been reduced to $6,850 from $6,900.

What does this mean for employers and employees?

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Tags: employee benefit adviser, employer digest, health insurance small employers, employers, HR, HSA taxes, HSA, health savings accounts

Higher employer healthcare costs driven by price increases

Posted by Emily Kubis on Mon, Feb 26, 2018 @ 07:02

Costs rising while utilization is unchanged

Spending per privately insured person grew by 4.6 percent in 2016, driven by price increases for care, according to a new report by the Health Cost Institute.

The report found that utilization remained unchanged or actually declined, both year over year as well as between 2012 and 2016.

Because utilization was unchanged, the spending growth was driven almost entirely by price increases, the report said.

This presents both a challenge and opportunity to employers. It does raise questions around the efficacy of cost-containment efforts focused on utilization, including wellness programs and shifting additional cost responsibility to employees.

However, it does suggest that efforts focused on improving price transparency and helping consumers find lower-cost sites of care may be more effective in bending the cost curve.

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Tags: employee benefit adviser, employer digest, health insurance small employers, employers, HR tech, benefits administration, BerniePortal, health insurance costs

HR tech is driving productivity—don’t get left behind

Posted by Emily Kubis on Fri, Feb 23, 2018 @ 08:02

How tech reduces the burden of HR

HR tech is increasingly important to workforce productivity. According to a study by Randstad Sourceright, 65 percent of organizations listed it as a top-cited influencer, among a dozen market factors.

There are two key ways HR tech drives workforce productivity.

The first is by reducing the administrative burden of HR. From onboarding to benefits administration, traditional HR processes have been conducted on paper, leading to inefficiencies and error.

By adopting a platform, organizations are able to streamline HR, freeing up valuable time.

This allows the HR department to operate more strategically, and refocus on high-impact training and development activities, which in turn lead to a more productive and capable workforce.

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Tags: employee benefit adviser, employer digest, health insurance small employers, employers, HRIS, HR tech

Three workplace technologies Millennials expect

Posted by Emily Kubis on Mon, Feb 19, 2018 @ 08:02

Recruit and retain with tech

Millennials became the largest generation in the U.S. workforce in 2018, and this has changed the way employers use technology in the workplace as they try to attract and retain high-quality talent.

The need is there—only 40 percent of Generations X, Y and Z believe employers have adequate digital competencies, according to a study by Randstad Sourceright.

The study’s researchers suggested that companies “focused on creating a simplified experience for front-end customers” often neglect to do so for their own workforce. This can have a negative impact on recruitment, retention and productivity.

But implementing workforce technology, including training tech, collaboration tools, benefits tech and more, can help organizations improve these areas by creating a streamlined work experience for all generations.

Here are three of the tech tools Millennials expect in the workforce:

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Tags: employee benefit adviser, employer digest, health insurance small employers, millennials

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