News

Employers: Benefits Are More Important than You Realize!

That’s what the Seventh Annual Study of Employee Benefits Trends – Findings from the National Survey of Employers and Employees shows. In fact, their data says health benefits are valued by 75 percent of employees, while employer perception is that 59 percent of their workers value health benefits. That’s a pretty big gap … combined with a number that states that well under half of employees (43 percent) actually understand which benefits fit their needs. Yikes!

It’s clear from all the numbers that employees value benefits more this year than in the past. Employees are talking more control of their finances and are increasingly looking to the workplace for help—even if it’s fully employee-paid benefits. Employees are also becoming more aware of their personal risk exposure, which leads to greater appreciation for benefits and company loyalty: Forty percent of employees say benefits play an important role in their decisions about whether to remain with their employer.

Here are some more key figures:

When asked which benefits are an important factor in employee loyalty (2007-2008), “salary/wages” decreased in importance by four percent while “other insurance benefits” (life, dental, disability, vision) climbed in importance by 18 percent (51% to 69%).

41% …

of employees consider workplace benefits to be the foundation of their personal safety net.

51% …

of all employees now state that they obtain most of their financial products through the workplace.

46% …

of employees have expressed greater interest in learning more about the benefits offered through their workplace.

73% …

of employees highly satisfied with their benefits were also satisfied with their jobs.

22% …

of employees not satisfied with their benefits said they were satisfied with their jobs. (Take note, employers!)

33% …

of employees expressed concern that their employer may reduce or cut benefit expenses in the next 12 months because of the economy.

90% …

of Americans believe that it is important for companies to continue to offer benefits, even if they must pay most or all of the cost!

Employer objectives and employee priorities seem to intersect, but they do not fully align. This, in our opinion, opens up opportunities to potential new benefit offerings.

If you’re surprised by any of these numbers—especially if you’re an employer—feel free to contact us at Stephenson Welsh Insurance Services to see if changes in your benefit offerings would better serve your employees while better positioning your company for retention and growth.

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Update: Halfway to Health Reform

Over the weekend, the House passed extensive health care reform that if enacted would radically reshape the American health care system. The final vote was 220-215, with a single Republican supporting the bill’s passage.

That brings us the halfway point of the legislative process. Well, maybe one-third since the final House and Senate bills would have to first be cobbled together before heading to President Obama’s desk.

The House bill does include a public health insurance option that would compete with private insurers as well as equally controversial employer coverage mandates for businesses with payrolls in excess of $500,000. The Senate bills introduced so far do not include employer mandates, and it’s unclear if a bill with such provisions could ever pass the Senate.

The diverse opinions on the public option, employer mandates, abortion funding and the trillion dollar price tag set up a legislative showdown in the Senate, with less than five weeks to pass their version in order to meet an unofficial goal of completing the entire process before the end of the year.

For our clients (and Americans in general), each day’s news brings myriad new questions. What we can do as brokers is continue to remain dialed in to the events on Capital Hill so we can be poised for change and proactive in our approach leading up to any final legislation.

Whether we’re talking about the current system, an insurance marketplace exchange or a public alternative to private carriers, it’s clear there’s going to be plenty for individuals, employees and employers to navigate. Our job is to know what’s available inside and out, help clients sort through choices and ultimately select the best possible coverage based on their status and situation.

The need for that type of help is perhaps the only thing in the world of health insurance that’s not about to change.

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During Flu Season, Prevention is King

Right now, many of our clients are concerned about getting the flu—especially H1N1 (Swine Flu). The answer to the question on most people’s minds is “yes,” the H1N1 vaccine is going to be covered by your insurance in most cases, but it’s still being given out on a priority basis.

We’re glad people are asking about vaccines because preventative care is an extremely important tool in staying healthy and avoiding potentially costly insurance charges related to illness. And most high-deductible plans have excellent preventative care features at no charge or that don’t apply to your annual deductible.

In addition to vaccines, regular wellness visits, covered screening exams, exercise and proper diet are a powerful ways to keep the body strong and to nip health issues in the bud.

We’re also aware that there are a significant number of people out there who are uncomfortable taking vaccinations for various reasons. In those cases, keeping the immune system strong through preventative measures is especially important to staying healthy and avoiding illnesses such as H1N1. Talk to your doctor, nutritionist or acupuncturist about the best ways to keep your immune system at peak performance to stave off seasonal flu and H1N1.

If you’re confused about what’s covered and what’s not, your broker should be a resource in answering your questions and directing you toward covered preventative care. You’re paying the premium costs for your insurance, so we want to make sure you’re getting the most out of that coverage and really leveraging it to support your good health.

When a virus runs rampant such as H1N1, it can be scary. People who need to be in public for work and life get understandably worried that they could be exposed and be the next to get sick. We as brokers hope that through covered preventative measures and good, clear information, our clients can feel more empowered … and more healthy.

Note: Every insurance carrier and every plan operates a little bit differently. As a reminder, always check with your doctor or carrier to confirm covered benefits and what qualifies as in-network services. Out-of-network services may cost more or have different coverage levels.

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Health Reform Latest: Words, Bills & Dollars

To say the legislative process has been “messy” would be an understatement. But despite all the heated rhetoric, we still seem to be moving closer to some form of health care reform day by day.

One of the main questions at this point is whether any degree of bipartisan consensus is possible, or if the Democratic majority will attempt to push a bill (or bills) through to passage on their own … either through a filibuster-proof 60-vote senate majority or the complicated “budget reconciliation” course of last resort, which theoretically would only require 50 senators for passage. Many people are uneasy about this approach.

Of course the other dominant question is whether the bill ultimately heading to President Obama’s desk will include a “public option” to compete against the offerings of private insurance companies. According to the latest reports out of Washington, the life of the public option is largely now a numbers game. This is the most volatile element of the legislative process at the moment, so we’ll keep an eye on the latest. We could know significantly more as early as Friday.

Meanwhile, the latest figures show health care advertisements on television have topped $100 million, illustrating how high the perceived stakes are for many parties and industries that would be affected by reform.

There are still many, many moving parts and how all the pieces of the puzzle fit together is not yet clear. Right now we are waiting on the Senate Finance Committee to complete its work so senate leaders get begin cobbling all the different versions of bills together into a package to take to the senate floor. The floor debate could last weeks (or longer) depending on how things go.

At this point as insurance brokers, we see our job as staying up to date on everything that could affect our current clients and having a firm grasp of what the re-formed health insurance landscape will look like (so we can properly advise new and renewing clients). One thing seems clear: No matter what health care looks like, there will be a need for expert help navigating all the choices and plans and key details—and matching people and groups with the programs that best suit their specific needs. That’s what we’re here for.

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Health Reform Update: Are We Moving Too Fast?

Health care reform is moving at a lightning pace, so we thought we’d provide another update on all the latest developments. We reached a major milestone, as two House committees approved reform legislation. That’s never happened before, and an overhaul of our health care system has never been so close.

… or so far away. As Reuters reports, there’s a long way to go and many hurdles to overcome. The biggest recent “pitfall” has been a report out of the non-partisan overseer Congressional Budget Office, which declared that the most recent iteration of the Democratic health care proposal wouldn’t actually curb escalating health care costs. Then, there was the news that Massachusetts was backpedalling from universal health coverage. (Mass. was often cited as evidence that health care reform can succeed.)

President Obama came forward Friday to address any growing concerns and voice vociferous support for speedy reform. And while the path to comprehensive reform is daunting and the best direction for Americans still unclear (especially small business employers), it would seem unwise to bet against the president getting this done before 2010.

While there are significant differences between the national and Massachusetts model, what the Bay State’s woes illustrate is that perhaps it’s not in our country’s best interests to rush through reform intended to meet or beat a self-imposed deadline. Maybe if Massachusetts is taking major steps backward, it’s an indication that they moved too quickly in the first place and some important elements slipped through the cracks. Now, some feel if national reform doesn’t pass this year, it never will. But whether or not that’s true (there’s no way for us to really know), it shouldn’t have to be that way.

Really, we’ve waited this long, so it would be wonderful if we could fully deliberate all the reform possibilities and be as sure as possible that we’re doing this right. Someone said to me recently that what’s happening right now with this accelerated timeline feels like Congress is “trying to force a watermelon through a garden hose.” It’s true that these are really big changes, so there’s a whole lot to thoughtfully consider and not a lot of time to do it in.

It’s still extremely early in the process, and there’s still plenty of reason for optimism. Hopefully, moving forward in the wake of the CBO report and the news out of Massachusetts, the emphasis will be on taking the time to do reform right, rather than getting reform done by a particular date.

Just know that if you’re a current Stephenson-Welsh client, we’ll keep following all the news out of Washington and blogging about anything that has a direct impact on your insurance.

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Use it or Lose it? Not with HSAs

Heath savings accounts (HSAs) and flexible spending accounts (FSAs) both provide tax-free ways to pay for all your medically eligible expenses. But they are often unfairly lumped together in people’s minds when it comes to the perceived drawbacks associated with the accounts.

It’s true that with an FSA, if you can’t use up invested money by the end of the year, you lose it. So, people scramble around, buying eyeglasses they don’t really need and finding any way possible to exhaust their account … or they’re left in the lurch when the account runs dry early. That experience leaves a bad impression on many people, which creates resistance around the idea of putting in place the HSA associated with high-deductible plans.

But HSAs are getting a bad rap.

HSAs are truly flexible, portable and in your name (not the employer’s). You have the control over when you put money in and when you take money out. You have control over the amount of those funds. You don’t have to take an educated guess at how much you’ll spend because the money isn’t vanishing into thin air at midnight on Dec. 31.

Not only is an HSA a retirement account, but whatever you don’t spend, you keep. The amount left over just rolls over into next year and continues to accrue. If you leave your employer, you take that account with you. It’s established and opened in your personal name, so the employer has nothing to do with it and the money doesn’t roll back to the employer. So, with an HSA you’re getting a medical IRA. You can actually make money on it if you’re a savvy investor and take that money wherever you go. It is a legitimate addition to your financial portfolio.

Used wisely, an HSA is an investment tool that will save you money and continue to grow. If you have big expenses later in life (braces for your kids, a big and unexpected medical expense, etc.), you have money saved up to deal with that.

This All Sounds Good … How Do I Get Started?

Starting an HSA is a pretty simple process-especially if you have your health insurance broker walk you through it. HSAs can be opened through essentially any bank or HSA administrator. You have to have a high-deductible, HSA-compatible health plan to open and contribute to one. What’s important to know is that if you later switch health plans, you won’t lose your HSA; you just can’t continue to contribute to it.

You can put in whatever amount of money you want at the outset. In fact, you can either prefund it or wait till you have a medically eligible expense. That means you can put in money ahead of time or pay out of pocket, fund the account after the fact and reimburse yourself out of the HSA account.

What’s Considered a ‘Medically Eligible’ Expense?

The book detailing what IS covered is an inch thick. You’ll only run into trouble with “elective” medical expenses such as cosmetic surgery, so no Botox injections or augmentation. Complementary medicine such as chiropractic care and acupuncture is eligible if you can validate that it’s needed. You also cannot pay medical premiums or insurance premiums with the funds. Otherwise, it covers most things that come up. Ask your broker if you’re not sure about a specific medical expense.

It’s Not Too Good To Be True

People often figure there must be “a catch” with HSAs since FSAs, while still quite valuable, are full of rules an exceptions. The reality is that HSAs are highly flexible, portable, carry over into the next calendar year and can grow over time. Talk to your broker or contact us with any questions you have or to get started.

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Answering Your Health Care Reform & Benefits Questions

While negotiations in Congress are certainly still ongoing, we thought it would be a good time to talk about the most recent health care reform proposals—and through doing so answer some frequently asked questions.

Let’s start by simply stating the obvious: We have a broken system. There are too many uninsured people in this country, too many people struggle to obtain adequate coverage and the process is so complicated that without a good broker it’s an immense challenge to secure the very best, most affordable plan for you and your family.

The solution with the most steam is mandated health coverage for all Americans (or more realistically 95 percent of all Americans). The outline recently released by Sen. Ted Kennedy (D-Mass.), as The Washington Post puts it, calls for “sweeping health-care legislation that would require every American to have insurance and would mandate that employers contribute to workers’ coverage.”

Democrats are not alone. This week, Sen. Judd Gregg (R-N.H.) reportedly broke ranks with his Senate colleagues with a proposal requiring that individuals own health insurance.

And while coverage for all Americans is certainly appealing, it’s the second part about mandated contributions that has many groups—from insurers to doctors to employers—concerned and keeping a watchful eye. What would it really mean for employers to contribute to workers’ coverage … and how would it work? Would this guaranteed health care be guaranteed by the government? Guaranteed through a person’s employer? Through a public health option?

There are a lot of uninsured individuals who don’t have coverage through their employer, so how do you make similar plans available to all individuals and families—especially those who don’t have health coverage through their employer?

These are all questions to which we have some clues, but it’s still too early to tell. What is clear is that the Obama administration is deeply committed to health care reform this year. In that same WaPo article the president is quoted as telling members of Organizing for America, “If we don’t get it done this year, we’re not going to get it done.”

That kind of urgency necessarily leads to a discussion of cost. Analyses of a recent Democratic House proposal estimated a need to cut 2 trillion dollars over the next 10 years to pay for a dramatic overhaul of the health care system. President Obama this week, according to the reporting of Politico.com, “summoned Democrats from two key Senate committees to the White House on Tuesday to make clear that the bill must control health costs and not add to the deficit.”

The goal is affordable health care plans for everyone, but where does that money come from and who’s going to pay for it?  That’s the big challenge right now. That’s what everyone on the Hill is trying to figure out, while those groups who would suffer under changes are mounting opposition.

I’m not here to characterize the current proposals as good or bad for Americans. In fact, there’s not enough concrete information at this stage to even make that judgment. My concern as a father, a broker and an American citizen is the potential for rushing into a new program too quickly and then have “buyer’s remorse.”

If this is done too quickly we could look back and realize our options or the quality of benefits has been compromised. For example, no legislation should prevent an American from being able to choose his or her own doctor. No legislation should effectively “penalize” those who have taken the steps to secure coverage by forcing them into inferior changes. There’s no evidence that a current proposal would create such limitations, but that’s just the type of unintended consequences that can occur from a rush to action. I just hope that through deliberation, we can put the right plan in place. At Stephenson Welsh, we strongly believe in continuing a private health care system that supports the freedom to choose your own doctors—one in which those who need coverage most are not denied the coverage they need.

It’s a good thing that reforms are being discussed. It’s just essential that we go about this in a thorough, deliberative way.

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Recent Survey: Health Benefits Not on the Chopping Block

According to a recent survey by Workscape, the vast majority of employers are not reducing health care benefits or forcing workers to shoulder more costs despite the state of the economy. Only 20 percent of responding companies reported a reduction or reconstitution of benefit offerings.

The fact that most companies are not decreasing their commitment to employer-sponsored health benefits, even though they are often the costliest of benefits, underscores the critical role of such plans in the overall compensation mix,” said Tim Clifford, President and CEO of Workscape. “Most organizations realize that in order to survive the recession and be poised for growth when the economy rebounds, employees must remain healthy and have peace of mind knowing that their families are protected.”

This is clearly good news for the industry and good news for most small businesses and employers. One way or another, employers are finding a way to make this work and doing everything possible to not cut health benefits. Forty-four percent of companies responding to the Workscape survey are opting for high deductible plans to offset costs, but all indications are they’re still funding those plans at 100 percent for employees. Some employers are taking steps to cut 401(k) or disability benefits. A small percentage of employers are going to higher employee contributions to pay for their benefits, although the vast majority are not.

The bottom line is to this point, employees’ health benefits are still sacred.

While disability and 401(k) plans as well as ancillary products may suffer cuts in the short term, that’s much better than the early predictions about how the steep recession would impact the health care sector. Instead of a catastrophic impact, this survey shows that employer-sponsored health benefits have withstood the economic downturn and are, in essence, considered the very last to go when a company is struggling financially.

As brokers, we think that’s absolutely the right decision. Health insurance is critically tied to employee satisfaction and is necessary for sustainability. In most industries, benefits are a retention tool. Most employers realize they need to offer quality health insurance to attract and retain quality employees. When considering two jobs that are of equal interest, a savvy talent will usually gravitate toward the superior benefit package. This is especially true in the small- to mid-market space and the technology sector.

When one employer offers quality benefits and another doesn’t, that makes the decision for the sought-after talent rather easy. There’s no way you’re going to recruit someone away from another organization without offering a quality benefits package, and there’s little chance of holding onto a top talent for long without benefits good enough to keep him or her put.

Our job as brokers is to work with clients to make sure offered benefits fit within their budget while still attracting or retaining key personnel. It makes little sense to offer an overly rich benefits package that you can’t afford. But it makes a great deal of sense to offer a solid health insurance plan to your employees at a fair price. There are high-quality yet value-priced health care options out there that are still going to make your employees happy. That’s what a good broker helps you achieve as part of the broker-client partnership.

Make sure you can have open, honest communication with your broker to say something like: “Hey, times are tough and we need to tighten our belt. What other strategies can we utilize to not break the bank while still offering good benefits?”

If you’re an employee considering a new company, talk to an experienced broker or experienced professional who can help you determine which benefit offering will best serve you.

If you’re an employer or small business owner, don’t destroy your business offering unaffordable, unsustainable benefits. There are affordable alternatives out there that will allow you to still offer quality benefits and retain top talent without breaking the bank. And if you don’t have an experienced HR department or have offered the exact same benefits to your employees for years, you better have a good broker take a look under the hood. Chances are you’re paying much more than is necessary, and without a sound strategy in place you’ll suffer though huge premium increases on outdated offerings.

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Update: Looking for Cal-COBRA Clarity from AB 23

There has been a great deal of recent confusion about the COBRA subsidy in the American Recovery and Reinvestment Act (ARRA). The uncertainty has stemmed from a lack of “ownership” on the local level as to who was going to notify all the small group assistance-eligible individuals (AEIs) of their new COBRA rights.

AEIs are employees involuntary terminated between Sept. 1, 2008 and Dec. 31, 2009 who also meet other qualifying criteria.

Pending legislation addresses this issue head-on, but some important details remain open-ended. This bill (AB 23) dictates that it’s the insurers who should notify all qualified beneficiaries eligible for premium assistance under Cal-COBRA (sending out these “second-chance” letters).

The insurance carriers will comply. But instead of sending specific, detailed letters only to assistance-eligible individuals, most insurers plan to send notifications to all terminated employees in the relevant timeframe (Sept. 1, 2008-March 31, 2009). Those former employees will have to read the form letter and determine for themselves if they’re eligible for the subsidy, as defined by the ARRA. That means small group employers may well be getting some phone calls from confused former employees who don’t know where they stand.

Additionally, some carriers are requesting small group employers to identify their own AEIs and send that information along to the carrier. If AB 23 passes in its current form, we know it’s the insurer who will be ultimately sending out these notification letters. But it’s clear that any small group with 2-20 employees should be proactively identifying all their AEIs. Your carrier may ask you for information … and so could AEIs themselves.

At Stephenson Welsh Insurance Services, we’re helping our small groups identify their AEIs. Your broker should be doing that, too. We’re also finding that some employers are receiving requests for information from carriers but aren’t sure exactly what to do or what specific information to send back. Your broker should be touching base with you so you’re aware of what’s happening and, if necessary, educate you so you’re comfortable complying with any requests made.

One final note on this topic: If you are an individual reading this who was involuntarily terminated from your job between Sept. 1, 2008 and now, we encourage you to contact your former employer directly if you’re unclear about your “second-chance” COBRA eligibility or COBRA rights. Regardless of this momentary confusion, many will benefit from this new ARRA subsidy and should be taking advantage of it.

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Are You Ready to Notify Your COBRA Assistance-Eligible Individuals?

As we’ve discussed in prior posts, the American Recovery and Reinvestment Act (ARRA) includes a subsidy for COBRA premiums for assistance-eligible individuals. Unfortunately, there is a great deal of confusion on the state level as to how notification of these new COBRA rights will be handled.

As you might imagine, insurance carriers aren’t going to simply volunteer to incur the time and expense of identifying all these assistance-eligible individuals (AEIs) and sending out millions of notification letters unless they absolutely must. Now, the ARRA identifies that in state continuation programs (in our case Cal-COBRA), the carrier has the responsibility to (A) manage and notify any eligible individuals and (B) pay the subsidy. The idea was to take the onus off the employer small groups altogether for Cal-COBRA. But most carriers haven’t yet explicitly stated they’re going to do that, and one of the problems is if you read any type of COBRA literature, everything ultimately falls back on the employer.

That’s why it’s essential that employers who fall under Cal-COBRA (2-20 employees) identify any AEIs and are prepared for any eventuality. Yes, it seems this notification falls on the carriers’ plates. But you should still be ready to react to any changes to model notices released by the Department of Labor.

Small group employers are understandably worried that if changes to model notices shift the responsibility, they’ll be on the hook if anything falls through the cracks. No one wants to be sued by former employees who claim that, by law, they were supposed to be notified of their new COBRA rights as defined by the ARRA.

That’s where a good broker can really provide a support system. Your broker should be both looking out for you and be ready to answer questions about the latest developments. Here at Stephenson Welsh Insurance Services, we’ve been going through our groups and giving employers a “heads-up” about these ongoing circumstances because they may need to act quickly if things change.

Be sure to contact your broker with any questions you may have. If you need a broker, feel free to contact us.

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