It’s almost time for year-end small group open enrollment and you need to drive engagement so that your employees can make informed decisions about their health insurance options.
We want to help you help your employees understand all of their options so that they can purchase a plan that is appropriate for their situation. So here is our advice for the open enrollment:
Listen to Your Workforce
Before you make any decisions, you should listen to your employees and better understand their needs and preferences.
With answers and feedback in hand you can create a benefits package which is more appealing to them, which in turn gives you a competitive edge when attracting and retaining workers.
Engage employees and solicit feedback through quarterly employee-benefits round table meetings. Invite employees from different age groups and different departments to participate in these meetings to ensure you have a good cross-section of your staff represented.
Give Advance Notice
You can start this month with simple reminders for them to start thinking about open enrollment and evaluate their current health plans. Send out memos and place posters in high traffic areas.
If you start with this in September or October, they can have time to assess their options, particularly if anything has changed in their lives like marital status, new children or health issues.
Costs Are Paramount
You can work with us to settle on plan arrangements that will be within your and your employees’ budgets (in their case, the plans also have to be deemed affordable under the Affordable Care Act).
Employees have a right to understand the costs, so let them know how to access the free transparency tools provided online by most medical carriers. Provide employees with a breakdown of medical and pharmaceutical cost increases to avoid sticker shock.
Get an Early Start
If your plan year starts Jan. 1, you should hold open enrollment meetings and dispense plan materials in October or November.
Avoid holding meetings in December. It’s too busy and the ramping up period is too short.
Communicate Effectively
Your task is to get employees out of cruise control and truly assess all of their options.
This is especially true if you are making changes to cost-sharing, introducing new plans, introducing a wellness plan or health savings accounts or flexible spending accounts.
You should use a variety of different media to communicate with your workforce.
Use video, virtual and live meetings, e-mail communications and print materials to get through to your employees. While the attentive ones may think it’s overkill, using different forms of communication ensures that you reach the widest number of staff.
Get Spouses Involved
If you also offer insurance to spouses, you should communicate through your employees that they are also invited to join your open enrollment meetings.
You can also invite them to view any electronic material you may post online, like the aforementioned videos.
If they cannot make a general meeting, you can invite them to come in to meet with your human resources manager if they have questions.
Remind Them of the Law
You can use open enrollment as a way to remind your staff of their responsibilities to secure coverage under the Affordable Care Act.
Let them know that employees who refuse affordable coverage from their employer and opt to purchase it on a public exchange will usually not be eligible for government premium subsidies.
Ask us about the most frequently asked questions about the ACA and we can help you prepare a list of online resources that they can access to get answers to those questions you may not be able to answer.
The Meeting
Send out meeting notices early to give your employees time to prepare and set aside time.
Try to make the meeting engaging.
You may want to consider video recording the session and also providing remote access to employees who don’t work onsite.
Provide enough time for the main presentation as well as questions from your employees.
As health insurance costs are rising at their fastest level in nearly 20 years, it’s important to have a clear idea of which metrics to track to ensure you’re seeing a good return on investment and that your employees are satisfied with their health plan.
Having the right metrics can also aid in negotiating better terms during the insurance selection process. This knowledge is essential not only for budgeting, but also for planning benefit offerings that meet the needs of your workforce and your firm.
While the goals for your health plan will differ from other employers, there are a number of common metrics that organizations track to gauge health plan performance. Your insurance company tracks the following metrics, and so should you:
Cost Per Member
This is typically calculated by dividing your plan’s total health care outlays (in a given month, for example) by the total number of members covered in the same period.
If you do this month after month, you can identify cost patterns and where you should focus on reducing costs without compromising quality of coverage and care.
Loss Ratio
This is calculated by your group plan’s total premium divided by how much the plan pays out in claims. The ratio evaluates the health of your plan and is a key factor used by insurance companies when calculating next year’s premiums.
If your plan’s loss ratio is lower than the industry standard, that information provides leverage for you when negotiating premium increases and coverage changes.
You may also be able to forecast future premium increases by tracking your current and historical loss ratio.
Employee Utilization
To track how often your employees use their health plans you’ll want to calculate the average claims filed per member. Divide the total number of claims submitted by the number of covered employees.
You can compare your average to the industry average utilization. If your staff are using their plans less frequently than their peers at other companies, it could point to issues, such as the plan being too costly, either via the employees’ share of premiums or out-of-pocket costs.
By digging deeper into claims, you can see where your workers are mostly going for health care services. If they are largely opting for high-cost providers, you can take steps to try to explain the long-run benefits of choosing another provider that may cost them — and the plan — less without sacrificing coverage.
Network Quality and Response Times
It’s vitally important that your staff don’t feel they are stuck in a health plan that requires them to jump through hoop after hoop to get coverage.
You can get an idea of how well your plan’s network is meeting your employees’ needs by measuring the quality of your network. Network sufficiency, as it’s also called, consists of a number of metrics and factors:
The number of providers in the network,
Accessibility to medical care,
Claims response times,
Number of medical specialties available,
Appointment wait times, and
Costs of out-of-network care.
You can use this information to discuss options with us and your carrier for expanding coverage to help your employees better access care.
The Takeaway
There are also other important metrics that you can use to get a sense of how well your plan is performing and serving your employees.
Health plan metrics provide you with valuable insights into your plan’s effectiveness and whether or not its expenses are running hot. Having this information can help you work with us and your group health insurer to craft a plan that meets the needs of your workforce.
One word of caution: If you plan to make changes based on what you find, it should be done with prudence and caution as you don’t want to compromise plan coverage or employee health.
As prescription drug costs continue growing and pricey new pharmaceuticals add to health plans’ cost burdens, some insurers are starting to reduce the number of medications they’ll cover and are imposing new barriers to accessing the most expensive ones.
According to a new study by GoodRx, a website that helps people find discounts and rebates on prescription medications, Medicare Part D insurance companies in 2024 cover 54% of all drugs approved by the Food and Drug Administration, compared to 75% in 2010.
During that same time, the percentage of drugs that Medicare drug coverage plans put restrictions on rose to 50% from 25% of all FDA-approved drugs.
GoodRx notes that the statistics are likely worse for individual health plans because they are not subject to the same regulations as Medicare plans are.
This trend makes it vitally important that you review formularies of covered medications during open enrollment to ensure you choose a health plan that covers drugs you need for a chronic condition, or which you need to take regularly for other issues.
It’s also important that you understand how much of a certain drug their health plan will cover and what your estimated out-of-pocket costs will be, so that you can budget accordingly.
Formularies Explained
The list of drugs that an insurance plan will cover or pay for is called a formulary. Pharmacy benefit managers, which health insurers contract with to manage drug costs, set these formularies, which determine how much a patient will pay out of pocket for their medication.
PBMs regularly add and remove drugs on their formularies based on their effectiveness, price, demand and available alternatives.
These formularies also dictate copays and coinsurance — the patient’s out-of-pocket costs for each drug.
Getting Squeezed
The title of the GoodRx report — “The Big Pinch” — reflects the trend of the past 14 years that’s resulted in patients being pinched between high drug costs and their health plans’ limiting coverage through prior authorizations.
First, copays and coinsurance have been increasing since 2010, usually after PBMs move certain drugs from one tier to another, according to the report. As well, more American workers are now in high-deductible health plans, which require more out-of-pocket layouts in exchange for lower premiums.
Also, a growing number of people have a separate deductible applied to prescription medications. This is referred to as a pharmacy deductible. These deductibles can be anywhere from $134 to $465 per month.
On top of it all, pharmaceuticals are getting more expensive.
Meanwhile, prior authorization rules imposed by PBMs and health plans require doctors to not only prescribe, but also justify why they are prescribing a medication, which may cause delays and make it more difficult for patients to receive drugs. In some cases, prior authorization may dissuade people from filling their prescriptions.
Eight in 10 doctors surveyed by the American Medical Association said that prior authorization leads to patients abandoning treatment.
Also, if patients encounter too many problems trying to fill a prescription, they may opt for paying out of pocket, which means absorbing the exorbitant cash price of the drug.
Help Your Staff Pick the Right Plan
During this year’s open enrollment, you should do your homework and read your current plan’s formularies to ensure that your needed medications are still covered.
If you are struggling to pay for your medications, you may need to scale up to a more generous health plan, but it will likely cost you more in higher premiums in exchange for a lower deductible and/or lower copays and coinsurance. That’s the trade-off.
If you have questions about open enrollment or covered medications, please give us a call. We are here to help.
What American employers have experienced this year and in 2023.
The higher rates reflect the costs borne by health insurers, which are seeing more claims for care that was postponed during the COVID-19 pandemic and a steady rise in the cost of pharmaceuticals as more innovative and effective drugs come to market, according to the study by PricewaterhouseCoopers.
Additionally, health plans have seen a surge in demand and utilization for behavioral health services, which has been hampered by a limited supply of in-network mental health professionals, who are also demanding higher reimbursement rates.
And while drug costs are rising, some of the medications may actually reduce future health care costs for those taking them. There are also new biosimilar drugs coming to market that cost a fraction of the originals.
Cost Drivers
Thanks to a continuing stream of pharmaceutical breakthroughs that are saving patients’ lives and/or improving their quality of life, insurers have to make coverage decisions. Many of the new drugs are costly, but they may also reduce overall health care costs in the long run as they may reduce the need for expensive intervention and emergency treatments.
Two classes of drugs that are on health insurers’ radar in 2024 and 2025 are:
GLP-1 agonists (annual cost: about $11,000).Various of this category of drugs treat type 2 diabetes, and can assist with chronic weight management and may reduce secondary cardiovascular events.
Most health plans offer coverage of GLP-1 agonists for type 2 diabetes. However, health plans won’t cover them solely for weight management, which is not considered an essential health benefit under the Affordable Care Act.
Central nervous system drugs (annual cost: about $22,000). This includes various drugs treating conditions such as Alzheimer’s, Parkinson’s, multiple sclerosis and schizophrenia.
While these medications may make it difficult for health plans to manage their costs, the report notes that despite the initial cost, health plans may see reduced medical costs as patient health improves.
Mental health services are also driving costs, and they were listed among the top three inflators of drug costs by health plans surveyed for the PwC report.
While the per member per month outlays for mental health services have historically been too low to be considered a cost driver of overall medical costs, spending on mental health has jumped 50% since the pandemic. As a result, behavioral health services are accounting for a greater portion of health plan spending.
The main factors affecting costs are a significant supply and demand imbalance for behavioral health services. Health plans are competing with each other to sign on mental health providers from a pool that is not enough to satisfy demand.
Counterbalancing Costs
There are three trends that could counterbalance some cost increases.
Biosimilars. — Biosimilars are biological products that are “highly similar” to and have “no clinically meaningful differences” from an existing Food and Drug Administration-approved reference product. One of the most recent drugs that has seen a flood of competing biosimilars hit the market is Humira (adalimumab), a medication that reduces the signs and symptoms of moderate to severe rheumatoid arthritis.
One report estimates that the savings generated by biosimilars in 2022 was $9.4 billion in the United States. Another analysis performed in early 2023 projects total savings from biosimilars to range from $125 billion to $237 billion between 2023 and 2027.
Health plans are increasingly focused on reducing wasteful spending, which is forcing them to look at:
Exploring new pharmacy benefit manager models. — This is in light of continuing reports of the country’s largest PBMs actually increasing the cost of medications for payers (health plans, self-insured employers and insureds).
Integrating medical and pharmacy benefits. — An example of this is a health plan pharmacy team identifying when members haven’t picked up prescriptions, aren’t taking medications as prescribed or not refilling prescriptions on time.
Connected benefits allow for real-time medical, behavioral health and pharmacy data analysis to help maximize management of chronic conditions, close care gaps and monitor prescription use and potential interaction.
A study of its own clients by health insurer Health Care Service Corporation found that large employer groups with integrated pharmacy and medical benefits saved an average of $516 per member per year in medical costs over a three-year period.
The Takeaway
As health insurance costs continue to rise, we can work with you to find health plans that will fit your and your employees’ budgets and help you look for actions to take that could have a positive effect on your rates.
According to a study by the Substance Abuse and Mental Health Services Administration, 10% of America’s workers are dependent on one substance or another.
The nation is still battling the biggest drug scourge: opioid and fentanyl. Provisional data from CDC’s National Center for Health Statistics indicate that in 2023 there were an estimated 107,543 drug overdose deaths in the U.S., 81,083 of which were opioid-related. While those are shocking statistics, the majority of addicts are hooked on other drugs or alcohol, and that includes millions of American workers.
A study by the American Addiction Center found that 22.5% of respondents admitted to using drugs or alcohol during work hours. The most common substance used during working hours is cannabis.
Those who work from home at least part of the time are more likely overall to abuse drugs or alcohol than those who work in offices. Overall, people who work from home part-time or full-time are about 10% more likely than people who work full-time in offices to get drunk at work.
As an employer, the costs are great if you have someone on staff who has a substance-abuse problem. Workers with addictions to drugs are alcohol have:
Lower or lack of workplace productivity;
Higher health care costs;
Increased absenteeism and presenteeism;
Diminished quality control;
More disability claims;
Increased workplace injuries;
Lower morale;
Higher job turnover; and
Employee theft.
How Your Health Plan Can Help
If you have an Affordable Care Act-compliant health plan, it will offer access to mental health and substance abuse treatment, which is considered one of 10 essential benefits plans must offer.
The ACA requires health plans to pay for prevention and early intervention as well for substance abuse issues.
Health care plans also have to comply with a “parity” law, which requires them to treat mental health issues the same way they do physical diseases. Since the COVID-19 pandemic demand for mental health services has soared, straining both providers of those services and the health plans.
The Centers for Medicare and Medicaid Services in 2024 also started requiring all ACA-compliant health plans to contract with at least one substance use disorder treatment center and one mental health facility in every county where they are available in the plan’s service area.
What Else Can You Do?
Some employers have tried to help employees tackle their addictions or abuse problems by implementing workplace prevention, wellness and disease-management strategies. These programs improve health, which lowers health care costs and insurance premiums and produces a healthier, more productive workforce.
Considering offering an employee assistance program. These programs offer temporary free access (typically a set amount of sessions) to a number of services like counseling as well as substance abuse assistance. These sessions are confidential and the employer will not know if an employee is accessing them.
Consider offering more accessible substance use management solutions, like digital and telehealth-based solutions. There are a growing number of these types of service providers, which make accessing counselors more convenient and cost-effective.
Offer confidential screenings and assessments. There are a number of screening, brief-intervention and referral-to-treatment modules available to help people confront their drinking or drug use and get the help they need.
Every year employees across the country choose the wrong group health plan from their employer because they don’t understand the coverage and what type of plan is best for their circumstances.
This ends up costing them hundreds if not thousands of dollars in unnecessary medical and premium outlays each year. But you can help them avoid leaving money on the table by educating them with helpful materials and a process that lets them find the plan that is best for their life circumstances.
The 2023 “Aflac WorkForces Report” found that while 51% of employees have a solid understanding of their total annual cost for health care coverage and care, just 39% have a full understanding of their health insurance policy. Additionally, 30% of employees say they need more information surrounding their benefits.
To help your staff choose the plan that best fits them requires an educational effort and outreach, but it should not consume all of your time. Sometimes shorter presentations, resources in print and electronic formats, followed by individual assistance in helping staff pick the right plan is the best approach.
By giving your communications strategy a boost, you can improve employee confidence in their benefits decisions and save a lot of money and headaches along the way.
Educating Employees
Don’t inundate your staff with educational materials that get bogged down in jargon and that are long and complicated. Often clear and concise materials are best, especially ones that use bullet points and infographics.
Benefits experts caution that human resources personnel should not go too far into the weeds in terms of being technical. Instead, provide bite-sized chunks of information that can help them whittle down their choice to a few plans.
The materials should give different scenarios for workers to help them decide on a plan. The documents can point them towards the right type of plan depending on their life circumstances, like:
A 27-year-old single female employee with no health problems, spouse or dependents.
A 46-year-old married father of three young kids.
A 58-year-old divorced woman with high blood pressure and asthma.
One thing that can really help your employees is an online calculator. Most health plans today offer these tools to help employees figure out which plans being offered best fit their needs. They plug in some simple details and the calculator will evaluate all of the plans on offer and recommend which one works best for them.
The tool compares out-of-pocket expenses, copays, coinsurance and premium costs in order to whittle down the plans. Some will even look for plans with the enrollee’s family doctor.
If the calculator doesn’t include this last feature, the employee should take it upon themselves to check before committing to a plan.
Here are the most important items that your workers should be considering:
Their Family Doctor(s)
Even if you are offering the same plans as last year, it’s a good idea to tell your employees to check the plan to see if their personal physician or their kids’ pediatricians are on the list of providers. Health plans make changes every year, so it’s important to check.
Getting the Financial Balance Right
This is important as some people end up spending more up front on higher premiums in exchange for lower out-of-pocket maximums and/or deductibles. But for a young, healthy person that rarely visits the doctor, that may not be the best option and they may be unnecessarily spending too much on premiums for overly generous benefits they may not even use.
You should ask your employees to look at the deductible they had in the last year and see if they reached it. Then:
If they did not, they should consider reducing their premiums in exchange for a higher deductible.
But if they surpassed the deductible or came close, paying more for a plan with a lower deductible might save them money overall. If this is the case, they should also look into the plan’s cost-sharing (copays and coinsurance) rules for medical expenses that kick in beyond the deductible.
Besides that, the deductible levels, copays and coinsurance levels must also be considered. They should understand how much they can be out of pocket.
Worst-Case-Scenario Calculation
It’s important that your employees understand the implications for them if they suffer a medical crisis.
For a full perspective, they can:
Calculate the total premium they will pay for the entire year (their monthly premium contribution x 12), and
Add the out-of-pocket maximum for the plan.
The total is how much they would have to pay overall if they suffered a medical crisis.
One Last Thing…
Finally, you should consider offering your workers a package of other voluntary benefits that will help fill any gaps in their main health coverage.
Supplemental plans you should be offering include accident, critical illness, or long-term care coverage should they have an unexpected accident or serious illness.
