As open enrollment is right around the corner, now is the time to make a plan to maximize employee enrollment and help your staff select the health plans that best suit them.
You’ll also need to make sure that you comply with the Affordable Care Act if it applies to your organization, as well as other laws and regulations.
Here are some pointers to make open enrollment fruitful for both your staff and your organization.
Review What You Did Last Year
Review the results of last year’s enrollment efforts to make sure the process and the perks remain relevant and useful to workers.
Were the various approaches and communication channels you used effective, and did you receive any feedback about the process, either good or bad?
Start Early with Notifications
You should give your employees at least a month’s notice before open enrollment, and provide them with the materials they will need to make an informed decision.
This includes the various health plans that you are offering your staff for next year.
Encourage them to read the information and come to your human resources point person with questions.
Help in Sorting Through Plans
You should be able to help them figure out which plan features fit their needs, and how much the plans will cost them out of their paycheck. Use technology to your advantage, particularly any registration portal that your plan provider offers. Provide a single landing page for all enrollment applications.
Also, hold meetings on the plans and put notices in your staff’s paycheck envelopes.
Plan Materials
Communicate to your staff any changes to a health plan’s benefits for the next plan year through an updated summary plan description or a summary of material modifications.
Confirm that their open enrollment materials contain certain required participant notices, when applicable – such as the summary of benefits and coverage.
Check Grandfathered Status
A grandfathered plan is one that was in existence when the ACA was enacted on March 23, 2010, and is thus exempt from some of the law’s requirements.
If you have a grandfathered plan, talk to us to confirm whether it will maintain its grandfathered status for the next plan year. If it is, you must notify your employees of the plan status. If it’s not, you need to confirm with us that your plan comports with the ACA in terms of benefits offered.
ACA Affordability Standard
Under the ACA’s employer shared responsibility rules, applicable large employers must offer “affordable” plans, based on a percentage of the employee’s household income. For plan years that begin on or after Jan. 1 , 2025, the affordability percentage is 9.02% of household income. At least one of your plans must meet this threshold.
Get Spouses Involved
Benefits enrollment is a family affair, so getting spouses involved is critical. You should encourage your employees to share the health plan information with their spouses, so they can make informed decisions on their health insurance together.
Also, encourage any spouses who have questions to schedule an appointment to get questions answered.
As they wrestle with providing attractive but affordable health care benefits for employees, employers are trying a variety of strategies. A recent report from insurance brokerage Gallagher shows businesses are balancing workers’ physical and emotional health against ever-rising costs.
There are many cost drivers in health care and insurers and employers are in a fine balancing act of trying to keep a lid on costs and also keeping their employees happy. And while firms are leaving no stone unturned in their quest for reducing costs, some are also adding new services employees are keen on.
Here’s what the report found:
Offering More Plans
To combat rising costs, many employers (80%) offer more than one health plan. A growing share of employers offer high-deductible health plans (HDHPs) and health savings accounts (HSAs) to employees. The percentage of companies offering such plans has increased five consecutive years and is now at 56%. At the same time, 24% of employers report more employees choosing HDHPs than the other offered plans.
Employers and employees contribute to the HSAs. When employers contribute, they provide about $500 or more for single coverage and $2,000 or more for family coverage.
Weight-loss drugs such as Ozempic and Wegovy are growing in popularity. However, these drugs (known as GLP-1s) are expensive, and employers are trying to manage the effects of those costs.
Slightly more than half of employers surveyed include weight management in their benefits programs, but they attach strings to the use of weight-loss medications. This may include:
Step therapy, which entails trying other, less expensive yet proven pharmaceuticals and health and fitness regimens first.
Prior authorization before approving their use.
Eligibility requirements. Around one-fifth of employers set eligibility requirements that include a combination of minimum body mass index and comorbid conditions. They do not pay for the drugs for otherwise healthy employees looking to drop a few pounds.
Plan Eligibility and Scope
Despite rising costs, some employers are expanding eligibility for and the scope of their health care plans.
The Gallagher report shows a small increase in the share of employers offering coverage to employees’ domestic partners and to part-time employees, though these remain the minority.
Some are also offering more specialty coverages. For example, more than half cover hearing aids and behavior analysis for employees’ children with autism. A small but growing fraction (17%) cover gene therapy.
Almost half of employers cover some form of treatment for infertility, including drugs, specialist evaluations, in vitro fertilization and other fertilization procedures. However, controversies surrounding some of these procedures have led to a patchwork of state mandates and restrictions. This has made providing these benefits more complex for companies.
Mental Health and Leave
More employers are paying attention to their employees’ mental and emotional states in addition to physical wellness. Most are concerned about staff suffering from burnout and stress.
However, they also believe their managers are not able to recognize the signs. More than a fifth now offer training to managers and human resources staff on identifying warning signs and referring employees for help, and that share has grown in the past two years.
Finally, more firms are offering family-focused leave policies. This recognizes the growing emphasis employees place on work-life balance amid tight labor markets.
Almost 90% offer paid bereavement leave (outside vacation leave,) while almost half provide paid time off to bond with a new child, and 15% provide it for taking care of ill or disabled family members.
The Takeaway
Employers are faced with two difficult realities. The workforce is aging, meaning that retirements will shrink the pool of available skilled workers. At the same time, health care costs are ever-increasing.
To meet both these challenges, employers are using the strategies detailed above, as well as other approaches. Some combination of them will help you compete in the war for talent while protecting your bottom line.
New Centers for Medicare and Medicaid Services rules that take effect Jan. 1, 2025 will significantly affect employees’ decisions on whether to continue staying with your group health plan while eligible for Medicare.
Under changes in Medicare Part D drug plan rules for 2025, once a beneficiary pays more than $2,000 out of pocket for prescription medications, Medicare will fully cover their prescription costs for the rest of the year.
Due to the rule changes, if your drug plan’s maximum out-of-pocket employee cost-sharing surpasses that amount it will not be deemed “credible” under CMS rules, and that would have long-term repercussions for your senior employees.
Why? If someone doesn’t purchase a Part D plan when they are first eligible for Medicare, they will face a 10% penalty on their annual premiums in perpetuity. That penalty increases for each year they fail to enroll in a Part D plan.
There is a provision in the law for Medicare-eligible workers to stay on their employer’s group health plan if that plan provides at least as thorough a level of coverage as Medicare does. Those that do are considered “credible” coverage.
However, if an employee’s plan does not meet the new Part D rules, it may be considered “non-credible” and they would be subject to Part D penalties for failing to enroll in a credible plan.
What You Should Do
Employers are required to inform affected employees if their plan is credible or non-credible before Medicare Annual Open Enrollment starts on Oct. 15. This way, the worker is given time to elect or decline Medicare Part D coverage based on their employer’s group benefit plan’s prescription benefits and avoid possible penalties. You can find templates of those notices here.
If your current plan doesn’t meet their needs, please contact us to discuss strategies for designing one that caters to affected workers and fits with your company needs and budget. The second option is not to make a change, and to inform your Medicare-eligible staff that your plan is non-credible.
Finally, you should hold a meeting with affected staff to inform them of the changes and if any of the plans you offer comply with the new rules.
Call us so that we can gauge if your health plan, or plans, offer credible or non-credible drug coverage for your Medicare-eligible staff.
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.
