Executive Perspectives

P.O. Box 838

2-4 Main Street
Peterborough, NH 03458
Toll Free: 800-258-5318 Phone: 603-924-9449 Fax: 603-924-4490

Consumer-Driven Health
Plans Show More Patient
Involvement in Their Health
Care

eople enrolled in so-called consumerdriven health plans are more involved in

their health care, according to a new report
from the nonpartisan Employee Benefit
Research Institute (EBRI).
According to the 2014 EBRI/Greenwald &
Associates Consumer Engagement in Health Care
Survey (CEHCS), about 15 percent of the U.S.
population, representing 26 million individuals with
private insurance, is currently enrolled in a
consumer-driven health plan (CDHP). About 11
percent was enrolled in a high-deductible health
plan (HDHP), and 74 percent was enrolled in more
traditional health insurance coverage.
Consumer-driven health plans are a combination of
health coverage with high deductibles (at least
$1,250 for individual coverage in 2014) and taxpreferred savings or spending accounts that workers
and their families can use to pay their out-of-pocket
health care expenses. A handful of employers first
started offering CDHPs in 2001 with HRAs and in
2004 employers were able to start offering health
plans with HSAs. In 2014, about 26 million
individuals with private insurance were enrolled in a
CDHP.
The 2014 CEHCS finds that CDHP enrollees were
more cost conscious in their decision making than
those in traditional plans. CDHP enrollees were
more likely to use resources to pick their health plan

JANUARY 2015:

Consumer-Driven Health Plans Show More

Patient Involvement in Their Health Care

Majority of Employers Offer Voluntary Products, Large

Employers Are Looking at Offering Even More

Employer Survey Finds Reducing Costs,

Increasing Engagement Key 2015 Health
Benefits Challenges

2015 Employer Responsibility Under the

Affordable Care Act

and more likely to use cost information before

getting health care services. CDHP enrollees were
more likely than traditional-plan enrollees to take
advantage of various wellness programs, such as
health-risk
assessments,
health-promotion
programs, and biometric screenings. In addition,
financial incentives mattered more to CDHP
enrollees than to traditional plan enrollees.
The data show that CDHP enrollees are more likely
than traditional-plan enrollees to take advantage of
various wellness programs, such as health-risk
assessments, health-promotion programs, as well
as biometric screenings, said Paul Fronstin,
director of EBRIs Health Education and Research
Program and co-author of the report. Its also clear
that financial incentives matter more to CDHP
enrollees than they do to traditional-plan enrollees.
Other findings in the 2014 CEHCS:

Among individuals enrolled in CDHPs, 57

percent had a health savings account (HSA) or
health reimbursement arrangement (HRA), while
43 percent were enrolled in HAS eligible health

This newsletter is for informational purposes only and should not be considered as legal advice.

AWANE
plans but had not opened an account.
Adults in a CDHP and those in an HDHP were
more likely than those in a traditional plan to
exhibit a number of cost-conscious behaviors.
Specifically, those in a CDHP were more likely
than those with traditional coverage to say that
they had checked whether the plan would cover
care; asked for a generic drug instead of a brand
name; talked to their doctors about prescription
options and costs; checked the price of a service
before getting care; asked a doctor to
recommend less costly prescriptions; talked to
their doctors about other treatment options and
costs; developed a budget to manage health
care expenses; and used an online cost-tracking
tool provided by the health plan.
There is also some evidence that adults in a
CDHP were more likely than those in a
traditional plan to be engaged in their choice of
health plan. Specifically, those in a CDHP were
more likely than those with traditional coverage
to say that they had attended a meeting where
health plan choices were explained; consulted
with their employers human resources (HR)
staff about health plan choices; and were more
likely to have consulted with an insurance broker
to understand plan choices.
________________________________________

Majority of Employers Offer

Voluntary Products, Large
Employers Are Looking at
Offering Even More

ccording to a recent study by Eastbridge

Consulting, nearly three-quarters (71
percent) of employers with 10 or more
employees offer voluntary products, and
the likelihood of offering voluntary increases as the
size of the employer increases. About one-third of
the large employers surveyed are very likely or
likely to add a new voluntary benefit and/or move a
current benefit to voluntary over the next 18 months.

Currently over 80 percent of large

employers offer at least one voluntary
benefit to their employees, most often
critical illness or accident.
Executive Perspectives

January 2015

The top reasons for offering voluntary, according to

the employers surveyed, are cost savings for the
company and employee interest in, and need for,
these type of products. Currently over 80 percent of
large employers offer at least one voluntary benefit
to their employees, most often critical illness or
accident. Large employers include those with 1,000
or more employees.
While the popularity of voluntary benefits at the
workplace continues to grow, the use of both public
and private exchanges to offer those benefits is still
relatively low, states Ginger Bates, Director of
Research at Eastbridge. Most employers (79
percent) still offer benefits the usual way. Of those
using exchanges, about half use private exchanges
and the other half public exchanges. Over one-third
(38 percent) of the employers surveyed indicated
that they are not open to using private exchanges
versus 28 percent that are open to it. However, 35
percent are still unsure of what the future holds in
terms of exchanges, adds Bates.
Following are a few additional findings from the
Opportunities for Voluntary in the Large Case
Market report:

Non-traditional voluntary products (e.g.: pet

insurance, legal plans, ID theft protection, etc.)
have the highest sales potential with large
employers.
Large employers are fairly open to using
exchanges in the future, particularly for both
core and voluntary benefits.
Although more and more employers are
embracing electronic enrollments and benefits
communication, large employers appear to use
these more often.

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Employer Survey Finds

Reducing Costs, Increasing
Engagement Key 2015 Health
Benefits Challenges

ccording to a recent survey by the Midwest

Business Group on Health (MBGH), one of
the nation's leading non-profit business
groups of private and public employers,
over the next two years the top priority for
employers is reducing benefit and health care
costs.
We conduct this employer survey each year to gain
insight and better understanding of employers
views and intentions related to their health benefits,
said Larry Boress, MBGH president and CEO.
Theres a lot of consistency among employers of all
sizes and industries, especially as they plan to avoid
the 2018 excise tax. However, even before the ACA
was enacted, leading employers were annually
evaluating and developing strategies to address
employee health, costs and productivity issues
impacting their bottom line.
Survey findings

While 64% indicated that reducing costs is a

high priority, other top areas of focus include:
avoiding the excise tax in 2018 (59%),
creating effective benefits communications
(59%), creating a culture of health (56%) and
managing specialty drugs (50%).
When asked about key issues for worksite
wellness, employers prioritized increasing
engagement in programs (64%) employee

January 2015

When asked about key issues for

worksite wellness, employers prioritized
increasing engagement in programs
(64%) employee use of preventive
services (44%), and providing effective
weight management programs (38%).

use of preventive services (44%), and

providing effective weight management
programs (38%).
While most employers will continue to offer
PPOs for their health plan options, 46%
indicated that they have implemented cost
shifting strategies such as high deductible
health plans and health savings accounts, and
this increases to 51% for 2015.
Ninety percent of employers indicated their
health plan designs require gateway activities
for employees to access medical plans.
When asked about plans to offer private
exchanges, employers largely indicated that
they will not consider this strategy through
2015 (94%). However, there is a sharp
increase in consideration of this approach in
2016 (21%), 2017 (28%), and 2018 (33%).
________________________________________

2015 Employer Responsibility

Under the Affordable
Care Act

hile the Affordable Care Act does not

require businesses to provide health
benefits to their workers, larger
employers face penalties if they dont
make affordable coverage available. Penalties will
go into effect in 2015 for employers with 100 or
more employees and in 2016 for employers with 50
or more workers.
The employer mandate does NOT apply to small
groups with two to 49 employees. Approximately 96
percent of employers are small businesses with
fewer than 50 workers and therefore exempt from
the employer responsibility provisions. To ensure a
gradual phase-in and assist the employers to whom

Executive Perspectives

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AWANE

January 2015
consecutive six-month period in 2014. In general:

the policy does apply, the final rules provide for

2015, that:

The employer responsibility provision will generally apply to larger firms with 100 or more fulltime employees starting in 2015 and employers
with 50 or more full-time employees starting in
2016.
To avoid a payment for failing to offer health
coverage, employers need to offer coverage to
70 percent of their full-time employees in 2015
and 95 percent in 2016 and beyond, helping
employers that, for example, may offer coverage
to employees with 35 or more hours, but not yet
to that fraction of their employees who work 30
to 34 hours.

A large employer is one where FTs and full-time

equivalents (FTEs) sum to 50 or more. A FT is
one who works 130 hours per month or more
roughly 30 hours per week. Each 120 hours per
month of part-time and seasonal labor
comprises one FTE.
Temporary employees do not count when
determining whether an employer is large or
small. Typically this provision of the law treats
temps as employees of the business from whom
they are leased (the lessor), and not from the
business using the employees services (the
lessee).
Independent contractors are usually not treated
as employees. (There are some exceptions.)

If an owner or family is involved with several

different businesses related or unrelated they
may be treated as a controlled group or affiliated
services group. If so, the FTs and FTEs in the
group will be added together and treated as if they
were one business in determining whether the
employee count is 50 or more. Defining a controlled
group becomes vastly more complex and
ambiguous when different owners hold varying
percentage shares in a group of businesses.

Employer mandate penalties are based on a

sequence of four questions.

How Much Are The Penalties?

If an employer doesnt offer FTs insurance, and if at

least one FT receives federal insurance subsidies in
the individual exchange, the business will pay
$2,000 per FT (minus the first 30).

Is this employer large or small?

If the employer is large, does it offer qualified
health insurance to substantially all full-time
employees (FTs)?
How many, if any, FTs receive subsidies in the
health insurance exchanges?
If the employer is large and has at least one
subsidized FT, how much does it owe in annual
penalties?

Example: a business with 50 FTs, two of whom are

subsidized, would pay $40,000 = $2,000 x (50 30).

The different calculations use different sets of data

from varying subsets of employees. In 2015, an
employers status as large or small will depend
on employment levels during all or part of 2014. An
employer with fewer than 50 employees in 2015
may find itself classified as large because of its
employment patterns in 2014. For 2015, a business
can determine whether it is large by determining
whether it employed an average of at least 50 fulltime employees on business days during any

Executive Perspectives

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