Covered California announced the rates and expansion plans for its small group health insurance exchange. The statewide weighted average rate increase is 5.9%, for employers and their employees beginning Jan. 1, 2017, which is down from the 7.2% increase in 2016.
Starting Jan. 1, Blue Shield of California will take its Full PPO plan statewide across all metal tiers with coverage available to employees working out-of-state. Blue Shield of California will also offer a new plan, Trio HMO Network, powered by an accountable care organization (ACO). Additionally, Kaiser Permanente will bring coverage to Santa Cruz County.
Kirk Whelan, director of Individual and Small Business Outreach and Sales said, “The expansion of the small group market is allowing thousands of businesses to take advantage of the new control and choice now offered by Covered California for Small Business. Employers can select up to two adjoining metal tiers and then set their contribution level at one tier or the other. Meanwhile, the employee — knowing the employer’s contribution level — has the flexibility to choose which of the two tiers fits best with the employee’s budget and needs.” Whelan also noted that Covered California for Small Business operations are sound, with new employers being enrolled within three days of filing an application, and a year-over-year retention of almost 90%. There is also growing interest and participation among insurance agents certified to sell plans on the exchange. “We’ve seen a near doubling since 2014 in the number of agents writing policies, with many agents continuing to enroll multiple groups throughout the year,” Whelan said.
Covered California for Small Business also announced the addition of Rogers Benefit Groups to the ranks of general agents working with the exchange. The company joins general agents Claremont Insurance Services, Dickerson Employee Benefits, LISI and Warner Pacific. All six carriers participating in 2016 will return for 2017: Blue Shield of California, Chinese Community Health Plan, Health Net, Kaiser Permanente, Sharp Health Plan and Western Health Advantage. More than 28,000 people have insurance through Covered California for Small Business, which makes it one of the largest Small Business Health Options Programs in the nation.
Peter Lee, executive director of Covered California pointed to the moderate rate change for Covered California for Small Business. “While some have focused on large potential increases in some parts of the country, there has been little attention paid to the fact that 2017 is a transition year for the individual market. It is important to remember how much of an impact the end of the temporary reinsurance program is having on rates, and the relatively low increase for small business helps focus attention on what stability can look like.” The reinsurance program was designed to moderate rate increases during the first three years while exchanges were being established. The American Academy of Actuaries estimates the removal added up to 7% to premiums for 2017. “Take that one-time adjustment away and the rate changes for individual and small group marketplaces in California would be nearly identical,” he added.
Businesses with up to 100 employees can apply for health insurance coverage for their workers through Covered California for Small Business. Federal tax credits may be available to employers providing insurance through Covered California for Small Business. For more information, visit www.CoveredCA.com/forsmallbusiness.
Workers Have Increased Cost Sharing
Medical insurance costs are contributing to working Americans de-valuing their employee benefits in 2016, according to a survey by the Guardian. Employers are asking employees to shoulder a larger share of costs: 54% are implementing HDHPs (up from 48% in 2014), and 49% are increasing cost sharing (up from 43%)
Benefits are still important. Three in five workers contribute to their financial security. But, they value them less in 2016 Generation X and middle income workers driving the decline. An unintended consequence of this financial stress is the risk working Americans are taking with their health. One in three employees with an HDHP has done the following:
- Skipped a doctor visit.
- Delayed a recommended procedure/surgery.
- Failed to fill a prescription.
- Avoided a blood test or x-rays.
HDHPs may initially help rein in medical costs, but it could be at the risk of higher catastrophic medical and disability claims. Employers that offer HDHPs can help employees fund out-of-pocket expenses through health savings accounts (HSA) and supplemental health benefits, but just four in 10 private employees with an HDHP also offer an HSA. For more information, visit this link.
Health Benefits in 2016
This year marks the fifth straight year of relatively low premium growth in health plans among private and non-federal public employers with three or more workers. Family coverage is growing 3% to 4% each year. However, deductibles continued to grow in 2016, according to a survey by the Kaiser Family Foundation and the Health Research & Educational Trust (HRET).
Eighty-three percent of workers have a general annual deductible compared to 74% five years ago. The average single deductible increased from $991 to $1,478. These higher deductibles have likely moderated premium increases.
ACA implementation is not causing major disruptions in the employer market. The employer responsibility provision was fully implemented in 2016. Virtually all employers that have 50 or more FTEs offer coverage that meets affordability and minimum value standards. Few employers changed working hours or hiring as a result of the provision. In fact, more took actions that increased coverage offers. Most large employers, have analyzed how the high cost plan tax will affect them if it takes effect in 2020. About 12% have taken some action in response to the tax. but few small employers have done so.
There are several emerging issues to watch. One is the growth of HDHPs.
After lull, they have seen significant enrollment growth in the past two years. Twenty-nine percent of workers are in a high deductible health plan (HDHP) with a savings option in 2016 compared to 17% in 2011. In the past two years, HDHP enrollment grew 8% while PPO enrollment fell 10%. These plans have higher deductibles, but many employers contribute to HAS or HRAs to offset cost sharing.
Another issue is whether more small employers will stop offering health coverage.
These employers are not required to offer coverage under the ACA. In some cases, their workers have more affordable options in public marketplaces, which could encourage employers to stop offering coverage.
Single Employee Premiums
- Premiums for employer sponsored single coverage remained stable at $6,435.
- The average single premium contribution is $1,129.
- Workers contribute 18% of the premium for single coverage.
- At firms with a high percentage of lower-wage workers, employees contribute 23% of the premium compared to 18% at firms with fewer lower-wage workers.
- Workers at small firms have lower average contributions for single coverage than do people who work for large employers ($1,021 vs. $1,176).
- 62% of workers are in plans that require them to make a premium contribution of 25% or less; 2% have a contribution of more than half of the premium; 12% have no contribution.
Family Employee Premiums
- Premiums for employer sponsored family coverage were $18,142 in 2016. The average premium was $17,546 at small firms (three to 199 workers), compared to $18,395 at large firms (200 or more workers). Premiums rose 3% since 2015, 20% since 2011, and 58% since 2006.
- 17% of workers are in a plan with an annual total premium of at least $21,771 (120% or more of the average family premium). Nineteen percent of workers are in a plan with a family premium of less than $14,514 (less than 80% of the average family premium).
- People who work for small firms contribute 39% of the family premium while
- people who work for large firms contribute 26%.
- 3% of workers don’t have no premium contribution for family coverage; 45% contribute 25% or less; and 15% contribute more than half of the premium.
- Thirty four percent of people who work for small firms contribute more than 50% of the total family premium compared to 7% of those who work for large firms.
- Forty-five percent of small employers and 18% of large employers provide the same contribution for single and family coverage, which means that employees pay the full cost to enroll family members.
- Forty-five percent of small employers and 67% of large employers make a higher contribution for family coverage than for single coverage.
- The average annual family premium contribution for 2016 is $5,277.
- Workers’ average contribution has increased 78% since 2006 and 28% since 2011.
- Workers at small employers have higher average contributions ($6,597 vs. $4,719).
High Deductible Health Plan Premiums
Compared to all plan types, premiums for high-deductible health plans with a savings option are considerably lower for single coverage at $5,762 and family coverage at $16,737. These premiums don’t include employer contributions to workers’ health savings accounts (HSAs) or health reimbursement arrangements (HRAs).
Forty-eight percent of workers are in a PPO, which is the most common plan type in 2016. Twenty-nine percent are in a high-deductible plan with a savings option; 15% are in an HMO; 9% are in a POS plan; and less than 1% are in an indemnity plan. Fifty-two percent of workers who work for large employers are in PPOs, compared to 39% who work for small employers. Over the past two years, enrollment in PPOs has fallen 10%. At the same time, enrollment has risen 8% in HDHPs with a savings option. This has reduced the growth of single and family premiums by roughly a half percent each of the past two years.
Employee Cost Sharing
Eighty-three percent of workers have to meet an annual deductible for single coverage before the plan pays for most services. The average deductible for single coverage is $1,478, compared to $1,318 last year. Sixty-five percent of people who work for small employers and 45% of people who work for large employers have a deductible of at least $1,000 for single coverage, similar to the percentages last year.
Forty-one percent of people who work for small employers have a deductible of at least $2,000 compared to 16% of people who work for large employers. Even workers without a deductible often have other types of cost sharing, such as copayments or coinsurance.
Growing deductibles in PPOs and other plan types generally increase enrollee out-of-pocket liability. But the shift in enrollment to An HDHP with a savings option does not necessarily do so because most enrollees get an account contribution from their employers, which reduces the high cost sharing. Fourteen percent of people with a health reimbursement arrangement (HRA) and 7% of people with a health savings account (HSA)- get an account contribution for single coverage that’s at least equal to their deductible.
Forty-seven percent of those enrolled in an HDHP with an HRA get account contributions that would reduce their deductible to less than $1,000 as do 28% of those with an HSA-qualified HDHP. If you reduce the deductibles that workers have by employer account contributions, the percentage of workers with a deductible liability of $1,000 or more would be 38%.
The out-of-pocket liability after HRA/HSA contributions is $1,000 or more.
For primary care, 67% of workers have a copayment for doctor visits and 25% have coinsurance. For specialty care, 66% have a copayment and 26% have coinsurance. The average in-network copayments are $24 for primary care and $38 for specialty care. The average in-network coinsurance is 18% for primary and 19% for specialty care. These amounts are similar to those in 2015.
Most workers have additional cost sharing for a hospital admission or an outpatient surgery:
- After any general annual deductible is met, 64% of workers have a coinsurance and 14% have a copayment for hospital admissions.
- The average coinsurance rate for hospital admissions is 19%.
- The average copayment is $282 per hospital admission.
- The average per diem charge is $281.
- The average separate annual hospital deductible is $898.
- For outpatient surgery 66% percent of workers have coinsurance and 17% have copayments.
- The average coinsurance rate for outpatient surgery is 19% and the average copayment is $170.
Ninety-eight percent of workers have limited in-network cost sharing for single coverage, but there is considerable variation in dollar limits. Fourteen percent are in a plan with an annual out-of-pocket maximum of less than $2,000 for single coverage while 18% are in a plan with an out-of-pocket maximum of $6,000 or more.
Availability of Employer-Sponsored Coverage
Fifty-six percent of employers offer health benefits to at least some workers, similar to percentages in recent years. But fewer smaller employers offer coverage (10 to 49 workers). This trend precedes the ACA coverage expansions. Only 46% of employers with three to nine workers offer coverage compared to virtually all employers with 1,000 or more workers. Eighty-nine percent of workers are in a firm that offers health benefits to at least some employees, similar to recent years.
Taking full effect in 2016 is the ACA provision that requires employers with at least 50 full-time equivalent employees (FTEs) to offer health benefits to full-time workers. Ninety-seven percent of employers with at least 50 FTEs offer coverage to at least 95% of their employees who work 30 hours per week or more. Ninety-six percent offer a plan that meets the ACA standards for affordability and minimum value.
Employers have done or are planning to do the following:
- 2% make some full-time employees part-timers so that they would not be eligible for health benefits.
- 7% make some part timers full time so that they would become eligible for health benefits.
- 4% Reduce the number of full-time hires because of the cost of providing health benefits.
- 2% increase the waiting period before new employees become eligible for benefits.
- 12% extend eligibility for health benefits to workers who were not previously eligible.
- 2% extend eligibility for more comprehensive benefits to employees previously eligible only for limited benefit plans.
Coverage for Spouses and Unmarried Partners
Virtually all of the employers offer coverage for spouses, although 13% of small employers and 5% of large employers say a spouse who is offered coverage from another source ineligible. Five percent of small employers and 8% of large employers say that a spouse who is offered coverage from other sources can only enroll under certain conditions. Twenty-seven percent of employers offer family coverage to unmarried opposite-sex partners, with an additional 28% saying that they have not encountered the situation. Forty-two percent of large employers offer coverage to unmarried opposite-sex partners compared to 26% of small employers.
- 24% of large employers offer health benefits to retirees compared to 23% in 2015.
- 92% of large employers offer health benefits to workers retiring before 65, and 72% offer health benefits to Medicare-age retirees.
- 6% of large employers offer some retiree benefits through a corporate or private exchange, and 17% are considering changing the way they offer retiree coverage because of the new health insurance exchanges established by the ACA (down from 26% in 2015).
Fourteen percent of large employers have high performance or tiered networks in their largest health plan, down from 24% last year. These programs identify providers that are more efficient or have higher quality care, and may provide financial or other incentives for enrollees to use the selected providers. Seven percent of employers offer a health plan with a narrow network, similar to the percentage reported last year. There is no difference between small and large employers on this measure. Six percent of employers say that they or their insurer has eliminated a hospital or health system from any of their plans’ networks to reduce costs.
Thirteen percent of people who work for small firms and 82% of those who work for large firms are in partially or completely self-funded plans, similar to last year.
Two percent of employers with at least 50 employees offer their health benefits through a private exchange. Eighteen percent of employers with at least 50 workers that don’t offer a private exchange have considered it as have 28% with at least 5,000 workers.
Professional Employment Organizations
Four percent of small employers that offer health benefits offer coverage through a Professional Employer Organization, similar to last year.
Grandfathered Health Plans
Twenty-three percent of employers offer at least one grandfathered health plan in 2016, down from 35% last year. Twenty-three percent of workers are in a grandfathered health plan, similar to the percentage in 2015.
Thirty-two percent of small employers and 59% of large employers offer a health risk assessment; and 54% offer a financial incentive to complete the assessment. The incentives include: offering lower premium contributions or cost sharing (51%); requiring a completed health risk assessment to be eligible for other wellness incentives (44%); and offering cash, contributions to health-related savings accounts, or merchandise (60% of employers).
Twenty percent of small employers and 53% of large employers offer biometric screenings. Fifty-nine percent of large employers give employees an incentive to complete a screening. Fifty-two percent of large employers offer premium contributions or cost sharing; 32% require a completed biometric screening to be eligible for other wellness incentives; 56% make cash contributions to health-related savings accounts; and 56% offer merchandise. Fourteen percent have financial incentives for employees to meet biometric outcomes, such as a targeted body mass index (BMI) or cholesterol level. Fifteen percent of workers are in a plan that requires tobacco users to contribute more towards the premium. Forty-six percent of small employers and 83% of large employers offer a program in at least one of these areas: smoking cessation, weight management, or behavioral or lifestyle coaching. Three percent of small employers and 16% of large employers collect health information from employees through wearable devices, such as a Fitbit or Apple Watch.
Forty-two percent of large employers with a wellness programs offer a financial incentive to participate in or complete the program. Thirty-four percent of the large employers with an incentive offer lower premium contributions or cost sharing; 76% offer cash, contributions to health-related savings accounts, or merchandise; and 14% offer some another type of incentive.
Large employers offer these maximum incentives:
- 26% less than $150
- 35% from $150 to $500
- 23% from $500 to $1,000
- 9% from $1,000 to $2,000
- 7% $2000 or more.
Thirty-nine percent of large employers cover some health care services through telecommunication; and 33% of them offer a financial incentive to get services through telemedicine.
Retail Health Clinics
Sixty percent of small employers and 73% of large employers cover services in retail health clinics, such as those in pharmacies and supermarkets. Ten percent give workers a financial incentive to get services in a retail clinic instead of visiting a traditional physician’s office.
On-Site Health Clinics
Five percent of the employers with at least 50 employees have an on-site health clinic. Eighty-six percent of those with an onsite clinic provide some services for non-work-related illnesses. Employers with at least 1,000 workers are more likely to have an on-site health clinic than are smaller employers (25% vs. 4%). For more information, visit kff.org.
Expanded Fiduciary Protection
MassMutual’s Fiduciary Assure program provides sponsors with different levels of support, greater flexibility, and more investment choices than typically available through fiduciary investment support services. Under the 3(38) service, sponsors can allocate certain fiduciary investment responsibilities to Envestnet. With the 3(21) service, sponsors share their fiduciary investment responsibility with Envestnet. For more information, visit massmutualatwork.com.
Fiduciary Planning Guide
MassMutual is introducing a digital fiduciary planning guide and calendar that helps advisors and sponsors track key fiduciary filing dates for defined contribution and defined benefit plans. The guide contains key dates that plan fiduciaries should be aware of related to plan filings, notices, distributions, testing and reporting requirements. For more information, visit http://www.massmutual.com.
Hospital Indemnity Plan
Bankers Life and Casualty Company introduced a hospital indemnity insurance plan. It provides cash benefits for hospitalization due to accidental injury or sickness. It can help cover out-of-pocket expenses that are typically not covered by private health insurance or Medicare, including deductibles and copays. The product can be paired with any major individual or employer-sponsored health plan. It pays fixed dollar cash benefits directly to the policyholder. For more information, visit bankerslife.com.
BenefitMall is offering one free year of payroll processing for new customers during September and October. BenefitMall will also be hosting an ACA Webinar on Wednesday, September 28. For more information, visit benefitmall.com.
Annuity With an LTC Feature
Genworth is offering IncomeAssurance, an annuity with long-term care features. The product is designed for people 70 or older who may need immediate care, but are too old or sick to purchase long-term care insurance. Unlike traditional long-term care insurance, you cannot be turned down due to your health; there are no claims to file or on-going health evaluations; and the income can be used for any purpose. Because this is a single-premium annuity, consumers don’t have to worry about LTC premium increases. For more information, visit genworth.com.
Webinar on Selling Annuities
On Thursday, September 29 the National Assn. of Fixed Annuities will provide interesting and entertaining insights about key trends and in annuity sales to consumer attitudes. It will be held 8:30 a.m. Pacific Time. For more information, visit NAFA.com.