Wellness Based Incentives: Creating Culturally Sensitive Outcome Based Premium Differentials

Transcription

1 Bottom Line Driven Health Benefits Planning : Creating Culturally Sensitive Outcome Based Premium Differentials Innovation. Dedication. Knowledge. Purpose. Integrity. Vision. Talent. Results.

2 Jeff Schultz Vice President BeneCo of Wisconsin ext

3 Creating Culturally Sensitive Outcome Based Premium Differentials What we will not cover: Prediction on ACA staying power Specifics of wellness program design Which wellness vendors to select -3-

4 Creating Culturally Sensitive Outcome Based Premium Differentials What we will cover: What the research says. Why wellness may be your best defense. Reasons your risk pool still matters. How ACA is a game changer. What plan sponsors should do now. Application for ALL EMPLOYERS -4-

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6 Creating Culturally Sensitive Outcome Based Premium Differentials Why do we do wellness anyways? -6-

7 Creating Culturally Sensitive Outcome Based Premium Differentials Why do we want to improve our employees and dependents health risk? -7-

8 Creating Culturally Sensitive Outcome Based Premium Differentials It s ALL about the risk. -8-

9 2014 Small Market: Scenario 1 Merge small group and individual risk pools. Individual rates same as small group rates. Disband Group Plan Small Employers 1-50 Consider Self-Funding Self-Funded Arrangement -9-

10 2014 Large Market: Scenario A Mid to High Wage Markets Large Employers Mid to High Wage Markets Maintain Group Plan Most Likely Traditional Self-Funded or Fully Insured Plan Less Likely Private HIX with Group Products -10-

11 Insure Low Wage FT Workers Fund to the Single Rate $260 avg. cost vs. $250 fine Eliminate Low Wage Eligibility FT to PT for Low Wage Jobs $0 cost and $0 fine 2014 Large Market: Scenario B Low Wage Markets Maintain Group Plan Traditional Self-Funded or Fully Insured Plan Private HIX with Group Products Disband Group Plan $167 fine -11-

12 Creating Culturally Sensitive Outcome Based Premium Differentials Even with Exchanges, for most plans It s still ALL about the risk. -12-

13 How will ACA potentially change my risk? The New Frontier: Subsidy Eligible Workforce Medicaid eligible free or almost free Wage earners less than $44,000 Government subsidy for exchange purchase Wage earners between $31,000 and $92,

14 Family of 4 Analysis* Which Employees are Subsidy or Medicaid Eligible? (400% of FPL**) $92,200 and above Not Eligible for Premium Subsidy (138% to 400% of FPL) $31,809 to $92,200 Not Eligible for Premium Subsidy due to Employee Contributions Not Exceeding 9.5% -Affordable- Eligible for Premium Subsidy due to Employee Contributions at 9.5% or higher -Unaffordable- Premium Contribution as a percent of household income 0.0% to less than 9.5%*** 9.5% and above*** (Under 138% of FPL) $0 to $44,680 For States with No Medicaid Expansion: **** Not Eligible for Premium Subsidy due to Employee Contributions Not Exceeding 9.5% -Affordable- For States with No Medicaid Expansion: **** Eligible for Premium Subsidy to 100% of FPL due to Employee Contributions at 9.5% or higher -Unaffordable- Medicaid Eligible No Employer Penalties for Medicaid Enrolled Employees Medicaid Eligible No Employer Penalties for Medicaid Enrolled Employees * For larger families add $3,740 for each additional person. ** 2012 Federal Poverty Level. Note: Single 100% =$11,170. *** Employer s Plan Based on Employee-Only or Single. **** States are no longer required to expand Medicaid to 138% Federal Poverty Level. There may be additional employer penalty exposure down to 100% Federal Poverty Level. Red text indicates employer penalties may apply.

15 Potential Adverse Outcome: Play AND Pay trap Low wage earners migrate out of plan to Medicaid. Mid wage earners receive subsidy and go to exchange. More tenured workforce remains on plan. Lower headcount and higher unit cost ($PEPY or $PMPM) is possible. -15-

16 Avoiding the Potential Adverse Outcome Play AND Pay trap Playing isn't enough Thorough analysis and understanding of subsidy and migration scenarios. Create strategy to enhance/incent/maintain risk pool. Examine wellness incentives. -16-

17 How will ACA potentially change my risk? New options for coverage that never existed now exist. Plan sponsors will have to think like never before: Go on the offense to retain attractive risk. Possibly allow poor risk to leave. -17-

18 What is my plan s response? Examine risk pool preservation, enhancement and wellness strategies. Expansion of Wellness Incentives: ACA codifies 30% differential based on outcomes. Differential is total cost not premium cost. Tobacco surcharge increases differential to 50%. -18-

19 What is my plan s response? Examine wellness and risk pool preservation and enhancement strategies Carriers can t underwrite but plans can Lower headcount and lower cost per employee is possible. Leveraging these concepts can put you in a position to win. -19-

20 Common Wellness Strategies Premium differentials based on participation. Loss of employer funding for non-participants. Incentives to improve scores. -20-

21 Types of Wellness Programs On June 3, 2013, the Departments of the Treasury, Labor, and Health and Human Services jointly issued final rules relating to wellness programs. Defined wellness programs into two types: Participatory Health Contingent Activity Based Outcome Based Participatory wellness programs either do not provide a reward or do not include any conditions for obtaining a reward that are based on an individual satisfying a standard related to a health factor. Examples include programs that reimburse employees for all of part of the cost of fitness center and diagnostic testing programs that provide a reward for participation and do not base any part of the reward on outcomes, or programs that provide incentives for employees to complete an HRA or Biometric Screen. -21-

22 Types of Wellness Programs Health-contingent wellness programs require an individual to satisfy a standard related to a health factor to obtain a reward. Activity-only wellness programs These require an individual to perform or complete an activity related to a health factor in order to obtain a reward but do not require an individual to attain or maintain a specific health outcome. Examples include: walking, diet or exercise programs, Outcome-based wellness programs These require an individual to attain a specific health outcome (such as not smoking or attaining certain results on biometric screenings) in order to obtain a reward. Examples include programs that test individuals for specified medical conditions or risk factors (such as high cholesterol, high blood pressure, abnormal BMI or high glucose level) and provide a reward to employees identified as within a normal or healthy range, while requiring employees who are identified as outside the normal or healthy range (or at risk) to take additional steps (such as meeting with a health coach or complying with a health care provider s plan of care) to obtain the same reward. -22-

23 Common Wellness Strategies 80 % offer an incentive for completing a health risk questionnaire. 10 % of employers provide a reward for improving on results of the questionnaire. 60 % provide an incentive for completing the screening. Less than 10 % provide anything when an individual takes action on the results. Aon Hewitt Health Care Study

24 Common Wellness Strategies What are common premium or incentive differentials? -24-

25 What Does ACA Permit? 100% variance on participation (always there). 30% (possibly 50%) differential based on outcomes. NOT 30% difference in premium cost!!!!! -25-

26 What Does ACA Permit? Examples: Cobra rates: $300 single $1,200 family 25% EE contribution Permitted variance based on participation: $300 single $1,200 family Permitted variance based on outcomes: $300 x 30% or $90; $1,200 x 30% or $400 So What? -26-

27 Creating Culturally Sensitive Outcome Based Premium Differentials ACA 30% Wellness Surcharge COBRA Rates 25% 30% Total Premium Total Premium Annual Contribution Surcharge Achiever Non-Achiever Difference Single $300 $75 $90 $75 $165 $1,080 Family $1,200 $300 $360 $300 $660 $4,

28 Creating Culturally Sensitive Outcome Based Premium Differentials ACA 50% Wellness Surcharge COBRA Rates 25% 50% Total Premium Total Premium Annual Contribution Surcharge Achiever Non-Achiever Difference Single $300 $75 $150 $75 $225 $1,800 Family $1,200 $300 $600 $300 $900 $7,

29 What Does ACA Permit? New Guidance in June, ACA affordability test based on lowest cost plan single earnings to single contribution calculation. Tobacco use wellness penalties are NOT a part of the calculation. Other wellness penalties ARE a part of the calculation. -29-

30 WHAT IS MY PLAN S RESPONSE? -30- Employer A has an outcome based wellness program. Members who score 70+ points on their Biometric screen or improve by 5 points are considered Achievers. All others are considered Non-Achievers Achievers pay $100 per month for their premium while non-achievers pay $300 per month. When the affordability calculation is performed, the government says plan must assume all members are Non-Achievers even if they are achievers. Therefore, the affordability calculation for all employees would be based upon a $300 per month premium.

31 WHAT IS MY PLAN S RESPONSE? Same scenario as the previous slide except tobacco users are charged an additional surcharge. Their premium is $500 per month. Achievers pay $100 per month for their premium while non-achievers pay $300 per month and tobacco users pay $500 per month. The affordability calculation for all employees would still be based upon a $300 per month premium. The law does not assume all members are smokers. -31-

32 WHAT IS MY PLAN S RESPONSE? Does the new guidance Kill my wellness plan? Make all my plans unaffordable -32-

33 WHAT IS MY PLAN S RESPONSE? Does the new guidance Change my participation based program into a outcomes based program? -33-

34 WHAT IS MY PLAN S RESPONSE? Strategy thoughts to consider Assuming aggressive outcome based wellness differentials, what's my cost per employee now vs the tax adjusted penalty? Make all my plans unaffordable -34-

35 WHAT IS MY PLAN S RESPONSE? Strategy thoughts to consider What's the possibility of removing any wellness plan connection to the health plan? -35-

36 WHAT IS MY PLAN S RESPONSE? Strategy thoughts to consider What's are the new alternative reasonable standards and how will my plan be forced to comply? -36-

37 WHAT IS MY PLAN S RESPONSE? Strategy thoughts to consider If I think this is all too complicated, and we dump our wellness plan what will my risk look like? -37-

38 What is the Potential ROI? # of Employees: 100 Cost Differential for Adverse Risk Migration off Plan, 100 Employees Better Risk Adverse Risk 35% 65% 35% 65% 35% 65% Better Adverse Risk Risk 40% 60% 40% 60% 40% 60% Better Adverse Risk Risk 45% 55% 45% 55% 45% 55% 65% Adverse Risk 60% Adverse Risk 55% Adverse Risk Adverse Risk Cost Variance Better Risk Cost PEPY Adverse Risk Cost PEPY No Change Lose 20% Adverse Risk Lose 40% Adverse Risk Lose 60% Adverse Risk Total Cost Avg Cost PEPY Total Cost Net Total Avg Cost Cost PEPY Net Avg Cost PEPY Total Cost Net Total Avg Cost Cost PEPY Net Avg Cost PEPY Total Cost Net Total Avg Cost Cost PEPY 20% $7,500 $9,000 $847,500 $8,475 $730,500 $117,000 $8,397 $78 $613,500 $234,000 $8,291 $184 $496,500 $351,000 $8,139 $336 30% $7,500 $9,750 $896,250 $8,963 $769,500 $126,750 $8,845 $118 $642,750 $253,500 $8,686 $277 $516,000 $380,250 $8,459 $503 40% $7,500 $10,500 $945,000 $9,450 $808,500 $136,500 $9,293 $157 $672,000 $273,000 $9,081 $369 $535,500 $409,500 $8,779 $671 20% $7,500 $9,000 $840,000 $8,400 $732,000 $108,000 $8,318 $82 $624,000 $216,000 $8,211 $189 $516,000 $324,000 $8,063 $338 30% $7,500 $9,750 $885,000 $8,850 $768,000 $117,000 $8,727 $123 $651,000 $234,000 $8,566 $284 $534,000 $351,000 $8,344 $506 40% $7,500 $10,500 $930,000 $9,300 $804,000 $126,000 $9,136 $164 $678,000 $252,000 $8,921 $379 $552,000 $378,000 $8,625 $675 20% $7,500 $9,000 $832,500 $8,325 $733,500 $99,000 $8,242 $83 $634,500 $198,000 $8,135 $190 $535,500 $297,000 $7,993 $332 30% $7,500 $9,750 $873,750 $8,738 $766,500 $107,250 $8,612 $125 $659,250 $214,500 $8,452 $286 $552,000 $321,750 $8,239 $499 40% $7,500 $10,500 $915,000 $9,150 $799,500 $115,500 $8,983 $167 $684,000 $231,000 $8,769 $381 $568,500 $346,500 $8,485 $665 Net Avg Cost PEPY -38-

39 What is the Potential ROI? $8,000 PEPY cost For every 100 employees 80/20 risk mix 40% cost difference between risk groups Lose 50% of higher risk Reduces PEPY cost by $267 or 3.3% Reduces total costs by $105,000 (net $75,000 after penalties) -39-

40 What is the Potential ROI? $9,000 PEPY cost 400 employees 60/40 risk mix 50% cost difference between risk groups Lose 75% of higher risk Reduces PEPY cost by $1,387 or 15.4% Reduces total costs by $1,728,000 (net $1,368,000 after penalties) -40-

41 What do I do now? If your haven't started get going. Check these thoughts against company philosophy and culture. Share the rationale with employees. Implement objective measure for outcomes. Implement programs to obtain full engagement. Understand your risk pool and profile. Measure and manage outcomes. Developing a 2-5 year strategy. Cast vision to your employees. Communicate with employees well and often. -41-

42 Avoiding the Potential Adverse outcome Play AND Pay win Better risk pool Better outcomes Healthier, more productive employees Regardless of headcount change lower $PEPY costs -42-

43 Pay or Play Webinar Series Series: Course Level Date Time Top 10 Frequently Asked Questions about ACA (Rebroadcast) 101 2/13/2014 2:30-4:00 Top 10 Frequently Asked Questions about ACA (Rebroadcast) 101 3/12/2014 9:00-10:30 Top 10 Frequently Asked Questions about ACA (Rebroadcast) 101 4/16/ :00-11:30 Top 10 Frequently Asked Questions about ACA (Rebroadcast) 101 5/14/2014 9:00-10:30 To Register:

44 ACA Learning Series: Course Level Date Time What You Need to Know to Pass a DOL Audit 300 2/19/ :00-11:00 What Do the Updated Regs Mean To Our Company and Our ACA Strategy Cadillac Tax: Creating a Glide Path to Minimize the 2018 Excise Tax Impact Top 5 Most Inaccurate Assumptions about the ACA and How to Avoid Them 313 3/19/ :00-11: /23/ :00-11: /28/ :00-11:00 To Register:

45 Avoiding ACA s Cadillac Tax: Five Most Costly Benefit Plan Misconceptions that Employers Have: Misconception #1: Plan Design is the Only Way I Can Reduce Plan Expenses Course Level Date Time 300 4/1/ :00-11:00 Misconception #2: My PBM Doesn't Matter 300 4/24/ :00-11:00 Misconception #3: Wellness Doesn't Produce an ROI 300 6/3/ :00-11:00 Misconception #4: All Care Management/Utilization Review Firms Are the Same 300 7/15/ :00-11:00 Misconception #5: My Employees Will Never Understand Their Benefits and Engage 300 8/5/ :00-11:00 To Register:

46 We are grateful AM 620 WTMJ has asked BeneCo to host a radio series to educate listeners on how best to tackle the ins and outs of the Affordable Care Act (ACA). Focused primarily on educating: Business Owners, CEO's, CFO's and HR professionals; we will help them determine if ACA is a "Top 3" or "Top 30" business priority. Tune in to hear us discuss critical ACA challenges to business on February 16th from 8:00-9:00pm. Be sure to listen for the advertisements! -46-

47 MRA s 2014 Health Care Implementation Workshop Series Exclusive Focus on ACA Measurement, Administrative & Stability Periods Overview: Confused about the various safe harbor periods? Do you have more questions than answers? While the regulations seem simple in concept, putting these periods on paper creates a wave of questions about various classes and types of employees and scenarios. This session s exclusive focus is helping participants leave with their periods determined and ready. Learning Objectives: Learn which period length options works best for your organization Explore the pros and cons of various time period selections Understand how the periods impact different classifications of employees Arrive with your workplace specific questions Leave with your periods determined and ready To assist in your preparation, listed below are some suggested additional workshop materials: We would like to have each participant supplied with the knowledge and practical tools they will need to return to their workplaces with a thorough understanding of how to apply what they have learned. Practical takeaways including examples and decision-making flowcharts To-do-checklists or guides that will reinforce steps to be taken Case studies or survey information regarding what other employers are doing Links to useful Internet resources March 17th, :30am 11:00am -47-

48 You asked for it ACA Impact Study How will ACA impact my organization? What do I need to plan for? Free initial consultation Fee for service basis based on plan complexity ACA Sustainability Analysis How do I create a long term sustainable ACA cost strategy and still comply? Fee for service basis based on plan complexity -48-

49 Ask us about Haiti The work: Orphan care and sponsorship, tent city refugee relocation and community development, microenterprise other ministry opportunities To get more info or engaged in some way drop us a , or for a glimpse of the work go to or Upcoming trips: December 2013 or 2014: April June and October -49-

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51 Post-workshop questions or to get the links for upcoming webinars: Jeff Schultz Vice President BeneCo of Wisconsin, Inc x