TREND #1: Building Wellness Programs Under ACA and ADA to Reduce Premiums
We all know that 2015 is the year of the ACA, and for most employers with 100 or more employees, it’s beginning to sink in that it’s real. At the same time we’re preparing for this reality, many employers are seeing their premiums rise, which adds a thick layer to the compliance work being done right now. A properly administered health and wellness program can help an employer reduce premiums and promote a healthier and more productive workforce. However, many employers are having considerable difficulty understanding the rules for wellness plans because there are still questions about them under the ACA, the Americans with Disabilities Act (ADA), and relevant employment laws and regulations. Given that there is uncertainty with the law in this area, as a first step in implementing a properly administered wellness plan it is important that health and wellness programs be provided as a voluntary option.
TREND #2: Embracing Micro Networks to Minimize Costs
Most major carriers are expected to implement smaller network options. They’re looking for ways to minimize costs for employers within the framework of the ACA, which of course requires them to deliver affordable insurance to everyone, regardless of pre-existing conditions. Employers who are considering joining a micro network should allow plenty of time to plan and investigate the opportunity. Given the very specific provider parameters around a micro network, employers need to understand their employee population and the provider options available, and how they mesh or don’t mesh. It’s best to start by looking internally to get a good reading of employee health and welfare needs, including how they access healthcare providers today. From there, employers should examine what’s available externally to gain an understanding of the provider network available to them and their employees.
Employers are gravitating more and more to private exchanges/marketplaces as they look for better ways to deliver health insurance to their employees. Rather than continuing to assume the responsibility for making healthcare decisions for plan participants (or managing the risk on their behalf), employers are transferring responsibility to employees and making them better consumers of healthcare. At the same time, employers have something to gain, too: more predictable healthcare costs. However, the move to a private insurance exchange could be difficult for employees who generally are not accustomed to making benefits plan decisions for themselves, or who balk at the potential of an increased out-of-pocket burden. It’s incumbent upon employers to guide them through the transition to help them accept the idea that having more power and choice is a good trade-off to taking on more risk. To do this, the employer must introduce a defined contribution approach to the workforce and embrace concepts like premium transparency, fixed dollar contributions and multiple plan options.
TREND #4: Using Forensic Underwriting to Lower Benefit Costs
As employers investigate ways to reduce benefit costs, a growing trend is the practice of forensic underwriting. It’s the act of auditing the employer’s existing insurance rate structure and working with carriers to reduce annual increases. Understanding how carriers formulate insurance rates is the foundation of forensic underwriting and the first step to reining in annual renewal hikes. Underwriting, as we all know, is the premise of carrier profit. With that in mind, carrier underwriters are often amenable to negotiation as long as counter offers are logical and make sense and the resulting renewal rate is sustainable. As long as brokers approach insurer underwriters with the goal of developing a win/win scenario, it’s possible to create a beneficial outcome for everyone.
TREND #5: Engaging Cyber Insurance as a Cash-flow Tool
A majority of cyber attacks are focused on theft or loss of information as opposed to taking down a network. As executives look to safeguard their intellectual property, customer information, financial data and employee records, they’re also concerned about protecting against the inevitable financial hit. Instead of thinking about cyber insurance as an expense, employers are increasingly viewing it as a cash flow tool. If a business network is attacked and high-priced consultants have to be hired to fix the problem, a significant cash flow will be required to cover the expense. There could be lawsuits by customers to deal with and loss of revenue, not to mention hard-to-overcome reputation damage. The risk is real. The loss can happen in an eye blink. It’s a good time to check property & casualty policies and internal risk management strategies.
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©2015 Corporate Synergies Group, LLC. No part of this material may be republished or distributed without prior written consent.