By Donna Lively ~
In my role as director of insurance plans for GuideStone Financial Resources. I work with many pastors and ministry leaders who are concerned about their ability to maintain high-quality employee health coverage. These individuals are battling the double whammy of rapidly rising health care delivery costs and the crushing regulatory requirements of the Affordable Care Act.
What we’ve learned through this process is summed up in the three strategies outlined here.
Strategy 1: Work with Your Provider
No one understands all the ins and outs of a medical plan better than the organization offering it. Share your problems and tap into your provider’s knowledge to craft a medical plan design that’s strong, yet cost-efficient.
We advise churches, ministries and other nonprofit Christian organizations to choose a provider that offers non-ERISA medical plans. They have fewer administrative requirements, which cuts down on costs.
We also suggest working with providers who offer access to large discounted networks of providers. This makes it more convenient for employees to find network participating providers. Because about 85 percent of claims are related to provider visits, having a discounted network can also translate into lower premiums for employers.
Understanding your network is critical if you are contemplating a plan change. Before you make a switch, ask your provider to run a disruption analysis, which outlines your employees’ current in-network usage and compares it with the network you are considering. If you find that your employees will lose access to a significant number of their providers in the other network, it may not be such a bargain.
Finally, look for a medical plan provider who offers hands-on tools, like a robust website that clearly outlines employee benefits and access to wellness programs. These can save everyone time and money.
Strategy 2: Empower Employees
Your employees understand that employer-sponsored health coverage is their best value, but they also want choices.
That’s why it’s important to build options into your benefit plan. For example, offer a base plan and allow employees to buy up to a plan with stronger benefits or buy down to a plan with fewer benefits as their needs merit. Employees who want more or a specific type of coverage are usually willing to pay extra for it, while employees who may not need such extensive coverage will welcome a plan with fewer benefits at a lower cost. This gives all your employees the opportunity to choose a medical plan that perfectly fits their needs.
Skyrocketing prescription drug costs is one of the factors to blame for the upward trend of health care premiums. To better manage costs, offer a plan that rewards the use of generic drugs and manages the use of specialty medications. Tiered prescription co-pays are a common way to achieve this goal.
Also, look for providers who offer tools, including personalized calculators, pharmacy management programs and side-by-side benefit comparison options.
If you must shift the cost burden to employees, compensate for those additional costs. For instance, if you switch from a PPO plan to a federally qualified High Deductible Health Plan, develop a plan of contribution to the employees’ Health Savings Accounts to offset higher out-of-pocket costs.
Health Reimbursement Arrangements continue to be a popular strategy to offset employee out-of-pocket costs while providing financial protection to the employer.
Strategy 3: Stay in Compliance with the ACA
The ACA is a complicated law, which has created many new administrative responsibilities for employers. Failure to comply with these new regulations can be costly.
For instance, the Employer Mandate requires Applicable Large Employers to offer minimum essential coverage to all full-time employees (with “full-time” being defined as those who work an average of 30 hours a week or 130 hours a month). The coverage you provide must cost less than 9.5 percent of the employee’s household income and be of minimum value, meaning the plan offered by the employer must cover at least 60 percent of the total allowed cost of medical services and prescription drugs.
(The Employer Mandate has detailed counting and reporting requirements, which are outlined in IRS Code sections 4980H, 6055 and 6056.)
If your church or ministry meets the definition of an Applicable Large Employer and you fail to offer minimum essential coverage to at least 95 percent of your workforce and one person receives subsidized Exchange coverage, you will be fined up to $2,000 per year for each employee who receives the subsidy. If you offer coverage as required, but an employee receives an Exchange subsidy because the coverage is not affordable or does not provide minimum value, your ministry could be fined up to $3,000 per year for each employee who receives the subsidy. These penalties are expected to only increase over time.
Each employer’s circumstances are unique, and because the penalties for non-compliance with the ACA are so steep, we always encourage employers to consult with their own tax and legal advisers with respect to their specific facts and circumstances.
benefits package is a must for recruiting and retaining quality employees.
We know that many more changes are on the horizon. However, by working with your provider, your employees and competent tax and legal advisers, you can continue offering healthy employee benefits — and still be a good steward of your health care dollars.
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