Multiemployer Health Plans Have Cost-Containment Options

Multiemployer health plan sponsors could consider more options for managing costs, a study finds.

In the five years since the Patient Protection and Affordable Care Act (ACA) became law, many multiemployer health plan sponsors have implemented cost-containment strategies.

A study of multiemployer health plan clients by Segal Consulting revealed the most popular cost-management strategies that plans have implemented are soliciting competitive bids from carriers/vendors (40%), implementing more intensive pharmacy management programs (34%) and increasing copayments (32%). Twenty-seven percent have increased deductibles and 18% have implemented more intensive medical-management programs (e.g., prior authorization and/or disease management).

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“The study suggests plan sponsors have additional options and opportunities for managing the high cost of health care beyond increasing participant cost sharing, because relatively few plans have implemented strategies such as including financial incentives tied to wellness, moving to a narrower network or establishing an on-site clinic,” says Andrew Sherman, senior vice president at Segal. “The Supreme Court affirmed with its King v. Burwell decision that the Affordable Care Act is here to stay, which means it is also time for trustees to take a look at how their plans are impacted by the 2018 excise tax.”

A large majority of plans in the study have not changed coverage for spouses, and most plans in the study have maintained coverage for retirees. According to the survey, 77% of multiemployer plan sponsors are not considering changes in an effort to avoid the excise tax on high-cost plans.

Individual health insurance coverage purchased through the federal marketplace or a state exchange must provide benefits at various actuarial levels: platinum (90%), gold (80%), silver (70%) and bronze (60%). To illustrate how the “metal” levels work, a platinum plan that has an actuarial value of 90% would be a plan that pays approximately 90% of eligible medical expenses. Segal determined the closest “metal” value of the surveyed plans’ primary coverage and found 60% are gold plans, 34% are platinum and 6% are silver.

In addition, Segal notes that group health plans in existence as of March 23, 2010, are grandfathered, meaning that they do not have to comply with some of the law’s requirements. A plan will remain grandfathered for as long as the plan’s benefit design does not change beyond certain limits set by the federal government. More than half of plans in the study are grandfathered under the ACA.

Segal points out that a loss of grandfathered status can add new costs to the plan. However, remaining grandfathered has its own set of consequences, most notably strict limits on the ability of the plan sponsor to make plan design changes.

More findings from the study may be found here.

Employers Can Help with Employee Financial Stress

A survey finds lower and middle-income mothers are the most financially stressed employees.

Nearly one-quarter, 23%, of employees feel “high” or “overwhelming” financial stress, up from only 18% in 2012 and 19% in 2011, according to a survey by Financial Finesse, a provider of financial education to workers.

Employers have a role in helping people with financial stress as well, says Liz Davidson, chief executive officer of Financial Finesse. They can offer financial wellness programs to teach their workers practical money skills. “Employers can offer workshops, webcasts, an online financial wellness center and one-on-one financial coaching to help simplify financial complexities and help busy employees get the most out of their benefits,” Davidson says. “A workplace-based financial wellness program saves busy parents time, and has been proven to reduce financial stress as well as create a sense of loyalty between employee and employer.”

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Underscoring the need for financial wellness programs is the fact that among all employees, 85% report at least some level of financial stress, Financial Finesse says. Among those who feel overwhelming financial stress, 84% say they feel like their financial situation is not under control, 56% are not confident they will be able to meet future financial goals, 26% do not know who to trust with investing their money, and 29% worry about the U.S. economy and/or stock market and how that will affect their financial future.

Not surprisingly, those who feel overwhelming financial stress have poor money management behaviors, with only 8% of this group having an emergency fund, a mere 14% comfortable with the amount of debt they are carrying, 18% having a handle on their cash flow, 53% paying their bills on time and 34% carrying a loan or hardship withdrawal from their 401(k) plan.

Across all age groups, women experience significantly higher levels of financial stress than men, with the most frazzled group being women between the ages of 30 and 55 with minor children and annual incomes below $60,000. More than half, 55%, of this group feels elevated levels of financial stress. The least financially stressed group is men younger than 30 or older than 55 with no minor children and annual incomes above $100,000, with only 6% of these groups experiencing financial stress.

“While it’s no surprise to any working mother that juggling competing financial needs is stressful, small steps over time can create financial balance for families at any income level,” Davidson says. Three steps people can take to alleviate financial anxiety is to build an emergency fund, pay down high-interest debt and take advantage of employer-sponsored benefits at work, namely save for retirement.

The good news is that more employers are offering financial wellness programs to help their employees reduce their financial stress. The Financial Finesse survey can be uploaded here.

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