Great news, during FOE groups will not be subject to any enrollment participation requirements!
FOE will run from 11/15 through 12/15. See below for submission timelines:
12/1 effective date groups must be entered by 11/24
1/1 effective date groups must be entered by 12/15
A little-known requirement but most important under the Affordable Care Act (ACA) is that Health Insurers must waive their minimum employer-contribution and employee-participation rules once a year. ACA requires a one-month Special Open Enrollment Window for January 1st coverage.
The special open enrollment period occurs November 15th through December 15th of each year, allowing eligible small group employers to enroll for coverage effective January 1st of the following year.
Background
The ACA has a section in it called the “guaranteed issuance of coverage in the individual and group market.” It stipulates that “each health insurer that offers health insurance coverage in the individual or group market in the state must accept every employer and individual in the state that applies for such coverage.” The section also states that this guaranteed issuance of coverage can only be offered during (special) open enrollment periods and that plans can only be offered to applicants that live in, work in, or reside in the plan’s service area(s).
Participation and Contribution Requirements
In many states (including California and Nevada), carriers can decline to issue group health coverage if fewer than 70% of employees elect to enroll in coverage. Some carriers may have even tighter participation requirements.
Generally speaking, employees with other coverage (Medicare, other group coverage, individual coverage through the Exchange, etc.) are removed from the participation requirement calculation – though it varies by insurance carrier.
Furthermore, employer contribution rules require employers to contribute a certain percentage of premium costs for all employees in order to attain group health coverage. Some businesses struggle to meet these contribution requirements for a variety of financial reasons.
Problem Solved: Special Open Enrollment Period
Many employers want to offer coverage to their employees but are denied because they struggle to meet participation and/or contribution requirements. Employers cannot force employees to enroll in coverage unless the employer pays for 100% of the employees’ premiums, which many employers cannot afford. Even with moderate to generous employer contributions, many employers still find young and lower-income employees waiving coverage.
The U.S. Department of Health & Human Services provides final guidance on this in regulation 147.104(b)(1): “In the case of health insurance coverage offered in the small group market, a health insurance issuer may limit the availability of coverage to an annual enrollment period that begins November 15 and extends through December 15 of each year in the case of a plan sponsor that is unable to comply with a material plan provision relating to employer contribution or group participation rules.”
If your employer groups are struggling with participation and/or contribution, the Special Open Enrollment Window is the time to enroll them in coverage.
This Compliance Overview is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.
In preparation for open enrollment, Employers should review their plan documents in light of changes for the plan year beginning Jan 1, 2024. Below is an Employer 2024 Open Enrollment Checklist including some administrative items to prepare for in 2024.
Change has been constant for employer plans in the last few years. Unfortunately, 2023 was no exception. As they prepare for 2024 open enrollment, employers must incorporate new requirements affecting the design and administration of their health plans for plan years beginning on or after Jan. 1, 2024. Those changes include items that are adjusted for cost of living changes each year, – e.g., the cost-sharing limits for high deductible health plans (HDHPs), contribution limits to health savings accounts (HSAs), as well as new requirements due to legislative and regulatory updates, such as the expiration of COVID-19 mandates, to name a few.
Employers should ensure their health plan is updated and communicate benefit changes to participants through an updated summary plan description (SPD) or a summary of material modifications (SMM) for the 2024 plan year.
As a general best practice, employers should confirm that their open enrollment materials contain certain required participant notices and consider including some periodic notices, such as the Medicare Part D creditable/non-creditable coverage notice, in their open enrollment materials.
PLAN DESIGN CHANGES
ACA Mandates
Affordability Requirements
Under the ACA’s employer shared responsibility rules (the “pay or play” rules), applicable large employers (ALEs) (those with 50 or more full-time employees or the equivalent) are required to offer affordable, minimum value health coverage to their full-time employees (and dependent children) or risk paying a penalty.
Under the ACA, an ALE’s health coverage is considered affordable if the employee’s required contribution to the plan does not exceed 9.5% of the employee’s household income for the taxable year (as adjusted each year). The adjusted percentage is 9.12% for 2023.
The affordability percentage for plan years that begin on or after Jan. 1, 2024, will be 8.39%. That is another reduction demonstrating the need for ALEs to monitor the affordability percentage each year so they can confirm that at least one of the health plans offered to full-time employees satisfies the ACA’s affordability standard (typically by the use of one of the optional safe harbors – federal poverty level, W-2 or rate of pay).
Out-of-pocket Maximum
Under the ACA, non-grandfathered health plans (which apply to almost all employer plans) are subject to limits on cost sharing for essential health benefits. Confirm that out-of-pocket maximum limits for your health plan comply with the ACA’s limits for the 2024 plan year.
Plan years beginning on or after Jan. 1, 2024:
$9,450for self-only coverage
$18,900for family coverage
Note, the out-of-pocket maximum limits for HDHPs compatible with HSAs must be lower than the ACA’s limits. For the 2024 plan year, the out-of-pocket maximum limits for HDHPs are $8,050 for self-only coverage and $16,100 for family coverage.
Preventive Care Benefits
The ACA requires non-grandfathered health plans to cover certain preventive health services without imposing cost-sharing requirements (e.g., deductibles, copayments, or coinsurance) when in-network healthcare providers supply the services. The preventive care services covered by the requirements are based on the following:
Evidence-based items or services that have a rating of A or B in the current recommendations of the United States Preventive Services Task Force (USPSTF).
Immunizations for routine use in children, adolescents, and adults that are currently recommended by the Centers for Disease Control and Prevention.
Evidence-informed preventive care and screenings are included in the Health Resources and Services Administration (HRSA) guidelines for infants, children, and adolescents.
Evidence-informed preventive care and screenings are included in HRSA-supported guidelines for women.
There needs to be some clarity. An ongoing court case has raised some uncertainty about using the USPSTF recommendations. However, guidance from federal agencies will permit employers to use those factors without the risk of penalties for the time being. Therefore, employers should monitor future developments regarding the ACA’s preventive care mandate, which is expected by the end of 2023.
Coverage For COVID-19 Vaccines, Testing And Treatment
Because the COVID-19 public health emergency has ended (seeAlert here), health plans are no longer required to cover COVID-19 diagnostic tests and related services without cost sharing or other medical management requirements. Health plans are still required to cover recommended preventive services (under the ACA requirements), including COVID-19 immunizations, without cost sharing, but this coverage requirement can now be limited to in-network providers.
For plan years ending after Dec. 31, 2024, an HSA-compatible HDHP is no longer permitted to provide COVID-19 testing and treatment benefits without a deductible (or with a deductible below the minimum deductible for an HDHP). Therefore, employers should
Determine whether health plans will impose cost-sharing requirements, prior authorization, or other medical management requirements on COVID-19 testing for the upcoming plan year.
Determine whether health plans will continue covering COVID-19 immunizations without cost sharing from all healthcare providers or whether this first-dollar coverage will be limited to in-network providers.
Confirm that HDHPs that do not have a calendar year as the plan year will not pay benefits for COVID-19 testing and treatment before the annual minimum deductible has been met for plan years ending after Dec. 31, 2024.
Notify plan participants of any changes for the 2024 plan year regarding COVID-19 testing and vaccines through an updated SPD or SMM.
The IRS issued a memorandum on claims substantiation (see Article here) for health FSAs. The memorandum clarifies that health FSA expenses are not considered properly substantiated if employees self-certify expenses, if the plan uses sampling, if only amounts over a certain level are substantiated, or if charges from favored providers are not substantiated. Employers should, therefore, review the health FSA substantiation procedures to make sure they comply with IRS rules.
If you offer an HDHP to your employees that is compatible with an HSA, you should confirm that the HDHP’s minimum deductible and out-of-pocket maximum comply with the 2020 limits. The IRS limits for HSA contributions and HDHP cost-sharing increase for 2024. The HSA contribution limits will increase effective Jan. 1, 2024, while the HDHP limits will increase effective for plan years beginning on or after Jan. 1, 2024.
Check whether your HDHP’s cost-sharing limits need to be adjusted for the 2024 limits.
If you communicate the HSA contribution limits to employees as part of the enrollment process, these enrollment materials should be updated to reflect the increased limits that apply for 2024.
The following table contains the HDHP and HSA limits for 2024 as compared to 2023. It also includes the catch-up contribution limit that applies to HSA-eligible individuals who are age 55 or older, which is not adjusted for inflation and stays the same from year to year.
Type of Limit
2024
2023
Change
HSA Contribution Limit
Self-only
$4,150
$3,850
Up $300
Family
$8,300
$7,750
Up $550
HSA Catch-up Contributions (not subject to adjustment for inflation)
Age 55 or older
$1,000
$1,000
No change
HDHP Minimum Deductible
Self-only
$1,600
$1,500
Up $100
Family
$3,200
$3,000
Up $200
HDHP Maximum Out-of-pocket Expense Limit (deductibles, copayments and other amounts, but not premiums)
Self-only
$8,050
$7,500
Up $550
Family
$16,100
$15,000
Up $1,100
HDHP Design Option – Telehealth
At the beginning of the COVID-19 pandemic, Congress temporarily relaxed the rules for HDHPs to allow them to provide benefits for telehealth or other remote care services before plan deductibles were met without jeopardizing HSA eligibility. That relaxed rule currently applies for plan years beginning before Jan. 1, 2025.
Determine whether HDHPs will waive the deductible for telehealth services for the plan year beginning in 2024
Communicate plan changes for the upcoming year to participants through an updated SPD or SMM
Mental Health Parity – Required Comparative Analysis For NQTLs
The Mental Health Parity and Addiction Equity Act (MHPAEA) requires parity between a group health plan’s medical/surgical benefits and its mental health or substance use disorder (MH/SUD) benefits. These parity requirements apply to financial requirements and treatment limits for MH/SUD benefits. In addition, any nonquantitative treatment limitations (NQTLs) placed on MH/SUD benefits must comply with MHPAEA’s parity requirements. For example, NQTLs include prior authorization, step therapy protocols, network adequacy, and medical necessity criteria.
MHPAEA requires health plans and issuers to conduct comparative analyses of the NQTLs used for medical/surgical benefits compared to MH/SUD benefits. This analysis must contain a detailed, written, and reasoned explanation of the specific plan terms and practices and include the basis for the plan or issuer’s conclusion that the NQTLs comply with MHPAEA. Plans and issuers must make their comparative analyses available to specific federal agencies or applicable state authorities upon request.
Employers should request that health plan issuers (or third-party administrators) confirm that comparative analyses of NQTLs will be updated, if necessary, for the plan year beginning in 2024 and make the analysis available to the employee.
Open Enrollment Notices
Employers who sponsor group health plans should provide certain benefits notices in connection with their open enrollment periods. Some of these notices must be provided at open enrollment time, such as the Summary of Benefit and Coverage (SBC). Other notices, such as the WHCRA notice, must be distributed annually. Although these annual notices may be provided at different times throughout the year, employers often include them in their open enrollment materials for administrative convenience.
In addition, employers should review their open enrollment materials to confirm that they accurately reflect the terms and cost of coverage. In general, any plan design changes for 2024 should be communicated to plan participants through an updated SPD or an SMM.
Summary Of Benefits And Coverage
The ACA requires health plans and health insurance issuers to provide an SBC to applicants and enrollees each year at open enrollment or renewal. Federal agencies have provided atemplatefor the SBC, which health plans must use.
Note that for self-funded plans, the plan administrator is responsible for providing the SBC. For insured plans, the issuer usually prepares the SBC. If the issuer prepares the SBC, an employer is not required to also prepare an SBC for the health plan, although the employer may need to distribute the SBC prepared by the issuer.
Medicare Part D Notices
Group health plan sponsors must provide a notice of creditable or non-creditable prescription drug coverage to Medicare Part D-eligible individuals covered by, or who apply for, prescription drug coverage under the health plan. The notice alerts the individuals about whether their prescription drug coverage is at least as good as Medicare Part D coverage. The notice generally must be provided at various times that cannot always be anticipated, including when an individual enrolls in the plan and each year before Oct. 15 (when the Medicare annual open enrollment period begins). Therefore, the best practice is to provide it annually at open enrollment, as that will ensure timely compliance. Model notices are available on the Centers for Medicare and Medicaid Services’website.
Annual CHIP Notices
Group health plans covering residents in a state that provides a premium subsidy to low-income children and their families to help pay for employer-sponsored coverage must send an annual Children’s Health Insurance Program (CHIP) notice about the available assistance to all employees in that state. The U.S. Department of Labor (DOL) has provideda model notice.
Initial COBRA Notices
COBRA applies to employers with 20 or more employees who sponsor group health plans. Group health plan administrators must provide an initial COBRA notice to new participants and certain dependents within 90 days after plan coverage begins. The initial COBRA notice may be incorporated into the plan’s SPD. Because the COBRA election-period will not start until this notice is provided, it is helpful to many employers to include a copy in the open enrollment materials as a backup.
Notices Of Patient Protections
Under the ACA, group health plans and issuers that require the designation of a participating primary care provider must permit each participant, beneficiary, and enrollee to designate any available participating primary care provider (including a pediatrician for children). Additionally, plans and issuers that provide obstetrical/gynecological care and require a designation of a participating primary care provider may not require preauthorization or referral for such care. If a health plan requires participants to designate a participating primary care provider, the plan or issuer must provide a notice of these patient protections whenever the SPD or similar description of benefits is provided to a participant. If an employer’s plan is subject to this notice requirement, they should confirm that it is included in the plan’s open enrollment materials. This notice may be included in the plan’s SPD.Model languageis available from the DOL.
Grandfathered Plan Notices
If an employer has a grandfathered plan, they should include information about its grandfathered status in plan materials describing the coverage under the plan, such as SPDs and open enrollment materials. Model language is available from the DOL.
Notices Of HIPAA Special Enrollment Rights
At or before enrollment, an employer’s group health plan must provide each eligible employee with a notice of their special enrollment rights under HIPAA. This notice may be included in the plan’s SPD.
HIPAA Privacy Notices
The HIPAA Privacy Rule requires covered entities (including group health plans and issuers) to provide a Notice of Privacy Practices (or Privacy Notice) to everyone who is the subject of protected health information (PHI). Health plans are required to send the Privacy Notice at certain times, including to new enrollees at the time of enrollment. Also, at least once every three years, health plans must either redistribute the Privacy Notice or notify participants that the Privacy Notice is available and explain how to obtain a copy. Self-insured health plans are required to maintain and provide their own Privacy Notices. However, special rules apply for fully insured plans, where the health insurance issuer, not the plan itself, is primarily responsible for the Privacy Notice.
Special Rules for Fully Insured Plans
The plan sponsor of a fully insured health plan has limited responsibilities with respect to the Privacy Notice, including the following:
If the sponsor of a fully insured plan has access to PHI for plan administrative functions, they are required to maintain a Privacy Notice and to provide the notice upon request.
If the sponsor of a fully insured plan does not have access to PHI for plan administrative functions, they are not required to maintain or provide a Privacy Notice.
A plan sponsor’s access to enrollment information, summary health information, and PHI that is released pursuant to a HIPAA authorization does not qualify as having access to PHI for plan administration purposes.
Model Privacy Notices are available through the Department of Health and Human Services.
WHCRA Notices
Plans and issuers must provide notice of participants’ rights to mastectomy-related benefits under the WHCRA at the time of enrollment and annually. The DOL’s compliance assistance guide includes model language for this disclosure.
SARs
Plan administrators required to file Form 5500 must provide participants with a narrative summary of the information in Form 5500, called a summary annual report (SAR). Amodel noticeis available from the DOL.
Group health plans that are unfunded (that is, benefits are payable from the employer’s general assets and not through an insurance policy or trust) are not subject to the SAR requirement. The plan administrator generally must provide the SAR within nine months of the close of the plan year. If an extension of time to file Form 5500 is obtained, the plan administrator must furnish the SAR within two months after the close of the extension period.
Wellness Program Notices
Group health plans that include wellness programs may be required to provide certain notices regarding the program’s design. As a general rule, these notices should be provided when the wellness program is communicated to employees and before employees provide any health-related information or undergo medical examinations. These notices are required in the following situations:
HIPAA Wellness Program Notice—HIPAA imposes a notice requirement on health-contingent wellness programs offered under group health plans. Health-contingent wellness plans require individuals to satisfy standards related to health factors (e.g., not smoking) to obtain rewards. The notice must disclose the availability of a reasonable alternative standard to qualify for the reward (and, if applicable, the possibility of waiver of the otherwise applicable standard) in all plan materials describing the terms of a health-contingent wellness program. The DOL’scompliance assistance guideincludes a model notice that can be used to satisfy this requirement.
ADA Wellness Program Notice—Employers with 15 or more employees are subject to the Americans with Disabilities Act (ADA). Wellness programs that include health-related questions or medical exams must comply with the ADA’s requirements, including an employee notice requirement. Employers must give participating employees a notice that tells them what information will be collected as part of the wellness program, with whom it will be shared, and for what purpose, as well as the limits on disclosure and the way information will be kept confidential. The U.S. Equal Employment Opportunity Commission (EEOC) has provided asample noticeto help employers comply with this ADA requirement.
ICHRA Notices
Employers may use individual coverage HRAs (ICHRAs) to reimburse their eligible employees for insurance policies purchased in the individual market or Medicare premiums. Employers with ICHRAs must notify eligible participants about the ICHRA and its interaction with the ACA’s premium tax credit. In general, this notice must be provided at least 90 days before the start of each plan year. Employers may provide this notice at open enrollment time if it is at least 90 days before the beginning of the plan year. A model notice is available for employers to use to satisfy this notice requirement.
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Enhance Your Employee Benefits Package. A competitive benefits package is key to keeping and attracting top talent.Assess your current benefits package and consider making necessary adjustments to include options, such as expanded mental health support, for example.
GENERAL HR
Review Employee Records. The fourth quarter is a good time to review your employee records and check record retention guidelines. Don’t forget to dispose of outdated termination and outdated job applications properly. With W2s around the corner, make sure all addresses and information are updated.
Develop and Distribute Your 2024 Calendar. Create and distribute a calendar outlining important dates, vacation time, pay dates, and company-observed holidays for 2024.
Review and Update Employee Handbook. Review your employee handbook to make sure it is up-to-date and addresses areas, such as employment law mandates, new COVID-related policies, guidelines for remote working, privacy policies, compensation and performance reviews, social media policies, attendance, and time-off, break periods, benefits, and procedures for termination, discipline, workplace safety, and emergency procedures.
PLEASE NOTE: This Checklist is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. This information is for general reference purposes only. Because laws, regulations, and filing deadlines are likely to change, please check with the appropriate organizations or government agencies for the latest information and consult your employment attorney and/or benefits advisor regarding your responsibilities. In addition, your business may be exempt from certain requirements and/or be subject to different requirements under the laws of your state. (Updated Sept 3, 2023)
As per NY State Law, Health Insurers are required to send out early notices of rate request filings to groups and subscribers. Despite only 3 months of mature claims data experience for 2023 health insurers’ original requests were noticeably above the average of 22%/individuals and 15.3% for small groups.
State Department of Financial Services officials asserted the rising cost of medical care — including in-patient hospital stays and rapid increases in drug prices — continued to be the main driver of health insurance premium increases. The final approved rates for 2024 would keep health insurers’ profit provisions at 1%, state officials added, noting they sought to limit those returns in light of ongoing inflationary pressures harming consumers. That said, in anticipation of spikes in claims submissions + overall inflation, a larger-than-average increase is needed. This is in addition to increases in pricing by hospitals, consolidated IPA groups, and pharmaceuticals.
Rate Factors
The state noted that the premiums increase main drivers are medications. “Rising medical costs and inflation continue to put upward pressure on premiums,” said Superintendent Harris. “With our rate actions announced today, we continue to prioritize the financial well-being of consumers while ensuring that New Yorkers have access to a robust, stable health insurance market.” Also, DFS, recognizing the continued uncertainty of the pandemic’s effect on consumers’ healthcare costs and the economy, held insurers’ profit provisions to a low 1%.
Health Insurers
Oxford/Unitedhealthcare, notably, got only a 4.7% rate increase approval for next year. This is a sharp reduction from the original 15.5% request in part to disagreed anticipated costs, held reserves, overall market pricing, and reinsurance gained from ACA’s Risk Corridor. See more info here, https://medicalsolutionscorp.com/risk-adjustment-reinsurance-and-risk-corridors/.
Small Group Market
Almost 800,000 New Yorkers are enrolled in small group plans, which cover employers with up to 100 employees. Insurers requested an average rate increase of 15.3% in the small group market, which DFS cut by 52% to 7.4% for 2024, saving small businesses $607 million. A number of small businesses also will be eligible for tax credits that may lower those premium costs even further, such as the Small Business Health Care Tax Credit.
DFS SMALL GROUP MARKET RATE ACTIONS
*Indicates the Company will offer products on the NY State of Health Marketplace in 2024.
PEO Alternatives to Small Group
Before you consider renewing automatically, you should first find out what is a PEO so that you can know exactly what to expect from it. PEOs are large-group markets underwritten. With the right PEO, you will be able to manage your business’s demand for growth and your employees as well.
Clients on average save 15-40% off the small group market. If you are looking for a complete insurance solution for your business, go to our website and check out our business insurance solutions. Contact us for more information today.
Learn how a PEO can make a difference for your group. For more information on how Employer-Sponsored Insurance and a PEO can make a difference for your small business please contact us at [email protected] or 855-667-4621.
We already love Professional Employer Organizations (PEO)– our clients do too. Today we’re counting down our top 5 reasons why we love PEO:
1. National Capabilities: It ensures your compliance with local and federal laws, even if your business has locations in different states. Access to a national provider healthcare plan, not single state carriers
2. Liability Protections: Some liability moves to the PEO service instead of your company.
3. It saves you money on HR staff. Being part of a PEO gives you a clear-cut idea of what your costs are going to be a year in and year out. The PEOs work tirelessly to keep their insurance renewals down, so their clients won’t leave. Every year they work with the insurance carriers to introduce new plans and ways to reduce the costs of insurance to their clients. This gives you the ability to forecast and know precisely what your costs will be.
4. Technologies: Online HR resources for self-service issues Ability for employees to make personal changes on their own, online. Ability to track PTO (paid-time off).
5. One Vendor: It streamlines HR tasks like payroll, taxes, employee benefits, worker’s compensation, 401K, and HR administrative tasks.
Our PEO Quoting Tool ensures that we have first-hand insight as to what the small business owner needs to be successful. Click below for a quote.
Yesterday, NYS Dept of Financial Services approved 2023 health insurance rate requests yesterday. Small group rates increased by 7.9% and 9.7% for individuals.
As per NY State Law, Health Insurers are required to send out early notices of rate request filings to groups and subscribers see original –2023 NY Small Group Carrier Rate Filings. Despite only 3 months of mature claims data experience for 2022 health insurers’ original requests were noticeably above the average of 16.5%/individuals and 19% for small groups. For example, regulators last year approved average rate increases of 3.7% for individuals and 7.6% for small group plans. Over 1.1 million New Yorkers are enrolled in individual and small group plans impacted by the rate increases, the state agency noted.
The recent COVID-19 surge irony reflected a lower cost utilization due to COVID-19. The average medical-loss ratio, which represents the portion of premiums spent on medical claims and quality improvement, was 70% in recent years years. That said, in an anticipation of spikes in claims submissions + overall inflation, a larger than average increase is needed. This is in addition to increases in pricing by hospitals, consolidated IPA groups, and pharmaceuticals.
Rate Factors
The state noted that the premiums increase main drivers are medications. “Rising medical costs and inflation continue to put upward pressure on premiums,” said Superintendent Harris. “With our rate actions announced today, we continue to prioritize the financial wellbeing of consumers while ensuring that New Yorkers have access to a robust, stable health insurance market.”Also, DFS, recognizing the continued uncertainty of the pandemic’s effect on consumers’ health care costs and the economy, held insurers’ profit provisions to a historically low 0.5%.
Health Insurers
Oxford/Unitedhealthcare, notably, got only a 6% rate increase approval for next year. This is a sharp reduction from the original 16.8% request in part by disagreed anticipated costs, held reserves, overall market pricing, and reinsurance gained from ACA’s Risk Corridor. See more info here, https://medicalsolutionscorp.com/risk-adjustment-reinsurance-and-risk-corridors/.
Small Group Market
Almost 850,000 New Yorkers are enrolled in small group plans, which cover employers with up to 100 employees. Insurers requested an average rate increase of 16.5% in the small group market, which DFS cut by 52% to 7.9% for 2023, saving small businesses $632.4 million. A number of small businesses also will be eligible for tax credits that may lower those premium costs even further, such as the Small Business Health Care Tax Credit.
DFS SMALL GROUP MARKET RATE ACTIONS
*Indicates the Company will offer products on NY State of Health Marketplace in 2023.
PEO Alternatives to Small Group
Before you consider renewing automatically, you should first find out what is a PEO so that you can know exactly what to expect from it. PEO’s are large-group markets underwritten. With the right PEO, you will be able to manage your business’s demand for growth and your employees as well.
Clients on average save 15-40% off the small group market. If you are looking for a complete insurance solution for your business, go to our website and check out our business insurance solutions.Contact usfor more information today.
Learn how a PEO can make a difference for your group. For more information on how Employer-Sponsored Insurance and a PEO can make difference for your small business please contact us at [email protected] or 855-667-4621.
Health insurance is expensive, and we’ve all asked ourselves, “Is it really worth what I am paying?”. For employer-sponsored health insurance, the answer is a resounding YES it is. For every dollar employers spent on health insurance-related costs, they get back $1.47 according to a newstudy from Avalere Health. This figure in fact is expected to grow to 52% by 2026 from 47%.
The U.S. Chamber of Commerce commissioned the Avalere Health employer study that used publicly available data from the Bureau of Labor Statistics and the Congressional Budget Office to estimate the return on investment employer-sponsored health insurance provides employers with 100 or more employees. Improved employee productivity, reduced direct medical costs, and tax benefits were the primary aspects that generated benefits for employer-sponsored health plans. Employers who offered employer-sponsored health coverage and wellness programs had healthier employees and spent less on direct medical costs, Avalare found.
The Numbers
Employee productivity reflects the reductions in absenteeism and lost productivity after receiving employer-sponsored coverage. These productivity increases contributed an estimated $275.6 billion in employer benefits in 2022, or 53.3% of all benefits. By 2026, this is expected to rise to $346.6 billion or 55.9 percent of total ROI.
ROI of some of these key components includes $275.6 billion from improved productivity in 2022 and $346.6 billion in 2026, $101 billion from a reduction in direct medical costs in 2022 and $108 billion in 2026, and $119.2 billion or a 23% ROI from tax benefits in 2022 and $139.7 billion in 2026.
Employer-Sponsored Insurance(ESI) offerings can positively influence prospective employees’ decisions to join firms, reducing employer recruitment and vacancy costs. The study’s model assumes that 9% of individuals decide to accept a certain position based on ESI. The analysis estimates that firms with 100 or more employees derived $141M in employer benefits in 2022, growing to $167M in 2026.
Similarly, ESI positively affects the retention of employees. Avalere’s analysis estimates $20.3B in employer benefits from improved retention in 2022 and $24.3B in 2026.
Conclusion
The study finds that industries where firms generally made greater investments in ESI tended to result in larger ROI. Also, since costs associated with turnover and recruitment are positively associated with wages, Avalere estimates higher ROI in higher-wage industries. On the flip side of that same coin, lower ROI was associated with industries that typically have a lower investment in ESI and wellness programs, lower wages, and lower employee participation in ESI and wellness programs.
The full report including the methodology can be found here.
For more information on how Employer-Sponsored Insurance and a PEO can make difference for your small business please contact us at [email protected] or 855-667-4621.
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