A report from the Kaiser Family Foundation revealed that for employers with fewer than 200 employees, annual group health insurance premiums in 2017 totaled $17,615 for family coverage ($6,486 for single coverage). Those numbers indicate a 19% increase in family coverage since 2012 and 55% since 2007.
Companies with more than 50 employees are required by law to make health coverage available. But even though smaller employers don’t have the same requirements, many still offer health insurance benefits to attract and retain good talent.
Every company that offers health benefits to its employees is looking for ways to mitigate the risks of rising premiums – and to keep track of all the paperwork and compliance requirements that come with it. Make sure you follow these four best practices for administering health benefits to help ease the burden.
Most companies that offer health benefits have eligibility enrollment periods (e.g., a new employee qualifies for benefits after 60 days). Even if you have less than 50 employees and aren’t required to offer those benefits by law, once you’ve established these parameters, it’s imperative that you follow through and meet your obligations in a timely manner.
If you offer health benefits, you need to prove you offered it. Make sure employees sign documentation that indicates whether they accept the coverage or waive it. I’ve had clients who’ve had employees say they didn’t need insurance when they were first hired, but then six months later they changed their minds. Without signed documentation of waived coverage, the Department of Labor (DOL) could get involved and demand your company accommodate the employee’s demands.
Additional documentation is required when premiums are deducted from an employee’s paycheck. Section 125 of the IRS code indicates that employees must sign a salary reduction agreement.
Establish a process that outlines what paperwork is required, who turns it in, timeframes, how new enrollees are handled versus renewals, etc. Also establish who is responsible for implementing each step. Organize everything in a way that’s repeatable. Establishing an intranet with everything an employee might need is helpful, and using software to send alerts regarding notices, deadlines and other updates helps you and your employees stay on top of responsibilities.
Consistency is key when managing health benefits and creating organizational efficiencies. Some companies try to skirt around established timeframes because they’re eager to bring on a new hire who wants to get benefits immediately instead of waiting for the enrollment period. Every employee needs to abide by the same rules. If another employee had to pay for COBRA when he or she first came on board and discovers that a new hire didn’t, it could mean trouble.
It’s not unusual for companies to change plan designs to mitigate escalating costs. It’s important to not only notify employees, but to communicate why the changes occurred and put them in as positive a light as possible. Accentuate the benefits of the plan and put any changes in perspective. It may help to disclose the total premium to show employees what they’re paying versus what you as the employer pays.
You’ll also want to communicate annual notices and rights associated with health benefits. Some examples include the Children’s Health Insurance Program (CHIP), special enrollment rights for newly married spouses or adoptive children, Michelle’s Law, COBRA rights notifications and many others.
Some workers believe it’s the employer’s job to keep premiums as low as possible. While selecting the right coverage, carrier and broker certainly are major factors, the greatest impact comes when all employees take personal responsibility to reduce costs.
It’s imperative to teach employees they have choices, and that making the right ones could lower their premiums over time. Many carriers now have a hotline service that employees can call to speak with a real doctor or nurse who will evaluate a non-life-threatening condition over the phone or via FaceTime and issue a prescription without the patient ever having to step foot inside a hospital, clinic or, worse yet, the emergency room. Additionally, a hospital might order an MRI for a non-life-threatening issue, yet shopping around to get that procedure from a different provider could cut the claim costs in half. Teaching employees how to get the right care at the right time at the right price could significantly reduce claims and, consequently, premiums.
Of course, wellness programs are a big topic these days, so check out our previous article for creative ideas and how it can be another way your employees can take ownership of their overall wellbeing.
There are many other best practices to follow and creative ways to structure plans. In my role as a strategic risk advisor, I help review plans and work with employers and employees to ensure everyone takes advantage of opportunities to mitigate rising premiums, ensure compliance and create efficiencies.
A reputable benefits broker can help you weed through all the considerations and make sure your benefits are aligned with your organization’s business goals and initiatives. If you’d like to talk with one of our employee benefits professionals, let us know.