Daily Insurance Report - July, 7 2023

Your summary of the Voluntary and Healthcare Industry’s most relevant and breaking news; brought to you by the Voluntary Benefits Association®

Views: New PTO policies signal the future of employee benefits

By Ulises I. Orozco - For years now, AI-based tech systems have been training people to expect hyper-personal experiences wherever they go. Shopping online, watching TV and even grocery shopping have been transformed by personalization. But the workplace has lagged behind the personalization curve. Employee benefits in particular have traditionally followed a static, one-size-fits-all model. Read Full Article…

VBA Article Summary

  1. Employee benefits are shifting towards personalization and flexibility: While AI-based technology has already transformed various aspects of people's lives, including online shopping and entertainment, the workplace has been slower to adopt personalized experiences. However, employers are now realizing that employees want benefits that can adapt to their individual needs and priorities. With the availability of tools that can facilitate this customization, companies are recognizing the potential to provide personalized benefits while also reducing costs.

  2. Paid time off (PTO) is a critical aspect of personalized benefits: The future of employee benefits lies in personalization and flexibility, and reevaluating how companies approach PTO is essential. Traditionally, benefits followed a static, one-size-fits-all model, but the workforce of today and beyond is highly diverse, with different generational groups having distinct needs and preferences. By offering flexibility in terms of PTO, companies can address barriers such as financial stress, workplace pressures, and guilt associated with taking time off, ultimately improving employee well-being and productivity.

  3. Transforming static benefits into flexible options: Companies are exploring various strategies to provide flexible and personalized PTO options. Instead of relying on unlimited PTO, which often leads to compliance issues and management challenges, organizations are adopting approaches such as company-wide vacations, PTO minimums, and increased accruals to offer employees more control over their time off. Moreover, implementing PTO conversion programs allows employees to convert unused PTO into cash or other benefits like retirement savings or student loan payments. These initiatives prioritize flexibility, peace of mind, compliance, and liability benefits, meeting the expectations of both employees and businesses.

Overall, the shift towards personalized and flexible employee benefits is driven by the need for improved well-being, increased employee retention, and enhanced productivity. By reevaluating and adapting their benefit offerings, companies can meet the diverse needs of their workforce while staying competitive in an evolving job market.

The Complexities of the Special Retirement Supplement

By FEDweek - One of the most complex provisions of the FERS retirement system is the “special retirement supplement,” also sometimes generically called the “annuity supplement.” By either name, it is a payment in addition to your regular annuity benefit if you retire on an immediate, unreduced FERS annuity before reaching age 62. Read Full Article… 

VBA Article Summary

  1. Special Retirement Supplement (SRS): The SRS is a payment in addition to the regular annuity benefit for federal employees who retire on an immediate, unreduced Federal Employees Retirement System (FERS) annuity before reaching age 62. It is designed to make up for the Social Security portion of the overall FERS benefit until the retiree becomes eligible for Social Security benefits.

  2. Eligibility and Calculation: To be eligible for the SRS, a FERS employee must retire with an immediate, unreduced annuity. This can be achieved by retiring at age 60 with 20 years of service, at the minimum retirement age (MRA) with 30 years of service, or under specific circumstances such as involuntary retirement or voluntary early retirement authority (VERA). The SRS amount is determined using a complex formula that considers the retiree's Social Security benefit and total years of FERS service.

  3. Important Details: There are three key points to remember about the SRS: Firstly, the SRS is a fixed amount established on the day of retirement and is not subject to cost-of-living adjustments (COLAs). Secondly, the SRS ends when the retiree reaches age 62 and becomes eligible for Social Security benefits. Lastly, the SRS is funded by the Civil Service Retirement and Disability Fund, not the Social Security Administration, and is subject to an annual earnings limit, except for certain law enforcement officers, firefighters, and air traffic controllers who retired before their minimum retirement age.

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What benefits advisors need to know about PBM reforms

By Craig Stephens - Given the various proposed legislation for PBM reform, benefits brokers would be well served to be fully aware of the changes, be able to explain how they might affect their clients, and in the best-case scenario, be prepared to offer recommendations for plan changes and employee communication. Pharmacy benefits managers (PBMs) have become integral to the health care industry in the U.S., gradually cementing a position as an intermediary among pharmacies, insurance companies, and drug manufacturers. Read Full Article…

VBA Article Summary

  1. Impact on pricing and cost: Congressional efforts to reform Pharmacy Benefit Manager (PBM) practices could change pricing structures and affect the cost of prescription drugs for employees and the cost of plans for employers. This presents an opportunity for brokers to act as trusted advisors, enhancing relationships with existing clients and engaging in meaningful conversations with prospective clients.

  2. Compliance and value optimization: Advisors can leverage their knowledge and experience to ensure that HR departments are compliant with regulations, maximize the value of benefits spending, and create strategies for managing costs related to PBM reforms. By providing guidance on compliance and cost optimization, advisors can strengthen their value proposition to clients.

  3. Increased transparency and market changes: The proposed PBM reforms aim to increase transparency into PBM practices. Brokers should be aware of these changes, understand their implications for clients, and be prepared to offer recommendations for plan changes and employee communication. By staying informed and providing tailored advice, brokers can help clients navigate the evolving landscape of PBM reforms and make informed decisions about their benefits packages.

Overall, brokers should care about PBM reform because it presents an opportunity to deepen client relationships, provide valuable guidance, and stay ahead of market changes that can impact pricing, compliance, and overall benefits strategy.

Employers Step Up with Emergency Savings Accounts

By John Egan - A recent Survey by personal finance website Bankrate and polling company SSRS found that nearly half (48 percent) of American adults lack enough emergency savings to cover at least three months' worth of living expenses. Generally, experts recommend that people keep enough money on hand to pay three to six months' worth of expenses. Read Full Article… 

VBA Article Summary

  1. Alarming statistics: A survey conducted by Bankrate and SSRS reveals that 48 percent of American adults do not have enough emergency savings to cover three months' worth of living expenses. This falls significantly short of experts' recommendations, which suggest maintaining three to six months' worth of expenses as emergency savings.

  2. Introducing emergency savings accounts (ESAs): Personal finance expert Suze Orman and others are advocating for the establishment of ESAs for employees. Similar to health savings accounts (HSAs), ESAs are interest-bearing accounts that help individuals save for emergencies. The federal SECURE Act 2.0 passed in 2022 has expanded access to workplace ESAs.

  3. Initiatives and success stories: Companies like California Closets of Tennessee, Delta Air Lines, and Starbucks are taking the lead in promoting emergency savings for their employees. They offer programs that encourage employees to save and provide matching contributions. Financial technology company SecureSave, founded by Suze Orman and others, aims to fill the void in emergency savings through workplace ESAs, with 90 percent of account holders not touching their savings. Investment manager BlackRock's Emergency Savings Initiative has already resulted in over $2 billion in savings.

Overall, emergency savings is becoming increasingly crucial in the current economic environment, and employers are recognizing the importance of helping their employees establish solid savings behaviors to handle unexpected expenses.

End of the Line for COVID-19 Services under High-Deductible Health Plans

By CBIZ - A recent IRS Notice 2023-37, provides guidance on the impact of COVID-19 testing and treatment on HSA eligibility. As a reminder, at the beginning of the pandemic the IRS stated that HSA eligibility would not be jeopardized if first dollar coverage of COVID-19 testing, and treatment were provided. Generally, to be HSA eligible an individual must be covered by an HSA compatible high deductible health plan and no disqualifying coverage. Read Full Article…

VBA Article Summary

  1. HSA eligibility and COVID-19 coverage: The IRS Notice 2023-37 provides guidance on the impact of COVID-19 testing and treatment on Health Savings Account (HSA) eligibility. During the pandemic, the IRS stated that HSA eligibility would not be affected if first dollar coverage of COVID-19 testing and treatment were provided. This demonstrates the IRS's recognition of the importance of maintaining HSA requirements.

  2. Reimbursable expenses before the deductible: Normally, only preventive services and permitted benefits such as dental and vision expenses can be reimbursed before meeting the minimum statutory deductible. However, during the pandemic, COVID-19 testing and treatment expenses were allowed to be reimbursed before satisfying the deductible.

  3. Timeframe for COVID-19 coverage: According to the recent guidance, the ability to cover COVID-19 testing and treatment before meeting the minimum statutory deductible applies to plan years ending on or before December 31, 2024. After this date, COVID-19 benefits must be subject to the minimum statutory deductible. This information highlights the temporary nature of the pandemic-related exceptions and emphasizes the need to comply with HSA requirements in the future.

    Disclaimer: The information provided in this article is general guidance and not intended to replace professional advice. Changes in laws or regulations may affect the information, and readers should consult their own attorney or tax advisor for specific situations. CBIZ, the author of the article, assumes no liability for any damages related to its use and has no obligation to update the information in response to changing circumstances.

As workforce well-being dips, leaders ask: What will it take to move the needle?

By Jen Fisher, Colleen Bordeaux, Paul H. Silverglate, and Michael Gilmartin - As organizations look ahead to the remainder of 2023 and beyond, one thing is certain: Workforce well-being will remain firmly on the agenda of the C-suite—and for good reason. Deloitte’s second Well-Being at Work Survey  uncovered that many employees are still struggling with unacceptably low levels of well-being. What’s more, most reported that their health worsened or stayed the same last year. Read Full Article… 

VBA Article Summary

  1. Workforce well-being remains a significant challenge for organizations: The article highlights that despite employees' motivation to improve their well-being, the overall well-being of workers has worsened or remained stagnant. A majority of employees reported low levels of well-being, including physical, mental, social, and financial well-being. The C-suite's perception of well-being differed significantly from the reality, indicating a lack of awareness among leaders regarding the well-being of their teams.

  2. Managers play a critical role in employee well-being but face obstacles: The survey revealed that managers are crucial in supporting employee well-being, but they often lack the necessary tools, support, and empowerment to make a positive impact. While employees expect their managers to take responsibility for their well-being, a significant percentage of managers struggle to provide adequate support. Organizational barriers, such as rigid policies, heavy workloads, and unsupportive workplace cultures, hinder managers from effectively promoting employee well-being.

  3. Accountability for workforce well-being starts with the C-suite: The article emphasizes that the responsibility for workforce well-being lies with the top leadership. Executives recognize the need for greater accountability and express their intention to become more responsible for employee well-being in the coming years. Many executives believe that their bonuses should be tied to workforce well-being metrics, and organizations should publicly report these metrics to build trust with employees. The article suggests that measuring, monitoring, and discussing workforce well-being at the board level can facilitate progress in this area.

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JPMorgan's health arm launches policy guide to push value-based care in employer plans

By Alan Goforth - The commercial insurance market has historically lagged behind government payers on value-based care and requires federal action, recommends JPMorgan Chase’s health care arm. Morgan Health encourages federal policymakers to prioritize reforms that advance and scale value-based care in employer-sponsored insurance plans. Read Full Article…

VBA Article Summary

  1. Lack of Benefit for Americans: The majority of Americans have yet to experience the full advantages of value-based care, despite the federal government's focus on advancing a value-based agenda in public programs. This discrepancy creates a growing disconnect between the government's efforts and the actual benefits received by the population.

  2. Insufficient Financial Incentives: Market data reveals that a meager 13% of commercial insurance payments in 2021 were linked to financial risk for health outcome improvements. In contrast, Medicare Advantage had over 35% of payments tied to such incentives, and traditional Medicare had 24%. This disparity in incentives undermines employers' capacity to provide accessible, high-quality primary and accountable care, contributing to gaps in health outcomes among employees.

  3. Barriers to Data Collection and Reporting: Clean and consistent data is crucial for effective healthcare payment, delivery, and quality. However, various obstacles impede meaningful data collection, use, and reporting for employers, health plans, and providers. To address these barriers, Morgan Health suggests three policy reforms: finalizing a proposal for a centralized, national provider directory; modernizing HIPAA statutes to align with current technology and business transactions; and establishing consistent standards for race and ethnicity data collection and reporting that are coordinated between the private sector and federal government.

Bonus point (related to whole-person health services): Growing demand for whole-person health services calls for expanding the primary and behavioral health-care workforces and maximizing the skills of non-physician providers. To achieve this, Morgan Health recommends promoting accountable-care arrangements that integrate primary and behavioral health care, empowering non-physicians to practice to the fullest extent of their licenses, and improving reimbursement for behavioral health-care services.

State Medicaid spending fell below pre-pandemic levels during continuous enrollment

By Emily Olsen - The number of people covered by Medicaid and the Children’s Health Insurance Program skyrocketed during the pandemic, contributing to record-low uninsurance rate projections this year. But that rate could rise again as states begin determining who is still eligible for Medicaid after the continuous enrollment period. Read Full Article…

VBA Article Summary

  1. Despite a surge in Medicaid enrollment during the COVID-19 pandemic, state spending on the program fell below pre-pandemic levels. The analysis by KFF reveals that states received over $117 billion in increased federal funding through the Federal Medical Assistance Percentage (FMAP) during the public health emergency. However, as the expanded federal funding comes to an end, states may begin to disenroll people from Medicaid, leading to a projected decline in enrollment but an expected increase in state spending.

  2. Medicaid enrollment is predicted to decrease by 18% from March 2023 to May 2024. The actual decline may vary across states as they employ different approaches to redetermining eligibility. Some states have already started to disenroll beneficiaries, resulting in approximately 1.3 million people being removed from the program across 22 states. The U.S. Department of Health and Human Services (HHS) has expressed concerns about the number of people losing coverage and offered new flexibilities to states during the redetermination process.

  3. State spending on Medicaid is expected to increase as the enhanced FMAP expires. The analysis shows that state Medicaid spending decreased from $231 billion in 2019 to $214 billion in 2020, while federal spending rose from $444 billion to $481 billion. In 2022, states spent $224 billion, while the federal government allocated $538 billion. Despite states that haven't expanded Medicaid receiving 27% of the expanded federal funding, they only account for 22% of overall Medicaid spending because the enhanced FMAP didn't apply to their eligible population through the Affordable Care Act expansion.