Effective Cost Management Solutions for Variable Hour Employers
Living with the Affordable Care Act (ACA) is challenging for many employers. But it’s especially complex for companies with large variable hour employee (VHE) populations. Employers in the retail, hospitality and senior living sectors especially, need help building strategies to respond to the new laws—and that’s where Trion comes in.
What to Expect in 2018
This January, we took a moment to reflect on what we accomplished for our clients with variable hour employees in 2017 and considered what they should expect in 2018. Last year we predicted that a new administration would tinker with the Affordable Care Act (ACA) and employers would have the opportunity to restructure their benefit programs. Congress was unable to alter the ACA either through a direct repeal or with the budget reconciliation process, but the Individual Mandate was essentially repealed with the Tax Reform legislation effective with the 2019 tax filing. Unfortunately, this will have little impact for employers. These are the issues we expect to review with our contacts in the upcoming year: (click here to read more)
Three Keys to Success For Variable Hour Employers
A strategic medical benefit plan design
- Cost effective.
- Compliant for employer mandate.
- Competitive for recruiting/retention.
Appropriate insurance mechanisms
- Balance cost and risk.
- Fits the characteristics of the workforce.
- Allows for unique plan design strategies.
The systems to manage increased complexity
- Automated, self-service enrollment, eligibility, and plan administration.
- VHE tracking and reporting.
- Efficient ancillary and voluntary plan administration.
Affordable Medical Solutions
- Plans designed for variable hour employees—no HSA plans.
- Four “metal” medical plans are available — employers choose the plans they offer.
- UMR is plan administrator — competitive UHC provider network.
Advantages to the employer:
- Pre-defined benefit and operating provisions reduce administrative costs and simplify implementation.
- Self insured plans lead to less cost — taxes and ACA fees are virtually eliminated; administration charges are reduced. A greater percentage of the funding goes to pay claims.
- Employers can better manage their health care costs.
- More control and better benefit alternatives for employee offerings.
- Captive reinsurance structures to provide claims cost consistency.
- Preventative care at no cost.
- 2 additional doctor’s office visits.
- 20 generic prescriptions.
- Teladoc — 24/7 calls to a physician who can diagnose and prescribe treatment. No additional cost.
- Fixed benefits for diagnostic tests, hospital admission, or surgery.
- First dollar benefits, no deductibles, no copays.
Advantages to the employer:
- A health plan that covers their every day needs at an affordable price.
- A way to offer medical insurance to valuable part-time employees.
- Can reduce pressure on the overall health care budget.
- Wide variety of insurance:
- Critical Illness
- Hospital Indemnity
Government exchanges only offer health care offerings. The Trion Individual Exchange offers more health plan options than the public exchange, as well as additional coverage options.
Advantages to the employer:
- Quality product offerings and service may appeal to full-time and part-time employees.
- There are no participation requirements.
- For “smaller” employers, this can be the comprehensive benefits offering.
There is no one size fits all solution—which is why Trion developed multiple tools you can use to support your strategy.
Each of these can be used individually or as part of a larger strategy.
Self Funding – lower taxes, lower fees, lower administration costs
Enhanced MEC offering – Employees like a lower cost for basic health benefits coverage, which minimizes employer subsidy amount
Captive Dividends – with like minded groups, smaller employers can capture profits earned by insurance companies in covering risk. Over time, these groups can use wellness strategies to improve their claims costs.
Trion helps organizations efficiently manage their costs by creating programs designed to meet ACA requirements for both employers and their employees. Every group is different, and savings opportunities for each company is based on many factors including demographics, location and current benefits strategies.
What Your Administrative Services/System Should Do
- Eligibility management
- Online benefits enrollment
- Call center services for enrollment and benefits questions
- Carrier billing and administration
- COBRA, Retiree and Spending Accounts Services
- ACA reporting
- ERISA compliance
Internal Administrative Challenges
- Tracking and reporting ACA administration is complex and labor intensive
- Additional personnel may be necessary to track ACA requirements
- Maintaining accurate eligibility files/vendor payments is difficult
- Non-integrated systems increase the administrative burden
- ACA penalties are high; mistakes can be costly
For Variable Hour Employers, benefits administration is no longer nice to have, it’s a requisite for ACA compliance!
ACA Compliance Considerations
- Full-time equivalent employees offered minimum value/affordable plan by employer.
- Requires tracking of all employees for eligibility management and government reporting.
- Onerous penalties for non-compliance.
IRS Non-Discrimination Rules (IRC 105(h) and IRC 125)
- Depending on the plan design, highly compensated employees may not be able to take advantage of Section 125 for their medical contributions.
- Self-funded health plans may not discriminate in favor of highly compensated individuals for both eligibility and benefits level due to IRC 105(h).
- At some point in the future, fully insured plans will be subject to discrimination rules similar to 105 (h), part of ACA regulations.
Many employers initially thought that offering medical insurance to all employees working more than 30 hours would make them unprofitable. Among those most concerned were employers with a large percentage of variable hour employees, i.e., those in the retail, hospitality, and even senior living sectors. Some in these sectors considered and even implemented employment strategies to manage the number of benefit eligibles, for example, building their workforce with a higher percentage of part-time employees.
Trion is a leader in the health and welfare benefits business, and we have a reputation for underwriting excellence and building creative solutions for our clients. For our retail and hospitality clients, we examined the demographics of current plan participants, and those employees who would be newly eligible for benefits. We built plans around three premises:
- New hires and newly eligibles want to work and they are healthy,
- They make their benefit choices based on price, and
- Inherent turnover in these sectors reduces long-term risk.
With this analysis, we’ve built strategies that enable most employers in these sectors the opportunity to offer a comprehensive and attractive benefits program. We have convinced insurance carriers and product providers that our strategies make sense, which means reasonable pricing for the employer and the employee. Depending upon the situation, groups are saving money on projected costs and some are even saving money over current costs.
There are other issues for the retail and hospitality sectors including benefits enrollment and administration, ACA reporting and tracking, and compliance and we have solutions employers can implement today.
The Affordable Care Act has created a brave new world; we’ve built the programs and strategies feeling our way in a dark room alongside our clients and partners. Many employers in these sectors are still stumbling in the dark, searching for answers. We’ve built a light, and we’re delivering quality benefit solutions to variable hour employers.
Reid has been in health benefits field since 1985, holding positions as an insurance carrier representative, director of client relationships for a third party administrator, practice leader for a national consulting and brokerage firm, and president of his own consulting company. Reid joined Trion in 2009 as a relationship manager specializing in designing creative solutions for his clients. His experience includes advising/managing the benefits programs for both Fortune 500 companies and large privately held organizations. His skills include strategic design, underwriting and acquisition screening and integration.
Jay is a health care consultant in Trion’s Greensboro, NC office. He joined Trion’s team in 2006, with a specialty in voluntary benefits. With more than 25 years in the Human Resources and Employee Benefits fields, Jay has considerable experience with all types of employers large and small, including manufacturers, health care, as well as hospitality and retail. He understands how to construct holistic plan offerings that appeal to employees and knows how to communicate plans so that employees understand their benefits and appreciate the value. Prior to Trion, Jay ran his own Voluntary Benefits and enrollment company for almost 20 years.
Joe joined Trion in 2013, serving as a Benefits Consultant focused on helping customers simplify the complexity of their benefits programs while achieving their budget objectives. Responsible for managing new business opportunities and supporting new client on boarding, Joe works closely with Jay Wink and Reid Wagner and their clients. Joe holds a Bachelor of Science degree from Pennsylvania State University.
Headquartered in King of Prussia, Pennsylvania, Trion is a leader in the employee benefits marketplace, developing leading-edge solutions that simplify benefits and risk management for local, regional, and Fortune 1000 companies. With 10 offices and more than 500 associates nationally, we combine advanced consultation, brokerage, administration, and risk management services to help clients reach a favorable balance between their insurance and benefits programs—and to provide long-term value to their business. Trion is a part of Marsh & McLennan Agency, LLC (MMA) a subsidiary of Marsh, LLC, the world’s leading global insurance broker and risk management advisor.