Health care costs are rising significantly, greatly impacting the price you and your employer pay for your health benefits. takes its responsibility to provide you with quality, affordable benefits seriously. You, too, must think carefully about how you use those benefits. Managing your personal health care expenses is one way you can help to keep costs down.
The role you play in managing health care costs is simple: Spend your health care dollars wisely. Each time you go to a medical provider or receive medical services you generate a claim that must be paid for through your employee health benefits. Essentially, the costs of your claims, and all your coworkers’ claims, determine the price you and your employer pay for your health benefits. In the end, decisions you make directly affect the year-to-year increases in your health benefits cost.
Making Wise Choices
When you have an illness or suffer a minor injury, you want to feel better—fast. Your health plan provides coverage for treatment that can be received in a variety of settings, such as your doctor’s office, a hospital or an urgent care center. However, every setting is not appropriate for every kind of care. Your responsibility is to know which setting provides the best, most cost-effective care for your condition.
The first step is to become familiar with your benefits—don’t wait until you are sick or injured. Review your benefits and know your copayments and coinsurance amounts for an office visit, urgent care facility or a hospital emergency room. And, remember to learn about what is required of you if you need to seek medical care when you are out of town.
For most illnesses or injuries, the best choice for medical care may be a visit to your general practitioner or primary care physician. Your regular doctor knows you best, has your medical history, and has the expertise to diagnose and treat most conditions. For most illnesses and injuries, and for regular checkups and preventive care, your doctor can provide the most cost-effective care.
Many situations require immediate care that you might not be able to receive in your doctor’s office, yet these situations might not be serious enough to require the services of a hospital emergency room. In these situations, a walk-in clinic or urgent care center may be an appropriate choice.
Below are some guidelines for determining when going to an urgent care center is appropriate.
- You have telephoned your doctor or nurse practitioner and he or she recommends that you go to an urgent care center.
- Your symptoms or injury have occurred outside of your physician’s regular office hours and are too severe to wait until the next regular office hours, yet they are not severe enough to warrant a visit to the emergency room.
- You do not have a regular doctor or primary care physician.
- You are out of town.
- You are unable to reach your doctor or nurse practitioner by phone.
Remember, care received in an urgent care facility is costly, yet it is much less expensive than an emergency room. Your best choice for non-urgent situations, however, is always a scheduled appointment with your doctor.
Emergency Room Care
A visit to the hospital emergency room is the most expensive type of outpatient care. Emergency rooms should only be used for true emergencies, as they are staffed, equipped and best suited for medical emergencies. Going to an emergency room for non-emergency care is a poor use of your health benefits and can be very costly. Some examples of situations where emergency room care is appropriate are as follows:
- A major injury, such as a broken bone
- A wound that continues to bleed vigorously despite application of pressure
- Decreased mental activity or awareness, or disorientation
- Shortness of breath
- A cold sweat accompanied by chest pain, abdominal pain or lightheadedness
- Severe pain
The next time you are faced with deciding where to go to receive medical care, be sure to evaluate all your options and choose the setting that best suits your illness or injury. Of course, in a true emergency, seek the appropriate care without delay. Choosing the most cost-effective options will go a long way toward ensuring that your employer can continue to provide you and your family with the quality, affordable health benefits you rely on.
An emergency is life-threatening and requires immediate care. Call 911! Be sure to bring along identification, insurance cards, medication and health history information.
Examples of an Emergency:
- Not breathing/having difficulty breathing
- Choking – unable to dislodge item
- Heart attack or stroke
- Broken bones
- Severe bleeding or burns
Situations for Routine/Self-Care at Home:
- Minor cuts and sprains
- Fever of 102° F or below
- Sore throat
- Upper respiratory infection
- Common neck and back pain
Your Home Emergency Kit:
- Assorted bandages
- Sterile gauze pads and tape
- Moist towelettes
- List of emergency numbers
- Flashlight and batteries
- Nasal bulb syringe
- Elastic wrap
- Pain and fever medications (ibuprofen/acetaminophen)
- Antibacterial ointments
- Antihistamines (avoid if pregnant)
- Anti-itch products
- Anti-diarrheal products
Be Prepared for Emergencies:
- Learn CPR and first aid
- Keep first aid book or card handy
- Have emergency numbers posted
- Know the location of the closest emergency facilities
- Understand your insurance policy
- Have medical history available
- Carry ID and insurance cards at all times
The Affordable Care Act (ACA) imposes “pay or play” requirements on applicable large employers. Under these requirements, applicable large employers that do not offer health coverage to their full-time employees and their dependents, or that offer coverage that is either unaffordable or does not provide minimum value, may be subject to a penalty. This penalty is also referred to as a “shared responsibility payment.”
On Feb. 12, 2014, the IRS published final regulations on the ACA’s employer shared responsibility rules. These regulations finalize provisions in proposed regulations released by the IRS on Jan. 2, 2013. Under the final regulations, applicable large employers that have fewer than 100 full-time employees generally will have an additional year, until 2016, to comply with the pay or play rules. Applicable large employers with 100 or more full-time employees must comply with the pay or play rules starting in 2015.
In addition, the final regulations extend the transition guidance provided in the proposed regulations for employers that contribute to multiemployer plans. According to the IRS, this transition guidance is intended to provide an administratively feasible way for employers that contribute to multiemployer plans to comply with the ACA’s pay or play requirements.
A “multiemployer plan” is a collectively bargained plan maintained by more than one employer and has a joint board of trustees representing employees and employers. Each participating employer’s relationship with the plan, and the employee’s participation in the plan, differs from the typical single-employer-sponsored arrangement. For example, service at participating employers generally is aggregated to determine an employee’s eligibility to participate in the multiemployer plan, even though the participating employers generally are not related.
This transition guidance applies to an applicable large employer that is required by a collective bargaining agreement to make contributions (with respect to some or all of its employees) to a multiemployer plan that:
- Offers, to individuals who satisfy the plan’s eligibility conditions, coverage that is affordable and provides minimum value; and
- Offers coverage to those individuals’ dependents.
Under this transition rule, with respect to employees for whom the employer is required to make contributions to the multiemployer plan, the applicable large employer will not be treated as failing to offer the opportunity to enroll in minimum essential coverage to full-time employees (and their dependents) and will not be subject to a pay or play penalty.
In addition, to determine whether coverage under the multiemployer plan is affordable, employers participating in the plan may use any of the affordability safe harbors described in the final regulations (that is, the Form W-2, rate of pay or federal poverty line safe harbor). Coverage under a multiemployer plan will also be considered affordable with respect to a full-time employee if the employee’s required contribution, if any, toward self-only health coverage under the plan does not exceed 9.5 percent of the wages reported to the multiemployer plan. The amount of the wages may be determined based on actual wages or an hourly wage rate under the applicable collective bargaining agreement.
If a pay or play penalty is assessed, it would be payable by a participating applicable large employer and that employer would be responsible for identifying its full-time employees for this purpose (which would be based on hours of service for that employer). If the applicable large employer contributes to one or more multiemployer plans and also maintains a single employer plan, the transition guidance applies to each multiemployer plan but not to the single employer plan.
Employers may rely on this transition guidance until it is modified by the IRS. The final regulations provide that any future guidance that limits the scope of the transition guidance will be applied prospectively and will apply no earlier than Jan. 1 of the calendar year beginning at least six months after the date of issuance of the new guidance.
Source: Internal Revenue Service
Under HIPAA, can a group health plan reward its employees by charging healthy employees less for health insurance?
Although HIPAA generally prohibits group health plans from charging an individual within a group of similarly situated individuals a different premium or contribution for coverage based upon that individual’s health factors, group health plans still have many opportunities to offer financial incentives in order to promote health and prevent disease.
Participatory Wellness Programs
Participatory wellness programs either do not require an individual to meet a health-related standard to obtain a reward or do not offer a reward at all. This type of wellness program is not subject to the nondiscrimination rules, as long as participation in the program is made available to all similarly-situated individuals. Examples of this type of wellness program include:
- Rewarding employees for attending a free health education seminar;
- Reimbursing employees for the cost of health club memberships, without regard to any health factors; and
- Reimbursing employees for the cost of smoking cessation programs, without regard to whether the employee quits smoking.
Health-contingent Wellness Programs
Where a wellness program requires individuals to satisfy a standard related to a health factor in order to obtain a reward, the program must comply with certain nondiscrimination requirements.
Effective for plan years beginning on or after Jan. 1, 2014, the Affordable Care Act (ACA) adopts the HIPAA nondiscrimination requirements for health-contingent wellness programs, while also increasing the maximum reward that can be offered under these programs. On May 29, 2013, final regulations were released to implement the ACA’s requirements for health-contingent wellness programs. These final regulations, which are effective for 2014 plan years, retain HIPAA’s nondiscrimination requirements for wellness programs with some modifications.
Under the ACA’s final regulations, there are two types of health-contingent wellness programs:
- Activity-only wellness programs require an individual to perform or complete an activity related to a health factor in order to obtain a reward (for example, walking, diet or exercise programs). Activity-only wellness programs do not require an individual to attain or maintain a specific health outcome.
- Outcome-based wellness programs require an individual to attain or maintain a certain health outcome in order to obtain a reward (for example, not smoking, attaining certain results on biometric screenings or meeting exercise targets). Generally, these programs have two tiers: (1) a measurement, test or screening as part of an initial standard; and (2) a larger program that then targets individuals who do not meet the initial standard with wellness activities. Outcome-based programs allow plans and issuers to target specific individuals (for example, those with high cholesterol for participation in cholesterol reduction programs, or individuals who use tobacco for participation in tobacco cessation programs), rather than the entire population of participants and beneficiaries, with the reward based on health outcomes or participation in reasonable alternatives.
To protect consumers from unfair practices, health-contingent wellness programs are required to follow certain standards related to nondiscrimination, including a standard that limits the maximum reward that can be offered.
Do the HIPAA nondiscrimination regulations prohibit a group health plan from treating individuals with adverse health factors more favorably?
No. Group health plans may establish more favorable rules for eligibility for individuals with an adverse health factor, such as a disability, than for individuals without an adverse health factor. For example, some group health plans contain provisions that allow disabled dependent children to continue to be eligible for coverage beyond the limiting age applied to dependent children that are not disabled.
Do health reimbursement arrangements (HRAs) that allow unused funds to be carried over from year to year violate the HIPAA nondiscrimination regulations?
In response to inquiries requesting clarification on the application of the HIPAA nondiscrimination regulations to HRAs that allow unused funds to be carried over from year to year, the final regulations included an example of an HRA plan that is not a violation:
Example: The health insurance coverage is made available to all current employees. Under the plan, the medical care expenses of each employee (and the employee’s dependents) are reimbursed up to an annual maximum amount. The maximum reimbursement amount with respect to an employee for a year is $1500 multiplied by the number of years the employee has participated in the plan, reduced by the total reimbursements for prior years.
This example clarifies that even though unused employer-provided medical care reimbursement amounts carried forward from year to year vary among employees within the same group of similarly situated individuals based upon prior claims experience, the HRA does not violate the HIPAA nondiscrimination regulations. Employees who have participated in the plan for the same length of time are eligible for the same total benefit over that length of time and the restriction on the maximum reimbursement amount is not directed any individual participants or beneficiaries based on any health factor.
What nondiscrimination requirements apply when a wellness program requires individuals to satisfy a standard related to a health factor in order to obtain a reward?
Limit on Reward
The total reward offered to an individual under an employer’s health-contingent wellness programs cannot exceed a specified percentage of the total cost of employee-only coverage under the plan. The total cost includes both employer and employee contributions towards the cost of coverage. If, in addition to employees, any class of dependents (such as spouses and dependent children) may participate in the health contingent wellness program, the reward cannot exceed the specified percentage of the total cost of the coverage in which the employee and any dependents are enrolled (such as family coverage or employee-plus-one coverage).
The final ACA regulations increase the maximum permissible reward from 20 percent to 30 percent of the cost of health coverage, effective for plan years beginning on or after Jan. 1, 2014. In addition, the regulations increase the maximum permissible reward to 50 percent of the cost of health coverage for health-contingent wellness programs designed to prevent or reduce tobacco use.
Reasonably Designed To Promote Good Health or Prevent Disease
Wellness programs must be designed to promote good health or prevent disease. If a wellness program has a reasonable chance of improving the health of participants and is not overly burdensome, is not a subterfuge for discriminating based upon a health factor and is not highly suspect in the method chosen to promote health and prevent disease, the wellness program will satisfy this requirement.
Annual Opportunity to Qualify for Reward
Wellness programs must give individuals an opportunity to qualify for the reward at least once a year.
Reasonable Alternative Standard
The final ACA regulations require that the full reward under a health-contingent wellness program, whether activity-only or outcome-based, be available to all similarly situated individuals. Under the final regulations, a health-contingent wellness program must, in certain circumstances:
- Provide a reasonable alternative standard (or waiver of the otherwise applicable standard); and
- Provide a different, reasonable means of qualifying for the reward, to the extent that a plan’s initial standard for obtaining a reward (or a portion of a reward) is based on the results of a measurement, test or screening that is related to a health factor (such as a biometric examination or a health risk assessment).
All wellness program materials must include a description of the general standard and disclose the availability of a reasonable alternative standard.
Prior to the Affordable Care Act (ACA) becoming law, it was common practice for insurance companies to vary the price of premiums based on factors such as health status, demographics, industry and the amount of time someone had been on a plan. These practices are now banned.
Beginning Jan. 1, 2014, health insurance companies offering coverage to individuals and small employers are only allowed to vary premiums based on age, family size, geography and tobacco use. Basing premiums on other factors is illegal under the Fair Health Insurance Premiums provision of the ACA.
Factors that are no longer taken into account in determining premium prices include health status, past insurance claims, gender, occupation, how long an individual has held a policy and the size of the employer.
Fair Health Insurance Premiums
Under the ACA, health plans are allowed to adjust premiums based only on the following factors:
- Insurance companies are allowed to vary rates based on age, but they may not charge older people more than three times the rate they charge younger people. Older adults are defined as persons who are 64 and older. Younger persons are defined as people ages 21 to 63.
- Family size. Insurance companies are still allowed to vary rates based on who is enrolled in the plan. Different rates can be charged based on whether the plan covers only an individual or a family. There can also be different family rates depending on the number of people covered by a plan (for example, individual and spouse or individual and children).
- Geographic area. Insurance companies are allowed to charge more for people who live in areas where medical costs are high. There are a lot of complex variables that go into determining this, so consult your employer or health plan representative to find out what the rate is where you live.
- Tobacco use. Insurance companies are allowed to charge up to 50 percent more in premiums for people who use tobacco products than they charge for non-tobacco users.
The rating restrictions in the ACA set a minimum floor, not a ceiling, so states can retain or enact more stringent standards than federal law.
Wellness Program Incentives
The ACA also permits employment-based health plans to charge employees up to 30 percent more on their premiums (and potentially up to 50 percent more) if they fail to participate in a wellness program or meet specified health goals such as losing weight and quitting smoking.
Market Size and Grandfathered Plans
The new guidelines for premiums do not apply to all insurers. They only restrict the premiums that issuers may charge in the individual and small group markets. Issuers in the large group market may be similarly restricted if the state permits these issuers to offer coverage through a health insurance exchange.
If you have a health plan that was in existence before March 23, 2010, that adjusts premiums outside of the above provisions, that plan is considered grandfathered and does not have to change.
Health plans must disclose whether they are grandfathered. To find out if your plan is grandfathered, or if you are unsure whether your plan is subject to the Fair Health Insurance Premium rules, check your health plan documents or consult your employer or plan administrator.