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INSURANCE PLANS PURPOSE STEEP RATE INCREASES FOR 2016

By: Nicola Heredia, CHS Marketing Coordinator

Proposed insurance plan rate increases for Obamacare and private insurance plans are higher than in years past. The primary reasons for the steep rate hike focus on 2014 medical data, in addition to an increase in pharmaceutical expenses.

Rates do not need to be finalized and published until the fall of this year; however, if the proposed increase is 10 percent or higher, the insurance company is required to submit a proposal to government regulators. Although higher than normal increases may not be approved by regulators, experts believe the lower, approved rate will still be high.

“While recent public attention has focused on a subset of plans that filed for premium increases of 10 percent or more, this data reveals that most plans are proposing more modest increase,” Caroline Pearson, senior vice president at Avalere, said in a statement.

Avalere, a healthcare advisory firm, conducted an analysis on the 2015 rate increase in order to compare it with the upcoming plan proposal. On average, the Affordable Care Act plans are facing a potential increase that is 12 percent higher than in 2015.

“Those are not necessarily the plans that hold the bulk of enrollment,” said Pearson. “So, while some of those plans may be going up a lot in price, that doesn’t mean a lot of enrollees are necessarily affected.”

The results demonstrated that not all plans will be impacted. For instance, 68 percent of enrollees that have signed up for the silver Affordable Care Act plans will be facing increases topping out at 5.8 percent, which is lower that other coverage levels.

According to the firm, this is a trend among many of the plans that have been submitted for rate increase proposals. Large increases are not typically the norm, and many that will see the large spikes will not affect plans with large enrollment numbers. In fact, experts believe that the majority of Obamacare participants will remain unaffected since they qualify for subsidies.

Although rates have not been finalized, experts within the industry agree that there will be larger than normal increases. Insurance carriers are backing up their proposed rates with 2014 health data.

“Insurers seem to be reporting higher trend, which means they are seeing bigger increases in health care costs,” said Larry Levitt, senior vice president for special initiatives at the Kaiser Family Foundation, in a Politico.com article. “But really what’s going on here is they now have data showing what the risk pool looks like.”

After going through two years worth of insurance cycles, Obamacare providers now have a better understanding of who is in their health care pool. This data has made it possible to determine the health of their enrollees and predict the future medical expenses.

“With this much uncertainty, you become conservative, and so you raise your rates,” said Dr. Martin Hickey, CEO of New Mexico Health Connections, in the Politico.com article.

This may be the first of many steep insurance rate increases Americans will face in the future. Multiple factors have played into the providers’ decision to increase the cost of plans. It appears as medical expenses and pharmaceutical costs continue to rise, insurance providers will continue to prepare for this increase by passing much of the cost onto their participants.

FINANCIAL WELLNESS PROGRAMS PLAYING INTO OVERALL WELLBEING

By: Nicola Heredia, CHS Marketing Coordinator

Wellness programs are still an important employee benefit that many companies continue to offer. In an effort to revamp and evolve the program’s model, some companies are beginning to include a financial wellness aspect to the program.

“It’s a cultural shift. Financial wellness takes a more holistic approach to an employee’s finances,” said Megan Yost, head of participant engagement at State Street Global Advisors’, in a CNBC article. “It’s about reducing financial stress and improving productivity.”

Companies provide wellness programs as a benefit to employees for a variety of reasons, such as lowering health care costs, increasing workplace productivity and motivating employees to take an active role in their health care. Critics have questioned the ROI on wellness programs, while others insist that providing this benefit is a major morale boost that is necessary in the workplace.

“Financial wellness has changed so much from the old model of going to listen to a lunchtime speaker and learn about the personal finance at work,” said Liz Davidson, CEO of Financial Finesse, in the CNBC article. “Now financial wellness is an actual employee benefit.”

In the past, many programs have focused on weight loss and ending unhealthy habits such as smoking or excessive drinking. Incorporating a financial wellness aspect into the program not only prepares employees for retirement, but it also can have positive physical effects.

Three quarters of Americans report that their finances are a major source of stress for them, according to the Financial Health Institute. This type of stress can contribute to health risks such as depression, anxiety, high blood pressure and heart disease. Additionally, stress can cause individuals to turn to bad habits to reduce anxiety, which can lead to other negative side effects.

The Consumer Financial Protection Bureau has found that establishing a good financial wellness program can help to reduce financial stress and in turn, increase employee productivity, while improving an individual’s physical health and mental state.

“By providing this education in the workplace, the cost barrier is removed because now it comes as a benefit paid by the employer as opposed to it coming out of your own pocket,” said Greg Ward, Think Tank Director and Senior Resident with Financial Finesse, in an Ally article. “And because it’s being promoted throughout the workplace, there isn’t a sense that you’re taking away time from your employer to improve your financial wellness and build your wealth.”

Companies are setting up financial wellness programs that go beyond the basics of budgeting. Instead, they are hiring outside companies to conduct financial assessments, face-to-face guidance and workshops to help employees manage everything from day-to-day expenses to planning for college and retirement.

“We encourage every employee to take an assessment to find out where they may have financial vulnerabilities,” said Ward. “Those vulnerabilities could be insufficient life insurance or college savings, or maybe they aren’t as retirement ready as they thought they were.”

Providing expert guidance can help employees feel at ease that they are taking the necessary steps to financially prepare for the future. Removing some of the stress that comes with managing finances can have a positive impact on individuals’ health, which is why more and more companies are incorporating this aspect into their wellness programs.

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