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FUTURE OF EMPLOYER-SPONSORED INSURANCE IS UNCERTAIN
By: Nicola Heredia, CHS Marketing Coordinator

Open enrollment for 2015 is quickly approaching and employers are beginning to look at coverage options for the future that are fiscally beneficial for the company and their employees. Determining what approaches are feasible under the Affordable Care Act has been a challenge for businesses across the country.

Recently, there has been discussion to determine whether or not employers had the right to cancel their private plan, forcing their staff to enroll in individual insurance plans. It was proposed that companies would provide a stipend to contribute to employees’ premium costs by utilizing tax-free funds.

Right now, businesses can fund company-sponsored insurance plans by using tax-free money. However, the question has been posed to the Internal Revenue Service, or IRS, if using those funds to contribute to employees’ plan purchased through the exchange is allowed.

Ultimately, the IRS refused to all tax-free contributions to employees’ individually purchased health plans.

“An employee cannot use tax-free contributions from an employer to purchase an insurance policy sold in the individual health insurance market, inside or outside an exchange” said Christopher Condeluci, former tax and benefits counsel to the Senate Finance Committee in a New York Times article.

According to Politico.com, approximately 170 million Americans currently receive health care coverage through employee-sponsored plans.  The IRS’ recent decision will ensure that these individuals are not facing dropped coverage in the coming years.

“The IRS is going out of its way to keep employers in the group insurance market and to reduce the incentives for them to drop coverage,” reported Richard Lindquist, president of Zane Benefits, in the New York Times article.

Companies can still continue supplementing employees out-of-pocket, once the funds are taxed, which was the policy in the past.

“If an employer wanted to give additional taxable cash to employees, without regard as to whether the employee used the money to buy coverage on the exchange or not, the IRS doesn’t seem to care,” said Edward Fensholt, director of compliance for the Lockton Companies, in an Idea Stream article.

The ACA has an “employer mandate” that requires companies with over 50 employees to provide insurance to their workers or face a penalty of $2,000 per employee. Edward Emanuel, a former Obama Administration official, suggests that many large companies who spend more than that to provide coverage may consider paying the penalty in the future.

If a few large companies opt for penalty charges over coverage costs, “then it’s going to be the norm,” said Emanuel in The Fiscal Times article. “By 2025, few private-sector employers will still be providing health insurance.”

The Obama administration has recently delayed the mandate from being activate until 2016. Additionally, a survey taken by Towers Watson revealed that 98 percent of employers are planning to keep corporate-sponsored health plans through 2015, suggesting that there will be minimal changes with the employee-sponsored insurance market in the coming year.

“I don’t think that an employer-based system is going to be, or should be, replaced anytime soon,” said President Obama when asked about the future of this insurance system.

As businesses look to developing insurance plans for 2015 open enrollment, there are many things to consider within the newly reformed health care system. While changes might not be felt by employees in the next year, the future might be evolutionary to the standard, company-sponsored insurance plans.

CORPORATE WELLNESS PROGRAMS FAILING TO MAKE AN IMPACT

By: Nicola Heredia, CHS Marketing Coordinator

Over the last 10 years, many companies have integrated wellness programs into the workplace in an effort to improve health among employees and reduce medical costs. Investing in employees’ health can have a positive effect on the company, but critics are skeptical that the programs actually produce results.

According to the Rand Corporation, corporate wellness has grown into a $6 billion industry demonstrating that interest continues to rise in the benefits implementing this type of program can have. Although the rewards can be valuable to the entire company as a whole, studies show that employers are not getting the results they are looking for.

“U.S. companies that promote wellness are on the right track to help workers control their healthcare costs and lead more productive lives,” said Ed O’Boyle, global practice leader for Gallop’s consulting, in a Fierce Health Player article. “But their wellness programs are probably not as effective as leaders want them to be.”

A Gallop Business poll showed that approximately 85 percent of employers offered wellness programs to their staff. Although programs were available, only 60 percent of workers were even aware that this wellness initiative occurred within the company. From that group, less than half were participating in their companies’ program. 

Lack of motivation and knowledge of the program's existence are a few of the many contributing factors that make wellness programs unsuccessful.

“The strongest predictor of whether someone will lose weight or stop smoking is how motivated they are,” said Al Lewis, the founder and president of the Disease Management Purchasing Consortium International, in a Reuters article. “Since the programs are usually voluntary, the most motivated employees sign up.”

Studies show that more than half of the participants enrolled in wellness programs are of moderate health. If there are improvements within this group of individuals, there is typically not a huge cost savings to the company, since they are already in good health.

The majority of participants are not employees dealing with chronic conditions or other diseases that end up being costly for the company. Instead, workers considered unhealthy are less likely to participate or engage in these types of programs.

“You have to figure out what it is that you want,” said Soeren Mattke, the PepsiCo study’s senior author at RAND in a HRE Online article. “Workplace wellness is a good thing if you design and implement a program that matches your objectives.”

There are many different reasons to initiate a corporate wellness programs. Some may do it for the health factor, while other companies want to reduce medical costs. Additionally, business may look at the programs as an employment perk to their staff.

Knowing the specific goal of the wellness program is vital to determining how successful it is. Experts believe that it is necessary to spend money in order to see the financial benefits throughout their company.

“Any study that limits the value of wellness programs to just medical costs is understating that true value of these programs,” says Michael Thompson, principal of HR services practice at PricewaterhouseCoopers, in a HRE Online article. “In the end, I don’t think it is going to cause people to stop offering wellness programs. Instead, I think it will cause [employers] to rethink why and how they offer wellness programs.”

Taking a survey of what employees want out of a wellness program is a great way to gain an understanding of what direction the program should go. Tailoring wellness initiatives to the company’s employees as well as identifying specific objectives is essential to building a successful program that employees will buy into.

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