MISHRM 2014 Annual Conference
HR Amplified: Driven to be…
Gimme the Keys:
What Employers Need to Consider
Before Driving Employees to a
Private or Public Exchange
Sue Mathiesen
Director of Research
McGraw Wentworth, a Marsh & McLennan Agency
LLC company
Today’s Agenda
• Health Care Reform – Big Picture Impact
– Creates Public Exchanges
– Spillover effect of health reform-private exchange options for active
employees
• Public Exchanges
– State-based
– Premium subsidies for moderate incomes
– Plan options available
• Private Exchanges
– Conceptual design
– Options available
– Employer considerations
• Concluding Thoughts
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
The Big
Picture
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
In 2014 – Market Changes
• Public exchanges launched
• Individual (non-employer) market accessible/viable alternative
– No medical underwriting
– No pre-existing condition limitations
– No rating based on health conditions, gender
• Subsidies are available to qualifying individuals to help pay for
coverage
• Individual mandate requires coverage or tax penalty
• Half of states expand eligibility for Medicaid
• Employer mandate delayed until 2015
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
HCR Spillover Effect - Employer Market
• Many initial HCR provisions increased employer cost
• Many employers did not absorb full cost increase
• When benefits modified over past few years, most employers
quick to communicate added burden of HCR with employees
• Larger employers pressing for innovation
• Vendor marketplace responding with new ideas
– Improve marketplace information
– Create new incentives to control cost and improve quality of care
• One of the innovative ideas – Private Exchanges
– Mirrors feel of public exchange-but not the same thing
– Most pair with defined contribution approach to financing benefits
Sources:
Pre-2006 Mercer National Survey of Employer Health Plans
MISHRM
Post-2006 Hewitt Health Value Initiative
P.O. Box 99463
CPI data Bureau of Labor Statistics,
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Financing Benefits, a Problem?
• In most years, employer cost rising 2 to 3 time inflation
• Two major slowdowns in employer plan increases
• Will pace of increase remain calm or jump back up ?
18.6%
17.1%
Employer Plan Cost
Consumer Prices
14.7%
12.1%
11.2%
10.1%
8.1%
7.3%
8.0%
6.9%
3.0%
3.6%
8.5%
7.5%
6.1%
5.4%
4.1%
10.1%
6.1%
5.3%
6.2%
4.9%
2.6% 2.8%
3.3%
3.8%
4.2%
2.8%
3.0%
-1.1%
2.2%
3.2%
2.3%
2.8%
0.0%
Sources: Pre-2006 Mercer National Survey of Employer Health Plans
Post-2006 Hewitt Health Value Initiative
CPI data Bureau of Labor Statistics,
2.1%
1.5%
-0.4%
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Most Employers Committed to Health Plans
Importance of providing subsidized health benefits for the following
populations:
Active Full-Time Employees
2014
96%
1%
2015 and beyond
95%
2%
Spouses
2014
71%
2015 and beyond
56%
21%
30%
Active Part-Time and Seasonal Employees
2014
33%
2015 and beyond
30%
26%
25%
Retirees
2014
21%
2015 and beyond
17%
Very Important
22%
20%
Somewhat Important
Source: 2014 Employer Survey on Purchasing Value in Health
MISHRM
Source: 2014 Employer Survey on Purchasing
Care,
P.O. Box 99463
Value in Health Care, Towers Watson and
Towers Watson and National
Business
Group
on Health
Troy, Michigan 48099
National Business
Group
on Health
(844) 4-MISHRM
http://mishrm.org
Exchanges – Important Options
• Public Exchanges
–
–
–
–
ACA Marketplaces and subsidies
National picture
New Michigan Marketplace
Considerations for retirees
“Get Out” Strategy
What would
employees/participants
see if you dropped your
plan?
• Private Exchanges
– Why are employers interested?
– Evaluating Exchanges for your organization
• Administration of benefits
• Long term financial impact
“Stay In” Strategy
Emerging strategy
focused on Defined
Contribution approach
– What’s available for mid-market employers?
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Public
Exchanges
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
What Is A Public Exchange
• ACA mandates each state has a “Marketplace”
– Online facilitator to purchase health insurance (individuals, groups
<50)
– Subsidies provided for those who qualify based on income
Manage plan activities
Determine eligibility,
enroll individuals
Assist consumers
Provide financial management
Ensure plan accountability
Determine Medicaid and Federal
Subsidy Assistance
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Exchange Enrollment Rights
• Enrollment in the Exchange is limited
– Initial enrollment (October 1, 2013 – March 31, 2014)
– Open enrollment (generally from October 15 – December 7)
– Special enrollment (permitted in specific situations)
• Special enrollment (60 day window to enroll) permitted for:
– Loss of minimum essential coverage
– Gaining a dependent or becoming a dependent through marriage,
birth, adoption or placement for adoption
– Newly attained status as US citizen, national or lawfully present
individual
– An Exchange error, misrepresentation or inaction of Exchange party
– QHP materially violated contract provision
– Becoming newly eligible for premium assistance
– Gaining access to QHP because of permanent move
– Exceptional circumstances defined by DHHS
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Medicaid Expansion – Current Status
• Goal of HCR - standardize eligibility provisions across states
– Standard income-based eligibility, no asset requirements
• Reality – Almost ½ of states not expanding
– Exchange subsidies not available under 100% of FPL
– Leaves many low income earners in “No Man’s Land”
Source: Kaiser Family Foundation, January 27, 2014
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Initial Enrollment in “Metal Tiers”
• Plan options in public Exchange named after metals
• Subsidy based on “2nd Lowest Cost Silver Plan”
• Can buy up to Gold plan (pay more) or buy down to Bronze
plan (pay less)
Metal Tier Plan Value
Features
Plan value
Bronze
Silver
Gold
Platinum
Catastrophic
60%
70%
80%
90%
HSA rules
age <30
Percent Enrollment
United States
19%
62%
12%
7%
1%
Michigan
12%
73%
12%
3%
1%
http://aspe.hhs.gov/health/reports/2014/MarketPlaceEnrollment/Feb2014/ib_2014feb_enrollment.pdf
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Who is Eligible for Subsidized Coverage?
Household income < 138% FPL
Eligible for Medicaid*
(assuming State expands Medicaid)
Federal Poverty Level (FPL)
Household income < 400% FPL
Could be eligible for
subsidized Exchange coverage
2014 Eligibility Threshold
Household size of
2014
Medicaid
138% FPL
Exchange
400% FPL
1 (single)
$11,670
$16,105
$46,680
2
$15,730
$21,707
$62,920
3
$19,790
$27,310
$79,160
4
$23,850
$32,913
$95,400
5
$27,910
$38,516
$111,640
6
$31,970
$44,119
$127,880
* ACA specifies income threshold of 133% FPL but requires an “income disregard” of 5% of FPL in meeting income test; effective income threshold for eligibility is 138%
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
2014 Exchange Subsidies
Maximum monthly employee
contribution in Exchange for
second lowest cost silver plan
% Household
income
Dollars
% Poverty
level
Annual
household
income for
Individual
(increased Plan Value)
<100%
<$11,670
Medicaid / Access gap
N/A
N/A
<138%
<$16,105
Medicaid (if expanded)
N/A
N/A
138%
$16,105
94%
3.00%
$40
150%
$17,505
87%
4.00%
$58
200%
$23,340
73%
6.30%
$123
250%
$29,175
70%
8.05%
$196
300%
$35,010
70%
9.50%
$277
400%
$46,680
70%
9.50%
$370
>400%
>$46,680
70%
No maximum
Benefit Subsidy
Full cost
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Michigan Marketplace Statistics
Eligibility for Coverage for Current
1.1 Million Michigan Uninsured
No. of
Individuals:
United States
As of April 19, 2014
8,019,763
272,539
28,605,000
725,000
% of Eligible
Population Enrolled
28.0%
37.6%
Increase in Medicaid
enrollment as a
percent since
January 1, 2014
10.3%
8.4%
Selecting
Marketplace Plan
50%
Michigan
12%
38%
Ineligible for Financial Assistance
Eligible for Subsidies
Medicaid Eligible
Eligible for
Marketplace
Coverage
Source: Kaiser Family Foundation, July 2014
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Carrier Plans Offered in Michigan
• Marketplace pricing released
for single (age 27 & 50) and
family (age 45) rate tiers
• Included all 83 Michigan
counties
• All counties had access to
Bronze, Silver and Gold plans
• Only 31 counties had access
to Platinum options
• On average, counties had 4
carriers offering coverage
(min 1 carrier, max 9 carriers)
Vendor
BCBSM
BCN
Priority Health
Consumers Mutual
McLaren Health
HAP
Total Health Care
Humana
Meridian / Bronson
Molina
# of Counties
83
70
70
47
28
23
4
3
3
3
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Carrier Specific Pricing
• Humana offered lowest cost plans (all 5 tiers) for Wayne,
Oakland and Macomb counties
–
–
–
–
These three counties most populated (39% of the state’s population)
Humana did not offer any plans outside these three counties
All Humana offerings are HMO plans
LIMITED NETWORK: 12 hospitals included in Humana network –
majority are DMC locations (Crittenton, Henry Ford Macomb were
included)
• Outside these three counties, BCN had lowest cost plans in
majority of counties
• More on limited network options coming
– BCBSM releasing a limited network Marketplace product later this
year
– CMS pushing back with regulations in January for 2015
– Providers appear very concerned
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
What Do Plans Cost on the Exchange?
Monthly Premium for Family of 4 (age 45)
All Federal
Exchanges
Iowa
(Des Moines)
Michigan
(Wayne)
Virginia
(Arlington)
@ 150% of FPL
$58
$58
$58
$58
@ 250% of FPL
$196
$196
$196
$196
@ 400% of FPL
$370
$370
$370
$370
2nd Lowest Silver
N/A
$888
$732
$888
Average Silver HMO
$1,115
N/A
$875
$906
Average Silver PPO
$997
$973
$1,109
$2,807
Highest Silver Plan
$7,404
$1,049
$1,291
$5,680
400% of FPL Buy Up to PPO:
Wayne County
$370 + ($1,109 - $732) = $737/mo.
Incremental
Increase in HHI
Over $95k
“The Cliff”
Cost to Buy Up
to PPO Plan
significant
especially for
older workers
without access
to subsidies
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
What Do Benefits Look Like on the Exchange?
HUMANA
Deductible
Coinsurance
OOP Max
PCP Copay
Specialist Copay
Rx
Single Cost (Age 27)
Single Cost (Age 50)
Family Cost (Age 45)
Bronze
$6,300
0%
$6,300
Ded.
100% after
100% after ded.
$138
$235
$549
TOTAL HEALTHCARE (2nd Lowest Plan)
Single Cost (Age 27)
Single Cost (Age 50)
Family Cost (Age 45)
Silver
$4,600
20%
$6,300
$25
$35
Gold
$2,500
20%
$3,500
$25
$35
Platinum
$1,000
20%
$1,500
$25
$35
$1,500 Rx ded.
$500 Rx ded.
$500 Rx ded.
$10/$20/$50/50% $5/$10/$20/35% $5/$10/$20/35%
$156
$266
$622
$181
$308
$720
$203
$347
$811
Silver
$184
$313
$732
Gold
$203
$346
$810
Impact on Employer decisions in the future
Room to move to higher deductibles?
Trend to higher deductibles, not necessarily to HDHP compliant plans?
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Wayne County – All Plans Sorted by Tier
Rates for Single
coverage for a 50
year old
• Overlapping pricing between tiers (for instance, highest cost
Silver vs. lowest cost Gold) suggest vastly different
approaches to setting pricing between carriers.
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Cost for 40 Year Old – No Subsidy
40-year-old making $51,705 per year (450% of Poverty),
with no financial assistance
$154
At 450% FPL, an
enrollee would not
be eligible for
premium tax credits
$261
$311
$365
$481
Notes: Premiums indicate the amount a 40-year-old would need to spend on the second-lowest cost silver plan in a given county or region.
Source: Premiums for state-based exchanges were obtained through a Kaiser Family Foundation review of insurer rate filings to state regulators.
Premiums for federally-facilitated and partnership exchanges were obtained from data published by HealthCare.gov, as of January 22, 2014, available
at https://www.healthcare.gov/health-plan-information/.
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Cost for 40 Year Old – Limited Subsidy
40-year-old making $40,215 per year (350% of Poverty),
with moderate financial assistance
$154
At 350% FPL, eligible
enrollees would have
to pay a maximum of
9.5% of their income
on premiums for a
benchmark silver plan
$261
$311
$318
$318
$47
$163
Notes: Premiums indicate the amount a 40-year-old would need to spend on the second-lowest cost silver plan in a given county or region.
Source: Premiums for state-based exchanges were obtained through a Kaiser Family Foundation review of insurer rate filings to state regulators.
Premiums for federally-facilitated and partnership exchanges were obtained from data published by HealthCare.gov, as of January 22, 2014, available
at https://www.healthcare.gov/health-plan-information/.
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Cost for 40 Year Old – Larger Subsidy
40-year-old making $28,725 per year (250% of Poverty),
with significant financial assistance
$154
$193 $69
$193
$311$118
At 250% FPL, eligible
enrollees would have
to pay a maximum of
8.05% of their income
on premiums for a
benchmark silver plan
$193
$318 $173
$318
$193
$289
Notes: Premiums indicate the amount a 40-year-old would need to spend on the second-lowest cost silver plan in a given county or region.
Source: Premiums for state-based exchanges were obtained through a Kaiser Family Foundation review of insurer rate filings to state regulators.
Premiums for federally-facilitated and partnership exchanges were obtained from data published by HealthCare.gov, as of January 22, 2014, available
at https://www.healthcare.gov/health-plan-information/.
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
What Does 2015 Look Like in MI Marketplace?
• Open enrollment for
2015 starts on
November 15, 2014
• Still finalizing plans
and rates
• Looks like carriers will
be consistent
Michigan
2015 Rate Information
2015 Average Rate
Average Premium
increase
$342
1.6%
Median Premium
Increase
Premium increase
Range
6.5%
-21.6% - 15.4%
Number on
insurers
Number on New
Plan Bids
15
9
Source: 2014 PriceWaterhouse Coopers, A Preliminary Look at 2015 Individual Market Health Insurance
Rate Filing
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Retirees
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Retirees Covered By Employer Plan
• Include in active plan
– Plans must meet many ACA coverage requirements
– No “Employer Mandate Penalty” for affordability/benefits tests
– No Exchange Notices required
• Segment into “retiree-only” plan
– Pay taxes/fees
– Otherwise exempt from many ACA requirements
• Annual/lifetime maximums can apply, preventive care can be excluded,
etc.
• HRA plans can exist without medical plan
– Must have separate ERISA plan and cannot cover ANY active
employees (i.e., if a retiree returns part-time and keeps retiree
benefits, it would not be a “retiree-only” plan)
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Retirees – Subsidy Eligibility
• Pre-65
– Eligible for subsidies as long as not ENROLLED in ANY employer
plan
• “Eligibility” for a qualified plan doesn’t matter, but enrollment in ANY
employer-sponsored medical plan EXEMPTS retiree from subsidy
• FAQs disrupted many employer plans to exit market via HRA funding
and leveraging subsidies
• Post-65
– Eligible if not enrolled in Medicare A/Medicare Advantage
• Both groups may be eligible for Medicaid
– States who expanded Medicaid removed asset tests (just Income)
• Retirees should evaluate what is better for their situation,
employer coverage or Exchange coverage
• Difficult communication role for employers as decision specific
to individual decision (income, assets, state of residence, etc.)
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Summary Insights
• Public Exchanges not currently an equitable strategy for
replacing current employer coverage
– Benefits and networks significantly different
– Costs for non-subsidy and especially older employees high
– Regulations keep closing loopholes for employers to leverage
Exchange subsidies
• Market continues to evolve
– Technology challenges will continue in short-term
– Pricing impact of actual enrollment versus projections will be seen
in 2015 and beyond (age mix, volume of enrollment)
• Usually takes about 2 years to learn how claims are running vs.
premiums
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Public Exchange vs. Private Exchange
PRIVATE
PUBLIC
SPONSOR
ACCESS
State or Federal
Government
Open
Online and
Telephonic
Medical/Rx
ENROLLMENT
PRODUCTS
CARRIERS
CONTRACTS
Consultant/Broker,
Insurer, Tech Firm
Closed
Individual
Single or Multiple
Individual
(Get Out Strategy or Retiree)
ELIGIBLES
Actives, Retirees
FUNDING
Insured
PAYMENT
TOOLS
Dental, Vision, Life,
Voluntary, +More
Individual Post-Tax,
Federal Subsidies
Comparison
Tools
Group
Self-funded
Employer Pre-Tax,
Employee Pre-Tax
Decision Support,
Education
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Private Exchanges
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Private Exchanges
• Why are Employers interested in Private Exchanges?
• Evaluating Exchanges for Your Organization
– Administration of Benefits
– Long Term Financial Impact
• What’s Available in Exchanges for Mid-Market Employers?
– Options were limited in 2014 – expanding in 2015
– Targeted quoting plus delays in insured rates due to HCR
– Several Exchanges now expanding marketing efforts
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Lots of Confusion
• Do they wrap around Public Exchanges?
No
• Can Employees receive subsidies?
No
• Are active and retiree Exchanges the same?
No
• Can employees choose from lots of carriers?
Not Yet
• Is my experience “pooled” with other employers? No
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Lots of Advertising Messages
Percent of employers
that would consider
offering a private exchange
47%
33%
• You only need to make one strategic decision
Within 2 yrs
• Best prices through market leveraging
• Improves buying experience for employees
Within 5 yrs
– Personalizes benefit decisions
– Lots of choice, lots of decision support tools
• Eliminates employees from being “overinsured”
– 60% or more employees will “buy down”
– Reductions in overall gross costs of 25%+
• Works just like a 401(k)
• Reduces administrative and compliance burdens
• Simplifies communication
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
What’s the Real Deal?
•
•
•
•
Fit varies by employer
Short and long term considerations
Private Exchanges new and continually evolving
Goal today is to provide:
– Fundamental understanding of Private Exchanges
– Framework for how to evaluate these options for your
organization
– Information about current Exchange marketplace
• Focus on administrative and financial aspects of
Exchanges
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
The Benefits Management Process
PROCUREMENT TECHNOLOGY SERVICES
Enrollment/Communication
• Funding
• Contribution Approach
• Budgeting/Renewal Process
PROCESS DESIGN
• Plan and Carrier Selection
Data Management
• Bill Reconciliation
BENEFITS
Medical/Rx
Dental, Vision
Income Replacement
FSA, 401(k)
Voluntary Benefits
Wellness
• Data management
(transferring between systems)
• Internal Cost Allocation/
Bill Payment
• Data analysis/reporting
PROCUREMENT TECHNOLOGY SERVICES
•
•
•
•
•
Open Enrollment
New Hires/Qualifying Events
Terminations
Mergers / Acquisitions
Paper/Online/Call Center/
Face to Face
Process
Management
• Compliance
• Eligibility Rules
• Dependent
Verification/Audits
• Evidence of Insurability
• COBRA
PROCESS DESIGN
MISHRM
P.O. Box 99463
Troy, Michigan 48099
PROCUREMENT TECHNOLOGY SERVICES
Financial Structure
PROCESS DESIGN
(844) 4-MISHRM
http://mishrm.org
Private Exchange Solutions
• Benefit Management Process still responsibility of employer
• Bundles online enrollment system with carrier solutions
– Automatically sends eligibility to all Exchange carrier partners
– Unique decision support tools
– Can leapfrog employers into online solution (inc. email with
employees)
• Pre-defined plan/carrier menus
– Limits time on plan design and pricing decisions
– Offers more choice of benefit options (typically 5+ plans)
– Plan materials pre-developed (benefit summaries, certs, etc.)
• Facilitates commitment to defined contribution approach
– Most employers can do with current process, but don’t
– Systems built to communicate and price DC plans
– Primary driver of savings when moving to Private Exchange
approach
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Data Management and Enrollment
Adds, Terms,
Benefit Election,
Demographic and
Dep Data
Adds & Terms
Demographic Data
Payroll System
Benefit Elections
for Contributions
Enrollment
Process
(Manual or Online)
Benefits of Online System:
• Feeds create integrated system
• Eliminates manual entry
• Reduces billing differences
• Enrollment and communication
material can be mix of online and
paper-based approach
• Paper bills continue for most carriers
• List bill from life/disability
Incentive
Compliance
Wellness
Vendors
Enrollment
Enrollment
System
Enrollment
System
Carrier
System
Systems
Service
Providers
(COBRA)
New
Government
Reporting?
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Data Management with Exchanges
• Exchange facilitates carrier enrollment feeds/owns issues
• Expands review beyond selecting a “medical vendor”
– Moving carriers becomes tied to Exchange options
• Single carrier Exchanges more risky than multi-carrier
• Exchange can also tie the employer to a broker partner
– Can create administrative complexity (deductions, bill reconciliation)
– Can be more expensive than independent systems
• Carriers indicating plans priced the same off and on Exchanges
• System can be free…but many cost $5-$20+ PEPM
– Some solutions are not all-encompassing (medical/dental only)
• Challenging situation if already have an online system
• Can bring wide variety of “pre-packaged” voluntary benefits
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Data Management with Exchanges
Exchange
Carriers
Connected to Exchange
Carrier Partners
Adds, Terms, Benefit
Election, Demographic
and Dep Data
?
Adds & Terms
Demographic Data
Payroll System
Benefit Elections for
Contributions
?
EXCHANGE
?
?
• Exchanges don’t necessarily talk to
payroll or support upload process
• Goal of Exchange partner to support
connecting as many systems as possible
Enrollment
Enrollment
System
Non-Exchange
System
Carrier
Systems
Incentive
Compliance
Wellness
Vendors
Service
Providers
(COBRA)
New
Government
Reporting?
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Online Enrollment Systems vs. Private Exchange
Online Enrollment System
Defined Contribution
Products and Carriers
Consumer Experience
Private Exchange
Sometimes
Most of the time
Limited selection of plans
Wide selection of plans and
benefit options
One carrier per employer
Sometimes multi-carrier
Fully insured or self-insured
Fully insured or self-insured
Automation
Automation
Some decision support
High degree of decision support
Some employee engagement
High degree of employee
engagement
Generally includes year-round
enrollment, QLEs, billing,
Administrative Support eligibility,
payroll feeds, carrier feeds, COBRA
and FSA admin, call center
Often not end-to-end processing,
more open enrollment focused
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Defined Contribution Approach
Employer provides $6,000 annual contribution
Health FSA
Critical Illness
Health Saving Account
Short-Term Disability
Long-Term Disability
Life Insurance
Dental
CDHP Health Plan
PPO Health Plan
Employer Fund
Employer Fund
John
Jane
Employee shops the online exchange
John chooses:
CDHP health plan
HSA
Life insurance
STD
LTD
Total cost = $6,420
John’s cost = $420
Jane chooses:
PPO health plan
Dental
Life insurance
STD
LTD
Health FSA
Critical Illness
Total cost = $7,210
Jane’s cost = $1,210
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Non-Defined Contribution Trend Management –
“The Balancing Act”
?
Employee Costs
Out of Pocket
$13,857
$12,830
$11,880
$11,000
$5,543
$5,132
$4,400
$6,600
$4,752
$7,128
What should those who use the plan pay?
How much risk are we willing to allow them to take?
Payroll Contribution
What can they afford?
What cost should be shared by all?
$7,698
$8,314
Employer Cost
What can we afford?
2013
2014
Average Employee Cost
2015
2016
Average Employer Cost
What benefits do we need to
offer to attract and retain
employees?
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Defined Contribution Approach
Example: 5-Plan Menu with $6,300 Employer Funding
Buy-Down
Occurs When More
Choices are Offered
?
$12,247
$11,000
$4,400
Out of Pocket/Payroll Contributions
$11,340
$10,500
$4,200
$5,040
Employee Costs
$5,947
Employee Decides
Exchange support tools help to educate
Employer Cost
$6,600
2013
$6,300
$6,300
2014
Average Employee Cost
Assumes: 8% annual trend
2015
$6,300
2016
Average Employer Cost
What can we afford?
What funding level do we
need to offer to attract and
retain employees?
Commitment to aggressive
management of trend line
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Trend Management Strategies Still Required
$13,857
$12,830
$12,247
$11,880
$11,000
$5,543
$11,000
$5,132
$4,400
$4,752
$4,400
$6,600
$7,128
$7,698
2013
2014
2015
Average Employee Cost
$4,200
$5,040
$5,947
$8,314
2016
Average Employer Cost
Assumes:
 8% annual trend
 100% PPO enrollment
 60% employer contribution
$11,340
$10,500
$6,600
$6,300
$6,300
$6,300
2013
2014
2015
2016
Average Employee Cost
Average Employer Cost
Assumes:
 8% annual trend
 60% PPO enrollment, 40% CDHP enrollment
 Employer contribution fixed at 60% of 2014 gross
cost
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Long-Term Considerations In DC Design
• Underlying plans – employer-funded defined benefit plans
– Unlike 401(k)s, year over year deficits add to cost
– If 30% increase received, will you react via increased
funding/vendor review?
– If self-funded, budget variance felt immediately
• Adverse selection may have impact over time
– Initial pricing set based on plan differences
– What will impact be of employees “buying down”?
• Small percent of employees drive most costs
• Individual employees may be “over insured” but employer groups typically
not
• Adverse selection can “load” rates for some plans by 3-15%
– If gross premiums drop by 25%, but claims don’t, what happens?
• Cadillac tax impact based on “gross plan” costs and plan
offerings - cost needs to be managed to avoid tax
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Snapshot of Exchange Marketplaces
Target Market
Segments
Exchange Sponsor
• Consultant/broker
• Technology firm
• Insurer
Product Suite
• Medical/Rx only
• Medical/Rx, dental, vision
only
• Comprehensive portfolio
including dental, vision,
life, disability, voluntary
•
•
•
•
Small to mid-size
Large to jumbo
All employer sizes
Individual/Non-Covered
Employee Segments
• Retirees
Carriers Available
• Single carrier
• Multi-carrier
Benefits
Administration
Services
Funding Flexibility
• Fully-insured only
• Both fully-insured and
self-funded
•
•
•
•
•
Online enrollment platform
Payroll / carrier integration
Decision support tools
Call center support
Employee
communications
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Michigan Options–BCBSM’s GlidePath
• Limited roll-out 1/1/2014, expanding for 2015
– 30 clients (4 self-funded)
– High HDHP adoption
• Pre-defined menus of HDHP, PPO, and HMO
– BCBSM medical mandatory (single carrier), dental/vision optional
– No other benefits supported on platform
– Must use Defined Contribution strategy (can have classes)
• 75 day implementation
• $5 per eligible employee per month (PEEPM) administrative
fee
• Standard payroll reports, employer works with payroll vendor
to load deductions
• Broker neutral
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Michigan Options – Mercer Marketplace
• Available 100+ employees, fully-insured or self-funded
• Many carrier options – employer picks one (with some
flexibility for larger locations)
– Aetna, United HealthCare, CIGNA
– Many regional players (Anthem)
• Pre-defined menus, all lines of coverage
• Six month implementation schedule
• High level of integration services and employee
communication support including call center, compliance
services
• $21 PEEPM plus $5,000 minimum implementation fee
• Not broker neutral (Mercer or MMA)
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Michigan Options – iSelect
• Small to large group – fully-insured (for now)
• Multi-carrier options – employer must pick one
– Priority Health and Health Alliance Plan
– UHC will be a national option for 2015
• Pre-defined menus of HDHP, PPO, and HMO
– Medical/dental/vision/voluntary benefits mandatory
– Life/disability carrier options available or can use own
– Must use Defined Contribution strategy (can have classes)
•
•
•
•
45 day implementation schedule, quote through iSelect
Administrative fee paid by carriers
Support provided for integrating payroll
Broker neutral (unlerlying Liazon system recently purchased by
TowersWatson)
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Michigan Options - Other
• Other Private Exchanges (retiree only) exist and will continue
to emerge
• Available options may vary by employer size (3,000+)
• BCBSM indicating they may partner with Exchanges other
than GlidePath as long as they are the exclusive provider
• Interesting new capabilities to watch for:
– Ability to offer many carriers at same time (targeting discounts or
offering more choice)
– Regulations creating flexibility to leverage Public Exchanges
– Technology reduces employer administrative/compliance
responsibilities
– Neutral Exchange partners not tied to single carriers or broker
partners
– Individual insurance Exchanges for “get-out” approach integrating
public Marketplace and other individual product offerings
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Private Exchanges - Recap
An online portal that offers multiple plan options to the employee
Benefit administration powers the technology of a Private Marketplace
Most platforms offer a shopping mall experience with decision support for
employees
Employers can shift to a Defined Contribution strategy, and set a limit on
healthcare spend
Employees get a range of easy-to-compare plans
Employers get a complete benefit administration solution
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Why are Employers Interested?
Introduction of Defined Contribution to control corporate
contribution
One-stop shopping across core medical, life, disability and
voluntary benefits
Technology eases employee decision-making and employer
administration
Employees are not necessarily opposed to change, as long
as they see financial benefit; 60%+ select a cheaper plan
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Ownership of Benefits Administration Remains
PROCUREMENT TECHNOLOGY SERVICES
Enrollment/Communication
• Funding
• Contribution Approach
• Budgeting/Renewal Process
PROCESS DESIGN
• Plan and Carrier Selection
Data Management
• Bill Reconciliation
BENEFITS
Medical/Rx
Dental, Vision
Income Replacement
FSA, 401(k)
Voluntary Benefits
Wellness
• Data management
(transferring between systems)
• Internal Cost Allocation/
Bill Payment
• Data analysis/reporting
PROCUREMENT TECHNOLOGY SERVICES
•
•
•
•
•
Open Enrollment
New Hires/Qualifying Events
Terminations
Mergers / Acquisitions
Paper/Online/Call Center/
Face to Face
Process
Management
• Compliance
• Eligibility Rules
• Dependent
Verification/Audits
• Evidence of Insurability
• COBRA
PROCESS DESIGN
MISHRM
P.O. Box 99463
Troy, Michigan 48099
PROCUREMENT TECHNOLOGY SERVICES
Financial Structure
PROCESS DESIGN
(844) 4-MISHRM
http://mishrm.org
Will it Work for You?
• Is moving to a Defined Contribution approach and offering
more plan choices a driving goal of your benefits program?
• Are you a fit for online benefits management?
• Do you have internal technical support for payroll integration?
• Can you communicate with all employees via e-mail?
• Are you tied to a specific carrier (i.e., BCBS)?
• Is it a less expensive approach than current benefit offerings?
• Do you have segments of employees that cannot adopt this
approach (i.e., Union)?
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Summary Insights
• Significant shift in benefits management approach
• Evaluation goes beyond a medical RFP…start process
early!
• Commitment over time means managing new sets of
issues
• Exchange Market is new and options will evolve
• Current employer fit fairly focused
–
–
–
–
Online enrollment with a DC approach
Competitive fully-insured solution
“Get Out” approach
Other employer situations where Exchange is aligned with benefit
strategy
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Concluding Thoughts
The Landscape is Changing
• HCR has brought a monumental change to health care
delivery and payment system
• The landscape has changed either directly by HCR or in
response to HCR provisions
– More resources and time needed to manage the administrative
requirements
– Time will be needed to assess whether to “play or pay” decision and
understand cost control options going forward
– Over the next few years, new options for employers to consider
• Private Exchanges – viable for some employers now
• Limited network plans – may be available
• Changing benchmarks – public
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Exchanges Will Play a Role
• Understanding public exchange options critical
– “Get Out” completely or for segments of employees – implications of
purchasing coverage in individual market
– As understanding of Exchange marketplace grows, employees with
high contributions may want to evaluate individual market options
– These options may or may not be alternatives to employer plan
(non-calendar year employer plans will never align open
enrollments)
• Private Exchange understanding critical
– Will be a huge publicity push in the next several years-Leadership
will be asking about these exchanges
– The sales pitch is a fast ball...critically think about the implications of
moving to private exchange
• Relinquishing control of the plan options offered (and annual changes)
• Private exchange may tie you to broker, insurance carrier-moving is
harder
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org
Any Questions?
William D. Wentworth, Vice President
McGraw Wentworth,
a Marsh & McLennan Agency LLC company
3331 W. Big Beaver Rd., Ste. 200
Troy, MI 48084
(248)822-6201
wdwentworth@mcgrawwentworth.com
MISHRM
P.O. Box 99463
Troy, Michigan 48099
(844) 4-MISHRM
http://mishrm.org