Tag Archive: large employers

Employer-sponsored health coverage redefined in ACA era

While employer-sponsored plans typically have much lower deductibles than the most popular plans found on the exchanges, more employees have deductibles, and those deductibles are increasing. Over all, employees have deductibles that are about 50 percent higher than they were five years ago. Four out of five covered employees pay a deductible, which averages about $1,500 each, Kaiser found. Employees who get insurance through a smaller company have deductibles that now average $2,100. Workers are also paying a greater share of the premiums, contributing $5,277 annually toward a family plan, nearly a third of the total cost.

Source: Workers Pay More for Health Care as Companies Shift Burden, Survey Finds

The Patient Protection and Affordable Care Act is predicated on the principle that the vast majority of working age Americans are covered by employer-sponsored health insurance (ESI). In the not too distant past, ESI could have been accurately described as an employee benefit since employees paid little or nothing for their coverage.

In line with the trend of the past several years to have employees share in the cost of their coverage, the Affordable Care Act redefined ESI as “employer shared responsibility,” referring to the law’s requirement that employers of 50 or more offer nearly all full time employees coverage providing minimum value. That’s a critical distinction that reshapes the traditional view of ESI.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Workplace wellness flash point of large employer frustration with rising medical costs

Frustration among large employers over the continued high and rising cost of providing medical coverage for their workforces nearly five years since the Affordable Care Act’s 2010 enactment is reaching a flash point. The flash point is workplace wellness programs amid questions over their ability to reduce medical utilization costs by improving the health status of their employees. And specifically whether large employers who require biometric testing of employees are running afoul of rules promulgated to implement Patient Protection and Affordable Care Act provisions governing the programs.

The Affordable Care Act sanctions two types of wellness programs employers can offer as part of employer-sponsored health plans. In addition to the traditional participatory wellness programs such as discounts on fitness club memberships, health assessments and seminars, employers can also offer — on a voluntary basis — contingent wellness programs that require participating employees to take part in health improvement plans designed to help them reach health status goals such reducing weight, body mass index (BMI), blood pressure, or cholesterol levels. Employers can provide those achieving their goals economic incentives in the form of reduced health plan premiums.

However, the U.S. Equal Employment Opportunity Commission (EEOC) has sued some large employers, charging they are requiring all employees and not just those participating in voluntary, contingent wellness programs to undergo biometric testing. That goes beyond contingent wellness program rules and violates Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) since the testing is not job-related or consistent with business necessity, the EEOC claims.

Reuters (via Yahoo News) reports the federal government litigation has ticked off large employers to the extent that they are now politically turning against the Affordable Care Act and may work to undermine it in Congress and the courts.

The application of the workplace wellness rules isn’t the real issue. Large employers have known the how the rules governing voluntary and contingent wellness programs work for two years. Their real beef is over the fact that they’re not seeing their health costs being meaningfully reduced by the Affordable Care Act. Nor are they likely to without reforming their organizations to support a culture that truly respects the health and wellness of their members and affords them ample opportunity to engage in health promoting behaviors.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Interest in private exchange marketplace heats up

The Patient Protection and Affordable Care Act’s creation of the state health benefit exchange marketplace is aimed at restoring functionality to the individual and small group markets. By the time the Affordable Care Act was enacted in early 2010, these segments were inescapably mired in an adverse selection death spiral. Premiums grew unaffordable and carriers lost the ability to spread risk as state risk pools shrank. The exchange marketplace seeks to remedy this by scaling up the size of the pool and providing a demand aggregation mechanism that with sufficient enrollment can achieve better spread of risk and, in turn, lower premium rates.

The Affordable Care Act does not initially offer the demand aggregation mechanism of the public exchange marketplace for large employers but gives states the option of opening their exchanges to large employers in 2017. However, large employers seeking relief from rising employee health care costs aren’t about to wait. Instead, they are looking at private exchanges being formed by benefit consulting firms serving large employers. Several large employers participating in a private exchange could potentially cover many thousands of people and bring them into the pool far faster than state exchanges that have to enroll individuals and small employers one at a time.  Private exchanges also make it easier for big employers to adopt defined contribution-based health benefits in which employees would select from a larger number of plans than might otherwise be offered by a single employer. Media coverage this week of burgeoning interest in the private exchange marketplace can be viewed here and here.

While large employers of relatively highly paid full time workers find the private exchange marketplace of interest to reduce the cost of covering their workforces, those with low wage, part time staff are looking to the state exchange marketplace. It provides a means for these employers to reduce their health care outgo by sending part time workers (defined in the ACA as having an average work week of less than 30 hours) to purchase individual plans sold on the state exchanges and subsidized by advance income tax credits. Two such employers – specialty grocer Trader Joe’s and Home Depot –indicated in recent days they would take this route.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

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