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Actionable Strategies to Combat the Healthcare Cost Problem Created by COVID

The ongoing COVID-19 pandemic has created a new dynamic within the US healthcare system, leading to increased healthcare costs being passed onto employers. During this economically challenging time, it’s more important than ever before that employers are strategically managing and addressing rising healthcare costs.

There are three variable factors directly impacting healthcare costs: unit price of healthcare services, the number of services required, and the number of patients requiring service. In order to impact this equation, there are three strategies employers can deploy.

  1. Change the unit cost of healthcare.
    Even prior to COVID, ineffective and uninformed healthcare decisions were already a leading cause of rising healthcare costs. Now, in a post-COVID world, the impact of poor healthcare decisions is having an even more significant impact on employers. This issue typically arises when employees lack the guidance, resources, and other information they need to make smart healthcare choices. This results in employees incurring higher costs of care and leveraging lower quality providers. These costs are then passed onto their employer. In order to combat this, employers must work with a hands-on broker that provides their employees with guidance during the benefits selection process. Additionally, the correct broker should provide employees support in selecting the best healthcare providers for their unique situation and life stage. By making more informed decisions, patients receive better healthcare outcomes and less costs are passed onto the employer.
  2. Impact the number of services used.
    As the demand for routine and preventive healthcare services skyrockets in a post-COVID world, the ability for patients to receive the care they need, how and where they need it, has become increasingly important. Employees are more commonly demanding personalized guidance in managing their health. As an employer, implementing solutions that cater to employees’ unique situations or communication preferences can ensure they receive correct, accurate information that is relevant to them. Providing personalized content in easy-to-access channels helps employees proactively find care and identify other programs offered to them, such as telemedicine. As an employer, consider solutions that remove barriers to care as an important component of your overall cost-control strategy.
  3. Manage the demand for care.
    The last recommended strategy is to proactively manage the number of people on your employer-sponsored healthcare plans. Each year, employers unknowingly spend millions on dependents that do not meet eligibility requirements for the benefits the company offers. By leveraging effective processes and strategies to eliminate ineligible users from their plans, companies can reduce healthcare costs. A key recommendation is to conduct a regular ineligibility audit to ensure your employee population and plans are managed in a consistent and fair manner to ensure equal treatment of employees to manage employer costs.

Are you interested in implementing these strategies at your business? Launchways can help, get in touch with us today.

How COVID-19 has Altered the 2020 Healthcare Landscape

Prior to the COVID-19 crisis unfolding, most US employers were anticipating healthcare cost increases in the range of 4-7%, based on trends in 2018 and 2019. However, COVID-19 has drastically altered the healthcare space and thus dismantled most employers’ previous predictions. While some are now anticipating decreased healthcare costs for 2020, this does not mean good news for employers. In fact, the monumental impact COVID-19 has had on the healthcare space could mean employers will be facing unprecedented cost increases in 2021 and 2022. These impacts are something employers must be preparing for now, rather than later.

In this post, we’ll explore the major ways COVID-19 has impacted the healthcare landscape. We’ll delve into what this means for businesses in the near-term (the duration of 2020), as well as crucial action steps employers must be taking now to prepare their businesses for 2021 and beyond.

How has COVID impacted healthcare costs?

Due to the COVID crisis, by late March 2020, many American businesses had temporarily ceased operations and closed their physical offices. The immediate impact of the virus was a significant surge in the demand for hospital space in markets with significant virus spread, such as New York. However, the most significant shift across the country was a stark decline in elective care.

For the most part, over the past few months no procedures or surgeries deemed as “nonessential” have been conducted, in order to preserve hospital space and supplies for those with COVID. The shutdown of nonessential medical services and procedures lead to the furloughs of tens of thousands of healthcare workers.

As a result of all these challenges, in the second financial quarter, Americans are receiving substantially less care than anyone could have ever predicted. This impact will result in an unprecedented $140B to $375B decrease in care costs (and this figure includes the costs of COVID-19 treatments).

However, this short-term cost decrease will do little to offset substantial future increases. Models predict that in 2021 and 2022, the trend of rising healthcare costs will reset at a higher lever with a higher slope indefinitely. Employers must be planning and preparing for these changes now by working hand-in-hand with their benefits broker to enact effective cost-control strategies.

What’s the bottom-line?

As an employer, it’s important to realize that COVID-19 has substantially altered the extent to which employees have been able to receive the care they need. Although this shift will result in short-term healthcare cost decreases, the long-term impact is grim. Employees will be driven to more expensive care settings as healthcare becomes available again, resulting in substantial costs increases in 2021 and 2022. Employers must begin preparing for these costs now, by working proactively with their broker on impactful cost-control methods.

What Employers Need to Know About EBSA’s COVID-19 Employee Benefits Deadline Extensions

The Employee Benefits Security Administration (EBSA), IRS, and Department of the Treasury issued a joint announcement on April 28th stating that they are extending a variety of timeframes related to employer sponsored healthcare coverage, portability, and continuation under COBRA.

Generally speaking, these extensions are designed to maximize healthcare accessibility during the ongoing COVID-19 outbreak, continue coverage for as many Americans as possible, and loosen up claims negotiating windows in a way that prevents a processing bottleneck from weakening the system as a whole.

In this post we’ll explore:

  • Extensions of employee healthcare deadlines under ERISA Section 518
  • A few examples of what the extensions mean for employers
  • The meaning of the HHS “measured enforcement period”

ERISA Section 518 Relief

Section 518 of ERISA allows for the extension of certain benefits-related filing and documentation deadlines by up to one year in the event of a presidentially declared national emergency.

With this week’s joint announcement, the government has declared that all employee health plans, disability plans and other employee welfare plans must disregard the period from March 1, 2020 until sixty (60) days after the announced end of the COVID-19 national emergency (“the Outbreak Period”) when determining the following periods and dates:

  • The 30-day special enrollment periods for employees
  • The 60-day COBRA benefit continuation election
  • Dates for making COBRA premium payments
  • The date for individuals to notify the provider of a qualifying event or determination of disability
  • The date range within which individuals can file benefit claims
  • The date by which claimants must file an appeal for an adverse determination
  • The date range within which individuals can request an external review of an adverse determination
  • The date range within which individuals may file information to perfect an external review of an adverse determination

For employers, this means that your plan administrator can’t count dates occurring during the Outbreak Period against employee deadlines. The spirit of these extensions is extremely employee-friendly, but it’s also HR and administrator-friendly, as it significantly reduces the pressure to process claims and push laid off or furloughed employees through off-boarding as quickly as possible.

To see the full text of the joint announcement’s final rule, click here.

What Will This Look Like in Action?

Open-Enrollment Examples

If an employee has a baby during the Outbreak Period, the child can be brought onto employee healthcare via special enrollment until 30 days after the Outbreak Period ends (90 total days after the announced end of the national emergency).

Similarly, if an employee got married shortly before or during the Outbreak Period, the new spouse’s special enrollment period will last until 30 days after the Outbreak Period ends (90 days total after the announced end of the national emergency).

COBRA Election Example

If an employee has been furloughed to the point where they no longer work enough hours to qualify for employer-sponsored coverage due to the national emergency, their COBRA election period must remain open until 60 days after the Outbreak Period ends (120 total days after the announced end of the national emergency).

COBRA Premium Payments Example

If an employee was receiving COBRA coverage at the beginning of the Outbreak Period, premium payments for COBRA coverage during the Outbreak Period will be considered timely if the payments are made within 30 days of the end of the Outbreak Period (90 days total after the announced end of the national emergency). As long as premiums for all months during the Outbreak Period are paid in a timely manner, the employee is eligible to continue coverage.

Claim Filing Example

If an employee has a 365-day filing window for any claim, that window will not begin for any claims made during the Outbreak Period until the Outbreak Period ends. Similarly, the entire date range of the Outbreak Period should be excluded from claims deadline calculations for care that occurred shortly before the national emergency.

The “Measured Enforcement” Period

The Department of Health & Human Services (HHS) officially concurs with the relief announced by EBSA in the joint statement and is relaxing enforcement for public healthcare, while encouraging states to adopt the spirit of the extensions EBSA is creating for private employer-sponsored programs.

No official end date has been announced for this period.

Takeaways

EBSA’s COVID-19 employee benefits deadline extensions are designed to help as many Americans as possible maintain their access to employer-sponsored healthcare during the coronavirus outbreak. While they’re largely employee-friendly, the extensions also help HR departments and benefits administrators reduce the bottleneck that COVID-19 has created.

Remember:

  • The “Outbreak Period” is defined as March 1, 2020 until 60 days after the COVID-19 national emergency is declared over.
  • Dates falling within the Outbreak Period should not be counted against employees for:
    • Special enrollment windows
    • COBRA enrollment windows
    • COBRA premium payment due dates
    • Filing claims
    • Requesting a claim review
    • Perfecting a claim review

How Does COVID-19 Impact Your Employee Benefits Program?

There’s never been a moment in recent history where access to healthcare and other employee benefits was quite so important. As we enter the predicted “surge week” here in the United States, HR and business leaders across the country are scrambling to determine how COVID-19 and the laws that have gone into effect this month will affect their employee benefits program.

The challenge is: everyone’s program and carrier are different, so there’s no one right answer to the question of “What does this mean for benefits?”

That means you’re likely going to have to work internally and with your benefits broker to figure out exactly how COVID-19, the FFCRA, CARES Act, etc. will impact your benefits program. With that said, however, we can provide you with some general guidance to ensure you’re asking the right questions, viewing your benefits through the right lenses, and doing everything you can to support your employees and continue your business in a compliant way.

In this post we’ll explore:

  • Extension of benefits to cover COVID-19 care
  • How your FSA grace period can spread out coronavirus-related expenses
  • How special enrollment periods can help you connect employees with coverage right now
  • What the FFCRA & CARES Act say about employee benefits
  • The value of providing access to telemedicine as part of your benefits strategy

Benefit Extension During the Coronavirus Outbreak

Anytime you terminate an employee who is disabled or hospitalized or has a dependent who fits those criteria, benefits are generally extended until one of the following occurs:

  • The terminated employee returns to work
  • The terminated employee finds new work or access to coverage
  • The terminated employee’s dependent/spouse is discharged from the hospital

Of course, with all the layoffs and furloughs surrounding the coronavirus outbreak, those requirements carry a heftier responsibility than ever before.

That means there is no benefit to terminating workers who are already away from the office due to COVID-19, as you will continue to remain liable for their family medical expenses. It’s not an advisable strategy to reduce your employee benefits program costs by terminating people.

Thanks to the Employee Retention Credit provided by the CARES Act, retaining those employees on FMLA leave may actually be advantageous in the long run, as they will decrease your tax burden.

Keep in mind that if you’ve already laid off employees, you’ll have to extend coverage to COBRA-eligible workers for up to 18 months if they don’t find new jobs.

Understanding the FFCRA’s Paid Leave Grace Period

The Families First Coronavirus Response Act significantly expanded paid leave for small and medium-sized employers, but it also provided a grace period of non-enforcement, which lasts through April 18th.

In essence, that means that employers cannot be punished for non-payment of employee leave until mid-month as long as they are acting in good faith and not delaying payments for reasons other than logistical constraints.

However, that doesn’t mean employers can negligently ignore the mandate until April 18th. If you’re dragging feet or waiting for the enforcement period to begin before playing by the rules, you could be putting your business at risk. The Department of Labor will be applying Sections 16 and 17 of the FSLA judiciously to minimize non-compliance and abuse of employees requesting leave at this time.

Leveraging Special Enrollment Periods

A special enrollment period represents any time where employees or individuals may enroll in health insurance outside of the typical renewal window.

While a national ACA special enrollment window has been shot down from legislation several times since the COVID-19 outbreak, several states have announced special enrollment periods for uninsured individuals and families looking to protect themselves during this crucial time.

If there’s a special enrollment period occurring in your state, it’s vital that you communicate that information to employees that previously opted-out of a healthcare plan and encourage them to get the care they need.

Encouraging Employees to Use Your FSA Grace Period Effectively

Flexible spending accounts, healthcare reimbursement accounts, and other benefits that help employees fight out-of-pocket healthcare costs generally need to be used within a given calendar or plan year. However, employees usually have a few extra months to make sure they use those funds before they disappear. For example, if your plan year ended on December 31, that means your grace period likely extended through mid-March.

If your benefits program plan year ended in mid-January or later, your employees are likely still able to incur FSA or HRA expenses for plan year 2019. That’s good for you because it means that the funds your employees and their families need to fight COVID-19 and stay healthy might already be allocated to them from the prior year.

If your plan year ended in November or December, your grace period is likely over, but employees can still use FSA and HRA expenses to pay for the medications, treatments, doctor’s visits, and so on they need to survive this time. For those lucky enough to have plan years starting between January and June, employees will be able to “double-dip” this year, significantly increasing their ability to meet out-of-pocket medical costs.

The Value of Telemedicine

Telemedicine (access to doctors via video conference, phone call, etc.) has grown significantly over the last decade, and if it’s a part of your employee benefits program as you’re reading this, you’re already going a long way to support your employees during this challenging time.

Telemedicine is powerful because it gets employees a doctor’s appointment without the need to travel to the doctor’s office. During this time of social distancing, that technology has the power to provide care for patients without exposing them to the COVID-19 health risks that will be present in most of our U.S. hospitals for months to come.

If you’re offering telemedicine to employees, you need to be sure they’re aware of it and are clear on how to access it. Communicate via email blast with your team to help them understand what services are available through telemedicine and how they can access them.

If you’re not currently providing telemedicine opportunities through your employee benefit offerings, now would be a perfect opportunity to talk to your benefits broker about how to maximize access to care while minimizing the need to visit a doctor’s office.

Takeaways

As we said when we began, there’s no one answer to the question of “How is COVID-19 affecting my employee benefits program, and how can my employee benefits program help affect change in the fight against COVID-19?” You need to dive deep into your program offerings and speak with your benefits broker to understand what this really means for your business.

In the coming days and weeks, however, it will be important for everybody to think about:

  • Benefits extension: What will the real cost be of laying employees off while also continuing to support their benefits? Can we maintain our team and leverage the tax credits of the CARES Act to keep us afloat this year?
  • The paid leave grace period: How will we be sure we’re fully compliant with FFCRA leave requirements by April 18?
  • Special enrollment periods: Is there one in your area? Can you help previously unenrolled employees protect themselves through special enrollment?
  • FSA/HRA grace periods: Does your plan year allow for employees to use both 2019 and 2020 funds to fight coronavirus? If sure, make sure they know.
  • Telemedicine: Are you currently offering it? Do your employees know? How can you start offering it if you aren’t already?

In the Midst of the COVID-19 Outbreak Telemedicine Is More Important Now Than Ever More

The ongoing COVID-19 pandemic has put telemedicine in the spotlight and directed new resources towards this crucial healthcare innovation. Over the past few years, telemedicine has gained traction with forward-thinking growing businesses and benefits brokers as a cost-saving way for employees to get the medical advice they need – without having to miss work to do it. However, many businesses and healthcare professionals have treated it as a handy supplement at best and an unnecessary expense at worst.

But as the nation locks down under quarantine and a trip to the doctor means potentially exposing yourself and others to the risk of infection, telemedicine is coming to light as a critical point-of-care option.

Let’s take a look at why employers should leverage telemedicine to keep their employees healthy and contribute to containment efforts, explore plus the ins-and-outs of getting employees access to telehealth during the outbreak, including:

  • Why COVID-19 makes telemedicine more important than ever
  • How telemedicine is becoming more accessible due to the outbreak
  • How to get your team members the telehealth care they need

Why Telemedicine Is More Important Than Ever

There are almost limitless reasons to use telemedicine during the COVID-19 outbreak. On an individual and societal level, at this point in time our safety relies upon two things: limiting physical interactions through social distancing and preventing the healthcare system from getting overwhelmed. Telemedicine is a powerful tool to facilitate both of these goals.

Quarantine orders and the very real risk of exposure – or exposing others – mean that seeing a healthcare professional in-person should be the option of last resort for you and your employees. Your team members should still get physical assistance if their health condition becomes serious, but telemedicine can minimize the risk of the disease spreading to or from your employees. And given the fear of exposure, telemedicine will likely increase your employees’ access to healthcare in a very real way. People who would otherwise avoid a doctor’s visit for fear of leaving the house will be able to get the care they need.

Telemedicine is also quicker and easier for providers compared to a regular office visit. And it puts a significantly lighter burden on the healthcare system than an urgent-care or emergency-room visit. That means that it can limit the amount of strain that employees put on an already overburdened system, potentially saving lives.

While telemedicine can help employees safely get medical advice for issues not related to COVID-19, it is especially important for employees who suspect that they have the virus to use telemedicine as a first resort. As long as the symptoms are mild, doctors are encouraging home-treatment akin to mild flu. Unless the case is severe and requires urgent attention and physical treatment, telemedicine can resolve employees’ fears and get them the advice they need without causing COVID-19 carriers to go out into the world and potentially spread the disease. And while it is impossible to administer a COVID-19 test remotely, the current limited supply and application of the tests mean that mild cases would not be tested even if employees went to the hospital or doctor’s office.

Telemedicine Is Becoming More Accessible

The medical community and government have recognized the utility of telemedicine in combating the crisis of a rapidly spreading disease and an overwhelmed healthcare system. The good news for individuals and businesses alike is that they are increasing access to telemedicine as a result, generally at reduced or zero cost.

For example, the CMS has expanded Medicare to cover telemedicine and eliminated all requirements regarding the location of both patient and provider. They have also loosened restrictions to allow consultations over platforms such as Skype and FaceTime in addition to formal platforms. Some states have also similarly expanded their Medicaid coverage. While these expansions are unlikely to be directly applicable to your employees if you offer health benefits, it is a strong sign of the general support for telemedicine. And employers should inform their team members of the expansions as they may well have parents or loved ones on Medicare or Medicaid.

States are also starting to mandate that private insurance companies cover telemedicine for all members in the state. Thus far only Massachusetts has implemented the measure but more states will likely join Massachusetts as the situation continues to develop.

In the meantime, many if not most major private insurers are temporarily expanding their telemedicine coverage to address the outbreak. UnitedHealth and Aetna have both extended telehealth coverage to all members and waived co-pays, while Humana has followed suit for urgent-care telemedicine calls. CIGNA has also added the option to make a telemedicine appointment with a CIGNA doctor through their website at no added cost, which increases care but does not waive co-pays for standard telemedicine. As of today, Blue Cross Blue Shield is one of the only major insurers to not expand telemedicine coverage in light of the outbreak, though they have promised to “encourage the use of virtual care and will also facilitate member access and use of nurse/provider hotlines.”

How to Leverage Telemedicine to Get Your Employees The Care They Need

By now, it should be clear that telemedicine isn’t just an added employee benefit but a true necessity during the COVID-19 pandemic. But as with so many issues related to the outbreak, the situation is constantly changing in terms of access to care. So how can you ensure that your employees can take advantage of telemedicine to keep themselves and their communities safe and healthy?

The first thing you should do is to talk to your benefits broker and your insurance provider to evaluate your current telemedicine coverage. You should also ask about any changes that they may have made in light of the current COVID-19 situation. And if your employees aren’t covered, lobby your insurance company to expand their telemedicine coverage and consider shelling out for additional telemedicine coverage, at least temporarily. Also consider the fact that a prescription delivery option makes it easier for employees to follow-up on their telemedicine visit to get the treatment they need without added risk of exposure.

You might also consider making these changes permanent additions to your employee benefits, if they aren’t already. Telemedicine is an effective way to reduce healthcare expenses and health-related absenteeism even when there isn’t an ongoing health crisis.

Final Thoughts

During this unprecedented health crisis, it can be hard to tell what you should do to protect yourself, your employees, and your business. Telemedicine is emerging as one method that is certain to improve the situation. Talk to your employee benefits broker today to see how you can leverage telemedicine to address the COVID-19 outbreak.

Preventing Discrimination in Your Employee Benefits Program

“Discrimination” is a word that no human resources professional ever wants to hear. Unfortunately, many HR leaders are unaware that discrimination can easily be lurking where we expect it least: in our employee benefits programs.

Moving forward, we’ll explore:

  • The difference between unfairness and discrimination
  • How employee benefits can unknowingly be discriminatory
  • What HR needs to do identify and eliminate discriminatory benefits practices

Discrimination vs. Unfairness

Discrimination is the unjust or prejudicial treatment of different categories of people, particularly on grounds of race, age, or gender.

Unfairness is a lack of equity; that is to say, a situation in which not everybody is treated the same way.

Those concepts are closely tied – and they can certainly occur at the same time – but they’re not exactly synonyms.

Fairness is an ideal, a target we should be able to hit the vast majority of the time. As an HR department, nobody is ever going to love every policy or initiative, but if your policies and the way you treat people feels consistent, you’ll be fine. When fairness issues become systemic and begin to affect work or culture, then you have a problem.

On the other hand, it’s never okay to be discriminatory from a moral or legal/compliance standpoint.

How does this apply to employee benefits?

By nature, insurance isn’t always “fair.” For example, if a 30-year-old employee and a 68-year-old employee are on the same health plan, making the same employee contribution, the 68-year-old will see much more value due to their increased likelihood of medical need.

If you’re the 30-year-old in that scenario, that doesn’t feel very fair, but it’s not discriminatory. That’s because, if that 30-year-old had the same medical needs as the 68-year-old, the plan would be just as valuable to them. There’s no unfair barrier in place blocking access due to age.

The EEOC dictates that programs are not discriminatory in that exact scenario as long as they provide either equal cost or equal benefit.

HR directors and benefits managers hear a lot from employees about why their benefits offerings are imperfect, but it’s crucial to sort out a fairness issue from actual discrimination.

How can employee benefits be discriminatory?

As their name implies, employee benefits are valuable perks that positively impact people’s lives. When you start offering different employees different levels of benefits, you encounter a real fairness issue, but depending on the way you’re classifying employees when you make those offers, you might be discriminating and not even knowing it.

The law states that in order to offer two employees different benefits packages, you need to demonstrate those two individuals are on different levels in terms of “bona fide employment-based classifications.”

Those bona fide classifications include:

  • Full Time vs. Part Time status
    • It’s okay to offer full-time employees benefits that part-timers don’t receive
  • Geographic location
    • It’s okay (even necessary) to offer eligible employees different benefits packages based on where they live
      • This generally applies to businesses that operate across multiple states
  • Different dates of hire and lengths of service
    • It’s okay if senior employees have been “grandfathered in” with an old plan

So, the bottom line is, if you have two full-time employees working in the same office who got hired on the same day, they should have equitable access to the same employee benefits programs.

What about managers and executives?

The most common way businesses inadvertently commit benefit discrimination is by the way they structure benefit offerings to so-called Highly Compensated Employees (HCEs). An HCE is someone who:

  • Makes more than $130,000 or
  • Owns more than 5% of the business

If your business is self-insured, the ACA prevents you from offering preferential benefits packages to HCEs. If your business is fully insured, you can offer a higher tier of benefits (or lower premium costs) to HCEs if your business does not offer a cafeteria plan. In the event you are insured and have a cafeteria program in place, it’s unlikely you will be able to offer different plans to your executives, but always double check with your broker.

Regulations concerning benefits discrimination

If you would like to explore the compliance frameworks to fully grapple with the problem, here are some places you can find discrimination regulations specifically tied to employee benefits policies.

What does HR need to do?

There are three compelling core reasons to review your employee benefits programs through the lens of checking for discrimination:

  1. Reducing discrimination is simple the right thing to do
  2. An employee dispute over a discriminatory program could become a long legal battle
  3. If regulators discover or catch wind of discriminatory practices, your business will be fined

As an HR leader, you need to be proactive and be sure you:

  • Lead an internal audit of your employee benefits offerings to ensure packages are offered in a way that is nondiscriminatory
  • Contact your benefits broker to ensure they are aware of all relevant regulations and can describe to you how and why your program is compliant
  • Inform your legal and compliance teams as quickly as possible if you detect any issues, shortcomings, or possible areas of discrimination
  • Take ownership over correcting all issues as quickly as possible

When you work to eradicate hidden discrimination from your policies and offerings, you’re strengthening your organization for the long-term and doing your part to create a better work experience for all professionals.

Takeaways

Employee benefits discrimination unfortunately occurs often because the situations in which businesses can or can’t offer different packages can confusing at times.

Just remember:

  • Insurance isn’t necessarily “fair” (because there’s no guarantee people will get the same value out of it), but it should never be discriminatory
  • All differences in benefits offerings should be based on bona fide employment-based classifications, like part time vs. full time, location, or date of hire
  • If you are self-insured or have a cafeteria plan, you cannot offer preferential benefit packages to highly compensated employees
  • All HR departments should lead an audit of their offerings in collaboration with your benefits broker and legal team